Q3 Highlights:
- Revenue from continuing operations of $717 million increased 24% compared to prior
year; organic revenue from continuing operations increased
5%
- GAAP EPS from continuing operations of $0.60 compared to $0.42 in the prior year; adjusted EPS from
continuing operations of $0.95
increased 36% compared to prior year
- Operating cash flow of $89
million increased $104 million
compared to prior year; 112% free cash flow conversion in the
quarter
- Entered into agreement to acquire Schenck Food and
Performance Materials business, significantly expanding
Hillenbrand's presence in food end market; transaction expected to
close in fiscal Q4
FY23 Outlook:
- Updating FY23 adjusted EPS from continuing operations to
$3.40 - $3.50 from $3.30 -
$3.50
BATESVILLE, Ind., Aug. 2, 2023
/PRNewswire/ -- Hillenbrand, Inc. (NYSE: HI) reported results for
the third quarter, which ended June 30,
2023.
"We delivered double-digit organic growth in our Advanced
Process Solutions segment, saw strong demand for our leading food
processing solutions, and generated solid operating cash flow in
the quarter. Despite the ongoing macroeconomic uncertainty, I'm
proud of the continued execution by our global teams in managing
costs and driving productivity. While we are seeing customer delays
continue in our Molding Technology Solutions segment and an
increase in customer delays of orders for large plastics projects
in our Advanced Process Solutions segment, we remain focused on
executing our strong backlog and deploying the Hillenbrand
Operating Model to drive operating efficiencies across the
enterprise," said Kim Ryan,
President and Chief Executive Officer of Hillenbrand.
"During the quarter, we announced that we entered into a
definitive agreement to acquire the Schenck Food and Performance
Materials business, which will further position us as a global
leader of highly-engineered, mission-critical processing equipment
and solutions in the attractive end markets of food, durable
plastics, and chemicals, which are supported by long-term secular
growth trends. I'm excited about the opportunity this acquisition
creates in allowing us to offer greater value to our customers, our
associates, and our shareholders."
Third Quarter 2023 Results of Continuing
Operations1
Revenue from continuing operations of $717 million increased 24% compared to the prior
year, primarily due to acquisitions. On an organic basis, which
excludes the impacts of acquisitions and foreign currency exchange,
revenue increased 5% year over year, as favorable pricing and
higher volume in the Advanced Process Solutions segment was
partially offset by lower volume in the Molding Technology
Solutions segment.
Net income from continuing operations of $44.0 million, or $0.60 per share, increased $0.18 compared to the prior year primarily due to
favorable pricing, the impact of acquisitions, higher APS volume,
and productivity improvements, partially offset by cost inflation
and lower MTS volume. Adjusted net income from continuing
operations of $67 million resulted in
adjusted EPS of $0.95, an increase of
$0.25, or 36%. The adjusted effective
tax rate for the quarter was 30.6%, an increase of 70 basis points
compared to the prior year primarily due to the geographic mix of
income.
Adjusted EBITDA of $126 million
increased 25% year over year. On an organic basis, adjusted EBITDA
increased 7% as favorable pricing, productivity improvements, and
higher APS volume were partially offset by cost inflation and lower
MTS volume. Adjusted EBITDA margin of 17.6% increased 20 basis
points, primarily due to favorable pricing and productivity
improvements, partially offset by cost inflation.
Advanced Process Solutions (APS)
Revenue of $465 million increased
50% compared to the prior year, primarily due to acquisitions. On
an organic basis, revenue increased 14% year over year, primarily
due to favorable pricing, higher aftermarket parts and service
revenue, and an increase in large plastics systems sales.
Adjusted EBITDA of $94 million
increased 55% year over year, or 23% organically, as favorable
pricing, higher volume, and productivity improvements were
partially offset by cost inflation. Adjusted EBITDA margin of 20.1%
increased 60 basis points as favorable pricing, operating leverage
from higher volume, and productivity improvements were partially
offset by cost inflation and the dilutive effect of the
acquisitions. As previously highlighted, the recently acquired
businesses have lower relative margins but are expected to be
brought in line with the historical Advanced Process Solutions
segment margins over the next few years through the deployment of
the Hillenbrand Operating Model.
Backlog of $1.6 billion increased
31% compared to the prior year primarily due to acquisitions. On an
organic basis, backlog increased 7%, primarily driven by large
plastics systems and aftermarket parts and service. Sequentially,
backlog decreased 4% due to customer delays of orders for large
plastics systems and the execution of existing backlog.
Molding Technology Solutions (MTS)
Revenue of $252 million decreased
7% year over year. On an organic basis, which excludes the impact
of foreign currency exchange, revenue decreased 6% as a decrease in
injection molding and hot runner equipment sales was partially
offset by higher aftermarket parts and service revenue and
favorable pricing.
