Latest news with #Milacron
Yahoo
13-05-2025
- Business
- Yahoo
HI Q1 Earnings Call: Tariffs and Order Delays Drive Lower Outlook Amid Portfolio Transformation
Industrial processing equipment and solutions provider Hillenbrand (NYSE:HI) reported Q1 CY2025 results beating Wall Street's revenue expectations , but sales fell by 8.8% year on year to $715.9 million. On the other hand, next quarter's revenue guidance of $576 million was less impressive, coming in 5.4% below analysts' estimates. Its non-GAAP profit of $0.60 per share was 11.5% above analysts' consensus estimates. Is now the time to buy HI? Find out in our full research report (it's free). Revenue: $715.9 million vs analyst estimates of $691 million (8.8% year-on-year decline, 3.6% beat) Adjusted EPS: $0.60 vs analyst estimates of $0.54 (11.5% beat) Adjusted EBITDA: $98.8 million vs analyst estimates of $96.98 million (13.8% margin, 1.9% beat) The company dropped its revenue guidance for the full year to $2.59 billion at the midpoint from $2.71 billion, a 4.4% decrease Management lowered its full-year Adjusted EPS guidance to $2.28 at the midpoint, a 13.3% decrease EBITDA guidance for the full year is $379 million at the midpoint, below analyst estimates of $402.4 million Operating Margin: 8.5%, down from 10.6% in the same quarter last year Free Cash Flow was -$8 million compared to -$32.9 million in the same quarter last year Backlog: $1.65 billion at quarter end Market Capitalization: $1.6 billion Hillenbrand's first quarter results were shaped by persistent macroeconomic uncertainty and the impact of escalating tariffs, which the company identified as the main drivers behind slower order conversion and an 8.8% year-over-year decline in sales. CEO Kimberly Ryan noted that, despite these headwinds, the company delivered revenue and non-GAAP earnings above Wall Street expectations due to disciplined cost control and continued demand in food, health, and nutrition segments. She explained, 'Our teams delivered revenue of $716 million and adjusted earnings per share of $0.60 per share, ahead of our expectations coming into the quarter, but as expected, down versus the prior year due to lower starting backlog position.' Looking ahead, management lowered full-year revenue and profit guidance, citing ongoing delays in customer investment decisions linked to tariff uncertainty and dampened business confidence. Ryan was cautious on the near-term environment, stating, 'This unpredictable environment has resulted in delays in our customers' investment plans, with many taking a wait-and-see approach at this time.' The company expects the challenging conditions to persist into the next several quarters and has incorporated $15 million in direct tariff costs into its updated outlook. Hillenbrand's management attributed the quarter's revenue shortfall and lower operating margins primarily to external pressures from tariffs and a slowdown in customer investments, while highlighting recent portfolio changes and operational actions designed to position the company for long-term growth. Portfolio realignment: The divestiture of a majority stake in the Milacron injection molding and extrusion business marks a strategic shift, refocusing Hillenbrand on core processing technologies serving less cyclical end markets such as food, health, and performance materials. Tariff headwinds: Management emphasized that the rapid escalation of tariffs, particularly between the U.S. and China, led to project delays and caused large multinational customers to pause orders, especially in the company's Advanced Process Solutions (APS) segment and the Molding Technology Solutions (MTS) segment. Stable aftermarket and service demand: Despite broader market weakness, the company reported steady demand for aftermarket parts, services, and refurbishment, which provided a profitable and more predictable revenue base during the quarter, especially as customers prioritized maintenance over new investments. Cost control and footprint consolidation: The company accelerated cost reductions and continued consolidating manufacturing sites to offset inflation and volume declines. CFO Robert VanHimbergen cited ongoing procurement improvements and dual sourcing strategies as key to near-term cost mitigation. Synergy capture and integration progress: Management reported that integration of recent acquisitions within the food, health, and nutrition businesses is ahead of schedule, with cross-functional teams accelerating commercial and operational synergies. This integration was described as a foundation for future growth once the external environment stabilizes. Management's outlook for the remainder of the year centers on persistent uncertainty from tariffs and delayed customer investments, with focus on cost control, portfolio streamlining, and selective growth in resilient end markets. Tariff mitigation tactics: The company's forecast incorporates $15 million in direct tariff costs but expects to partially offset these through alternative sourcing, targeted price surcharges, and contract adjustments, particularly within the APS segment. Order pipeline conversion risk: Management warns that continued delays in large project orders and slow quote-to-order conversion—attributed to macro uncertainty—pose a risk to near-term revenue and backlog, especially for engineered plastics and large equipment. Portfolio simplification and deleveraging: Proceeds from the sale of non-core assets like TerraSource Global are earmarked for debt reduction, which is expected to