JBT Marel Corporation

Good morning and welcome to JBT Mar-El's earnings conference call for the fourth quarter and full year 2024. My name is Pam and I will be your conference operator today. As a reminder, today's call is being recorded. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I will now turn the call over to JBT Mar-El's Director of Investor Relations, Marlee Spangler, to begin today's conference.

Thank you, Pam. Good morning, everyone, and thank you for joining our conference call. With me on the call today is our Chief Executive Officer, Brian Deck, President Arne Sigurdsson, and Chief Financial Officer, Matt Meister. In today's call, we will use forward-looking statements that are subject to the Safe Harbor language in yesterday's press release and 8K filing. JBT MARL's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available in the investor relations section of our website. Also, our discussion today includes references to certain non-GAAP and non-IFRS measures. A reconciliation of these measures to the most comparable GAAP and IFRS measures can be found in the investor relations section of our website. With that, I'll turn the call over to Brian.

Thanks, Marlee, and good morning. We are excited to be hosting our first earnings call since uniting JBT and Murrell. The combination, which we completed on January 2nd, represents the culmination of more than a year of work bringing together two leaders in the food technology industry. We are now seven weeks into integration and are increasingly confident in our ability to generate long-term value for our customers, shareholders, and other stakeholders. Given our focus on realizing the benefits of this combination, I will begin today's call providing an update on our progress. Then Arnie will provide color on the integration process and talk about Morrell's 2024 performance. Lastly, Matt will provide an overview of JVT's 2024 performance followed by guidance for the combined company in 2025. In uniting JBT and morale, we have the ability to be an even more valuable partner to our global customers by providing holistic equipment solutions with enhanced application knowledge, service capabilities, and innovative technology. In terms of integration, our efforts are focused on best serving our customers' constantly evolving needs. That starts with a purpose-built company leveraging talent from both organizations. We have already made significant progress establishing the J.B.T. Morrell organizational design and expect to be materially complete by the end of March. We are also focusing on a customer-centric go-to-market commercial strategy that adopts an end-market focus. This will allow us to cross-sell the breadth of our solutions. We believe this customer-driven approach versus one organized by technology will streamline our commercial presence and enhance our value proposition to the customer. In fact, our diverse technology solutions were on full display at the recent IPPE trade show, otherwise known as the poultry show. The combination of JBT and Morrell's complimentary portfolio of innovative technology and service capabilities allows us to integrate primary, secondary, further, and end of line processing under one brand. This matters for our customers as it reduces the complex engineering required to integrate and commission full line solutions. It also leads to improved operational efficiency, machine uptime, and traceability in high volume operations. Additionally, our software and digital solutions are a differentiator as customers increasingly adopt digital technologies to optimize processing efficiency and improve profitability. Overall, our many productive conversations at IPPE, along with the recently reported financial results of our customers, confirm the strong fundamentals of the poultry industry. We believe we will see incremental investment in 2025 as customers look to take advantage of our technology to support automation and efficient operations by investing in existing facilities, as well as consider greenfield opportunities in a more meaningful way than we have seen in some time. I am pleased that we are already seeing the commercial strategies created by the combination. We secured a few significant orders at IPPE that included equipment we booked on the strength of each other's existing relationships. Speaking of orders, as you saw in our earnings release, JBT reported record orders of 523 million in the fourth quarter. Murrell also reported record orders of 474 million euros. Together, Orders totaled more than $1 billion for the period, benefiting from broad-based strength. Geographically, we enjoyed a pickup globally, with the sole exception of Asia Pacific. From an end market perspective, as already mentioned, the poultry industry remained strong in the fourth quarter and is expected to improve further in 2025. other proteins, we enjoyed a very solid quarter for both meat and fish. While the fundamentals of these markets remain uncertain, we are starting to see increased pipeline activity for pork and remain confident in the long-term fundamentals for fish. We also enjoyed strong ordered demand in the fruit and vegetable and pharmaceutical markets, which have continued into the first quarter of 2025. While the beverage end market was weaker through most of 2024 due to challenging industry fundamentals, we saw some pickup exiting the year. Lastly, both pet food and ready meals performed well in the quarter, while AGV, our automated material handling business, experienced another solid quarter of demand. Our positive view on the key end markets must be balanced against macro concerns, including U.S. and potential retaliatory tariffs and the prospect of higher inflation. However, we believe that end market dynamics are generally favorable for investment, while our recurring revenue franchise for parts and service is expected to provide resilience, growth, and close to half of our total revenue. Most importantly, we are increasingly confident in the value created by this combination as it relates to serving our customers. Now let me turn the call over to Arne.

