JBT Marel Corporation

Welcome to JBT's Marel Earnings Conference Call for the second quarter of 2026. My name is Aaron 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. To register to ask a question at any time, please press star 1 on your telephone keypad. I will now turn the call over to JBT Marel Senior Director of Investor Relations, Marlee Spangler. Please go ahead.

Thank you, Erin. Good morning, everyone, and thank you for joining our second quarter 2026 conference call. With me on the call is our Chief Executive Officer, Brian Deck, President Arni 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 8 filing. JBT Marel's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available on the IR website. Also, our discussion today includes references to certain non-GAAP financial measures. A reconciliation of these measures to the most comparable gap measure can be found on our website. With that, I'll turn the call over to Brian.

Thanks, Marlee, and good morning, all. First and foremost, we were very pleased with the continued robust demand environment in the second quarter. Orders increased 10% year-over-year and marked our third consecutive quarter with orders exceeding $1 billion reinforcing the strategic benefits of the JBT-Marel combination. By bringing together our complementary technologies, we are strengthening our ability to serve customers around the world. Contributing to the gain was double-digit year-over-year growth in our prepared food and beverage solution segment, which was led by our value-added prepared foods technology. The strong orders also reflect the success of our synergistic cross-selling initiatives. It is also clear that investment by the poultry industry remains solid, and JBT Marel is uniquely positioned to benefit from investment across the entire poultry value chain from primary and secondary processing through further processing and end-of-line solutions. allowing us to capture growth wherever our customers are investing. At the same time, we continue to advance our cost synergy initiatives. As we have discussed previously, the majority of our synergy actions in 2026 and 2027 are related to supply chain and footprint optimization projects. As Arni will highlight, we have taken decisive actions to advance our footprint optimization strategy allowing us to leverage our global scale and simplify our manufacturing and distribution network. And as Matt will discuss, we're restructuring our warehouse automation business to optimize the cost structure and take advantage of product standardization to operate more efficiently. There were temporary and other factors that impacted our second quarter, which Matt will discuss. Absent the net benefits of these factors, results fell short of our expectations in our prepared food and beverage segment. That said, we remain optimistic about the short and long-term future of that segment. At the same time, we are thrilled with the continued profitable growth of the protein solutions segment. Taken together, our backlogged visibility, integration efforts, and continuous improvement initiatives gives us confidence in realizing our second half 2026 forecast and achieving our longer-term financial targets, including an adjusted EBITDA margin of 20% in 2028. Now, let me turn the call over to Matt to provide an analysis of our second quarter and guidance for the remainder of the year.

