Hillenbrand Reports Fiscal Fourth Quarter and Full Year 2023 Results

Fourth Quarter Continuing Operations Highlights¹:

• Revenue of $763 million increased 26% compared to prior year, including $43 million from Schenck FPM; organic revenue decreased 1%
• GAAP EPS of $0.24 decreased from $0.44 in the prior year; adjusted EPS of $1.13 increased 45%, including a $0.02 net contribution from Schenck FPM
• Adjusted EBITDA margin of 19.3% increased 90 basis points

Fiscal 2023 Continuing Operations Highlights¹ and Fiscal 2024 Guidance:

• Revenue of $2.83 billion increased 22% vs. prior year; organic revenue increased 4%
• GAAP EPS of $1.53 increased 1%; adjusted EPS of $3.52 increased 31%
• Completed transformation to pure-play industrial company through acquisitions of Linxis, Peerless, and Schenck FPM, and the divestiture of secularly declining death care segment
• Fiscal 2024 guidance: Full Year adjusted EPS of $3.60 – $3.95; Q1 adjusted EPS of $0.66 – $0.71

Hillenbrand, Inc. (NYSE: HI), a leading global provider of highly-engineered processing equipment and solutions, reported results for the fourth quarter and full fiscal year, which ended September 30, 2023.

“Fiscal 2023 was a transformational year for Hillenbrand. We executed our strategy to position the portfolio for long-term success as a pure-play, global industrial company and delivered solid performance against the backdrop of a challenging macroeconomic environment, including strong organic growth in our Advanced Process Solutions segment. Through the acquisitions of Linxis, Peerless, and the Schenck Process Food and Performance Materials business, we strengthened our foundation for future growth in the less cyclical food end market, where we can leverage our leading brands and technologies to deliver world-class food processing solutions to our customers,” said Kim Ryan, President and Chief Executive Officer of Hillenbrand.

“As we look to 2024, we are monitoring the ongoing uncertainty within the global economic and geopolitical environment and remain focused on controlling what we can by capitalizing upon growth opportunities, driving productivity, and executing our integration plans to capture synergies from our recent acquisitions. Guided by our Purpose, ‘Shape What Matters for Tomorrow’, we look forward to continuing our growth journey in fiscal 2024 and beyond.”

Fourth Quarter 2023 Results of Continuing Operations¹

Revenue of $763 million increased 26% compared to the prior year, primarily due to acquisitions, including a $43 million contribution from the Schenck Process Food and Performance Materials (FPM) acquisition, which was completed on September 1, 2023. On an organic basis, which excludes the impacts of acquisitions, divestitures, and foreign currency exchange, revenue decreased 1% year over year, as lower volume in the Molding Technology Solutions segment more than offset favorable pricing and higher volume in the Advanced Process Solutions segment.

Net income of $17 million decreased from $31 million in the prior year largely due to an increase in taxes associated with acquisition costs and an increase in business acquisition and integration costs. Adjusted net income of $79 million resulted in adjusted EPS of $1.13, an increase of 45% compared to the prior year, largely due to acquisitions, including a net contribution of approximately $0.02 from FPM. The adjusted effective tax rate for the quarter was 28.4%.

Adjusted EBITDA of $147 million increased 33% year over year, or 3% organically, as favorable pricing, productivity improvements, and lower variable compensation more than offset cost inflation and lower MTS volume. Adjusted EBITDA margin of 19.3% increased 90 basis points.

Advanced Process Solutions (APS)

Revenue of $516 million increased 57% compared to the prior year, primarily due to acquisitions. On an organic basis, revenue increased 7% year over year, primarily due to favorable pricing and higher aftermarket parts and service revenue.

Adjusted EBITDA of $118 million increased 72% year over year, or 23% organically, as favorable pricing, productivity improvements, higher volume, favorable mix, and lower variable compensation were partially offset by cost inflation. Adjusted EBITDA margin of 22.8% increased 190 basis points.

Backlog of $1.9 billion increased 34% compared to the prior year primarily due to acquisitions. On an organic basis, backlog decreased 9% due to lower orders for large plastics systems primarily resulting from the continued delay of customer decision timing for several large projects. Sequentially, backlog increased 16% primarily due to the acquisition of FPM.

Molding Technology Solutions (MTS)

Revenue of $247 million decreased 10% year over year primarily due to a decrease in hot runner and injection molding equipment sales.

Adjusted EBITDA of $46 million decreased 23%, as lower volume, cost inflation, and unfavorable product mix were only partially offset by productivity improvements, lower variable compensation, and favorable pricing. Adjusted EBITDA margin of 18.5% decreased 310 basis points.