Adjusted EBITDA of $51 million
decreased 7%, or 5% on an organic basis, as lower volume, cost
inflation, and unfavorable product mix were offset by favorable
pricing, lower variable compensation, productivity improvements,
and cost containment actions. Adjusted EBITDA margin of 20.2% was
flat compared to the prior year.
Backlog of $266 million decreased
37% compared to the prior year primarily due to lower orders for
injection molding equipment and the execution of existing backlog.
Sequentially, backlog decreased 11%.
Balance Sheet, Cash Flow and Capital Allocation
The Company generated operating cash flow from continuing
operations of $89 million, an
increase of $104 million compared to
prior year, primarily due to favorable timing of working capital
and higher earnings. Capital expenditures were approximately
$14 million in the quarter. During
the quarter, the Company paid approximately $15 million in quarterly dividends.
As of June 30, 2023, net debt was
approximately $1.05 billion, and the
net debt to pro forma adjusted EBITDA ratio was 2.3x. Liquidity was
approximately $1.08 billion,
including $291 million in cash on
hand and the remainder available under the Company's revolving
credit facility.
As previously announced, the Company entered into a definitive
agreement to acquire the Schenck Food and Performance Materials
business ("FPM") from Blackstone for an enterprise value of
approximately $730 million. The
transaction is expected to close during Hillenbrand's fiscal fourth
quarter of 2023, subject to customary closing conditions.
Hillenbrand intends to finance the acquisition of FPM using cash on
hand and by drawing on its revolving credit facility and borrowing
under its recently announced €185.0 term loan. Following the
closing of the transaction, Hillenbrand's projected fiscal Q4 net
debt to adjusted EBITDA ratio is expected to be approximately 3.2x,
with a plan to return to its communicated target net leverage range
of 1.7x to 2.7x within 15 months after closing.
Updated Fiscal 2023 Outlook - Continuing Operations
Hillenbrand is narrowing its annual guidance for fiscal year
2023 based on year-to-date performance and its outlook for the
fiscal fourth quarter. Revenue estimates have been lowered modestly
due to ongoing customer order delays within the MTS segment,
particularly in China, and an
increase in customer delays for large plastics projects within the
APS segment. The Company is raising the midpoint of its full year
adjusted EPS range primarily due to lower interest expense and a
more favorable expected tax rate of 29% compared to the previous
estimate of 31%, primarily due to the benefit of a strategic tax
initiative that will take effect in the fiscal fourth quarter.
Revenue Outlook
($M)
|
Updated
Range
|
YOY %
|
Previous
Range
|
Advanced Process
Solutions
|
$1,775 -
$1,800
|
40% - 42%
|
$1,800 -
$1,830
|
Molding Technology
Solutions
|
$1,000 -
$1,010
|
(4%) - (3%)
|
$1,010 -
$1,030
|
Hillenbrand
|
$2,775 -
$2,810
|
20% -
21%
|
$2,810 -
$2,860
|
|
|
|
|
Adj. EBITDA
Outlook
|
Updated
Range
|
YOY bps /
%
|
Previous
Range
|
Advanced Process
Solutions
|
19.2% -
19.3%
|
(50) bps - (40)
bps
|
18.5% -
19.0%
|
Molding Technology
Solutions
|
18.7% -
19.0%
|
(200) bps - (170)
bps
|
19.0% -
20.0%
|
Hillenbrand
|
$468 -
$480
|
17% -
19%
|
$468 -
$499
|
|
Adj. EPS
Outlook
|
Updated
Range
|
YOY %
|
Previous
Range
|
Full
Year
|
$3.40 -
$3.50
|
26% -
29%
|
$3.30 -
$3.50
|
Note: Year-over-Year ("YOY") growth figures presented in
the guidance table above are on a continuing operations basis,
which exclude the discontinued operations of Batesville.
1Batesville
financial results are reported as discontinued operations for all
periods presented
Conference Call Information
Date/Time: Thursday, August 3, 2023, 8:00 a.m. ET
Dial-In for U.S. and Canada:
1-866-682-6100
Dial-In for International: +1-862-298-0702
Conference call ID number: 13740206
Webcast link: http://ir.hillenbrand.com under the News & Events
tab (archived through Thursday, August 31,
2023)
Replay - Conference Call
Date/Time: Available until
midnight ET, Thursday, August 17, 2023
Replay ID number: 13740206
Dial-In for U.S. and Canada:
1-877-660-6853
Dial-In for International: +1-201-612-7415
Hillenbrand's financial statements on Form 10-Q are expected to
be filed jointly with this release and will be made available on
the company's website (https://ir.hillenbrand.com).