Thanks, Brian. Second quarter consolidated revenue was $981 million, an increase of 5% year-over-year, which made up of 3% organic growth and 2% from foreign exchange. At the segment level, strong protein revenue of $467 million grew 11% year-over-year, which was 8% organic and 3% from foreign exchange. Prepared food and beverage segment revenue was flat versus Q2 last year. which included an approximate 2% favorable impact from foreign exchange. Equipment revenue in the segment was short of our expectations due to a combination of logistics constraints and production inefficiencies resulting from our efforts to optimize our manufacturing footprint. At the same time, we are quite pleased with the segment's strong order and backlog growth. Second quarter consolidated adjusted EBITDA of $168 million was impacted by the timing of equipment shipments described above and the following discrete items not included in our forecast. We recognized $17 million of IEPA tariff refunds, which was partially offset by $4 million in higher than expected tariff expense associated with prior years and $5 million in accelerated long-term incentive compensation expense. We are operating in a higher inflationary environment as the pace of higher logistics, metals, and other input costs put pressure on our year-over-year margins. That said, we have taken appropriate pricing actions to address these cost pressures. As mentioned, we are investing significant effort in optimizing our manufacturing footprint, primarily impacting the prepared food and beverage segment. These efforts delayed some revenue recognition in the quarter and correspondingly weighed on margins. We believe this short-term disruption is part of the transition to lower cost operations, which are critical to achieving our 2028 margin targets. At the same time, we took action to restructure our warehouse automation business. We have made significant progress in advancing our product standardization, enabling us to more efficiently deploy engineering resources and consolidate two facilities into one. These actions are expected to generate approximately 9 million in total annual savings, including approximately 3 million in the second half of 2026. While the prepared food and beverage segment margins were disappointing, we expect meaningful improvement in the back half of the year. which is supported by our strong backlog visibility, pricing actions, and operational improvement initiatives. Meanwhile, adjusted EBITDA margins in the protein segment improved year over year, even excluding the benefit from tariff refunds, primarily due to volume leverage in our poultry business, as well as benefits from our synergy and continuous improvement actions across the segment. During the second quarter, we also took a non-cash impairment charge to write off intangibles associated with the 2021 acquisition of Provenio within the protein segment. This impairment is a reflection of a shift in demand from Provenio's value-added antimicrobial offering for poultry to a more commodity-based customer approach. Moving to the balance sheet, we generated $179 million in year-to-date free cash flow. representing a conversion to adjusted EBITDA of 58%. And with leverage at the end of the quarter just below 2.5 times, we are pleased that we are now within our target range of 2 to 2.5 times after just 18 months after the close. In terms of guidance, the actions we have taken in our operations are expected to improve production efficiency as we progress through the second half of the year. Therefore, we expect a steeper ramp in the fourth quarter results compared to the third quarter. For the third quarter, we are guiding to a year-over-year revenue growth of 2% to 4% organic, partially offset by 1% FX impact. We expect adjusted EBITDA margins of 17% to 17.5%. Given our record backlog, which provides visibility to over 90% of back half equipment revenue, coupled with our resilient aftermarket revenue and operational improvements within the prepared food and beverage segment, We are maintaining our full year 2026 guidance for revenue and adjusted EBITDA. At the midpoint, that reflects consolidated revenue growth of 6% and adjusted EBITDA margin expansion of 145 basis points. Finally, we have refined our adjusted EPS guidance to reflect updated assumptions for depreciation, amortization, and our effective tax rate. With that, let me turn the call over to Arni.

Thank you, Matt. As Brian mentioned earlier, we have made significant progress on cross-selling, allowing us to realize synergy orders of $45 million through the first six months of the year and $75 million over the last 18 months. Many of our opportunities are in prepared foods, where we meaningfully strengthened our integrated offering through the JBT model combination. For example, We secured a multi-line order with a leading poultry customer. We leveraged technologies from across the combined portfolio including forming, coating, frying and heating for branded fully cooked chicken distributed to the retail channels. This is a testament to the strategic benefits of the combination and to our enhanced value proposition with customers. Additionally, As discussed at the top of the call, we continue to take decisive actions to optimize our operating footprint. To date, we have announced facility consolidations with a total of approximately 1.3 million square feet. This includes approximately 1.1 million square feet of manufacturing and distribution space and 200,000 square feet of office space, and represents in total an approximately 15% reduction of our global footprint. Nearly 80% of the manufacturing space reduction is associated with the prepared food and beverage segment as we focus on that segment's full margin potential and other opportunities do remain. But more than just the reduction in square footage, The footprint optimization allows us to take advantage of our scale, reduce complexity, and utilize low-cost operating capacity across our global network, such as in Eastern Europe, Brazil, and India. As a result of these initiatives, we expect to record a cash benefit on the sale of real estate assets in 2027 or 2028. In terms of the P&L effect, we expect these initiatives will deliver annualized savings of approximately $25 to $30 million by 2028, while exceeding our original estimated savings of $10 to $15 million. Of these anticipated annual savings, roughly $4 to $5 million is embedded into our 2026 forecast. Let me now turn the call back to Brian.

