# JBT MAREL Corp (JBTM) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from JBT MAREL Corp's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1433660/000143366025000009/jbt-20241231.htm
Accession: 0001433660-25-000009
Filing date: 2025-02-28
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/JBTM/
All MD&A years: /company/JBTM/mda/
Previous year: /company/JBTM/mda/fy2023/ (FY 2023)
Next year: /company/JBTM/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

JBT Marel Corporation is a leading global food and beverage technology solutions provider to high-value segments of the food and beverage industry. JBT Marel brings together the combined strengths of JBT and Marel with the goal of transforming the future of food.

We specialize in designing, manufacturing, and servicing cutting-edge technology, systems, and software for a broad range of food and beverage end markets. We aim to create better outcomes for our diverse customers by optimizing food yield and efficiency, improving food safety and quality, and enhancing uptime and proactive maintenance, all while reducing waste and resource use across the global food supply chain.

Our strategy capitalizes on favorable trends, as well as our leadership position, in the food and beverage processing industry. This strategy is based on a five-pronged approach to deliver continued growth and margin expansion.

•Strengthening Solutions and Value Proposition. We offer a broad portfolio of solutions developed for various food and beverage end markets to meet diverse customer and sustainability needs with precision and flexibility to fuel organic growth.

•Enhancing Service Offerings and Customer Relationships. Leveraging our industry expertise, we deliver high-quality service to minimize downtime, optimize performance, and strengthen customer partnerships with responsive support and reliable parts delivery.

•Advanced Digital and Software Capabilities. We deliver greater value through cutting-edge digital tools and software to improve productivity, reduce downtime, and optimize food and beverage processing.

•Focus on Innovation. By expanding our portfolio through cutting edge innovation we enhance technology leadership and deepen customer partnerships with advanced capabilities.

•Leveraging Our Scale to Expand Margins. By utilizing our resources and great talent, we drive efficiencies, achieve synergies, and deliver margin expansion, all while creating more value for our customers.

Our approach to Environmental, Social and Corporate Governance (ESG) builds on our culture and long tradition of concern for our employees’ health, safety, and well-being; partnering with our customers to find ways to make better use of the earth’s precious resources; and giving back to the communities where we live and work. Our equipment and technologies continue to deliver quality performance while striving to minimize food waste, extend food product life, support customer sustainability objectives, and maximize efficiency in order to create shared value for our food and beverage customers. While the majority of our impact lies within the solutions offered to our customers, our commitment to environmental responsibility extends to our own operations. We strive for our own facilities to operate efficiently and safely, much like the solutions we provide to our customers. We recognize the responsibility we have to make a positive impact on our shareholders, the environment and our communities in a manner that is consistent with our fiduciary duties. We have engaged in structured education for enhancing inclusive leadership skills in our organization designed to ensure more diversity in our leadership and hiring practices.

Strategic Acquisition of Marel hf.

On January 2, 2025, the Company closed the acquisition of Marel hf., a multi-national food processing company based in Gardabaer, Iceland that manufactures equipment and provides other services for food processing in the poultry, meat, fish, and pet food industries. The purpose of the Marel Transaction was to create a leading and diversified global food and beverage technology solutions provider by bringing together two renowned companies with long histories, complementary product portfolios, highly respected brands, and cutting-edge technology to enable global customers to more efficiently access industry leading technology worldwide. Refer to Note 22. Subsequent Events of the Notes to the Consolidated Financial Statements for additional information on the Marel Transaction.

In conjunction with the combination of JBT and Marel, JBT changed its corporate name and stock ticker symbol to “JBT Marel Corporation” and “JBTM,” respectively, on January 2, 2025.

The disclosures in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Annual Report on Form 10-K speak to the combined company subsequent to the Marel Transaction unless otherwise noted.

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Business Conditions and Outlook

JBT’s 2024 operating performance was strong, and the year-over-year revenue and orders growth was driven by JBT’s diverse end market solutions. In 2024, equipment demand from global poultry customers increased year over year as market conditions and customer cash flow improved. Additionally, JBT experienced strong demand across its diverse end markets, including warehouse automation, fruit and vegetable, ready meals, and pharmaceuticals. JBT generated record orders in the fourth quarter of 2024 with broad strength across most end markets. JBT also achieved record margins in full year 2024 primarily driven by supply chain cost savings and continuous improvement initiatives.

