Hillenbrand Reports Fiscal Third Quarter 2024 Results

Revenue of $787 million increased 10% compared to prior year; organic revenue decreased 8%

GAAP EPS of $(3.53) decreased from $0.60 in the prior year primarily due to non-cash impairment charges of $265 million; adjusted EPS of $0.85 decreased 11% compared to prior year

Previously announced restructuring program remains on track to deliver $20 million in annual run-rate savings in FY25; accelerating additional cost actions and synergies across the enterprise

Updated Outlook: FY24 adjusted EPS of $3.20 – $3.30, previously $3.30 – $3.50; Q4 adjusted EPS of $0.90 to $1.00

Hillenbrand, Inc., a leading global provider of highly-engineered processing equipment and solutions, reported results for the fiscal third quarter ended June 30, 2024. As of August 1, 2024, the Schenck Process Food and Performance Materials business has been rebranded under Hillenbrand’s existing Coperion brand but will be referred to as “FPM” throughout this release.

Summary of Third Quarter 2024 Results¹

“We’re pleased with our progress in executing our strategy during the quarter in light of a tougher than expected macro environment. Our FPM integration continued to progress well and exceeded our expectations for margin performance. However, due to the challenging macro environment, we experienced significantly lower than expected orders and revenue in our Advanced Process Solutions segment. This level of performance was primarily due to continued customer project delays, which became more widespread throughout the quarter given ongoing concerns around interest rates, inflation, and broader macroeconomic uncertainty,” said Kim Ryan, President and Chief Executive Officer of Hillenbrand.

“While the demand environment for our key end markets remains more challenged than we expected, we’re confident in our strategy and believe the long-term catalysts for our business remain strongly intact. We remain fully focused on managing discretionary costs and we’re utilizing temporary external resources to accelerate additional cost saving initiatives across the enterprise as we navigate the difficult demand environment over the near to medium term. I’m confident that our portfolio of leading process technologies and highly-engineered solutions is well positioned for success once market conditions improve.”

Third Quarter 2024 Results¹

Revenue of $787 million increased 10% compared to the prior year primarily due to the FPM acquisition. On an organic basis, which excludes the impacts of acquisitions and foreign currency exchange rates, revenue decreased 8%, as pricing and higher aftermarket parts and service revenue were more than offset by lower capital equipment volume.

Net loss of $249 million, or $(3.53) per share, decreased $4.13 compared to the prior year primarily due to $265 million in non-cash impairment charges in the quarter related to the hot runner product line within the Molding Technology Solutions segment. Adjusted net income of $60 million resulted in adjusted EPS of $0.85, a decrease of $0.10, or 11%. The adjusted effective tax rate for the quarter was 28.6%, a decrease of 210 basis points compared to the prior year.

Adjusted EBITDA of $131 million increased 4% year over year. On an organic basis, adjusted EBITDA decreased 14% as lower volume and cost inflation more than offset pricing and favorable product mix. Adjusted EBITDA margin of 16.7% was down 90 basis points.

Advanced Process Solutions (APS)

Revenue of $569 million increased 23% compared to the prior year primarily due to the FPM acquisition. On an organic basis, revenue was down 6%, as pricing and higher aftermarket parts and service revenue were more than offset by lower capital equipment volume.

Adjusted EBITDA of $109 million increased 17% year over year primarily due to the FPM acquisition. Organically, adjusted EBITDA decreased 8%, as lower volume and cost inflation more than offset pricing. Adjusted EBITDA margin of 19.2% decreased 90 basis points largely due to the dilutive effect of FPM. As previously highlighted, FPM has lower margins relative to historical APS segment margins, but is tracking ahead of previously communicated expectations on margin improvement due to accelerated achievement of cost synergies and operational efficiencies.

Backlog of $1.73 billion increased 8% compared to the prior year due to the FPM acquisition. On an organic basis, backlog decreased 8% primarily due to lower capital equipment orders. Sequentially, backlog decreased 8%.

Molding Technology Solutions (MTS)

Revenue of $217 million decreased 14% year over year primarily due to lower volume for injection molding equipment.

Adjusted EBITDA of $35 million decreased 32%, primarily due to lower volume and cost inflation, partially offset by cost actions, including savings from the previously announced restructuring. Adjusted EBITDA margin of 15.9% decreased 430 basis points from the prior year.

Backlog of $238 million decreased 11% compared to the prior year, but was up 4% on a sequential basis.

Balance Sheet, Cash Flow, and Capital Allocation

The Company’s operating cash flow was $46 million in the quarter, down $43 million compared to prior year, primarily due to timing of working capital requirements including lower customer advances on large plastics projects. Capital expenditures were approximately $16 million in the quarter. During the quarter, the Company paid approximately $16 million in quarterly dividends.

As of June 30, 2024, net debt was approximately $1.87 billion, and the net debt to pro forma adjusted EBITDA ratio was 3.5x. Liquidity was approximately $680 million, including $224 million in cash on hand and the remainder available under the Company’s revolving credit facility.

“Debt reduction remains our top priority for capital deployment, though our cash flow continues to be challenged by the weak demand environment. As a result, we expect our deleverage plan to remain under pressure until order patterns normalize,” said Bob VanHimbergen, Chief Financial Officer of Hillenbrand.

Fiscal 2024 Outlook

Hillenbrand is updating its annual guidance range for fiscal year 2024 and is providing a fiscal Q4 outlook for adjusted earnings per share. These changes primarily reflect reduced volumes stemming from lower than expected orders.

For full results 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.