JBT Marel’s Earnings Call: Strong Growth Amid Tariff Uncertainties

John Bean Tech ((JBTM)) has held its Q1 earnings call. Read on for the main highlights of the call.

JBT Marel’s recent earnings call painted a mixed picture, highlighting both strong performance metrics and looming uncertainties. The company reported impressive revenue and order growth, alongside successful integration efforts and a solid liquidity position. However, the suspension of full-year guidance due to tariff uncertainties and challenges in specific market segments like whitefish present notable risks. While positive achievements were significant, the uncertainties and potential financial impacts of tariffs weigh on the outlook.

Better-than-Expected Revenue and Margin Performance

JBT Marel’s first quarter revenue exceeded expectations, surpassing the midpoint of guidance by $19 million. This was largely attributed to strong equipment shipments and recurring revenue streams. The company also reported an adjusted EBITDA margin of 13.1%, which surpassed guidance by 60 basis points, showcasing efficient operational performance.

Strong Order Growth

The company experienced a 12% year-over-year increase in orders, driven by significant demand from the poultry industry and robust orders in the meat, beverage, pharma, and pet food sectors. Combined orders reached an impressive $916 million, reflecting healthy growth and market confidence in JBT Marel’s offerings.

Progress on Integration and Synergy Realization

JBT Marel reported significant progress in integrating operations with Marel, with cost synergies on track to achieve in-year savings of $35 million to $40 million by 2025, and annual run-rate savings of $80 million to $90 million. This integration is expected to enhance operational efficiencies and cost-effectiveness.

Strong Liquidity Position

The company boasts a robust liquidity position of approximately $1.3 billion, providing significant financial flexibility. Additionally, JBT Marel has successfully reduced its leverage to 3.8 times, improving from just below 4 times at the transaction close, which strengthens its financial stability.

Impact of Tariffs and Economic Uncertainty

JBT Marel has temporarily suspended its full-year financial guidance due to uncertainties arising from US tariffs and potential reciprocal tariffs. The estimated cost impact of these tariffs is projected at $50 million to $60 million annually, posing a significant financial challenge.

Challenges in Whitefish Market

The company continues to face challenges in the whitefish market, particularly with a 25% quota reduction in the Barents Sea for 2025. This reduction is expected to impact demand and market conditions, posing a risk to revenue from this segment.

Potential Backlog Repricing

JBT Marel is in discussions with customers about potential repricing of backlog orders due to tariff impacts. This could affect revenue and margin stability, adding another layer of complexity to the company’s financial outlook.

Forward-Looking Guidance

Despite macroeconomic uncertainties and the impact of US tariffs, JBT Marel has provided Q2 projections, anticipating revenue between $885 million to $915 million and an adjusted EBITDA margin between 14.5% and 15.25%. The company plans to mitigate potential tariff costs through supplier negotiations, pricing adjustments, and manufacturing shifts, aiming for targeted annual run-rate synergy savings of $150 million by the end of 2027.

In summary, JBT Marel’s earnings call highlighted a strong operational performance with significant revenue and order growth. However, the suspension of full-year guidance due to tariff uncertainties and challenges in specific market segments like whitefish present notable risks. The company remains focused on integration efforts and maintaining a strong liquidity position to navigate these challenges.