In addition to the financial measures prepared in accordance
with United States generally
accepted accounting principles (GAAP), this earnings release also
contains non-GAAP operating performance measures. These non-GAAP
measures are referred to as "adjusted" measures and exclude the
following items:
- business acquisition, disposition, and integration costs;
- restructuring and restructuring-related charges;
- intangible asset amortization;
- inventory step-up charges;
- gains and losses on divestitures;
- other individually immaterial one-time costs;
- the related income tax impact for all of these items; and
- certain tax items related to acquisitions and divestitures, the
revaluation of deferred tax balances resulting from fluctuations in
currency exchange rates and non-routine changes in tax rates for
certain foreign jurisdictions, and the impact that the Molding
Technology Solutions reportable operating segment's loss
carryforward attributes have on tax provisions related to the
imposition of tax on Global Intangible Low-Taxed Income (GILTI)
earned by certain foreign subsidiaries, the Foreign Derived
Intangible Income Deduction (FDII), and the Base Erosion and
Anti-Abuse Tax (BEAT).
Refer to the Reconciliation of Non-GAAP Measures for further
information on these adjustments. Non-GAAP information is
provided as a supplement to, not as a substitute for, or as
superior to, measures of financial performance prepared in
accordance with GAAP.
Hillenbrand uses this non-GAAP information internally to measure
operating segment performance and make operating decisions and
believes it is helpful to investors because it allows more
meaningful period-to-period comparisons of ongoing operating
results. The information can also be used to perform trend analysis
and to better identify operating trends that may otherwise be
masked or distorted by items such as the above excluded items.
Hillenbrand believes this information provides a higher degree of
transparency.
One important non-GAAP measure Hillenbrand uses is adjusted
earnings before interest, income tax, depreciation, and
amortization ("adjusted EBITDA"). A part of our strategy is to
pursue acquisitions that strengthen or establish leadership
positions in key markets. Given that strategy, it is a natural
consequence to incur related expenses, such as amortization from
acquired intangible assets and additional interest expense from
debt-funded acquisitions. Accordingly, we use adjusted EBITDA,
among other measures, to monitor our business performance. We also
use "adjusted net income" and "adjusted diluted earnings per share
(EPS)," which are defined as net income and earnings per share,
respectively, each excluding items described in connection with
adjusted EBITDA. Adjusted EBITDA, adjusted net income, and adjusted
diluted EPS are not recognized terms under GAAP and therefore do
not purport to be alternatives to net income or to diluted EPS, as
applicable. Further, Hillenbrand's measures of adjusted EBITDA,
adjusted net income, and adjusted diluted EPS may not be comparable
to similarly titled measures of other companies.
Organic revenue and organic adjusted EBITDA are defined
respectively as net revenue and adjusted EBITDA excluding net
revenue and adjusted EBITDA directly attributable to TerraSource,
which was divested on October 22,
2021, as well as recent acquisitions, including Linxis,
Herbold Meckesheim, Peerless Food Equipment, and Gabler
Engineering, and adjusting for the effects of foreign currency
exchange. In addition, the ratio of net debt to pro forma adjusted
EBITDA is a key financial measure that is used by management to
assess Hillenbrand's borrowing capacity (and is calculated as the
ratio of total debt less cash and cash equivalents to the trailing
twelve months pro forma adjusted EBITDA). Hillenbrand uses organic
and pro forma measures to assess performance of its reportable
operating segments and the Company in total without the impact of
recent acquisitions and divestitures.
Hillenbrand calculates the foreign currency impact on net
revenue, adjusted EBITDA, and backlog in order to better measure
the comparability of results between periods. We calculate the
foreign currency impact by translating current year results at
prior year foreign exchange rates. This information is provided
because exchange rates can distort the underlying change in sales,
either positively or negatively.
Another important operational measure used is backlog.
Backlog is not a term recognized under GAAP; however, it is a
common measurement used in industries with extended lead times for
order fulfillment (long-term contracts), like those in which our
reportable operating segments compete. Backlog represents the
amount of consolidated net revenue that we expect to realize on
contracts awarded to our reportable operating segments. For
purposes of calculating backlog, 100% of estimated net revenue
attributable to consolidated subsidiaries is included.
Backlog includes expected net revenue from large systems and
equipment, as well as aftermarket parts, components, and service.
The length of time that projects remain in backlog can span from
days for aftermarket parts or service to approximately 18 to 24
months for larger system sales within the Advanced Process
Solutions reportable operating segment. The majority of the
backlog within the Molding Technology Solutions reportable
operating segment is expected to be fulfilled within the next
twelve months. Backlog includes expected net revenue from the
remaining portion of firm orders not yet completed, as well as net
revenue from change orders to the extent that they are reasonably
expected to be realized. We include in backlog the full
contract award, including awards subject to further customer
approvals, which we expect to result in revenue in future periods.
In accordance with industry practice, our contracts may
include provisions for cancellation, termination, or suspension at
the discretion of the customer.
Hillenbrand expects that future net revenue associated with our
reportable operating segments will be influenced by order backlog
because of the lead time involved in fulfilling engineered-to-order
equipment for customers. Although backlog can be an indicator of
future net revenue, it does not include projects and parts orders
that are booked and shipped within the same quarter. The timing of
order placement, size, extent of customization, and customer
delivery dates can create fluctuations in backlog and net revenue.