Thanks, Brian. When JPT and Model began exploring the potential to combine the two businesses, it quickly became clear that we share a common purpose, which is to transform the future of food. We achieve that purpose by helping our customers improve their operations, solutions uptime, and sustainable processes. I'm very pleased to see and experience the momentum generated in just the first few weeks as JVT Model. Right after finalizing the transaction, we launched our new JVT Model brand. We also introduced our new purpose, vision, and values, which resonated well with our teams as it builds on the two company cultures while we transition to a new and exciting future. We also went on the road, hosting welcome days at key locations around the world, introducing the leadership team and the strategic pillars of JBT Mare. It was a great success, and I'm excited about the future. We also recognize the respective strengths that each company brings to the table that makes this combination so exciting. For example, I'm very proud of the reputation that Model has for its industry-leading technology and ongoing investment in innovation. And JVT, beyond its technology, brings a highly disciplined and efficient operational culture focused on continuous improvements. We realized that a combination of this scale requires rigorous execution and oversight by an experienced team of operators across the organization. The integration teams are co-led by top talent from our respective legacy organizations and report directly to Brian and me. Throughout this integration, our highest priority is to ensure business continuity and a seamless experience for our customers. Moreover, we are focused on cultural integration as our talented teams across the world represent our greatest asset. Since the close of the transaction, we have been able to have full transparency with one another, allowing us to do a deeper analysis into the benefits of the combination. Based on this extensive work, we have raised our expectations for cost synergies to an annual run rate savings of $150 million, and that's by the end of year three. That compares with our prior guidance of greater than $125 million. Most of that increase is the result of supply chain savings as we leverage our purchasing power and optimize our combined footprint. Looking at models performance in 2024, I'm happy to report that we had a strong fourth quarter to close the year. On an IFRS basis, record orders of 474 million euros increased 18% sequentially and reflect the improvement we have been expecting. We saw sequential growth in orders for meat, fish and pet food, while poultry had another healthy quarter. The strong book-to-bill of 1.11 increased the order book 8% sequentially to 600 million euros. Model's full-year revenue of 1.64 billion euros declined 4.6% compared to the prior year due to lower project revenues. At the same time, there were continued gains in recurring revenue with a record fourth quarter. For the full year, recurring revenues were 821 million euros and grew 5%. Full year adjusted EBITDA of 200 million euros included a net year-end adjustment of 17 million euros, resulting from initial efforts to align policies related to balance sheet reserves as a part of our combination with JBT. Underlying performance improved year-over-year as a result of cost discipline and efficiency improvements. Excluding the balance sheet adjustments, Mara's adjusted EBITDA margin for 2024 was in line with our most recent guidance of 13% to 14%. I want to take this opportunity to commend the dedication and valuable contribution of our teams across the world. We are excited by Legacy Model's momentum entering 2025, underpinned by order growth and strengthening order book, and our ability as JBT Model to do even greater things for our customers with the combined and highly complementary product portfolios. With that, let me turn the call over to Matt.

Thanks, Arne, and good morning. Let me begin with a quick recap of JBT's performance in 2024. We ended the year with extremely strong orders in the fourth quarter, up 25% year over year and 19% sequentially. For the full year, orders increased 7%. JBT's full year revenue increased 3%, or about 3.5% organically, excluding the impact of foreign exchange. Adjusted EBITDA of 295 million increased 8%. The adjusted EBITDA margin of 17.2% for the year was an improvement of 80 basis points driven by supply chain savings and continuous improvement initiatives. Specific to the fourth quarter, our results came in at the lower end of our guidance due to a mix of lower than expected volume on quick turn book and ship revenue and some delayed equipment shipments. On the expense side, we had higher than expected employee health care costs. That said, adjusted EBITDA margins for the quarter were 19.7%, which represented 150 basis point improvement over the prior year. Beginning in 2025, we are revising our adjusted EPS calculation to exclude acquisition-related items such as intangible amortization expense. We believe this change will better reflect our core operating earnings and improve comparability versus peers. When further adjusted for this change, JBT's 2024 standalone adjusted EPS would have been $6.15 compared to the reported figure of $5.10. Finally, for 2024, we delivered strong cash flow performance, driven by more efficient management inventory and higher deposits from the strong order growth. For the year, we generated a free cash flow of $199 million, an increase of 20% from the prior year period. Now let's move to the results and expectations for the combined JVT-Morrell business. On a combined basis, which reflects adjustments to align Morrell's IFRS results with U.S. GAAP, 2024 results were as follows. Orders of $3.6 billion, revenue of $3.5 billion, and adjusted EBITDA of $479 million, representing an adjusted EBITDA margin of 13.7%. In 2025, we are forecasting full-year revenue growth on a constant currency basis of 4.5% to 6.5%, which includes a projected negative foreign exchange impact of approximately $75 million, or 2%, due to the recent strength in the U.S. dollar. We are guiding to adjust the EBITDA margin of 15.75% to 16.5% in 2025, which represents more than 200 basis points of improvement. We expect to realize cost synergies of $35 to $40 million in 2025, and exiting the year, estimate achieving run rate synergies of $80 to $90 million. For the full year, we are projecting adjusted EPS of $5.50 to $6.10, which includes certain one-time items and acquisition-related costs, which were outlined in yesterday's press release and investor presentations. For the first quarter of 2025, we expect revenues to be in the range of $820 to $850 million, inclusive of an estimated negative $23 million of year-over-year FX translation impact. The first quarter is historically JVT's seasonally lightest. For Morrell, pickup and orders occurred in late 2024. And given the large project nature of its business, the conversion time from order to revenue is longer. We are forecasting adjusted EBITDA margins of 12% to 13% and adjusted EPFs in the range of $0.70 to $0.90. On the balance sheet, we expect capex of $90 to $100 million for the year. Starting leverage post-merger was just under four times, which excludes the benefit of any projected synergies. We continue to expect to delever to below three times by year-end 2025 due to higher adjusted EBITDA which includes realized cost synergies and strong cash flow generation. Let me turn the call back to Brian for some concluding remarks.

Thanks, Matt. There's been a tremendous amount of hard work getting to this point where we can leverage our combined expertise and achieve more for our employees, customers, and communities at JBT Morale. Together, we've established an unmatched position across the value chain as the premier global food and beverage solutions provider. Thank you to everyone across the organization for all you've done. We look forward to the exciting things to come as we transform the future of food. Now, let's open the call to questions. Operator?

Thank you. We'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to redraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, if you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And your first question comes from Sari Boroditsky with Jefferies. Please go ahead.

So I wanted to touch on the synergy. So you are now kind of two months into owning Merall, and you are able to increase the cost synergy guidance on the kind of supply chain synergies. So can you talk more about what gave you confidence to raise the guidance, like a little bit more color on the supply synergies? And was there a lot of, like, low-hanging fruits that you were able to identify after owning them? Thank you.

Yes, good question. So we've been working together, the two companies, for the last year or so, but there has been certain limitations on vendor names, customer names, et cetera, that until we combined we weren't able to have access to. So after getting access to that, we were really able to determine whether our strategy as it relates to supply chain savings, and including some of the early hits. We do feel that 35 to 40 million first-year savings will include some early hits on the supply chain side, as well as some of the organizational design things that we're doing. So the confidence really came along from access to information that we otherwise didn't have in the past.

Got it. Great. Thanks for the caller. And I guess kind of staying on the synergy, more on the revenue side, I think you noticed some benefit to customers, like providing integrated solutions and opportunities to kind of cross-sell. So can you provide more color on kind of revenue synergy opportunities?

Yes. We're really excited about this. So as I mentioned in the prepared remarks, we had a really excellent – IPPE show, the poultry show, and the conversations were great. And frankly, the thing that was most exciting about it was the way our commercial teams interacted with one another. They really fell right into understanding each other's product lines. You know, we obviously have experts across the industry, so it was fairly natural for them to be able to engage in conversations with customers on a combined basis. And as part of that, what we also found was each company, legacy company, has some particularly strong relationships with certain customers. And that really facilitated conversations about providing either JBT or morale solution to some of the projects that they were considering that perhaps they had not considered one or the other in the past. So that really developed nicely. And then I would say we announced earlier $75 million of revenue synergies by year three. We haven't updated that, but we are taking a close look at it. Again, now that we have access to customer data and conversations on a more combined basis, we are taking a review of that, and we'll follow up in the next quarter or two on what that means.

And just briefly to add on that, I think what was exciting around kind of what we heard and saw and experience at IPPE was a lot of conversation in the prepared foods area, where our portfolio is quite complementary. And we've talked in the past, for example, a chicken nugget line, when you just see kind of the different technologies across that same line. So that's where we saw some interesting opportunities. It was really kind of confirming what we believed, but it was just nice to see that really happen.

Your next question comes from Mick Dobry with Byrd. Please go ahead.

Thank you. Good morning, everyone, and I'll apologize in advance. I actually have a bunch of questions, so hopefully you'll hear me here. I guess maybe we can start with a clarification. Maybe I missed this in the guidance slides, but free cash flow for 25, how should we think about that? Yeah, let's start with that. Let's start with free cash flow.

Yeah, Meg, I think from a free cash flow perspective, it's still a little early for us to provide sort of specific numbers around that, I'd say, as we try to get a better feel for how the cadence and cash flows will go through the year. But, you know, I think the fundamentals of the business, both businesses together, still remain strong with relatively low CapEx costs, high recurring revenue, and deposits from customers. And so when we account for some of the one-time items on the P&L side, our expectation is that we should be able to achieve 100% free cash flow for the year.

And just the net income, right? Right. So, yeah, so we'll provide more guidance. But if you think about the general profile of this business, Mick, it's still quite attractive when you think about the the math just between the capex spend versus the depreciation and kind of how that flows, we will have a lot of one-time costs in 2025, as mentioned in the press release. But if you kind of look away from that, it's certainly a profile of more than 100% of adjusted net income.

That's helpful. One of the things that also stood out to me was the order intake. I think Morrell had a bit of a tough comp, and yet they were able to grow off of that. You had quite a bit of growth in legacy JVT. Maybe talk a little bit about what's going on here. We heard from you that the poultry markets are getting better, but I guess it's more than just poultry. The question here is on sustainability into 2025. Has this quarter simply been a bit unusual? Was there like a capex flush or something like that that helped you out? Or are these trends kind of sustaining into Q1? I mean, we're almost through February. What have you seen in Q1 thus far?

Sure. I'll provide some comments on legacy JBT and Arnie can provide a little bit on legacy morale and kind of how we're thinking about this going forward. So, On the GBT side, what we normally see is, I'm talking from an end market perspective, there's always pluses and minuses. Fruit and juice is up, maybe beverage is down. And that's, since I've been here, that's always been the case because these are lumpy projects often. So you see a lot of variability and almost magically it kind of evens out by the end of the quarter. However, in the fourth quarter, There was really no weak markets, which is quite unusual. So everything kind of hit. We mentioned ready meals, pet food, our AGV business, fruit and juice, even beverage improved in the quarter. Poultry remained strong. So it really kind of just flowed through it in a nice way. You know, I can't say this was a capex dump, but here's the way I think of it generally. is a $900 million is kind of the baseline for us, right? And that billion dollars in the month was extraordinarily strong. So I still think we're going to coalesce around that number, plus or minus, and there'll still be variability given the lumpy nature of our business. So I do think there'll be some general reversion. But overall, the markets are strong right now. And I put the caveat about regarding tariffs and whatnot. But kind of aside from that, conditions do seem strong.

Yeah, and on the model side, obviously very pleased with the orders in the quarter, and the poultry market continues to be quite attractive, and we see that in also just if you look at the results of some of our customers. I mean, they are showing very robust numbers on the poultry side, so that continued to be healthy in the fourth quarter for us, But then if we look at it sequentially, then we saw improvement in the other segments as well on the model side. And what I would say is on the pork side, kind of the market sentiment is improving, but kind of from a very low level. There is kind of with the low investment that has been there kind of throughout the cycle, there needs to be at some point catch up on kind of renewing the install base and more automation. And we kind of consolidation in Europe is in the final steps. We saw improved pipeline in the fourth quarter on the park side. So that was kind of encouraging. I mean, FIS also improved sequentially. But I think I'm not as confident about the market there yet, even though we really believe in the fundamentals of that market.

And make just to clarify that $900 million baseline. That's the combined company, uh, quarterly kind of, I'll say baseline, if you will, for orders.

Thank you for the clarification there. Um, and, uh, I want to move on to, to your outlook, your guidance, um, apologize for the numbers in the math here, but I'm trying to understand the moving pieces, right? So at the midpoint, your EBITDA, you're guiding at 582 million. On a combined basis, the company has done pro forma 479 million. So we're looking at 103 million of EBITDA growth. 37 of that is synergies. So the rest of it, 66, would be the lift from the two businesses. When we look at this 66, how much of it comes from legacy JBT versus lift in Morrell's business relative to the prior year?

Yeah, I think the starting point on the 479 for 2024 MIG is you have to adjust for the year-end piece at Morrell. It was about $20 million or so, $20 million of sort of year-end adjustments. You kind of add that back as a starting point. So you're kind of starting closer to $500 million for the combined company. And then you add in the synergies. Um, so you're now you're at 538. So now you're kind of doing the math off of that number. And so the flow through, um, from the combined business is closer to like 35 to 40%. And it's a little higher than we would typically expect for flow through, uh, on the combined business. But there is the benefit from morale on some of the restructuring activities that they took in 2024. That's also coming through. And I, we estimate that sort of around, uh, eight to 10 million, uh, benefit in 2025.

Right, so you've got the benefit of the synergies, the volume, as well as some of the, I'll say, rollover of some of the actions that Morrell took last year. So overall, MIG, I'd say more of the improvement is coming from the Morrell side, given some of the – they have a little bit higher growth rate in their forecasted revenues versus JBT because of the recovery, continued recovery of the poultry market, as well as some of the – restructuring actions that they took last year, which will flow into this year.

Well, to be honest with you, based on what you've just told me, to me, it seems like it's the opposite where, you know, you end up with X synergies. You end up with maybe like less than $50 million of EBITDA lift, but a good chunk of that would probably come just from JBT and the growth that you have on your business, assuming normal incremental margins on that organic revenue growth, which I mean, maybe I'm missing something or you're just being conservative, which is perfectly fine. Just looking to make sure that we understand the moving pieces.

Yeah, so the so I think we've given revenue guidance for the two businesses individually, and if you look at that and apply generally you apply, you know 30% ish flow through on that incremental volume and then from there you add on the benefit of the synergies and whatnot. Take a look. We're happy to walk through in more detail as we go from here. But our math shows a little bit more contribution from the morale side than the GBT side, at least from an EBITDA perspective.

Perfect. And my final question is on morale specifically. You know, as we're trying to look through what the fourth quarter looked like, at least on our math, the fourth quarter looked to be a sequential step down in margin and and maybe even tougher than some of the prior quarters in 24. Maybe you can give us some context, or Arnie can give us some context as to what's been going on with margins in the fourth quarter. And big picture, sort of how you think about progression here through 2025. And maybe you can comment on fish and meat specifically, because it's pretty clear that poultry is doing all right. It's the other two segments that have struggled. Thank you.

Yeah, so what I would say could have we we saw healthy kind of absent the balance sheet adjustment that we talked through, we saw a good margin in Q4 both improving sequentially and year over year. So I think kind of that is moving in the right direction. We also saw that kind of moving in the right direction for for fish and meat, but there's still a lot of work to be done on that front. That's on the margin side where we are on the right track and exiting the year at a healthy level or more healthy level, improving over the year. we can expect to be able to kind of do more as we enter 2025. And I mean, some of the initiatives that we have been going through, we will continue with, such as kind of standardizing the portfolio, more rigorous kind of project control and selecting the projects. And then we're also kind of, we have designed the combined organization in a way where we believe those businesses will benefit more with, greater scale in emerging markets, embedding the service capabilities and some of the other designs that we've taken.

And to add on to that, Meg, as we look to bring some of the continuous improvement capabilities, we've already started that on both meat and fish. And we obviously have a large tool chest. One of the things we're actually looking at right now is applying some of the 80-20 approach to the business and looking at the segmentation of the larger customers, larger projects and product lines, and how that profitability is segmented and making sure that we've got the right resources and the right places to attack that, as well as some of the general continuous improvement things that we're looking at. We are laser-focused on the overall improvement in this energy perspective, but in particular, meat and fish are getting good attention all the way up to the top.

Yeah, and just to clarify again, on the Q4 margins, again, we want to make sure we kind of look at it with and without the year-end adjustments that were booked at Morrell in December. Those were really some sort of alignment on accounting policies and procedures between RL and JBT. And so they're a little bit, I think, kind of one-time in nature and related to some older inventory and some older AR evaluation reserves. And I think if you look at the underlying business, I think what Arne had said, that they are seeing some improvements in the margins, and that's what we would expect to see heading into 2025.

I'm sorry, just to clarify, the 20 million, that was a 20 million euro add back. So in the fourth quarter with the IFRS margin at Morrell be somewhere close to 15%?

Yeah, I think it's in the 13 to 14% range. It's $20 million. It's about 17 million euros. Okay, helpful. We're not adding that back from an adjusted perspective. It's just It's just a different, I think, again, a different kind of accounting approach. So I don't want to blur the underlying performance of the operations with those adjustments. Understood.

But you're correct, Meg. You're correct, Meg. If you look at the reported results, IFRS 200 million euros, that is burdened by about 17, 18 million dollars of one-time items.

And if you would, absent of that, you would have kind of EBITDA margin for the full year kind of a little bit north of 13%. And so Fort Porter was more healthy. Got it.

Thank you.

Okay, thanks.

Your next question comes from Ross Barrandell, Buck, with William Blair. Please go ahead.

Hey, good morning, guys. Morning. Matt, you touched on this in your opening remarks, but can you maybe just remind us of the timing for back wall conversion for JBT and Norell and kind of what that mix looks like on a pro forma entity going forward?

Yeah, I mean, for the most part, we look at about – for JBT, it's in the – 50% or so of our equipment revenue is in backlog that we'd expect. So the backlog for equipment is sort of in the $450 million range for JBT historically, or legacy JBT. And only a small portion of that sort of bleeds into next year. We did take some bigger pharma projects and fruit and veg projects. So those will bleed into 2026. For Mar-El, they do have some larger Greenfield type projects that do have longer lead times. I don't have the exact sort of timing of that, but I would expect their revenue cadence to look very similar in terms of the backlog for equipment. So I'd expect probably 80 to 85% of their backlog on equipment would result in revenue in 2025.

And I'd say as a whole, when you consider the stability of the recurring revenue business, when you kind of add that into kind of the visibility as we start the year on the equipment side, we have somewhere, you know, ballpark 70% visibility for the full year revenue.

Okay. So with that expectation, then recurring revenue is probably being implied over 50% in kind of your 2025 guidance?

Actually, a little bit less because your equipment, we were at about James Rattling Leafs- Combined right about 50% last year, however, we do expect equipment growth to outpace aftermarket growth in 2025 so the mix will actually will grow both but the mix will change a little bit just because the outside growth on the equipment side.

James Rattling Leafs- Okay that's helpful and then just go back to a prior question on kind of the realm margin list for next year, you know the filings called out. I believe 11,700 employees, which does imply some material attrition over the past year. So just trying to get a sense of timing there around reductions and maybe how we should think about sizing that benefit in the context of the 8 to 10 MRL prior restructuring actions that are going to step up next year.

Yeah, I think there's two things to kind of mention there, Ross. First, I think there is, as we're going through this integration process, some definitional differences between what was reported historically for Morrell and what we reported as at 11,700. So that's a little bit of a difference. But I do think that Morrell has taken some significant actions in 2024 to reduce their FTEs. That's sort of already built into our guidance and part of – the additional self-help that we were talking about in terms of the margin uplift for, for morale. And that is before we actually think about this, the benefit from synergies.

Okay.

And is there any definitional changes between the recurring revenue from morale and JVC kind of look like there might've been slightly slightly, um, uh, there's the big question is, uh, open questions, uh, refurbishments and how they, we both treat those. Otherwise, we haven't married those up quite yet, so we will do that as we report out the first quarter, but not materially. Okay.

Thank you, guys.

Your next question comes from Walt Liptak with Seaport Research Partners. Please go ahead.

Hi. Thanks. Good morning, and congratulations on the deal. Good morning. Thank you. I wonder about the year one synergy savings. And I wonder if you could just help bucket it for us, you know, in terms of, you know, procurement versus people cost versus plan consolidation. And then on that procurement side, how are you thinking about pricing and tariffs this year? And, you know, if there are Inflationary pressures, how do you expect to deal with those?

Yeah, I'll take the first part, Walt. So in terms of bucketing, I would say approximately of the 35 to 40 million, 45 to 50% of that is related to procurement and cost of goods sold. And the remainder of the synergies is going to be related to either redundant contracts logistics and other SG&A-related sort of redundancies that we may have between the two businesses.