Thanks, Arni. We are pleased with the progress we are making on our next gen strategic initiatives. The strong market reception to our integrated and full line solutions demonstrates the differentiated value proposition we provide to customers and our cross-selling capabilities. We are in the early innings of deploying our customer first service initiatives. which combined with the global reach and digital offering are expected to deepen customer engagement and support our goal of increasing our aftermarket wallet share. We continue to make progress on our cost synergy initiatives. is articulated. One of the most significant benefits of the JBT-Marel combination is the flexibility to leverage our global scale and relocate production from higher cost and underutilized facilities to our most efficient, lower cost operations. These footprint optimization initiatives are just one of the many levers we have to capture the value-creating benefits of the business combination. Supply chain optimization is another pillar. as we consolidate our purchasing and execute value-add engineering projects to lower the cost and complexity of equipment and achieve further standardization of parts and subcomponents. And while the tariff environment has made these efforts more challenging, it has also motivated us to accelerate the localization of European supply chain to the U.S. to better serve the U.S. domestic market from a lead time and cost perspective. All told, we are demonstrating the industrial logic of the JBT-Marel combination. This pool of opportunities enhances confidence in our ability to deliver our profitable growth objectives and our target of 20% adjusted EBITDA margins in 2028. Before we take your questions, I'd like to thank our team. It is their commitment and hard work every day that has enabled us to make such significant progress on the integration of JBT and Marel. and positions us as a stronger partner to our customers around the globe. Now, let's open the call to questions. Operator?

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. We'll pause for just a moment to allow everyone a chance to queue. And we will take our first question from Meg Dobre. Your line is now open.

Thank you very much. Good morning, everyone. Just maybe a little bit of clarification on the guide and your thoughts here on prepared food and beverage. I'm curious as to how you think about the margin cadence relative to what we have seen in Q2. So you've done 17.5% in Q2. How do we think about Q3 and Q4, given everything that you talked about in terms of footprint consolidation, some of the challenges that you had in Q2? and then is there some sort of a catch up that we need to consider here in terms of revenue that got pushed out from Q2 into either Q3 or Q4? How do we maybe frame that as well?

Yes, Meg, it's Brian. Good morning. I'll start and then I'll hand it off to Matt to talk a little bit about the margin cadence. So when you think about the revenues in the second quarter, you exclude the impact of FX. I would say we were short about $20 million in revenue in the quarter, all of which being in the prepared food and beverage segment. And if you take a look at that, about half of that was I would say from delayed associated with logistics availability and the other half associated with some of these production inefficiencies with some of the moves we're making within our facilities. 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. That $20 million obviously comes with a margin impact in the quarter, again, which certainly hurt the PFB margins. So typically we look at somewhere in the range of a flow through on margins of 25, sometimes 30%. So I'll call it a five, maybe a $6 million impact on EBITDA just from the revenue. And again, that will flow through here in the back half. So in terms of the margin cadence on PFB, I think Matt can give some color there.

Yeah, Meg, I think what we expect to see in Q3 for the prepared food and beverage segment is about a 25 to 50 basis point sequential improvement. I'm sorry, year-over-year improvement from Q3 of last year, year-over-year. And then we expect to see improved margins from Q3 to Q4, probably around another 100 basis points or so. So you can see the sequential improvement from Q2 to Q3 to Q4 as we work through some of these inefficiencies and see some benefits from the higher volume.

Okay, that's helpful. I mean, that would suggest that in Q4 you would have pretty significant margin expansion in this segment year over year, which I guess is good to hear. And then maybe my follow-up, sticking with margins here, protein had much better margin than I was anticipating, but presumably there's a good chunk contribution from the IEPA refunds. Maybe you can clarify that. and similar question here. How do we think about margins in the back half? Thank you.

Right, yes, so you're correct that the, I think it's 24% margins for protein in the second quarter. There was, I would say, about 200 basis points impact from the tariff refunds. So they've been running it 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'll be relatively flat for the back half of the year. And part of the reason is they'll have a higher mix of equipment versus aftermarket. So the mix is changing a little bit. And as you know, the flow through on the equipment is a little bit less than the flow through on some of the aftermarket. So they'll be relatively flat in the back half. And by the way, just generally speaking in terms of going back to PFB and the margin progression, keeping in mind that we are going to start to see some of the benefits of some of these facilities combinations as well as the AGV restructuring that Matt mentioned in the prepared remarks. So that's part of the reason why you're seeing maybe a faster ramp up than you might otherwise expect.

All right. That's helpful. I'll get back to you.

Thank you.

And we will take our next question from Justin Ages with CJS Securities. Please go ahead.