improve the company's leverage profile and increase flexibility for future investments once demand returns. Matt Summerville (D.A. Davidson): Asked about order trends and how tariffs affected project timing. Management explained that orders remained stable until late in the quarter, when tariff escalation caused several large projects to be postponed, especially in food, health, and nutrition. John Franzreb (Sidoti & Company): Inquired about which cost mitigation levers would have the greatest near-term impact against tariffs. CFO VanHimbergen replied that dual sourcing and targeted price surcharges would provide the fastest relief, particularly in APS. Jeffrey Hammond (KeyBanc Capital Markets): Questioned why Hillenbrand's pricing response to tariffs was more targeted than broader industry price actions. CEO Ryan explained that demand softness and competitive pressures made broad price increases difficult, especially in the MTS segment. Dan Moore (CJS Securities): Requested updates on the aftermarket and service business as a stabilizer in the current environment. VanHimbergen reported that break-fix aftermarket sales held up well, but new equipment-linked parts orders were delayed. Dan Moore (CJS Securities): Also asked about the timing of order recovery needed for revenue growth in 2026. Management indicated orders for large projects must improve by the end of this year to avoid further revenue declines next year. Looking forward, the StockStory team will focus on (1) the pace at which delayed project orders in food, health, and performance materials begin to convert, (2) the effectiveness of Hillenbrand's tariff mitigation strategies and cost-reduction efforts, and (3) the execution and timing of asset sales such as TerraSource Global and the resulting impact on the company's balance sheet. Progress in integrating recent acquisitions and sustaining aftermarket demand will also be key markers of operational resilience. Hillenbrand currently trades at a forward P/E ratio of 8.8×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Yahoo
07-02-2025
- Business
- Yahoo
Q1 2025 Hillenbrand Inc Earnings Call
Sam Mynsberge; VP of Investor Relations; Hillenbrand Inc Kimberly Ryan-Dennis; President, Chief Executive Officer, Director; Hillenbrand Inc Robert VanHimbergen; Chief Financial Officer, Senior Vice President; Hillenbrand Inc Daniel Moore Mitchell Moore Operator Greetings and welcome to the Hillenbrand first quarter and full year 2025 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sam Mynsberge Vice President, Investor Relations. Thank you. You may begin. Sam Mynsberge Thank you, operator and good morning, everyone. Welcome to Hillenbrand's conference call where we will be discussing our fiscal first quarter performance as well as the sale of a majority stake in our Milacron injection molding and extrusion business within the molding technology solutions or MTF segment that we announced in an eight K and our earnings release yesterday afternoon. I'm joined by our President and CEO Kim Ryan and our Senior Vice President and CFO Bob VanHimbergen. I'd like to direct your attention to the supplemental slides posted on our IR website that will be referenced on today's call. Turning to slide 3. Please note that our comments may contain certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance and our actual results could differ materially. Also during the course of this call, our discussion of results will exclude any prior or impact from the discontinued operations of Batesville as well as certain non-GAAP operating performance measures. The Q1 results we'll be discussing today include Milacron on both a consolidated basis and within our MTs segment, Bob will discuss the impact of the transaction our future reported results later in the call, I encourage you to review the appendix and slide 3 of the presentation as well as our 10-Q which can be found on our website for a deeper discussion of non-GAAP information for looking statements and the risk factors that could impact our actual results with that. I'll turn the call over to Kim. Kimberly Ryan-Dennis Thank you, SAM and Good morning, everyone. Thank you for joining us on today's call. Before we jump into the quarterly results. I'd like to provide an update on the portfolio announcement we made yesterday after market close. Following an in-depth portfolio review, we've reached an agreement to sell approximately 51% of our Milacron injection molding and extrusion business to an affiliate of Bain Capital for $287 million, while we retain approximately 49% ownership. This transaction reflects the continuation of Hillenbrand's transformation as we significantly reshaped our portfolio towards being a higher margin, higher growth, less cyclical portfolio of industrial leaders in highly engineered processing equipment and systems. As you know, we began this transformation journey a little over three years ago. And over that time, we divested our secularly declining death care segment and completed several strategic acquisitions that increased our scale in the attractive food health and nutrition and markets. Now, we're representing just shy of 30% of our total revenue mix on a pro forma basis. We are confident this transaction will deliver value to Hillenbrand and its shareholders as well as the Milacron team bank capital has a proven track record of successful corporate partnerships and will provide greater focus and resources to help Milacron drive future growth and success for its associates and customers. The