Orders received of EUR 403m and EBIT at 9.4% despite revenue decline
Executive summary
- Orders received increasing to EUR 403m driven by very good project orders in Poultry, albeit order book remains low at 33% of trailing twelve months revenues.
- Revenue decline of 6.8% QoQ and 4.1% YoY due to low order book. Book-to-bill ratio at 1.04 in the quarter.
- Year-on-year and sequential increase in both EBITDA margin at 13.8% and EBIT margin at 9.4% in 3Q24, driven by ongoing cost actions.
- Orders received expected to trend upwards over the coming quarters. Order book needs to grow to deliver necessary revenue growth and improved operational performance.
- Leverage reduced to 3.75x, comfortably within leverage covenant of 4.25x.
- Outlook for full-year 2024 reiterated with 13-14% EBITDA, 9-10% EBIT, and revenue decline of low single digits.
Q3 2024 Financial highlights
- Orders received: EUR 402.5m (2Q24: 393.4m, 3Q23: 390.8m).
- Order book: EUR 554.1m (2Q24: 538.5m, 3Q23: 561.7m).
- Revenues: EUR 386.9m (2Q24: 415.2m,
3Q23: 403.6m). - EBITDA[1] margin: 13.8% (2Q24: 13.0%,
3Q23: 12.9%). - EBIT[1] margin: 9.4% (2Q24: 9.1%, 3Q23: 9.0%).
- Net result: EUR 3.8m (2Q24: 2.1m, 3Q23: 10.1m).
- Cash flow from operating activities before interest and tax: EUR 57.1m (2Q24: -4.0m, 3Q23: 62.4m).
- Free cash flow: EUR 41.4m (2Q24: -22.0m, 3Q23: 32.4m).
- Leverage[2]: 3.75x (2Q24: 3.92x, 3Q23: 3.48x).
9M 2024 Financial highlights
- Orders received: EUR 1,188.7m (9M23: 1,159.9m).
- Revenues: EUR 1,214.7m (9M23: 1,273.4m).
- EBITDA[1] margin: 12.8% (9M23: 12.4%).
- EBIT[1] margin: 8.8% (9M23: 8.7%).
- Net result: EUR 2.7m (9M23: 22.3m).
- Cash flow from operating activities before interest and tax: EUR 79.3m (9M23: 123.8m).
- Free cash flow: EUR 30.6m (9M23: 26.0m).
1 Result from operations and EBITDA adjusted for PPA related costs, including depreciation and amortization, acquisition related expenses and restructuring costs. In Q4 2023 and Q1 2024, result from operations is also adjusted for one-off write-offs related to product portfolio rationalization.
2 Net debt (excluding lease liabilities) / Pro forma LTM adjusted EBITDA (including recent acquisitions) excluding non-cash and one-off costs per Marel's credit agreements.
Arni Sigurdsson, CEO:
"These third quarter results demonstrate further progress on our strategy as we undertake actions to drive efficiency in our business to manage through near term challenges in our end markets. We are pleased to have delivered incremental improvements in our margin performance for the second consecutive quarter, despite lower revenues in the third quarter, showing how we are creating a higher quality business.
We encouragingly delivered a strong improvement in poultry orders and while other parts of our business remained softer, we expect orders overall to improve. As we deliver this, we will benefit from greater operational leverage from our efficiency actions and consequently we are reiterating both our guidance for the full year and mid-term outlook.
The proposed combination with JBT continues to progress well with closing targeted no later than 3 January 2025. With the strong rationale for the combination, I am very excited for what this means for our customers, employees and shareholders, as we look to deliver further success together, built on the strong heritage of both Marel and JBT."
2024 outlook reiterated, though short-term uncertainty remains
There is continued short-term uncertainty with differing segment demand, inflation and high-interest rate environment only slowly abating and continuing geopolitical tensions. Time to secure down payments and provide financial security on orders also continues to take longer. This is evidenced by the level of projects orders received in the year to date.
Orders received are expected to trend upwards over the coming quarters on the back of improved market fundamentals. To deliver revenue growth and improved operational performance, build up of the order book is needed.
Outlook for full-year 2024 reiterated at 13-14% EBITDA and 9-10% EBIT and revenue decline of low single digits.
Outlook for the mid-term is reiterated. Marel operates in attractive growth markets with expected long-term average market growth of 4-6% annually, supported by favorable secular trends, focused on automation, robotics technology and digital solutions to optimize processing and address customers' challenges of better utilization of raw materials, labor scarcity, high input costs and rising number of end products.
JBT voluntary takeover offer, targeted close no later than 3 January 2025
On 24 June, John Bean Technologies Corporation ("JBT") formally launched the voluntary takeover offer for all issued and outstanding shares in Marel in accordance with the provisions of the Icelandic Act no. 108/2007 on Takeovers.
The offer is based on the terms and conditions set out in an offer document approved by the Icelandic Financial Supervisory Authority of the Central Bank of Iceland and published and dated 24 June 2024. JBT has also issued a prospectus in connection with the offer. Further information here.
JBT targeting to close the transaction no later than 3 January 2025. JBT and Marel continue to make progress on the customary conditions to close the transaction.
Over 99% of shares voted at the JBT special shareholder meeting were in favor of the issuance of JBT shares for the Marel transaction.
Regarding regulatory workstreams, JBT has reported that following an in-depth prenotification process and dialogue with the European Commission, a formal review of the regulatory merger filing has begun as of 23 October, which is subject to a standard 25 working day Phase 1 review period and a provisional deadline of 28 November. JBT is targeting to receive regulatory approval from the Australian Competition and Consumer Commission during a similar timeframe to the E.C. approval.
JBT has received an extension from the Icelandic FSA regarding an extension of the voluntary takeover offer period to 20 December 2024. Provided JBT achieves minimum acceptance of 90% by Marel shareholders, JBT plans to settle offer within 5 Icelandic business days after the offer expires on 20 December.
JBT has secured financing commitments contingent upon the completion of the merger which includes a USD 900 million Term Loan B issuance and expanding an existing revolving credit facility to USD 1.8 billion. The funds from this new capital structure along with cash on the balance sheet will be used to pay the cash portion of the transaction, refinance Marel's outstanding debt, and pay transaction-related expenses.
Following the launch of the offer, the Board of Directors of Marel published its reasoned statement where the Board unanimously (i) supporting the offer, including the price and other terms thereto, (ii) recommending that the Marel shareholders accept the offer and tender their shares into the offer, and (iii) believing that the consummation of the transaction will have a positive effect on the interests of Marel and its employees. In its preparation for the reasoned statement, the Board received separate written opinions from J.P. Morgan and Rabobank.
Financial calendar
Marel will publish its financial results according to the below financial calendar:
- Q4 2024 - 12 February 2025
- AGM - 26 March 2025
Financial results will be disclosed and published after market closing of both Nasdaq Iceland and Euronext Amsterdam.
Upcoming trade shows and events
Marel regularly participates in exhibitions around the world where it showcases the company's innovative solutions. In addition, Marel hosts its own trade shows and KnowHows in the company's demonstration facilities. Here are some of Marel's upcoming events in 2024:
- Gulfood Manufacturing in Dubai, UAE, 5-7 November
- Eurotier in Hannover, Germany, 12-15 November
- OVUM in Punta del Este, Uruguay, 12-15 November
- Poultry India in Hyderabad, India, 27-29 November
Virtual investor meeting
On Thursday 31 October 2024, at 9:30 am CET (8:30 am GMT), Marel will host a virtual investor meeting where CEO Arni Sigurdsson and CFO Sebastiaan Boelen will give an overview of the financial results and operational highlights in the third quarter 2024.
Please note that the investor meeting is virtual only.
The investor meeting will be streamed live via Zoom and a recording will be made available after the meeting on marel.com/ir. Registration is available here.
Market share data
Statements regarding market share, including those regarding Marel's competitive position, are based on outside sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Marel, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.
Forward-looking statements
Statements in this press release that are not based on historical facts are forward-looking statements. Although such statements are based on management's current estimates and expectations, forward-looking statements are inherently uncertain. We therefore caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements, and that we do not undertake to update any forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement.
Investor Relations
For further information, please contact Marel Investor Relations via email ir@marel.com or tel. +354 563 8001.
About Marel
Marel (NASDAQ: MAREL, AEX: MAREL) is a leading global provider of advanced food processing equipment, systems, software and services to the food processing industry. Established in 1983, we have around 7,300 employees and a presence in more than 30 countries, servicing customer accounts in over 140 countries. We are listed on Nasdaq Iceland and Euronext Amsterdam, and in 2023 we delivered EUR 1.7 billion in revenues, with 46% coming from recurring aftermarket services and software. We invest 5-6% of revenues in innovation every year, setting new benchmarks in processing poultry, meat, fish as well as pet food, aqua feed and plant protein. Utilizing cutting edge technologies such as robotics, data-driven solutions, automation and software, we empower our customers to increase yield, ensure food safety, improve sustainability and ultimately create value for their businesses. For further information, please visit marel.com/ir.