Looking ahead, JBT Marel expects that the demand environment will continue to improve in 2025 driven by the Company’s holistic solutions offering, further recovery in equipment demand from global poultry customers, and resilient demand for aftermarket parts and service. JBT Marel is focused on improving margins through volume growth, continuous improvement initiatives, and synergy realization.

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Results of Continuing Operations

A discussion of JBT's results of operations for 2024 compared to 2023 is set forth below.

CONSOLIDATED RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2024 AND 2023

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","","Favorable / (Unfavorable)"],["(In millions)","2024","","2023","","","","Change","","","Change %"],["Revenue","$","1,716.0","","","$","1,664.4","","","","","$","51.6","","","","3.1%"],["Cost of sales","1,089.5","","","1,078.7","","","","","(10.8)","","","","(1.0)%"],["Gross profit","626.5","","","585.7","","","","","40.8","","","","7.0%"],["Gross profit margin","36.5%","","35.2%","","","","130 bps"],["Selling, general and administrative expense","506.7","","","409.6","","","","","(97.1)","","","","(23.7)%"],["Restructuring expense","1.4","","","11.4","","","","","10.0","","","","87.7%"],["Operating income","118.4","","","164.7","","","","","(46.3)","","","","(28.1)%"],["Pension expense, other than service cost","27.3","","","0.7","","","","","(26.6)","","","","(3,800.0)%"],["Interest income","23.7","","","13.4","","","","","10.3","","","","76.9%"],["Interest expense","19.4","","","24.3","","","","","4.9","","","","20.2%"],["Net income before income taxes","95.4","","","153.1","","","","","(57.7)","","","","(37.7)%"],["Income tax provision","10.7","","","23.5","","","","","12.8","","","","54.5%"],["Equity in net earnings of unconsolidated affiliate","(0.1)","","","(0.3)","","","","","0.2","","","","(66.7)%"],["Income from continuing operations","84.6","","","129.3","","","","","(44.7)","","","","(34.6)%"],["Income from discontinued operations, net of taxes","0.8","","","453.3","","","","","(452.5)","","","","(99.8)%"],["Net income","$","85.4","","","$","582.6","","","","","$","(497.2)","","","","(85.3)%"],["Adjusted EBITDA from continuing operations(1)","$","295.0","","","$","273.1","","","","","$","21.9","","","","8.0%"],["Adjusted EBITDA margin from continuing operations(1)","17.2","%","","16.4","%","","","","80 bps"]]
[[/GREPCENT_TABLE]]

(1) Refer to the 'Reconciliation of Non-GAAP Measures' section below for additional information on Adjusted EBITDA from continuing operations and Adjusted EBITDA margin from continuing operations.

2024 Compared With 2023

Revenue

Total revenue in 2024 increased $51.6 million or 3.1% compared to 2023. Organic revenue grew by $59.4 million and foreign currency translation was unfavorable by $7.8 million compared to the prior year. The increase in organic revenue was primarily the result of higher pricing as well as an increase in volume for non-recurring revenue. Recurring revenue was flat year over year.

Gross Profit and Gross Profit Margin

Gross profit margin increased 130 bps to 36.5% compared to 35.2% in 2023. The increase was driven primarily by higher volume and pricing as well as savings from our 2022/2023 restructuring plan and sourcing initiatives. This was partially offset by input cost inflation and a stronger mix of non-recurring revenue compared to the prior year, which tends to have lower margins than recurring revenue.

Selling, general and administrative expense

Selling, general and administrative expense increased $97.1 million compared to the prior year, and as a percent of revenue increased 490 bps to 29.5% compared to 24.6% in 2023. This increase was primarily due to higher M&A related cost in the amount of $79.9 million incurred in connection with the Marel Transaction, higher compensation expense from the long term incentive plan as well as merit increases, and higher marketing expenses. The increase was partially offset by savings from our restructuring program.