transaction will enable Hillenbrand to maximize shareholder value by concentrating our resources on growing our core business accelerating our commitment to deleverage, enhancing our margin profile and reducing our cyclicality. Additionally, by retaining an ownership stake, we maintain a potential for future returns from the Milacron business which we believe has many opportunities under this new structure, Bob will provide additional details regarding the transaction a bit later in the call. Now touching on our Q1 performance as expected, this quarter was characterized by continuing uncertainty around inflation, interest rates and government policy. Despite these persistent pressures, our performance reflects the hard work and dedication of our associates. I'm proud of their determination and focus as they delivered revenue and adjusted earnings per share in line with our expectations as anticipated overall order volumes were relatively soft, largely driven by lower capital equipment demand related to plastics projects partially offset by strong order performance within our food health and nutrition portfolio. In our advanced process solutions or APS segment, our customer quote pipelines remain robust across the enterprise test lab utilization continued to be high and aftermarket orders in APS reached a new record level. Consolidated revenue in the quarter was $707 million. Down 9% year-over-year and adjusted earnings per share of $0.56 was down 19%. But as mentioned, this was in line with our expectations due to the lower starting backlog coming into the quarter. I'll now provide a little more color on the dynamics we are seeing across our segments starting with polymers and performance materials. In APS we remain a market leader for high quality high output feeding extrusion and material handling solutions used in the production of base resins, engineering, plastics, recycled materials and other specialty chemicals. We strongly believe in the underlying secular trends that support long term demand in these markets. A growing global middle class, increasing focus on efficient and sustainable solutions and the evolving global supply chain as investment in China returns to more normalized levels. After significant wave which benefited us in recent years, future capital investment opportunities remain strong in India and the Middle East. These regions continue to be attractive for growth and our strong geographic footprint with local presence already in place positions us well to capitalize on these opportunities, customer quote pipelines especially in these regions remain healthy. Despite persistent global macro uncertainty, we are closely monitoring the demand environment and have taken prudent cost actions in response to near term volume levels while also ensuring we remain well positioned given our long-term growth outlook. These actions include several facility consolidations which create centers of excellence adding to our flexibility and creating more efficient capacity utilization for the long term in our food health and nutrition or FHN and markets. Within APS we are encouraged by signs of increased demand across all key application areas including baked goods, pet foods, snacks, and cereals, and pharmaceuticals. This growth is supported by broad based geographic strength led by North America. This improving demand environment was exemplified by record orders for our FHN and market in the quarter. I'm tremendously pleased with how our teams have accelerated our integration initiatives as we delivered high teens margins again, this quarter remaining on track to achieve our $30 million run rate cost synergy target by the end of the fiscal year, which is significantly ahead of our initial timeline. Additionally, we are making great strides in cross selling opportunities which we expect to accelerate as market conditions continue to improve and as customers respond positively to the breadth of our highly engineered process technologies, systems engineering capabilities and geographic reach. Finally turning to aftermarket and APS as I mentioned, orders were a record in the quarter, largely driven by the value-added services we provide through our life cycle of our equipment such as large modernization projects. Our FHN Business also continued to build momentum by driving a more proactive approach to aftermarket. As part of our integration efforts, aftermarket revenue in the quarter was negatively impacted by timing due to the large number of modernization projects and the naturally longer duration of these projects which are recognized using percentage of completion accounting. These attractive upgrade projects are an important part of supporting our long-term customer partnerships. Now turning to the MTS segment, I'd highlight that Q1 demand was in line with our expectations reflecting typical seasonality and ongoing market slowness. We continue to see softness in North America particularly in automotive as tariff uncertainty has significantly slowed new investments in that sector. Europe also remains relatively sluggish across most areas but we are observing a trend of improving stability in Asia with solid momentum in India, especially for packaging and consumer goods projects. Looking ahead, we expect the North America and European markets to remain fairly tepid in the near term. As customers wait for more clarity regarding tariffs and inflation. As a reminder, our fiscal Q2 for hot runner product line usually remains relatively consistent with Q1 due to the