Hi, morning all. Morning. You know, you mentioned ongoing strength in poultry. I was just wondering if you could elaborate on some of the strength in protein solutions outside of that poultry category.

Yes, so we have pork, beef, fish, and poultry. Poultry is certainly the largest segment and continues to show strength. We're particularly excited about some of the investments we're starting to see on the prepared food and beverage side. Sorry, the prepared food side. You've probably heard from some of our customers speaking about some of the investments we're making there. So we saw some really nice progress there. And that's actually within the PFB segment. But specific to the protein segment, we do expect continued investments even on the primary and secondary side of poultry. And on the fish side and on the pork side, I would say continued modest strength. It's not Thank you very much. were fairly strong in the second quarter, and outlook is generally positive. The weakest part by far is the beef side, right, given 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 just for your reference, Beef is less than 5% of our protein solutions portfolio.

That's helpful. Thanks, Brian. And then, you know, you mentioned outside of the restructuring in the HEV business, you mentioned that the business itself was improving, I think, in the deck. So just wanted to know if you can give us an indication if you're seeing that continuing, like beyond 2Q, is that improvement being sustained?

Yes, specific to prepared food and beverage. Indeed, yes. Again, we are seeing a lot of strength on what we call, when you think about our PFB segment, it's prepared foods, it's diversified food and health, and it's AGV. Clearly, from a demand perspective, that prepared food side is quite strong. And again, I think this is largely on investments Not only from the poultry segment but also other segments including pork, etc. The other thing I would mention is within that segment, AGV had its strongest quarter in six quarters. on volume. So as you may recall, AGV was 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. And that increased volume that we expect in the back half along with the restructuring has a nice ramp up of AGV in the back half. which, to be frank, was disappointed in the second quarter while AGV saw some improvements from the first quarter to the second quarter as we had hoped. It just didn't reach the levels that we had anticipated. Again, in part, some of the motivation for some of the restructuring, but again, that coupled with the higher volume should have a nice ramp up here in the back half of the year.

That's helpful. Thanks for taking the question. Sure. Thank you.

And we will take our next question from Ross Sparenbleck with William Blair. Your line is open.

Hey, good morning, gentlemen. Good morning. Maybe just starting with pricing actions, can you remind us where we stand in the backlog from the 2025 actions? And then how should we think about the impact of this inflationary cost and the catch up of the additional pricing actions throughout 2026?

Yes, so I would say when you think about the backlog, that's obviously 90% of the backlog is on the equipment side. And the pricing actions that we saw the back half of last year and and earlier this year associated with known costs. As we quote each project, we have known costs for goods and materials. That's embedded into the numbers. Again, I do think that is reflected in the margin guidance that we have. I will say in the current environment we are seeing a lot of inflation on logistics in particular. And I do think we didn't recover all of that in the second quarter. And so a little bit of leakage there for sure. If you think about logistics, we spend more than $100 million a year in logistics. and call it 60, 65% of that is inbound logistics and intercompany logistics. That's a little bit harder to, you know, obviously to pass through. Outbound logistics we do pass through kind of to our customers as we go. So we do see a little bit of pressure there and a bit of a lag between the cost that we're seeing and the pricing actions that we've taken here in the second and third quarter. Again, all this is reflected in the updated guidance.

Okay, now that's helpful. And when we think about the guidance, I mean, it sounds like the sensitivity around 2026 on the top line remains just, I guess, this logistics issue. The orders are strong. You know, the backlog is pretty much covering 2026. We have more pricing offset. I'm just trying to think through some of the caution on, you know, why we didn't see even a slight guidance range for the year or guidance increase for the year on the top line.

I think we're being given a logistics issue and we're still moving things around from 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 make-up in the third and fourth quarter from that miss in the second quarter. However, you are right in the sense that our backlog is at record levels. Both protein and PFB segment have great backlogs. We're looking forward to, as we get more efficient, that we get better flow through on that. However, again, given the second quarter, we felt it was prudent to keep the revenue guidance flat for the year.

Okay. Well, thanks, Brian. I'll pass it along.

Thank you.

And we will take our next question from Walt Liptak with Seaport Research. Your line is open.