And then as it relates to tariffs, it's still a little bit early to tell. We still don't know all the specifics of the tariff policies and any potential retaliation. So we haven't factored in a tremendous amount into the numbers right now. mainly because as it sits today with what has been announced, we can largely manage through that in terms of our supply chain. So over the last few years coming out of COVID, and this applies to both Legacy Morrell and JBT, we've enhanced our supply chain in terms of more options. I'll say more diversification of our supply chain just because of some of the challenges we saw a few years ago. I think we're both well positioned and particularly well positioned relative to our competition, given our global scale, our strength of our procurement organization, as well as our diversified manufacturing footprint. So we do need to see how this plays out. But I think in the short term, in terms of at least what we know today, we don't see a material impact in 2025.

Okay. Okay, great. Thanks for that. And I wanted to ask a follow-on. You commented about doing some segmentation and some 80-20 work, and that's very interesting to me. I wonder if you could talk a little bit more about that. Is this like a homegrown thing, or are you bringing in experts? Like, how robust of an 80-20 program are you thinking about?

Yeah, well, we are the experts on continuous improvement in 80-20, so we have more than enough resources within the company. So what we're going to do is, just to get a little bit more specific, what you do is look at the revenue streams and you segment that and look at the underlying, I'll say, concentration, and then what are the costs associated with those buckets, if you will, and then you Make sure that you're serving your best customers and your best product lines in a way that allows you to grow them. And then taking a close look at your projects, otherwise, and I'll say the discipline around pricing, the discipline around costing those projects before you give those quotes, and then strongly in execution on those projects as you go through So there's a lot of different tools that we'll have. It's not just 80-20, but as continuous improvement experts, we are focused on this. Okay, great.

Thanks. And then with regard to the change in focus to end markets, has that happened already, or what's the timing on that taking place?

It's happening as we speak. organizational design started in the fourth quarter and continues through the end of the first quarter here. So organizationally wise, we should be done by the end of the first quarter. I think there'll be some transition over the next few months, but I would say we would be done with that transition by the middle of the year completely.

Okay, great. Thank you.

Thank you.

Your next question comes from Justin Ages with CJS Securities. Please go ahead.

Hi, how's everyone doing? Great, thanks. During the prepared remarks, there was a comment about some greenfield opportunities. We're just hoping to get a little more color on either end markets or where that is.

Yeah, so, I mean, I would say, first and foremost, that is in the poultry segment. I mean, that is an area where kind of the fundamentals have been improving. We've seen some of those opportunities kind of in the past. I mean, I think Mara spoke to kind of one big one in the fourth quarter of 2023, which kind of explained the top comp opportunity. for Q4 2024, and then we've seen kind of just the improvement in the market in the second half of 2024. Also, what is very interesting, which I've spoken about in models results, is some of the solutions and technologies that we've been introducing in the U.S. market, such as a line split solution that allows our customers to increase the line speeds And we model has kind of very good technologies to be able to advance the industry and help our customers in particular in the U.S. market and to invest. So there's a lot of there's a few very interesting opportunities that we see there. It's still early, but we're optimistic.

And just to follow up on that, so on the poultry side, Murrell's technology is best in class, without question. And some of these techniques of line split allows, I'll say, the unleashing of the speed and that technology that is currently, I'll say, under some restrictions under the USDA policy. But this line split solution effectively allows us to, again, leverage this technology while still remaining compliant with USDA. So that's exciting for our customers. In fact, what we do here is if you can unleash this technology and these line speeds, it allows customers to take current, I'll say, inefficient operations. Maybe you can close two facilities and open one new greenfield facility that you could take on that capacity with one operation. So those are the type of conversations that are happening on the poultry side. And then on the non-poultry side, what we have been seeing is, particularly in the Middle East, a lot of green fill opportunities on fruit and juice. And then we're also seeing green fill opportunities on the farmer's side. So those are the areas where we are seeing some good activity.

That's helpful. Thanks. And then just one more on AGV, and I know it's a smaller portion of the combined entity now, but I was hoping to get a little more color. I know you said demand in fourth quarter was good, but looking ahead, what are expectations for that segment or end market, however you want to define it?

Yeah, AGV is a great business. It was definitely our most improved business in 2024. We talked quite a bit about that. I won't go into all those details, but there is very good business. And in terms of go-forward expectations, continued double-digit revenue growth, and they are in that 20% EBITDA range, so accretive on the growth and accretive on the margins.

I appreciate that. Thank you. Thank you.

There are no more questions. I will now turn the conference back over to Mr. Brian Deck for closing remarks.

Thank you all for joining us this morning. As always, our investor relations team will be available if you have any additional questions.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.