impact of the Chinese New Year. This is reflected in the Q2 guidance, Bob will cover in a moment. I'll now spend a few moments discussing our perspective on the recent tariff developments. Generally, our production is used to serve demand for the region in which we are producing. In response to COVID. We accelerated our efforts around localization, especially as it relates to China. We have largely mitigated the China tariff impact and continue to identify strategic sourcing opportunities to reduce the direct impact even further while monitoring the dynamic trade policy discussions that remain ongoing for other regions. In summary, our first quarter was in line with our expectations despite ongoing global macroeconomic uncertainty that said I remain extremely confident in our strategy and the long-term catalyst for our business. I'll now turn the call over to Bob to discuss the financials, the transaction, and our outlook in more detail. Robert VanHimbergen Thanks Kim and good morning, everyone. As a reminder, the Q1 results I am discussing today still includes the full performance of Milacron. According to our consolidated performance on slide, five, we delivered revenue of $707 million down 9% compared to the prior year. But in line with expectations, favourable pricing and synergies were more than offset by lower volume and the lower starting backlog entering the year just at EBITDA of $97 million decreased 15% as favourable pricing synergies and the impact of cost actions including the MTS restructuring we completed in fiscal '24 were more than offset by lower volume and cost inflation. We delivered consolidated adjusted EBITDA margin of 13.7%. A decrease of 110 basis points compared to the prior year. Largely due to lower volume. We report a GAAP net income of $6 million or $0.09 per share down from income of $17 million or $0.24 per share in the prior year. Largely due to an increase in business development and integration costs adjusted earnings per share of $0.56 decreased $0.13 or 19% year-over-year and was in line with our expectations. Our adjusted effective tax rate in the quarter was 29.2%. Our cash flow from operations represented a use of $11 million in the quarter which was favourable by $13 million compared to the prior year, primarily due to improved working capital efficiency. As a reminder, Q1 is seasonally a lower relative cash flow quarter for Hillenbrand capital expenditures were $10 million in the quarter and we returned approximately $60 million to shareholders through our quarterly dividend. I'm moving to segment performance starting with APS on slide, six revenue of $511 million decreased 10% compared to the prior year driven by lower volumes. Primarily due to lower starting backlog coming into the quarter. Just an EBITDA of $83 million decreased 14% year-over-year. Although lower volume and cost inflation were headwinds in the quarter, we were able to limit the detrimental impact to approximately 22% versus our standard flow through of roughly 30 to 35% to the benefits of favourable pricing, synergies and productivity. We delivered adjusted even a margin the quarter of 16.2% which was down 70 basis points over the prior year. But in line with expectations, as Kim mentioned, we've recently executed several footprint optimization initiatives. We will continue to evaluate cost actions to help mitigate the near-term market. Uncertainty backlog of $1.6 billion decreased 17% compared to the prior year. Orders were as anticipated in the quarter as customers continued to delay order decisions, uncertainty around interest rates, government policy and inflation remain key factors in driving customer decisions over the near term. We remain confident in our competitive positioning and our ability to drive strong performance. Once order decision timing normalizes, I'll turn you to MTS on slide seven. Revenue of $196 million decreased 5% year- over-year, an adjusted EBITDA of $27 million decreased 15% and adjusted EBITDA margin of 14% decreased 170 basis points due to lower volume cost inflation and ongoing pricing pressure partially offset by the benefit of the restructuring completed last year and other discretionary cost actions. Backlog of $233 million increased 1% compared to the prior year. Orders were aligned with expectations in the quarter, but we do not yet see a broad-based recovery in the near term. However, positive movement in Gardner's mold making index stability in Asia and strength in India do give us cautious optimism. As we look ahead over the medium term as a point of reference, approximately 78% of the Q1 ending backlog is related to the Milacron injection molding and extrusion business. Now turning to slide 8 net debt at the end of the quarter was $1.7 billion and the net debt to adjust the EBITDA ratio was 3.4 times which was in line with our expectations. Debt reduction continues to be our top priority for capital employment and all net proceeds from Milacron sale will be used for this purpose. Based on the estimated close timing, we anticipate leverage will increase modestly in Q2 before dropping into the low threes by the end of the fiscal year before turning to our outlook for Q2 and the remainder of the year, I'll touch on some additional transaction details from last night's announcement. We have entered into a definitive agreement to sell approximately 51% of the Milacron injection molding and extrusion business with an MTS to an affiliate of bank capital for $287 million. Subject to customary closing adjustments. We expect net proceeds after tax to be approximately $250 million to be used for debt pay down reference in fiscal 2024. Milacron crime generated $526 million in revenue and $64 million in adjusted EBITDA. We anticipate this transaction will be completed at the end of our fiscal second quarter or early in our fiscal third quarter. Following the close, our results will include approximately 49% of Milacron's net income which we will report as equity income at corporate. The impact of these changes is reflected in our updated 2025 guidance which I'll now cover on slide 10 based on the expected close timing, our fiscal year guidance now reflects approximately six months of Milacron performance and we have removed their expected performance from the second half of the fiscal year. Which translates to an adjustment of approximately $300 million in revenue and $41 million in adjusted EBITDA which is not of a proportionate share of their net income. We expect to recognize filing the transactions close on the adjusted EPS line. This impact is partially offset by the expected reduction in interest expense. You can see the reconciliation of these impacts on slide 10. Now turning to slide 11, I'll cover updated guidance in more detail. After adjusting for the Milacron transaction, our full year outlook for hill and brand assumes revenue of approximately $2.63 to $2.8 billion adjusted EBITDA of $411 to $447 million and adjusted earnings per share of $2.45 to $2.80. Our updated full year operating cash flow is expected to be approximately $150 million with approximately $45 million of expected CapEx. We do not anticipate a material change in our effective tax rate as a result of the transaction. In summary, outside of the impact of the Milacron transaction, we are maintaining our previous outlook for the remaining businesses. This is based on our original assumption for foreign currency exchange rates which assumed rates would be in line with the fiscal 2024 exit. However, the recent strengthening of the US dollar against other world currencies could become a more significant translation headwind to our as reported results if this persists. Additionally, we are monitoring the potential impact of tariff policy. But given the fluid nature of the current environment, we have not included a material impact or outlook related to the potential tariffs in Canada or Mexico. Given these factors along with the potential effect of geopolitical uncertainty on customer order timing, we will continue to be focused on managing our discretionary costs and identifying additional mitigating actions as needed. Finally, for Q2, we expect consistent performance with Q1 targeting revenue of $685 million to $705 million and adjusted earnings per share in the range of $0.53 to $0.58 on a sequential basis. This reflects modestly improved operational performance, mostly offset by unfavourable effects. Please review slide 11 for additional guidance assumptions with that. I'll turn the call back over to Kim. Kimberly Ryan-Dennis Thanks Bob. Before we open the line for Q&A, I'll end our prepared remarks with a few closing comments. Our strategy remains intact, and the competitive strength of our leading brands combined with the enhanced focus on our core business will enable us to return to a solid growth trajectory. Once current macro pressures are resolved, we remain confident in the team's ability to execute on our strategic initiatives, diligently manage costs and navigate the current market conditions to position Hillenbrand for long term success with that operator. Please open the line for questions. Operator Thank you. (Operator Instructions) Our first question is from Daniel Moore with CJS securities. Please proceed. Daniel Moore Tim Bob. Good morning. Thanks for taking questions. Start with fundamentals and then and then get into the, I'm sure it would be more questions on the transaction. But starting with APS you know, the large Polyol and projects and business. It, you think you said, customer quote lines remain healthy. What are you hearing from customers in terms of what they need to see in order to move from quoting to, to placing orders, the interest rate, clarity, administrative, geopolitical, we get them off the sideline and placing orders again. Kimberly Ryan-Dennis Yeah, I think, II think the geopolitical stuff has got, certainly got everyone's attention right now as we had indicated in our last quarterly call, Dan. I think people want to make sure that they understand before they're making major investments in certain areas, exactly what the financial implications of that are going to be. So the pipelines remain strong, especially in areas like and Saudi Arabia, in fact, those have continued to stay strong and improve and, and we've continued our conversations there. But I do think people are waiting for a little bit of this turmoil to level out. And so those are, those are a few of the things that we're hearing. I think relatives in the Polyolefin project, the larger the project kind of the less specifically it's tied to interest rates, the more mid-size the project. That's, what's really more tied to interest rates. And then, and obviously, inflation is a concern and how tariffs may impact the cost of these projects and the payback period. Those are the things that people are kind of watching. Daniel Moore Understood, really helpful aftermarket, encouraging. You know, as expected kind of countercyclical reached a new record. What was it as a percentage of revenue and what's the outlook for the next few quarters? I'm sorry, then that was an after-market question. Yeah, after market, I believe you said reached a new record just trying to get, percentage of revenue and then, and then what the outlook? Robert VanHimbergen Yeah, great. Yeah, so orders so orders were strong as we mentioned, they were close to like almost 40% of, of total. I'd say orders for the quarter revenue for the for the year. So high 30s is the way I would think about that right now, Dan, I would mention that we did have a mix toward those modernization projects that, that Kim highlighted. And so those are projects that are like mid-term, mid-size refurbishment projects that will be generated, the revenue will be generated over, 7 months to 10 months. So, revenue come over that period on a on a prorated basis, but those could be lucky as well. And timing of those orders revenue again coming forward in the next 7 months to 10 months on that, I'd say for the full year. And you know, I think we're probably, we're, we always targeted that 30%. We've been a little bit north of that here in the quarter and probably the rest of the year, just as we see, improvement in the aftermarket profile, but also as those capital projects. And obviously, we're down a little bit this year with the lower starting backlog. Kimberly Ryan-Dennis And so that's a positive on the APS kind of the legacy C side. We also continue to see you know, good activity in terms of aftermarket. You remember that was a key part of our value proposition when we acquired the all the assets that roll up under FHN that, that moniker today. You know, a lot of the opportunity that we saw was around aftermarket. So they have, they've got their organization together, they've begun more proactive sewing in that arena and are, are really putting in some of the standard kind of operating model practices. Those have really begun to bear some fruit in the FHN part of the business as well. And even our Mold Masters business has really been much more proactive about making sure that any service on their assets out in the field is going to be performed by us as the OEM. And so, you know, a lot of good things going on in the aftermarket arena, in all of us, in all of the businesses, I would say. Daniel Moore I assume that's part of your ability to manage the decremental as you know, the higher mix of higher margin your term? Okay. And, and one more and then I'll jump back in queue, and we'll circle back to the, to the transaction. But that FHM business, obviously, long term tailwinds are pretty clear. Sounds like the kind of current pause or is it starting to, to thaw and you're starting to see more opportunity there maybe just kind of give more color what you're hearing by geography or end market. Kimberly Ryan-Dennis Yeah, we are encouraged at the things that we're seeing in our food and Pharma areas. Specifically North America was very strong this quarter and we saw it in several of the markets, food in the snacking, confectionary, baked goods, pet food. So, we saw a lot of strength in those markets in the quarter and we expect that we will continue to see that for the year. So we are very encouraged by that. I think that the exciting part about that is that we are also starting to do more cross selling across those product portfolios. You know, they operated pretty independently in the in the environment that they came from, especially the Lexus assets. And as they come together with that kind of coherent mindset around happy to sell individual pieces of equipment, but also more than happy to be a consultant, adviser on subsystem and full systems so that we can offer the full breadth of our capabilities to our customers. And that has been, I think that is being well received in the market. So led by North America at this point, which is not surprising because that's where our largest footprint is. But, but at any rate, we're quite encouraged and see a lot of good things coming from those that team who really in earnest started there, really brought together their entire organization under their new management structure and all of that was completed October 1 and so very, very excited about the opportunities that they're going to have in front of them. Daniel Moore Great. I'll jump back with it if you follow up. Thank you. Kimberly Ryan-Dennis Great. Thanks Dan. Operator (Operator Instructions). Our next question is from Mitchell Moore with Key Bank Capital Markets, please proceed. Mitchell Moore Hey guys, good morning. That's I was just wondering if you could maybe talk about what drove the decision to sell a majority stake in Milacron rather than a full divestiture and what that process looked like internally and then just how you view the strategic fit for the remaining MTS assets. Kimberly Ryan-Dennis Yes. So we discussed several times how we do a very regular review of all of the assets and in our portfolio to determine, kind of on three vectors value to us, value to others and ability in the market to and attractiveness of the market to, look at these assets and bring the greatest return for shareholders. And so we determined it was it was an appropriate time to evaluate what types of opportunities there were for that. In the end, we determined that this was the best, all the best way for us to create return and future opportunity for our shareholders and the best opportunity for Milacron to have some differential investments and growth for their future. So we believe this structure and this partnership is, a great match for Milacron company for Hillenbrand and for the and for bank capital. So this is you know, something that we're excited about and I think our associates are excited about and it gives us the opportunity then to focus all of our energy on continuing to, to focus on these, core businesses that we remain, continue to focus on debt pay down. And, that we believe is, going to create the greatest return for shareholders. We still see opportunities, we like the Milacron business. It was certainly one of the more cyclical businesses in the portfolio. And so that is that was one of the more strategic reasons that we, investigated the alternative. We believe that there is, we like the businesses we have in the portfolio, we believe there is a lot of opportunity in them to continue to go forward and, and we, but obviously, we continue to evaluate all the businesses all the time to make sure that we are the, best donors in creating the best outcome for our shareholders. Mitchell Moore Great. That's super helpful. And then just maybe in a normal operating environment, could you flush out what MTS looks like now from a growth margin perspective? And maybe with the proceeds of the sale, could you provide an update as to when you expect to be back within leverage guardrails? Robert VanHimbergen Yeah, sure. So I'll take the first one and then I'll cover the second one. Mitch. Yeah. So, the proceeds of the sale, we expect this transaction to close, I'd say at the end of March or early April and, and that'll help us deliver by approximately 0.2 turns. And so what that gets us to at the end of the year is in the, in the low freeze. So we won't be within our guard rails of 17 to 27, this fiscal year, but I'd highlight that debt pay down still is our number one priority for capital allocation. And then on the, on your first question related to the MTS segment. So, keep in mind that, this business has been depressed with volumes and pricing pressure, the last, you know, almost two years now. And, and so we see once this gets back to, I'd say normalcy, that the margin of this business should be in the mid-20s, and maybe a little bit north of that as far as margins. And, that generally speaking, this business is a short cycle business. And historically, it does when it recovers, it recovers back pretty quickly. But I would think of this business over the medium to long term as a low single digit growth business and margins and that again, that mid to mid to high 20s. Mitchell Moore Okay, great. I'll hop back in Keep it. Thanks. Thank you. Operator Our next question is a follow up from Daniel Moore with CJS Securities. Please proceed. Daniel Moore Yes. Thank you very much. Following up on the transaction. Just getting into the weeds a little bit. How do we think about, maybe that the transaction multiple and you know, with the capital structure of the new entity just to get a, get a sense there. And you know, what's the end game, do you expect to sell the remaining 49% at some stage or, and I think you answered, if there's remaining assets that you consider noncore, a lot of questions there, but I guess focus on the Milacron transaction first. Yeah, maybe I'll start with, I'll start with a little bit of math. Robert VanHimbergen Yeah. So, the multiple then, when you look at the face of what it would look like you're going to get like something like a nine multiple, but the capital structure of the deal isn't quite as clear. And so I would assume it's like in the 6 to 7 range of the multiple that we on that. And so the accounting for that, keep in mind we're going to get, $285 million give or take (202 102 $150 )million net of tax, you know, up on the sale and then we'll retain that 49% ownership in that business and then we'll record equity income on that, which will be our 49% of their net income moving forward. And so in our guidance, we've got about $4 million of earnings in the second half of the year associated with the, with that transaction. So hopefully that gives you a little bit of clarity on that. Kimberly Ryan-Dennis In terms of the, yeah in terms of the long term, Dan, I would II think, really, we see a lot of opportunity for them to you know, to continue to explore investment opportunities for growth. And so I think that a lot of that end game obviously depends on, how those strategies set out, you know, paying capital. You know, I don't want to speak for them there. They will be operating the company, and they will be determining the outcome, we will be a minority interest holder in that. So I think would be, I don't think it would be appropriate for me to speculate on what their time frames are, how they, how they plan to move forward with that. But we believe that based on the opportunities and investments that we expect that they will, pursue in that business that, that it will create. We felt that that would definitely have the opportunity to create the greatest outcome for our shareholders over the long term. Daniel Moore Understood, makes sense and very consistent with, the strategy you've laid out just Bob to clarify that $4 million is the equity income. It's kind of net of equity income and any TSA payments. Is that the right way to think about it? Robert VanHimbergen Yeah, so that, that's right. So that equity income will be reported at corporate and then as far as TSA ban on corporate costs, so our corporate costs would be pretty consistent with what we've laid out, the original guy that we gave beginning of the year. And so we'll have obviously a period of time where we'll be