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Pension expense, other than service cost

Pension expense, other than service cost increased $26.6 million compared to the same period in the prior year. This increase was primarily due to the settlement charge of $23.3 million recognized in the fourth quarter of 2024 as part of the partial termination of the U.S. qualified defined benefit pension plan. The remaining increase was primarily due to a lower expected return on pension assets in 2024 compared to the prior year.

Interest income

Interest income increased $10.3 million compared to 2023. This increase was due to interest income earned on cash on hand from the proceeds from the sale of the AeroTech business ("AeroTech") which was completed during the third quarter of 2023.

Interest expense

Interest expense decreased $4.9 million compared to 2023. This decrease was due to the Company having a lower average debt balance and lower weighted average interest rate, including the impacts of the interest rate swaps, during 2024 compared to 2023.

Income tax provision

The Company's tax rate from continuing operations was 11.2% for the year ended December 31, 2024 compared to 15.3% in 2023. The tax rate for the year ended December 31, 2024 was favorably impacted by discrete items totaling $10.0 million, primarily driven by a non-recurring deferred tax benefit related to an internal reorganization. The tax rate for the year ended December 31, 2023 was favorably impacted by discrete items totaling $9.5 million, primarily driven by a benefit related to the disposition of a subsidiary which generated a capital loss that was partially allocated to continuing operations.

The Organization for Economic Co-operation and Development established a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar Two), with certain aspects of Pillar Two effective January 1, 2024 and other aspects effective January 1, 2025, depending on the jurisdictions in which the Company operates. While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two, certain countries in which the Company operates have enacted legislation, and other countries are in the process of introducing legislation, to implement Pillar Two. Pillar Two did not have a material impact on the Company's effective tax rate, consolidated results of operations, financial position, or cash flows for the year ended December 31, 2024.

Income from continuing operations and Adjusted EBITDA

Income from continuing operations for the year ended December 31, 2024 was $84.6 million compared to $129.3 million in 2023, representing a decrease of $44.7 million. Adjusted EBITDA was $295.0 million for the year ended December 31, 2024 compared to $273.1 million in 2023, representing an increase of $21.9 million or 8.0%. The increase in Adjusted EBITDA was primarily driven by higher gross profit, partially offset by higher selling, general and administrative expense, excluding the impacts of our depreciation, amortization, and acquisition and integration costs.

Income from discontinued operations

For the year ended December 31, 2024, we recognized income from discontinued operations, net of income taxes, of $0.8 million. For the year ended December 31, 2023, we recognized income from discontinued operations, net of income taxes, of $453.3 million, which included the gain on the sale of AeroTech of $443.7 million, net of tax, that was completed during the third quarter of 2023.

45

Reconciliation of Non-GAAP Measures

We present non-GAAP (as defined below) financial measures in this annual report on Form 10-K. These non-GAAP financial measures adjust for certain amounts that are otherwise included or excluded from a measure calculated under U.S. generally accepted accounting principles ("GAAP"). By adjusting for these items, we believe we provide greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance. Management uses these non-GAAP financial measures in financial and operational evaluation, planning and forecasting. We also believe that these non-GAAP measures are useful to investors as a way to evaluate and compare our operating performance against peers in the Company's industry. The adjustments generally fall within the following categories: restructuring costs, M&A related costs, pension-related costs, constant currency adjustments and other major items affecting comparability of our ongoing operating results.

The non-GAAP financial measures presented in this report may differ from similarly-titled measures used by other companies. The non-GAAP financial measures are not intended to be used as a substitute for, nor should they be considered in isolation of, financial measures prepared in accordance with U.S. GAAP.

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Additional details for each Non-GAAP financial measure follow:

•EBITDA and Adjusted EBITDA: We define EBITDA as earnings before income taxes, interest expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA before restructuring, pension expense other than service cost, and M&A related costs.

•Adjusted income from continuing operations and Adjusted diluted earnings per share from continuing operations: We adjust earnings for restructuring expense, M&A related costs, which include integration costs and the amortization of inventory step-up from business combinations, advisory and transaction costs for both potential and completed M&A transactions and strategy (“M&A related costs”), amortization of debt issuance costs related to bridge financing for potential M&A transactions, and impact on tax provision from remeasurement of deferred taxes for material tax rate changes and internal reorganizations.

•Free cash flow: We define free cash flow as cash provided by continuing operating activities, less capital expenditures, plus proceeds from sale of fixed assets and pension contributions. For free cash flow purposes, we consider contributions to pension plans to be more comparable to the payment of debt, and therefore exclude these contributions from the calculation of free cash flow.

•Constant currency measures: We evaluate our results of operations on both an as reported and a constant currency basis as it provides greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results. The constant currency presentation excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our financial results in local currency for a period using the average exchange rate for the prior period to which we are comparing.

The tables below reconcile each non-GAAP financial measure to the most comparable GAAP financial measure.

The following table presents a reconciliation of the Company's reported Income from continuing operations to Adjusted EBITDA.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(In millions)","2024","","2023","","2022"],["Income from continuing operations","$","84.6","","","$","129.3","","","$","103.8"],["Income tax provision","10.7","","","23.5","","","16.2"],["Interest (income) expense, net","(4.3)","","","10.9","","","12.6"],["Depreciation and amortization","89.4","","","91.3","","","76.2"],["EBITDA from continuing operations","180.4","","","255.0","","","208.8"],["Restructuring related costs (1)","1.4","","","11.4","","","7.3"],["Pension expense, other than service cost (2)","27.3","","","0.7","","","\u2014"],["M&A related costs (3)","85.9","","","6.0","","","11.6"],["Adjusted EBITDA from continuing operations","$","295.0","","","$","273.1","","","$","227.7"]]
[[/GREPCENT_TABLE]]

(1) Costs incurred as a direct result of the restructuring program are excluded because they are not part of the ongoing operations of our underlying business.

(2) Pension expense, other than service cost is excluded as it represents all non service-related pension expense, which consists of non-cash interest cost, expected return on plan assets, amortization of actuarial gains and losses, and settlement charges.

(3) M&A related costs include integration costs, amortization of inventory step-up from business combinations, impacts of foreign currency derivatives and trades to hedge variability of exchange rates on the cash consideration paid for business combination, advisory and transaction costs for both potential and completed M&A transactions and strategy. M&A related costs are excluded as they are not part of the ongoing operations of our underlying business.

47

The table below provides a reconciliation of income from continuing operations as reported to adjusted income from continuing operations and adjusted diluted earnings per share from continuing operations.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(In millions, except per share data)","2024","","2023","","2022"],["Income from continuing operations","$","84.6","","","$","129.3","","","$","103.8"],["Non-GAAP adjustments"],["Restructuring related costs","1.4","","","11.4","","","7.3"],["M&A related costs","85.9","","","6.0","","","11.6"],["Amortization of bridge financing debt issuance cost","7.1","","","\u2014","","","\u2014"],["Impact on tax provision from Non-GAAP adjustments(1)","(23.2)","","","(4.5)","","","(4.8)"],["Recognition of non-cash pension plan related settlement costs","23.3","","","\u2014","","","\u2014"],["Impact on tax provision from non-cash pension plan related settlement costs","(6.0)","","","\u2014","","","\u2014"],["Impact on tax provision from tax basis write-off","\u2014","","","(10.7)","","","\u2014"],["Deferred tax benefit related to an internal reorganization","(8.8)","","","\u2014","","","\u2014"],["Adjusted income from continuing operations","$","164.3","","","$","131.5","","","$","117.9"],["Income from continuing operations","$","84.6","","","$","129.3","","","$","103.8"],["Total shares and dilutive securities","32.2","","","32.1","","","32.1"],["Diluted earnings per share from continuing operations","$","2.63","","","$","4.02","","","$","3.23"],["Adjusted income from continuing operations","$","164.3","","","$","131.5","","","$","117.9"],["Total shares and dilutive securities","32.2","","","32.1","","","32.1"],["Adjusted diluted earnings per share from continuing operations","$","5.10","","","$","4.10","","","$","3.67"]]
[[/GREPCENT_TABLE]]

(1) Impact on tax provision was calculated using the enacted rate for the relevant jurisdiction for the years ended December 31, 2024, 2023, and 2022, respectively.

The table below provides a reconciliation of cash provided by operating activities to free cash flow:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in millions)","2024","","2023","","2022"],["Cash provided by continuing operating activities","$","232.6","","","$","74.2","","","$","135.2"],["Less: capital expenditures","37.9","","","55.1","","","84.6"],["Plus: proceeds from disposal of assets","1.4","","","2.1","","","1.1"],["Plus: pension contributions","3.2","","","12.1","","","3.5"],["Plus: income taxes on gain from sale of AeroTech","\u2014","","","133.2","","","\u2014"],["Free cash flow (FCF)","$","199.3","","","$","166.5","","","$","55.2"]]
[[/GREPCENT_TABLE]]

48

Restructuring

In the third quarter of 2020, the Company implemented a restructuring plan ("2020 restructuring plan") for manufacturing capacity rationalization across the Company. The Company completed the 2020 restructuring plan as of June 30, 2022 and total cost in connection with the 2020 restructuring plan was $11.0 million with $2.1 million incurred in the year 2022.

In the third quarter of 2022, the Company implemented a restructuring plan (the "2022/2023 restructuring plan") to optimize the overall cost structure for the Company on a global basis. The initiatives under this plan included streamlining operations and enhancing our general and administrative infrastructure. The Company recognized restructuring charges of $18.2 million, net of a cumulative release of the related liability of $7.7 million. The 2022/2023 restructuring plan was completed as of March 31, 2024.

The following table details the cumulative amount of annualized savings and incremental savings for the 2022/2023 restructuring plan:

[[GREPCENT_TABLE]]
[["","Cumulative Amount","","Incremental Amount","","Cumulative Amount"],["(In millions)","As of December 31, 2023","","During the year ended December 31, 2024","","As of December 31, 2024"],["Cost of sales","$","4.9","","","$","4.3","","","$","9.2"],["Selling, general and administrative","6.2","","","4.6","","","10.8"],["Total restructuring savings","$","11.1","","","$","8.9","","","$","20.0"]]
[[/GREPCENT_TABLE]]

For additional financial information about restructuring, refer to Note 20. Restructuring of the Notes to Consolidated Financial Statements.

Inbound Orders and Order Backlog

Inbound orders represent the estimated sales value of confirmed customer orders received during the year. JBT's inbound orders from continuing operations during the years ended December 31, 2024 and 2023 were $1,788.3 million and $1,667.5 million, respectively.

JBT's inbound orders from continuing operations increased $120.8 million for the year ended December 31, 2024 compared to 2023, which includes an unfavorable foreign currency translation impact of $8.8 million in the period resulting in an increase of $129.6 million on a constant currency basis.

Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders. JBT's order backlog from continuing operations was $720.5 million and $678.2 million as of December 31, 2024 and 2023, respectively.

JBT's order backlog from continuing operations at December 31, 2024 increased by $42.3 million compared to December 31, 2023. We expect to convert 88% of backlog at December 31, 2024 into revenue during 2025.

Seasonality

We experience seasonality in our operating results. Our revenue and operating income are generally lower in the first quarter and highest in the fourth quarter, primarily as a result of our customers' purchasing trends.

Liquidity and Capital Resources

Overview of Sources and Uses of Cash

Our primary sources of liquidity are cash flows provided by operating activities from our U.S. and foreign operations, our revolving credit facility and our cash and cash equivalents on hand. In connection with the Marel Transaction, we drew an additional $604 million from our existing revolving credit facility on December 30, 2024. On January 2, 2025, we secured takeout financing comprised of the amended and restated 5-year, $1.8 billion revolving credit facility and $900 million in the Senior Secured Term Loan B ("Term Loan B"). The take out financing resulted in the carryforward of the initial $604 million borrowing from our existing revolving credit facility and additional borrowings of $900 million drawn from the Term Loan B and $18.6 million from the amended credit facility to fund the Marel Transaction and related expenditures.

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On January 2, 2025, we closed the Marel Transaction by acquiring approximately 97.5% of Marel's issued and outstanding common shares. On of February 4, 2025, we acquired the remaining 2.5% of Marel's issued and outstanding common shares ("Squeeze out"). Upon the closing of the Marel Transaction on January 2, 2025 and for the Squeeze out on February 4, 2025, we used available cash and additional borrowings from the takeout financing to fund $1.0 billion of cash consideration paid to the Marel shareholders, $867.8 million for repayment of Marel's debt, $111.4 million for transaction related expenses, and $16.1 million for debt issuance costs.

For the year ended December 31, 2024, we had total operating cash flows from continuing operations of $232.6 million. Our liquidity as of December 31, 2024, or cash plus borrowing ability under our revolving credit facilities, was $1.4 billion. As a result of the take-out financing related to the Marel Transaction, we now have access to additional liquidity, if needed, through further borrowings on our amended revolving credit facility. Therefore, the liquidity for the combined company as of the Marel Transaction close date of January 2, 2025 was approximately $909.3 million. Take-out financing includes a leverage holiday that permits a maximum secured leverage ratio of 5.0x for the initial 12-months after the Marel Transaction close date and a total leverage ratio of 5.75x.

We expect to use the liquidity available for the combined company for the integration of JBT and Marel and our other capital allocation priorities. Based on our current capital allocation objectives for the combined company, we anticipate capital expenditures to be between $90 million and $100 million during 2025. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions. During 2025, we also expect to incur integration costs and other synergy related costs in the range of $55 million to $65 million related to the acquisition of Marel.

Additionally, the cash flows generated by the continuing operations of the combined company are expected to be sufficient to satisfy our principal cash requirements that include our working capital needs, new product development, restructuring expenses, capital expenditures, income taxes, debt interest and repayments, dividends, and other financing arrangements.

As of December 31, 2024, we had $1.2 billion of cash and cash equivalents, $411.6 million of which was held by our foreign subsidiaries. Although certain funds are considered permanently invested in our foreign subsidiaries, we are not presently aware of any restriction on the repatriation of these funds. We maintain significant operations outside of the U.S., and many of our uses of cash for working capital, capital expenditures and business acquisitions arise in these foreign jurisdictions. If these funds were needed to fund our operations or satisfy obligations in the U.S., they could be repatriated and their repatriation into the U.S. could cause us to incur additional U.S. income tax and foreign withholding taxes. The foreign withholding taxes on these repatriations to the U.S. would potentially be partially offset by U.S. foreign tax credits.

As noted above, certain funds held outside of the U.S. are considered permanently invested in our non-U.S. subsidiaries. At times, these foreign subsidiaries have cash balances that exceed their immediate working capital or other cash needs. In these circumstances, the foreign subsidiaries may loan funds to the U.S. parent company on a temporary basis; the U.S. parent company has in the past and may in the future use the proceeds of these temporary intercompany loans to reduce outstanding borrowings under our committed credit facilities. By using available non-U.S. cash to repay our debt on a short-term basis, we can optimize our leverage ratio, which has the effect of lowering our interest costs.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures in the U.S. over five years. As a result, we experienced an adverse impact to our cash from continuing operations of $11 million in 2024 and will experience approximately a $7 million decrease in cash from continuing operations in 2025. The impact will continue over the five-year amortization period but decrease each year.

Contractual Obligations and Cash Requirements

The following is a summary of our significant contractual and other obligations at December 31, 2024:

[[GREPCENT_TABLE]]
[["(In millions)","Total Payments","","Current","","Long-Term"],["Long-term debt (a)","$","1,252.1","","","$","\u2014","","","$","1,252.1"],["Interest payments on long-term debt (b)","219.0","","","42.6","","","176.4"],["Operating leases (c)","37.2","","","13.3","","","23.9"],["Total contractual and other obligations (d)","$","1,508.3","","","$","55.9","","","$","1,452.4"]]
[[/GREPCENT_TABLE]]

(a)A summary of our long-term debt obligations as of December 31, 2024 can be found in Note 7, “Debt”, of the Notes to the Consolidated Financial Statements.

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(b)Amounts include contractual interest payments using the interest rates as of December 31, 2024 and include the effect of our interest rate swaps.

(c)A summary of our operating lease obligations as of December 31, 2024 can be found in Note 18, “Leases”, of the Notes to the Consolidated Financial Statements.

(d)This table does not include obligations under our pension and postretirement benefit plans, which are included in Note 9, Pension and Post-Retirement and Other Benefit Plans, of the Notes to the Consolidated Financial Statements.

We also have outstanding firm purchase orders with certain suppliers for the purchase of raw materials and services, which are not included in the table above. These purchase orders are generally short-term in nature and include a requirement that our supplier provide products or services to our specifications and require us to make a firm purchase commitment to our supplier. The costs associated with these agreements will be reflected in cost of sales on our Consolidated Statements of Income as substantially all of these commitments are associated with purchases made to fulfill our customers’ orders.

The following is a summary of other off-balance sheet arrangements at December 31, 2024:

[[GREPCENT_TABLE]]
[["(In millions)","Total Amount","","Current","","Long-Term"],["Letters of credit and bank guarantees","$","41.6","","","$","41.5","","","$","0.1"],["Surety bonds","3.5","","","3.4","","","0.1"],["Total other off-balance sheet arrangements","$","45.1","","","$","44.9","","","$","0.2"]]
[[/GREPCENT_TABLE]]

To provide required security regarding our performance on certain contracts, we provide letters of credit, surety bonds and bank guarantees, for which we are contingently liable. In order to obtain these financial instruments, we pay fees to various financial institutions in amounts competitively determined in the marketplace. Our ability to generate revenue from certain contracts is dependent upon our ability to obtain these off-balance sheet financial instruments.

Our off-balance sheet financial instruments may be renewed, revised or released based on changes in the underlying commitment. Historically, our commercial commitments have not been drawn upon to a material extent; consequently, management believes it is not likely that there will be claims against these commitments that would result in a negative impact on our key financial ratios or our ability to obtain financing.

Cash Flows

Cash flows for each of the years ended December 31, 2024 and 2023 were as follows:

[[GREPCENT_TABLE]]
[["(In millions)","2024","","2023","","2022"],["Cash provided by continuing operating activities","$","232.6","","","$","74.2","","","$","135.2"],["Cash (required) provided by continuing investing activities","(41.3)","","","729.3","","","(413.2)"],["Cash provided (required) by continuing financing activities","561.8","","","(354.1)","","","270.6"],["Effect of foreign exchange rate changes on cash and cash equivalents","(9.0)","","","(1.2)","","","(2.5)"],["Net increase (decrease) in cash from continuing operations","$","744.1","","","$","448.2","","","$","(9.9)"]]
[[/GREPCENT_TABLE]]

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2024 Compared with 2023

Cash provided by continuing operating activities in 2024 was $232.6 million, representing a $158.4 million increase compared to 2023. The increase was driven by higher collections of customer advanced payments, and lower payments of accounts payable as a result of improved vendor terms. These increases were partially offset by lower collections of trade receivables and higher inventory purchases during the period. Operating cash flows in the prior year were also lower due to tax payments of $133.2 million for income taxes on gain from sale of AeroTech.

Cash required by continuing investing activities during 2024 was $41.3 million, compared to cash provided of $729.3 million in 2023. The cash outflow during the period was driven primarily by spending on capital expenditures, which was lower compared to the prior year as we completed the initial development and deployment of our OmniBluTM platform in 2023. The prior year cash provided was primarily comprised of the proceeds received on the sale of the AeroTech business.

Cash provided by continuing financing activities of $561.8 million in 2024 was primarily due to net proceeds from the fourth quarter draw on our revolving credit facility, partially offset by the payment of debt issuance costs related to the amended revolving credit facility and Term Loan B secured during the fourth quarter of 2024, and the Bridge Credit Agreement entered into during the second quarter of 2024. Cash required by financing activities of $354.1 million in 2023 was primarily due to payments made on our borrowings on the revolving credit facility, which did not recur in 2024.

Financing Arrangements

As of December 31, 2024 we had $854.0 million drawn on and $439.0 million of availability under the revolving credit facility. Our ability to use this revolving credit facility is limited by the leverage ratio covenant referenced below.

Our credit agreement includes restrictive covenants that, if not met, could lead to a renegotiation of our credit lines, a requirement to repay our borrowings and/or a significant increase in our cost of financing. Restrictive covenants include a minimum interest coverage ratio, a maximum leverage ratio, as well as certain events of default. As of December 31, 2024, we were in compliance with all covenants in our credit agreement. We expect to remain in compliance with all covenants.

On January 2, 2025, we executed takeout financing consisting of an amended and restated 5-year, $1.8 billion revolving credit facility and a 7-year, $900 million senior secured term loan B. The amended credit facility will retain the same pricing grid as our existing revolving credit facility. The Term Loan B will have secured pricing of SOFR plus 225 basis points. This pricing structure will step down to SOFR plus 200 basis points once leverage is below 3.25x.

In connection with the Marel Transaction, on April 4, 2024, the Company entered into a Bridge Credit Agreement with certain financial institutions that committed to provide the Company with secured bridge financing in an aggregate principal amount of €1.9 billion. The Bridge Credit Agreement was terminated on January 2, 2025, upon the closing of the Marel Transaction and related takeout financing.

Additionally, we entered into deal-contingent forward contracts during October 2024 to hedge the impact of variability in exchange rates on the euro-denominated purchase price of the Marel Transaction. The deal-contingent forward contracts had an aggregate notional amount of EUR 731.7 million, and effectively fixed the exchange rate for a portion of the purchase price for the Marel Transaction at 1.093 EUR to USD. At December 31, 2024, we recognized a mark-to-market loss on the forward contracts of $42.4 million, resulting from a decrease in the EUR to USD exchange rate.

On May 28, 2021, we closed a private offering of $402.5 million aggregate principal amount of the Company's 0.25% Convertible Senior Notes due 2026 (the "Notes") to qualified institutional buyers, resulting in net proceeds to us of approximately $392.2 million after deducting initial purchasers’ discounts. The Notes will mature on May 15, 2026 unless earlier converted, redeemed or repurchased. Concurrently with the issuance of the Notes, we entered into the Note hedge transactions that reduce potential dilution upon conversion of the Notes and into the warrant transactions to raise additional capital to partially offset the costs of entering into the Note hedge transactions.

For additional information about our credit agreement, Notes, convertible note hedge and warrant transactions, refer to Note 7. Debt of the Notes to the Consolidated Financial Statements.

As of December 31, 2024, we have four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025. We have designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in Accumulated other comprehensive income (loss).

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As a result, as of December 31, 2024, a significant portion of our total outstanding debt of $1,256.5 million effectively remains fixed rate debt, with the Convertible Senior Notes subject to a fixed rate of 0.25% and a portion of the revolving credit facility subject to an average fixed rate of 0.76%. Approximately $604.0 million or 48%, remained subject to floating, or market rates in addition to the premium charged for the credit spread on our revolving credit facility. To the extent interest rates increase in future periods, our earnings could be negatively impacted by higher interest expense.

On January 3, 2025, we entered into five cross-currency swaps related to the U.S. dollar denominated debt of $700 million of the Term Loan B drawn down by JBT Marel's European entity expiring in January 2032. These cross currency swap agreements have a combined notional amount of $700 million and synthetically swap interest rates from SOFR to EURIBOR and hedge the impact of variability in exchange rates on the U.S. dollar dominated debt and related interest payments, excluding credit spread, by our euro-functional entity.

Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions about matters that are inherently uncertain. On an ongoing basis, our management re-evaluates these estimates, judgments and assumptions for reasonableness because of the critical impact that these factors have on the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the periods presented. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed this disclosure. We believe that the following are the critical accounting estimates used in preparing our financial statements.

Revenue Recognition

We recognize a large portion of our product revenue over time, using the "cost-to-cost" input method for contracts that provide highly customized equipment and refurbishments of customer-owned equipment for which we have a contractual, enforceable right to collect payment upon customer cancellation for performance completed to date. The input method of “cost-to-cost” to recognize revenue over time requires that we measure progress based on costs incurred to date relative to total estimated cost at completion. These cost estimates are based on assumptions and estimates to project the outcome of future events including estimated labor and material costs required to complete open projects.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements see Note 1 of the Notes to Consolidated Financial Statements.