JBT Marel (JBTM) Q2 FY26 earnings call: guidance and Q&A

How should we think about the margin cadence for PFB in Q3 and Q4, given Q2's performance, and is there a revenue catch-up from Q2 into the back half?

Approximately $20 million in PFB revenue was short in Q2 due to logistics and production inefficiencies, which is expected to be redistributed across Q3 and Q4. PFB margins are projected to see a 25-50 basis point year-over-year improvement in Q3, followed by another 100 basis points sequential improvement from Q3 to Q4, driven by higher volumes and restructuring benefits.

“So that $20 million, we do feel is really just changes the cadence moving from Q2 into Q3. And then obviously, we're trying to be very thoughtful in terms of the Q3 guidance to account for any other inefficiencies that we see or any other logistics challenges. So we've essentially redistributed that $20 million across the back half of the year.”

asked by Mircea Dobre · answered by Brian Deck

How should we think about Protein segment margins in the back half of the year, considering the Q2 benefit from EPA tariff refunds?

The Protein segment's Q2 margins included approximately a 200 basis point benefit from tariff refunds. Management expects the general margin cadence to continue, remaining relatively flat in the back half of the year due to a higher mix of equipment revenue, which has a slightly lower flow-through than aftermarket revenue.

“There was, I would say, about 200 basis points impact from the tariff refunds. So they've been running at about -- in that low to mid-20s. We would expect that general cadence to continue through the back half keeping in mind that they have a higher mix of -- so it would be relatively flat for the back half of the year.”

asked by Mircea Dobre · answered by Brian Deck

Can you elaborate on the strength seen in Protein Solutions beyond the poultry category?

While poultry remains the largest and strongest segment, the Prepared Food side (within the PFB segment) is showing significant strength. Fish and pork segments are experiencing modest strength, driven by consumers seeking alternatives to high beef prices. The beef segment, however, is the weakest, representing less than 5% of the Protein Solutions portfolio, due to low cattle inventory.

“The weakest part by far is the beef side, right, given the the lack of cattle inventory for the processors. So we're not seeing much in the way of investments on the beef side. So that's the weakest for sure. And it's -- and just for your reference, beef is less than 5% of our Protein Solutions portfolio.”

asked by Justin Ages · answered by Brian Deck

Is the improvement in the AGV business, mentioned in the prepared remarks, being sustained beyond Q2?

Yes, the Prepared Food side within PFB is quite strong. The AGV business had its strongest volume quarter in six quarters, suggesting that disruptions from tariffs are largely behind it. The combination of increased volume expected in the back half and ongoing restructuring efforts is anticipated to lead to a significant ramp-up for AGV.

“The other thing I would mention is within that segment, AGV had its strongest quarter in 6 quarters on volume. So as you may recall, AGV was a little bit more -- a lot more impacted on the volume side from some of the disruptions from the tariffs as folks pulled back on some of their warehouse automation. And that seems to be behind us, again, an extraordinarily strong quarter.”

asked by Justin Ages · answered by Brian Deck

What is the status of pricing actions, how is the company addressing inflationary costs, and why was the full-year top-line guidance not increased despite strong orders?

Pricing actions from late last year and early this year are embedded in the backlog, reflecting known costs. However, current inflation, particularly in logistics (over $100 million annual spend), is causing some margin leakage and a lag in recovery. Despite record backlog, the full-year revenue guidance was maintained due to the Q2 miss and ongoing pressures from logistics and facility transitions, requiring a 'makeup' in the back half.

“I think we're being -- given those logistics issue, and we're still moving things around some facilities to that, we thought it was really appropriate to just keep the guidance as is given a little bit of the pressure we saw in the second quarter. So we have a bit of a makeup in the third and fourth quarter from that, miss in the second quarter.”

asked by Ross Sparenblek · answered by Brian Deck

When are the factory consolidations expected to be completed, given the inherent difficulties and timing issues?

The consolidations are a phased approach. Some began in Q2, another will wrap up in H2 FY26. Two larger facilities will be consolidated in 2027, with one completed by mid-2027 and the other by the end of 2027. Management is proceeding thoughtfully to avoid overwhelming receiving plants, noting that the 2027 moves involve consolidating production into facilities already manufacturing those products, which should make the transition smoother than current efforts.

“There will be a phase in, right? We started some here in the second quarter. There's another one wrapping up here in the back half of the year. And then two facilities are -- I'm talking larger facilities will happen in 2027. One will be done by mid-27 and another one by the end of 2027. So I would say it's phased-in approach.”

asked by Walter Liptak · answered by Brian Deck

Can you provide an update on the USDA's progress regarding speeding up chicken inspection lines and the potential impact on JBT Marel?

Management expects a USDA decision on poultry line speeds in late summer or early fall. U.S. line speeds (140-175 birds per minute) are significantly lower than Europe's (240 birds per minute), creating a productivity disadvantage. A permanent increase to 175 birds per minute, or higher, would be a multi-year tailwind for the industry, not just 1-2 years, and would strengthen JBT Marel's value proposition due to its leading technology at higher speeds.

“What we currently hear or I understand is that we'll expect some kind of decision either late summer or early fall. Obviously, we're talking about the government, so you never know precisely where they stand, but that's our current expectation. And then just in terms of the benefits, I think one thing to understand is that the U.S. line speeds, which are currently at 140 birds per minute versus I'm talking poultry and with waivers 175 birds per minute. That compares to Europe of 240 birds per minute on average at the lines front.”

asked by Ian Zaffino · answered by Brian Deck

Given the consistent orders and past poultry investment cycle, what is the visibility on orders going forward, and should we expect a mix shift between segments in 2027?

There is strong underlying demand for protein, with poultry being the #1 protein. While there have been significant investments in primary and secondary poultry processing, the Prepared Foods side (within PFB) saw 15% year-over-year order growth in Q2, now outpacing primary/secondary investments. Both Prepared Foods and primary/secondary poultry pipelines remain strong, with backlog extending well into 2027, supported by global demand for protein self-sufficiency.

“And what I would tell you is the second quarter, the Prepared Foods side has now lapped the primary and secondary side in terms of investment. So we -- in our Prepared Foods business, it was about 15% order growth year-over-year. So it was really quite strong. And I think this is -- if you listen to the earnings calls from our customers, you hear about how they're shifting some of that commodity-based volume to added value volume into their prepared food side.”

asked by Mircea Dobre · answered by Brian Deck