Hi, thanks. Good morning, everyone. Hi, Walt. I wanted to ask about, you know, some of the U.S. industrial environments getting better, the ISMs are moving up, and that seems to be sort of, you know, you guys have been in a pretty good place with new orders, and it looks like second quarter was pretty good, too. Are you guys on a different cycle, or is that sort of general industrial trends somehow beneficial for your outlook, too?

You know, certainly food and food production has somewhat of its own peculiarities, right? I think there is a very, very strong backdrop of protein consumption going on right now. And so I do think that in itself is a bit unique for our industry. I do think some of the, you know, pro-growth initiatives that are supporting the overall economy are good for us, right? You know, reasonably good. Thank you very much. For your benefit, when you include the protein exposure we have within our PFB segment, about 70% of our overall revenues are associated with the protein market. So I do think that's been quite helpful. And then within our businesses, you still see some other pockets of weakness. that buck the overall industrial trends because some of the CPG companies are a little bit weaker right now, but the benefit of JBT Marel with our broad portfolio, we're there to provide support wherever our customers are investing, and right now it happens to be very strong in proteins across both protein segment and the PFB segment.

Okay, I appreciate that. Thank you. And then with the factory consolidations, you know, those relocations are extremely difficult, so timing issues, I guess, you know, that's totally understandable. You know, when do we think that the consolidations are done? Do you have them completed by the end of the year, or is it into 2027?

Sure, there'll 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, I'm talking larger facilities, will happen in 2027. One will be done by mid-2027 and another one by the end of 2027. So I would say it's a phased-in approach. Obviously, it partially depends on The local law is dealing with works councils, et cetera, as well as having, I'll say, a moderate pace that does not overwhelm the receiving plant. I think that's an important consideration. Again, we saw a little bit of pressure on the receiving plant here in the second quarter. We're trying to be very thoughtful about that. One of the nice benefits of the plants that are being moved going forward here is that the receiving plants are already manufacturing these products. So that helps out quite a bit. So it's more of a consolidation into someone who already has that knowledge. But that said, this is going to be a phase in all the way through the end of 2027.

Yeah, I think that's an important differentiation to make is that the Experiences that we're having right now in the consolidation of some of the footprint is moving product to plants that haven't produced that product yet or before versus what Brian just said about the moves in 2027. That is really more of a consolidation of production into one facility so that the transition is going to be a lot smoother in those 2027 consolidations versus what we're experiencing in Q2 and Q3 of this year.

Okay, great. Thanks for calling that out. And then maybe a final one for me. On capital allocations, you guys announced a share buyback of $200 million. Can you talk about the buyback versus M&A deals or what you're seeing in the environment?

Yeah, I think... Walt, we're still really focused on the integration of the two companies. And so M&A is still something that's in the future. And so with the buyback process, That was announced in Q2. We are able to sort of choose between debt pay down and share buybacks. And we've chosen to do some share buybacks where it makes the most sense opportunistically relative to the price of the market versus what we expect the price to be. So that's why we made some of those share buybacks in the quarter and will continue to be opportunistic going forward. and make the decision in the short to medium term between debt pay down and share buybacks.

What we've also talked about is not only a balance sheet question, it is the management capacity. And like Matt said, we're laser focused now on maximizing the benefits of the combination of JVT and Marel. We spoke about all the work that we're doing. There's still a lot of work on the footprint and other areas, so we're really focused on that. But we do believe and anticipate there will be a time where M&A will be a lever to really accelerate our strategic journey and strengthen the offering that we have. Okay, great. Thank you.

and we will move next to Ian Zafino with Oppenheimer. Your line is open.

Hi, thank you very much. On PFB, not to kind of beat a dead horse here, but what are your customers seeing as far as their end customer demand? What are they seeing maybe about the state of the consumer? Do they feel good? Because I know you gave us a lot of commentary on your customers, but maybe you could talk a little bit about your customers' customers.