Backlog of $233 million decreased 36% compared to the prior year primarily due to the execution of existing backlog and a decrease in orders for injection molding equipment. Sequentially, backlog decreased 12%.

Fiscal Year 2023 Results of Continuing Operations¹

Hillenbrand’s full year revenue of $2.83 billion increased 22% compared to the prior year primarily due to acquisitions. On an organic basis, revenue increased 4% as growth in the Advanced Process Solutions segment of 9% was partially offset by a 2% decline in the Molding Technology Solutions segment.

Net income of $107 million decreased 2% from the prior year. Adjusted net income of $247 million resulted in adjusted EPS of $3.52, an increase of $0.83, or 31%, largely due to acquisitions. The adjusted effective tax rate for the year was 29.5%.

Adjusted EBITDA of $483 million increased 20% year over year, or 4% organically, as favorable pricing, productivity improvements, higher APS volume, and lower variable compensation were partially offset by cost inflation, an increase in strategic investments, and lower MTS volume. Adjusted EBITDA margin of 17.1% decreased 20 basis points primarily due to the dilutive effect of price-cost coverage.

Balance Sheet, Cash Flow and Capital Allocation¹

Hillenbrand generated cash flow from operations of $207 million in the year, an increase of $144 million year-over-year, primarily driven by reductions in inventory and unbilled receivables, and higher earnings, partially offset by unfavorable timing of accounts payable and customer advances, and higher business acquisition and integration costs. During the year, the Company returned approximately $61 million to shareholders in the form of quarterly dividends.

As of September 30, 2023, net debt was $1,767 million, and the net debt to pro forma adjusted EBITDA ratio was 3.2x. Liquidity was approximately $718 million, including $243 million in cash on hand and the remainder available under our revolving credit facility. As previously communicated, the Company intends to continue to prioritize debt reduction with a goal to return to its net leverage target of 1.7x to 2.7x by the end of fiscal Q1 2025.

Fiscal 2024 Outlook

Hillenbrand is providing annual guidance for fiscal year 2024 and quarterly guidance for fiscal Q1 2024. The guidance range reflects the ongoing uncertainty within the global economic and geopolitical environment; it does not assume a broader economic recession.

“Heading into fiscal 2024, we’re excited by the momentum we’re seeing in our recent acquisitions and the outlook for continued organic growth within the APS segment. While we face a challenging macro environment in our MTS segment, we remain laser focused on driving efficiencies and optimizing costs to help offset the top-line headwinds, and we’re confident the MTS segment is well positioned to return to growth and higher levels of profitability once demand recovers. As we navigate this dynamic environment, deleveraging our balance sheet and integrating our recent acquisitions remain our top priorities,” said Bob VanHimbergen, SVP and Chief Financial Officer of Hillenbrand.

Revenue Outlook ($M)	FY 2024 Range	Total YOY	FX	Organic YOY
Advanced Process Solutions	$2,400 – $2,500	32% – 37%	~0%	3% – 8%
Molding Technology Solutions	$880 – $940	(12%) – (6%)	~1%	(13%) – (7%)
Hillenbrand	$3,280 – $3,440	16% – 22%	~1%	(3%) – 3%
Adj. EBITDA Outlook	FY 2024 Range	Total YOY
Advanced Process Solutions	18.0% – 19.0%	(150) – (50) bps	includes dilutive effect of FPM
Molding Technology Solutions	18.5% – 19.5%	(20) – 80 bps
Hillenbrand ($M)	$530 – $588	10% – 22%
Adj. EPS Outlook	FY 2024 Range	Q1 EPS
Hillenbrand	$3.60 – $3.95	$0.66 – $0.71

Note: Total growth figures include impact from Schenck FPM, Linxis Group, and Peerless acquisitions (in APS and Total HI); organic performance is adjusted for acquisitions and the impact of foreign currency exchange

1All financial results are reported on a continuing operations basis, excluding the divested Batesville segment, which is reported as discontinued operations for all periods presented

For the complete press release, click here.

About Hillenbrand

Hillenbrand (NYSE: HI) is a global industrial company operating in over 40 countries with over 10,000 associates serving a wide variety of industries around the world. 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. Hillenbrand’s portfolio includes brands such as Coperion, Milacron Injection Molding & Extrusion, and Mold-Masters, in addition to Batesville. To learn more, visit: www.Hillenbrand.com.

Source: Hillenbrand, Inc.