Net revenue attributable to backlog may also be affected by foreign
exchange fluctuations for orders denominated in currencies other
than U.S. dollars.
See below for a reconciliation from GAAP operating performance
measures to the most directly comparable non-GAAP (adjusted)
performance measures. Given that backlog is an operational
measure and that the Company's methodology for calculating backlog
does not meet the definition of a non-GAAP measure, as that term is
defined by the U.S. Securities and Exchange Commission, a
quantitative reconciliation is not required or provided. In
addition, forward-looking revenue, adjusted EBITDA, and adjusted
earnings per share for fiscal 2023 exclude potential charges or
gains that may be recorded during the fiscal year, including among
other things, items described above in connection with these and
other "adjusted" measures. Hillenbrand thus also does not attempt
to provide reconciliations of such forward-looking non-GAAP
earnings guidance to the comparable GAAP measure, as permitted by
Item 10(e)(1)(i)(B) of Regulation S-K, because the impact and
timing of these potential charges or gains is inherently uncertain
and difficult to predict and is unavailable without unreasonable
efforts. In addition, the Company believes such reconciliations
would imply a degree of precision and certainty that could be
confusing to investors. Such items could have a substantial impact
on GAAP measures of Hillenbrand's financial performance.
Hillenbrand, Inc.
Consolidated
Statements of Operations (Unaudited)
(in millions, except
per share data)
|
|
|
Three Months
Ended
June
30,
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net revenue
|
$
716.6
|
|
$
579.8
|
|
$
2,063.2
|
|
$
1,711.4
|
Cost of goods
sold
|
469.7
|
|
388.8
|
|
1,382.5
|
|
1,149.9
|
Gross
profit
|
246.9
|
|
191.0
|
|
680.7
|
|
561.5
|
Operating
expenses
|
144.8
|
|
111.6
|
|
424.6
|
|
337.1
|
Amortization
expense
|
19.7
|
|
13.4
|
|
58.6
|
|
40.8
|
Loss on
divestiture
|
—
|
|
—
|
|
—
|
|
3.1
|
Interest
expense
|
18.6
|
|
17.5
|
|
63.0
|
|
52.7
|
Other income,
net
|
(4.0)
|
|
(2.5)
|
|
(10.6)
|
|
(9.3)
|
Income from continuing
operations before income taxes
|
67.8
|
|
51.0
|
|
145.1
|
|
137.1
|
Income tax
expense
|
23.8
|
|
19.9
|
|
50.2
|
|
54.4
|
Income from continuing
operations
|
44.0
|
|
31.1
|
|
94.9
|
|
82.7
|
Income from
discontinued operations (net of income tax expense)
|
0.6
|
|
19.0
|
|
20.1
|
|
73.3
|
Gain on divestiture of
discontinued operations (net of income tax expense)
|
0.4
|
|
—
|
|
441.3
|
|
—
|
Total income from
discontinued operations
|
1.0
|
|
19.0
|
|
461.4
|
|
73.3
|
Consolidated net
income
|
45.0
|
|
50.1
|
|
556.3
|
|
156.0
|
Less: Net income
attributable to noncontrolling interests
|
1.7
|
|
1.3
|
|
4.8
|
|
3.9
|
Net income
attributable to Hillenbrand
|
$
43.3
|
|
$
48.8
|
|
$
551.5
|
|
$
152.1
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
|
|
|
|
Income from continuing
operations attributable to Hillenbrand
|
$
0.60
|
|
$
0.42
|
|
$
1.29
|
|
$
1.09
|
Income from
discontinued operations
|
0.02
|
|
0.26
|
|
6.62
|
|
1.01
|
Net income attributable
to Hillenbrand
|
$
0.62
|
|
$
0.68
|
|
$
7.91
|
|
$
2.10
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
Income from continuing
operations attributable to Hillenbrand
|
$
0.60
|
|
$
0.42
|
|
$
1.29
|
|
$
1.08
|
Income from
discontinued operations
|
0.02
|
|
0.26
|
|
6.59
|
|
1.00
|
Net income attributable
to Hillenbrand
|
$
0.62
|
|
$
0.68
|
|
$
7.88
|
|
$
2.08
|
Weighted average shares
outstanding (basic)
|
70.0
|
|
71.4
|
|
69.7
|
|
72.4
|
Weighted average shares
outstanding (diluted)
|
70.3
|
|
72.0
|
|
70.0
|
|
73.0
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
$
0.22
|
|
$ 0.2175
|
|
$
0.66
|
|
$ 0.6525
|
Condensed
Consolidated Statements of Cash Flows
(in
millions)
|
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
Cash flows provided by
(used in):
|
|
|
|
Operating activities
from continuing operations
|
$
133.6
|
|
$
(9.9)
|
Investing activities
from continuing operations
|
25.0
|
|
(40.3)
|
Financing activities
from continuing operations
|
21.4
|
|
(201.3)
|
Total cash (used in)
provided by discontinued operations
|
(117.0)
|
|
96.3
|
Effect of exchange
rates on cash and cash equivalents
|
(9.3)
|
|
(10.2)
|
Net cash
flows
|
53.7
|
|
(165.4)
|
|
|
|
|
Cash, cash
equivalents, restricted cash, and cash and cash equivalents held
for sale:
|
|
|
|
At beginning of
period
|
237.6
|
|
450.9
|
At end of
period
|
$
291.3
|
|
$
285.5
|
Reconciliation of
Non-GAAP Measures
(in millions, except
per share data)
|
|
|
Three Months
Ended
June
30,
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Income from continuing
operations
|
$
44.0
|
|
$
31.1
|
|
$
94.9
|
|
$
82.7
|
Less: Net income
attributable to noncontrolling interests
|
1.7
|
|
1.3
|
|
4.8
|
|
3.9
|
Income from continuing
operations attributable to Hillenbrand
|
42.3
|
|
29.8
|
|
90.1
|
|
78.8
|
Business acquisition,
disposition, and integration costs (1)
|
10.6
|
|
9.1
|
|
28.5
|
|
20.6
|
Restructuring and
restructuring-related charges (2)
|
0.8
|
|
0.2
|
|
2.3
|
|
3.5
|
Inventory step-up
charges (3)
|
—
|
|
—
|
|
11.1
|
|
—
|
Intangible asset
amortization (4)
|
19.7
|
|
13.4
|
|
58.6
|
|
40.8
|
Loss on divestiture
(5)
|
—
|
|
—
|
|
—
|
|
3.1
|
Other
(6)
|
—
|
|
0.1
|
|
—
|
|
3.2
|
Tax adjustments
(7)
|
0.6
|
|
3.0
|
|
2.2
|
|
5.4
|
Tax effect of
adjustments (8)
|
(7.1)
|
|
(5.2)
|
|
(25.7)
|
|
(15.8)
|
Adjusted net income
from continuing operations attributable to Hillenbrand
|
$
66.9
|
|
$
50.4
|
|
$
167.1
|
|
$
139.6
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
0.60
|
|
$
0.42
|
|
$
1.29
|
|
$
1.08
|
Business acquisition,
disposition, and integration costs (1)
|
0.15
|
|
0.12
|
|
0.41
|
|
0.28
|
Restructuring and
restructuring-related charges (2)
|
0.01
|
|
0.01
|
|
0.03
|
|
0.05
|
Inventory step-up
charges (3)
|
—
|
|
—
|
|
0.16
|
|
—
|
Intangible asset
amortization (4)
|
0.28
|
|
0.19
|
|
0.84
|
|
0.56
|
Loss on divestiture
(5)
|
—
|
|
—
|
|
—
|
|
0.04
|
Other
(6)
|
—
|
|
—
|
|
—
|
|
0.04
|
Tax adjustments
(7)
|
0.01
|
|
0.04
|
|
0.03
|
|
0.07
|
Tax effect of
adjustments (8)
|
(0.10)
|
|
(0.08)
|
|
(0.37)
|
|
(0.21)
|
Adjusted Diluted EPS
from continuing operations
|
$
0.95
|
|
$
0.70
|
|
$
2.39
|
|
$
1.91
|
(1)
|
Business acquisition,
disposition, and integration costs during the three and nine months
ended June 30, 2023, primarily included professional fees related
to acquisitions and costs associated with the integration of recent
acquisitions. Business acquisition, disposition, and integration
costs during the three and nine months ended June 30, 2022,
primarily included professional fees and employee-related costs
attributable to the integration of Milacron and the divestiture of
TerraSource.
|
(2)
|
Restructuring and
restructuring-related charges primarily included severance costs
during the three and nine months ended June 30, 2023 and
2022.
|
(3)
|
The amount during the
three and nine months ended June 30, 2023, represents the non-cash
charges related to the fair value adjustment of inventories
acquired in connection with the acquisitions of Herbold, Linxis,
and Peerless.
|
(4)
|
Intangible assets
relate to our acquisition activities and are amortized over their
useful lives. The amortization of acquired intangible assets is
reported separately in our Consolidated Statements of Operations as
amortization expense. The amortization of acquired intangible
assets does not impact the core performance of our business
operations since this amortization does not directly relate to the
sale of our products or services.
|
(5)
|
The amount during the
nine months ended June 30, 2022 represents the loss on the
divestiture of TerraSource.
|
(6)
|
Includes other
individually immaterial one-time costs, including reserves against
certain receivables during the three and nine months ended June 30,
2022.
|
(7)
|
For three and nine
months ended June 30, 2023 and 2022, this primarily represents the
net impact from certain non-recurring tax items, including items
related to acquisitions and divestitures.
|
(8)
|
Represents the tax
effect of the adjustments previously identified above.
|
|
Three Months
Ended
June
30,
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
Advanced Process
Solutions
|
$
93.6
|
|
$
60.6
|
|
$
238.1
|
|
$
180.6
|
Molding Technology
Solutions
|
50.8
|
|
54.5
|
|
141.4
|
|
156.7
|
Corporate
|
(18.3)
|
|
(14.3)
|
|
(43.5)
|
|
(46.7)
|
Add:
|
|
|
|
|
|
|
|
Total income from
discontinued operations
|
1.0
|
|
19.0
|
|
461.4
|
|
73.3
|
Less:
|
|
|
|
|
|
|
|
Interest
income
|
(2.8)
|
|
(1.3)
|
|
(7.1)
|
|
(4.0)
|
Interest
expense
|
18.6
|
|
17.5
|
|
63.0
|
|
52.7
|
Income tax
expense
|
23.8
|
|
19.9
|
|
50.2
|
|
54.4
|
Depreciation and
amortization
|
31.1
|
|
24.2
|
|
93.1
|
|
74.4
|
Business acquisition,
disposition, and integration costs
|
10.6
|
|
9.1
|
|
28.5
|
|
20.6
|
Inventory step-up
charges
|
—
|
|
—
|
|
11.1
|
|
—
|
Restructuring and
restructuring-related charges
|
0.8
|
|
0.2
|
|
2.3
|
|
3.5
|
Loss on
divestiture
|
—
|
|
—
|
|
—
|
|
3.1
|
Other
|
—
|
|
0.1
|
|
—
|
|
3.2
|
Consolidated net
income
|
$
45.0
|
|
$
50.1
|
|
$
556.3
|
|
$
156.0
|
|
Three Months
Ended
June
30,
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Consolidated net
income
|
$
45.0
|
|
$
50.1
|
|
$
556.3
|
|
$
156.0
|
Interest
income
|
(2.8)
|
|
(1.3)
|
|
(7.1)
|
|
(4.0)
|
Interest
expense
|
18.6
|
|
17.5
|
|
63.0
|
|
52.7
|
Income tax
expense
|
23.8
|
|
19.9
|
|
50.2
|
|
54.4
|
Depreciation and
amortization
|
31.1
|
|
24.2
|
|
93.1
|
|
74.4
|
EBITDA
|
115.7
|
|
110.4
|
|
755.5
|
|
333.5
|
Total income from
discontinued operations
|
(1.0)
|
|
(19.0)
|
|
(461.4)
|
|
(73.3)
|
Business acquisition,
disposition, and integration costs
|
10.6
|
|
9.1
|
|
28.5
|
|
20.6
|
Inventory step-up
charges
|
—
|
|
—
|
|
11.1
|
|
—
|
Restructuring and
restructuring-related charges
|
0.8
|
|
0.2
|
|
2.3
|
|
3.5
|
Loss on
divestiture
|
—
|
|
—
|
|
—
|
|
3.1
|
Other
|
—
|
|
0.1
|
|
—
|
|
3.2
|
Adjusted
EBITDA
|
126.1
|
|
100.8
|
|
336.0
|
|
290.6
|
Less: Acquisitions
adjusted EBITDA(1)
|
(19.1)
|
|
—
|
|
(43.9)
|
|
—
|
Foreign currency
impact
|
1.0
|
|
—
|
|
12.0
|
|
—
|
Organic adjusted
EBITDA
|
$
108.0
|
|
$
100.8
|
|
$
304.1
|
|
$
290.6
|
|
|
|
|
|
|
|
|
Advanced Process
Solutions adjusted EBITDA
|
$
93.6
|
|
$
60.6
|
|
$
238.1
|
|
$
180.6
|
Less: Acquisitions
adjusted EBITDA(1)
|
(19.1)
|
|
—
|
|
(43.9)
|
|
—
|
Foreign currency
impact
|
(0.2)
|
|
—
|
|
6.4
|
|
—
|
Advanced Process
Solutions organic adjusted EBITDA
|
$
74.3
|
|
$
60.6
|
|
$
200.6
|
|
$
180.6
|
|
|
|
|
|
|
|
|
Molding Technology
Solutions adjusted EBITDA
|
$
50.8
|
|
$
54.5
|
|
$
141.4
|
|
$
156.7
|
Foreign currency
impact
|
1.2
|
|
—
|
|
5.9
|
|
—
|
Molding Technology
Solutions organic adjusted EBITDA
|
$
52.0
|
|
$
54.5
|
|
$
147.3
|
|
$
156.7
|
(1)
The impact of the acquisitions of Gabler, Herbold, Linxis, and
Peerless.
|
|
Three Months
Ended
June
30,
|
|
Nine Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Advanced Process
Solutions net revenue
|
$
464.7
|
|
$
310.3
|
|
$
1,308.0
|
|
$
942.0
|
Less: TerraSource
Global net revenue(1)
|
—
|
|
—
|
|
—
|
|
(2.4)
|
Less:
Acquisitions(2)
|
(110.5)
|
|
—
|
|
(308.1)
|
|
—
|
Foreign currency
impact
|
(2.3)
|
|
—
|
|
32.1
|
|
—
|
Advanced Process
Solutions organic net revenue
|
351.9
|
|
310.3
|
|
1,032.0
|
|
939.6
|
Molding Technology
Solutions net revenue
|
251.9
|
|
269.5
|
|
755.2
|
|
769.4
|
Foreign currency
impact
|
2.8
|
|
—
|
|
21.1
|
|
—
|
Molding Technology
Solutions organic net revenue
|
254.7
|
|
269.5
|
|
776.3
|
|
769.4
|
Consolidated organic
net revenue
|
$
606.6
|
|
$
579.8
|
|
$
1,808.3
|
|
$
1,709.0
|
(1)
|
The TerraSource
business, which was included within the Advanced Process Solutions
reportable operating segment, was divested on October 22,
2021.
|
(2)
|
The impact of the
acquisitions of Gabler, Herbold, Linxis, and Peerless.
|
|
June
30,
|
|
June
30,
|
|
2023
|
|
2022
|
Advanced Process
Solutions backlog
|
$
1,604.0
|
|
$
1,228.6
|
Less:
Acquisitions(1)
|
(267.2)
|
|
—
|
Foreign currency
impact
|
(26.6)
|
|
—
|
Advanced Process
Solutions organic backlog
|
1,310.2
|
|
1,228.6
|
Molding Technology
Solutions backlog
|
266.4
|
|
420.2
|
Foreign currency
impact
|
0.6
|
|
—
|
Molding Technology
Solutions organic backlog
|
267.0
|
|
420.2
|
Consolidated organic
backlog
|
$
1,577.2
|
|
$
1,648.8
|
(1)
The impact of the acquisitions of Gabler, Herbold, Linxis, and
Peerless.
|
|
June
30,
|
|
2023
|
Current portion of
long-term debt
|
$
10.0
|
Long-term
debt
|
1,329.3
|
Total debt
|
1,339.3
|
Less: Cash and cash
equivalents
|
(290.5)
|
Net debt
|
$
1,048.8
|
|
|
Pro forma adjusted
EBITDA for the trailing twelve months ended
|
$
461.9
|
Ratio of net debt to
pro forma adjusted EBITDA
|
2.3
|
Forward-Looking Statements
Throughout this earnings release, we make a number of
"forward-looking statements," including statements regarding the
proposed acquisition (the "Proposed Transaction") by the Company of
the Schenck Process Food and Performance Materials ("FPM")
business, such as statements about the timing and other anticipated
benefits of the Proposed Transaction that are within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, and that are intended to
be covered by the safe harbor provided under these sections. As the
words imply, these are statements about future sales, earnings,
cash flow, results of operations, uses of cash, financings, ability
to meet deleveraging goals, and other measures of financial
performance or potential future plans or events, strategies,
objectives, beliefs, prospects, assumptions, expectations, and
projected costs or savings or transactions of the Company that
might or might not happen in the future, as contrasted with
historical information. Forward-looking statements are based on
assumptions that we believe are reasonable, but by their very
nature are subject to a wide range of risks. If our assumptions
prove inaccurate or unknown risks and uncertainties materialize,
actual results could vary materially from Hillenbrand's
expectations and projections.
Words that could indicate that we are making forward-looking
statements include the following:
intend
|
believe
|
plan
|
expect
|
may
|
goal
|
would
|
project
|
position
|
become
|
pursue
|
estimate
|
will
|
forecast
|
continue
|
could
|
anticipate
|
remain
|
target
|
encourage
|
promise
|
improve
|
progress
|
potential
|
should
|
impact
|
|
This is not an exhaustive list, but is intended to give you an
idea of how we try to identify forward-looking statements. The
absence of any of these words, however, does not mean that the
statement is not forward-looking.
Here is the key point: Forward-looking
statements are not guarantees of future performance or events, and
actual results or events could differ materially from those set
forth in any forward-looking statements. Any number of factors,
many of which are beyond our control, could cause our performance
to differ significantly from what is described in the
forward-looking statements. These factors include, but are not
limited to: global market and economic conditions, including those
related to the financial markets; the impact of contagious
diseases, such as the outbreak of the novel strain of coronavirus
("COVID-19") and the escalation thereof due to variant strains of
the virus and the societal, governmental, and individual responses
thereto, including supply chain disruptions, loss of contracts
and/or customers, erosion of some customers' credit quality,
downgrades of the Company's credit quality, closure or temporary
interruption of the Company's or its suppliers' manufacturing
facilities, travel, shipping and logistical disruptions, domestic
and international general economic conditions, such as inflation,
exchange rates and interest rates, loss of human capital or
personnel, and general economic calamities; risks related to the
Russian Federation's invasion of
Ukraine and resulting geopolitical
instability and uncertainty, which have had and could continue to
have a negative impact on our ability to sell to, ship products to,
collect payments from, and support customers in certain regions, in
addition to the potential effect of supply chain disruptions that
could adversely affect profitability; the risk of business
disruptions associated with information technology, cyber-attacks,
or catastrophic losses affecting infrastructure; the risk that
regulatory approvals required for the Proposed Transaction delay
the Proposed Transaction or cause the parties to abandon the
Proposed Transaction, or that obtaining any such regulatory
approvals results in the imposition of conditions, limitations, or
restrictions that adversely affect the Company or FPM; the risk
that other conditions to the completion of the Proposed Transaction
are not satisfied on a timely basis or at all; uncertainties as to
the timing of the Proposed Transaction and the risk that the
Proposed Transaction may not be completed in a timely manner or at
all; uncertainties as to the Company's access to available
financing for the Proposed Transaction on a timely basis and on
reasonable terms; the possibility of unanticipated costs or
liabilities associated with the Proposed Transaction; risks related
to diversion of management attention of FPM from its ongoing
business operations due to the Proposed Transaction or its
announcement or pendency; risks associated with contracts
containing consent and/or other provisions that may be triggered by
the Proposed Transaction; the impact of the announcement or
pendency of the Proposed Transaction on the Company's or FPM's
ability to retain and hire key personnel; the risk of litigation
relating to the Proposed Transaction; the possibility that the
integration of FPM with the Company's current operations will be
more costly or difficult than expected or may otherwise be
unsuccessful; negative effects of the Proposed Transaction
(including its announcement or pendency), the Linxis Group SAS
("Linxis") acquisition or other acquisitions on the Company's
business, financial condition, results of operations and financial
performance (including the ability of the Company to maintain
relationships with its customers, suppliers and others with whom it
does business); the possibility that the anticipated benefits from
the Proposed Transaction, the Linxis acquisition and other
acquisitions, including potential synergies and cost savings,
cannot be realized by the Company in full or at all or may take
longer to realize than expected, or the failure of the Company or
any acquired company to achieve its plans and objectives generally;
risks that the integrations of FPM, Linxis or other acquired
businesses disrupt current operations or pose potential
difficulties in employee retention or otherwise adversely affect
financial or operating results; increasing competition for highly
skilled and talented workers as well as labor shortages; our level
of international sales and operations; the impact of incurring
significant amounts of indebtedness and any inability of the
Company to respond to changes in its business or make future
desirable acquisitions; the ability of the Company to comply with
financial or other covenants in debt agreements; cyclical demand
for industrial capital goods; impairment charges to goodwill and
other identifiable intangible assets; competition in the industries
in which we operate, including on price; impacts of decreases in
demand or changes in technological advances, laws, or regulation on
the revenues that we derive from the plastics industry; our
reliance upon employees, agents, and business partners to comply
with laws in many countries and jurisdictions; increased costs,
poor quality, or unavailability of raw materials or certain
outsourced services and supply chain disruptions; the dependence of
our business units on relationships with several large customers
and providers; the impact to the Company's effective tax rate of
changes in the mix of earnings or tax laws and certain other
tax-related matters; exposure to tax uncertainties and audits;
involvement in claims, lawsuits and governmental proceedings
related to operations; uncertainty in the
United States political and regulatory environment or global
trade policy; adverse foreign currency fluctuations; labor
disruptions; and the effect of certain provisions of the Company's
governing documents and Indiana
law that could decrease the trading price of the Company's common
stock. Shareholders, potential investors, and other readers are
urged to consider these risks and uncertainties in evaluating
forward-looking statements and are cautioned not to place undue
reliance on the forward-looking statements. For a more in-depth
discussion of certain factors that could cause actual results to
differ from those contained in forward-looking statements, see the
discussions under the heading "Risk Factors" in Part I, Item 1A of
Hillenbrand's Form 10-K for the year ended September 30, 2022, filed with the Securities and
Exchange Commission ("SEC") on November 16,
2022, and in Part II, Item 1A of Hillenbrand's Form 10-Q for
the quarter ended June 30, 2023, filed with the SEC on
August 2, 2023. The forward-looking information in this
release speaks only as of the date hereof, and we assume no
obligation to update or revise any forward-looking information.
About Hillenbrand
Hillenbrand (NYSE: HI) is a global
industrial company that provides highly-engineered,
mission-critical processing equipment and solutions to customers in
over 100 countries around the world. Our portfolio is composed of
leading industrial brands that serve large, attractive end markets,
including durable plastics, food, and recycling. Guided by our
Purpose — Shape What Matters For Tomorrow™ — we pursue excellence,
collaboration, and innovation to consistently shape solutions that
best serve our associates, customers, communities, and other
stakeholders. To learn more, visit: www.Hillenbrand.com.
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SOURCE Hillenbrand, Inc.