Yes, I would say it is very mixed. Again, I think on some of our CPG customers, they are seeing some tradeoffs from maybe higher branded products to more of the generic products, et cetera. So there's definitely a fair amount of activity at the consumer level. And again, it does depend on the category. and you still even have some GLP-1 impacts which is net positive for us given the protein focus but in some categories like snacks and sweets you're seeing some Some shifting of consumer behavior. I think the thing that we hear a lot from our customers in terms of how they're focused on the consumer is that they need to be responsive in terms of product innovation, different sizing, different flavors, even adding some of this protein aspect to some of the different offerings. So there's a fair amount of noise and churn happening. However, with a general strong backdrop with quite a bit of our customer focus, again, with 70% plus exposure to protein, we're net good in that regard. But we still see a fair amount of noise on the CPG side that I think will take some time to settle out as inflation works its way through the system.

Yeah, and just to add a little bit, like on the consumer side, customers on the protein side have been very specific that they still see good demand. What you tend to see is consumers don't stop consuming protein. That's why it's such a great category. It's more around optimizing within protein. That's where we have good exposure and diversification across the different protein segments. That's a pretty good spot to be in. The other trend that we see is more value-added, more Prepare Foods, and we're seeing kind of that side of the market also picking up and kind of our customers are talking about that which should help our prepare food and beverage segments just like we saw on the order side in Q2.

Okay, thanks. Can you guys maybe give us an update or some color on where the USDA is as far as speeding up the inspection lines for chickens? And what does that actually mean for you guys as far as a trustful market or opportunity? Any specifics you can give us there would be helpful. Thanks.

Sure. Yes, we do converse with the USDA. We're obviously a proponent and have given our white papers, if you will, to them and answered a lot of questions to the USDA about the line speeds. What we currently hear or 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, I'm talking poultry, and with waivers of 175 birds per minute. That compares to Europe of 240 bird per minute on average that the lines run. So the U.S. is at a fairly distinct disadvantage from a productivity perspective. So with over 350 lines in the U.S., and Call it less than 20% of them are running at 175 birds per minute. There we would expect a fairly durable cycle, and it will take multiple years. This will not all happen in one year or two. This will be, I would say, a tailwind for multiple years if we get this permanent 175. We are hopeful and excited about what that means for us and hopefully we'll see a decision here sometime in the third quarter.

Just to highlight, our value proposition is much stronger as the speed of the line is higher. Generally, because we have the leading technology and are able to operate at that level, that really helps us from a value proposition standpoint. And a differentiation versus our competitors.

All right, great. Thank you very much.

And as a reminder, it is star one to ask a question today. We'll take a follow-up from Mig Dobre with Baird. Your line is open.

Thank you, guys, for taking a follow-up. Just one quick question for me. And Brian or Arni, you know, we're kind of looking at your orders here over the past three quarters. They've been actually remarkably consistent, right, between $1.3 billion and $1.7 billion. And I guess one of the concerns that I keep hearing about is this notion that we've had a pretty big investment cycle in poultry and eventually that's going to kind of run its course. So I'm curious how you think about this going forward in terms of visibility that you have on orders. And, you know, as you kind of think about 2027, for instance, is there a makeshift that maybe we should be thinking about here between the two segments, maybe away from protein solution and maybe more towards prepare food and beverage where at least from your comments it sounds like demand and orders have actually picked up. So any context here I think would be really helpful.

Yes, and so I'll give you a little bit from our customer's point of view. And there is a lot of poultry demand in general right now. It's by far the number one protein, and we may even see poultry Thank you. Thank you. Thank you. 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% Thank you for joining us. You hear about how they're shifting some of that commodity-based volume to added value volume into their prepared food side. So we saw some really nice projects out of that here in the second quarter, and it even started in the first quarter. And that pipeline is quite strong from here. However, given the overall backdrop of the demand for protein, the primary-secondary pipeline is actually quite strong too. and it's global. I think that's one important consideration also as different regions want to become more self-sufficient in terms of protein production. We do see some other shifts from export-import and people wanting to be self-reliant. So as we sit here today, one, we have backlog going well into 2027. and the pipeline remains strong. So we feel very good about 2027 on the protein side.

That's great.

Thank you. Thank you.

And this does conclude the question and the answer session. I'd like to turn the program back over to Mr. Brian Deck for closing remarks.

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

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation.