Midera Food Processing Inc

Good day and thank you for standing by. Welcome to the Madeira Food Processing Q2 2026 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, Rob Fagan, Vice President, FP&A and Investor Relations.

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Madera's second quarter 2026 earnings call, which is also our first earnings call as an independent public company. Alongside me today are Mark Salman, Chief Executive Officer, Chief Financial Officer, and Mark Bowie, Chief Operating Officer. This conference call is being webcast live within the investors section of our website at madera.com, and a downloadable version of today's presentation is available there as well. A webcast replay will be posted to our site following the call. You can also reach our investor relations team at investors at madera.com. Before we begin, please note that today's discussion will include forward looking statements regarding our business outlook, operating performance, capital allocation plans, market conditions, and other future events. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. please refer to today's earnings release and our SEC filings for discussion of these risk factors. We undertake no duty to update forward-looking statements except as required by law. We will also refer to certain non-GAAP financial measures. The company believes that its presentation of non-GAAP financial measures is useful because it provides investors and securities analysts with the same information that it uses internally for purposes of assessing its core operating and financial performance. One specific item to this first report in regards to non-GAAP measures, our separation from Middleby was completed on July 6, 2026, after the close of the second quarter. The historical results we are discussing today are therefore presented on a carve-out basis. Where we refer to estimated standalone adjusted EBITDA, that measure reflects management's view of profitability fully burdened by our estimated standalone public company costs. which are not reflected in NOBI's historical segment reporting and are not fully captured in the Carvel financial statements. We intend to present our recent historical results on this estimated standalone adjusted basis for the next several quarters so that our reported performance, our guidance, and our medium-term framework are all measured in the same way. historical reconciliations to the most directly comparable GAAP measures are available in today's earnings release and accompanying materials posted on our investor relations website. A reconciliation of forward-looking estimated standalone adjusted EBITDA to the most directly comparable GAAP financial measure net earnings is not available because the timing and magnitude of certain items cannot be reasonably estimated at this time without unreasonable effort. With that, I would like to turn the call over to Mark.

Thank you, Rob, and good afternoon, everyone. Before I get to the quarter, let me acknowledge the moment. This is our first earnings call as Medera Foods Processing. We completed our separation from the Middleby Corporation on July 6th and subsequently began trading on NASDAQ under the ticker MFP. Thank you to the Middleby team and our board for positioning us for this chapter and to our 2,800 colleagues for delivering uninterrupted service throughout the launch of the new company. I've never seen this team more energized or more aligned around where we're headed. And that enthusiasm is already showing up in how we're executing. That energy carries right into the quarter We beat our own expectations. Net sales of $245.4 million and estimated standalone adjusted EBITDA of $41.8 million both came in above the high end of the previous guided range when including $8 million for estimated quarterly standalone public company costs. We also had a strong growth in orders and ended the quarter with a record backlog. With that strong quarter as a backdrop, on today's call, I start by addressing the value creation opportunity that I see as a standalone company and why we believe we can accelerate shareholder value faster as a standalone company. Then I'll discuss the quarter against the four pillars we laid out at our investor day in May. Finally, I'll hand it over to Amy for the financial review, and we will take your questions. This platform started out representing a single brand addressing a single category. Today, we design, build, and service complete lines for bacon, hot dogs, charcuterie, bread, cakes, and tortillas, just to name a few. We manufacture out of 29 plants and sell across six continents. Building that expertise took over two decades, which is why customers facing complex manufacturing challenges look to Midera for solutions. The question I expect from all of you is why is Midera worth more on its own than a segment of a larger diversified company? The answer is focus. Every dollar of capital, every engineering hour, and every acquisition decision at Midera now serves one purpose, building the best food processing technology platform in the world. Focus is not a slogan for us. It shows up in how quickly we can say yes to a customer and in whether the next brand we want to acquire gets funded on its own merits rather than against someone else's priorities. That focus is why we believe independence unlocks value we couldn't fully realize before and you will hear it in each of the four pillars I cover this afternoon. MEDERA is the pure play leader in the further processing segment of food processing technology. The part of the industry with the most complex, highest value engineering problems. We operate more than 30 industry leading brands across protein, bakery, and snack. Recurring aftermarket parts and service make up roughly 40% of our revenue on an installed base of more than 100,000 units and systems. Our growth strategy consists of building where we hold the engineering edge and acquiring category leadership where that's faster and more capital efficient than building from scratch. Every one of those units or systems sits in a plant we know, running products our customers sell every day, a familiarity that is difficult to replicate. We sell into a roughly $70 billion market that remains highly fragmented with more than 2,500 smaller, often single category manufacturers serving much of the market. We intend to leverage that fragmentation organically through share shift and inorganically through disciplined consolidation. Our strategy rests on four growth pillars. Total line solutions, market penetration, aftermarket and acquisitions. Every decision with regard to these four pillars run through one filter. Does it materially improve outcomes for our customers? Total line solutions is our ability to design, integrate, and support a complete production line rather than sell a single machine. Take bacon for instance. A pork belly comes in at roughly two to three dollars a pound and through further processing is transformed as a pre-cooked packaged bacon which has four to five times the value. That is made possible by our total line solution that integrates six brands we acquired. One recent example saved the customer 4.4 million dollars a year a 55% return and it paid for itself in about two years. We now offer these total line solutions across more than 20 product lines, shifting the conversation from price to performance and ROI. When we sell a line instead of a machine, we own the outcome. The yield, uptime, and labor on that line are ours to answer for. And that accountability changes the aftermarket relationship. A customer running one of our machines might call us for a part. A customer running one of our lines call us for a partnership. And our service level agreement attachment rate at the time of sale on a total line solution is more than 90%. Parts of our industry are navigating a tougher environment, with some large CPG customers slower to commit capital. But we continue to see projects funded where the ROI case is clear, better yield, less waste, lower energy costs, and labor automation. That is exactly what a total line solution delivers and is one reason why our order trends have strengthened over the last 12 months. Total line solution orders continue to outgrow the rest of our business and the second quarter included our first major execution of that strategy with our newly acquired company, Frigo Mechanica, a Parma, Italy based brand serving the charcuterie, dry cured meat and ready to eat portable protein categories. This total line solution, which is a collaboration between four of our brands, reinforce our clear market leadership in the charcuterie category and is an excellent example of the strategy at work. Our second pillar is market penetration. driven by innovation and geographic expansion. Innovation here does not start in a lab. It starts with a problem a customer brings to us and our teams working with them until we solve their problem. New products contributed approximately $340 million of revenue over the last three years, representing more than 20% of our equipment sales. Our funnel today has more than 70 innovations in development, 12 of them we would consider to be game changers. Our Helix Spiral Oven for Poultry, for example, delivers 3-5% higher yield and a 40-60% faster cook time in half the footprint of a conventional oven. Poultry is our fastest growing category. up from roughly 6% of our net sales a couple years ago to more than 10% today. We validate this pipeline in four innovation centers where customers test complete solutions using their own ingredients and products and where they can witness the year's improvement for themselves before committing capital. Our newest innovation center opened in Italy last October and has already generated over 33 million dollars of orders through Q2. Our third pillar is aftermarket, which represents roughly 40% of our revenue mix and supports our significant installed base of over 100,000 units and systems to drive recurring parts, service and modernization. We are focused on growing our service revenue over the long term by delivering the consistency and reliability our customers increasingly value as they modernize their lines. Our aftermarket team comprises of over 300 service technicians and 20 offices worldwide, and we're investing to grow it further. When a line goes down at 2 in the morning, That team is who our customer calls, and how we answer that call is what earns us the next order. Finally, acquisitions, which have underpinned our platform for decades. Since 2005, we've acquired more than 30 companies and deployed roughly $850 million of capital. We're tracking a pipeline of more than 100 companies today, and of those, we are evaluating currently more than 35 active opportunities. Roughly one-third of our existing brands are still run by their founders. When they sell us a business, they spend a lifetime building. That name stays on the door, and in many cases, they stay on to run it. That reputation is why many of our deals never go to auction. Acquisition timing is hard to predict, but it's a perpetual process for us. We are targeting completing three to five deals per year on average. This quarter, post-spin, we've re-engaged our pipeline and activity consistent with that pace. Acquisition execution is what this team is known for. We've consistently driven meaningful adjusted EBITDA margin expansion at the companies we acquire, and we underwrite every deal to target double-digit ROIC by year three. That discipline is what keeps our balance sheet strong and flexible, with long-term net leverage targeted at less than three times trailing adjusted EBITDA. In fact, our net leverage at separation was approximately 1.3 times, which speaks to the significant flexibility and capacity to execute our growth strategy. Underneath all four pillars is the MEDeAIR operating system, our lean manufacturing toolbox, quality systems, technology integration, including AI, along with supply chain optimization and design efforts working together in unison. And it is what underpins our margin expansion opportunity over the long term as the platform grows. As an example of this action is how we paired skilled welders with welding robots. which lifted welding rates dramatically on a process common across our facilities. Multiply that one process across 29 plants and you start to see the opportunity. While there is room to automate and drive labor efficiency across our factories, the biggest opportunity to expand margin under the MEDERA operating system is material cost and supply chain management. Reducing logistics costs, consolidating purchasing power, utilizing low-cost country sourcing, and deploying intentional make-or-buy strategies all offer significant cost opportunity to harvest. We remain in the early innings of this journey, with margin expansion still ahead of us, not behind us. Before I hand it to Amy, let me give you a sense of how the first half has shaped up across our categories. The headline is that we are seeing growth-based strength. In protein, we saw strength at both ends of the spectrum. premiumization in charcuterie and bacon, and steady value-driven demand in poultry and dairy, with GLP-1 users shifting towards higher protein and fiber content, which supports the entire category. In bakery, artisan and long fermentation formats like sourdough remain our strongest growing solutions alongside demand for smaller, better-for-you portions. and Snack, Mexican-inspired and protein-forward formats continue to outpace the category, which is why our tortilla and chip platform remains a priority. None of this is a trend we're chasing from the outside. Every time a customer reformulates or launches a new format, they need different equipment, and that's the moment they call us. With that, I'll turn it over to Amy for a detailed financial review.