supporting, that that business with corporate cost and, and obviously charging transaction services to that entity. And so we've been focused in the last, the last probably six months, as you know, as you can see from our corporate costs, we've been really managing that knowing that this is, that was a potential. And, and so I think the way I think about it is our corporate costs be pretty consistent here with what we've got at the beginning of the year because we will be in curing those costs and then charging those out to support that Milacron business. Daniel Moore Okay. And then similar to the Milacron question, pro forma, let's go 18 months market normalizes a little bit. How do you think about kind of the overall, EBITDA margin and you know, maybe free cash flow conversion capabilities of the assets that we have in place. You know, post the divestiture. Robert VanHimbergen Yeah. So if you're thinking 18 months down the road, Dan, I still think, obviously, if there's a normalcy in recovery in the hot runner business, I think again, that's going to be in the mid to high 20s margins growing at, low single digits on the top line and then, EPS we continue to improve margins there. We can see that F PM business get to historical margins. And so once again that this quarter, they perform extremely well in that high teams margin. So I think, we'll probably be called high teams, be low 20s and that EPS. And then in the MTS segment will be in that mid 20s and, maybe 18 plus months in that, that high 20s. Daniel Moore And that free cash flow conversion. Robert VanHimbergen Oh, I'm sorry. Yeah. You know, our target is still 100% of, of conversion. And so you think we're 18 months out? I think we'll be a lot closer to that number considering, a lot of the integration stuff behind us. So, I kind of think about it that way then. Daniel Moore Okay, that's it for me. Thank you. Operator Thank you with no further questions in the queue. I would like to hand it back over to Kim for closing remarks. Kimberly Ryan-Dennis Thanks again for joining us, everyone one. The first Quarter call we appreciate your ownership. And interest in Hillenbrand and we look forward to talking to you again late April when we will cover our second quarter results. Thank you and have a great rest of your day. Operator Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
Associated Press
05-02-2025
- Business
- Associated Press
Bain Capital Announces Majority Investment in Milacron, a Leading Global Provider of Highly Engineered Plastic Processing Solutions
BOSTON & BATESVILLE, Ind.--(BUSINESS WIRE)--Feb 5, 2025-- Bain Capital, a leading private investment firm, today announced a majority investment in the Milacron Injection Molding and Extrusion business (or the 'Company'), a globally renowned provider of highly engineered plastic processing equipment and services. Bain Capital will partner with Milacron's current owner, Hillenbrand, Inc. (NYSE: HI), who will remain a significant investor in the business to accelerate the Company's continued growth. Bain Capital entered into a definitive agreement to purchase an ownership stake of approximately 51% of Milacron for $287 million, subject to customary closing adjustments. Hillenbrand will retain an ownership stake of approximately 49%. This press release features multimedia. View the full release here: Since 1968, Milacron has been a global provider of highly engineered plastic processing solutions including injection molding and extrusion equipment as well as aftermarket parts and services. Milacron has long been recognized as a market leader for its product and service expertise serving a variety of end-markets, including the construction, automotive, packaging, consumer goods, and medical industries. With the largest installed base of equipment in the U.S., Milacron serves as a complete lifecycle partner, leveraging its extensive support network to deliver comprehensive aftermarket parts and services solutions. 'Milacron is an iconic American manufacturing business with a 50-year legacy of driving innovation in plastics,' said Matt Evans, a Partner at Bain Capital Special Situations. 'With manufacturers increasingly focused on supply-chain resilience and domestic production, we believe the U.S. is entering a manufacturing renaissance that will create significant opportunities for industry leaders like Milacron. With its advanced engineering capabilities, global reach, and deep customer relationships, Milacron is well-positioned to build on its strong foundation.' 'We are excited to partner with Mac Jones, the President of Milacron, and the entire Milacron team to support the next chapter of growth of one of the world's premier plastics processing solutions businesses,' added Chris Sun, a Principal at Bain Capital Special Situations. 'Milacron combines industry-leading engineering and manufacturing capabilities with innovative technology to enable the production of essential products used daily in the U.S. and around the world. We share a common vision with Milacron's associates, customers, and other partners to continue building on Milacron's more than 50-year legacy to create an even stronger future ahead.' 'Following an in-depth portfolio review, we determined that Milacron would be best positioned for the future through this partnership with Bain Capital,' said Kim Ryan, Hillenbrand President & CEO. 'Bain Capital has a proven track record of successful corporate partnerships and will provide greater resources to Milacron, which we believe will drive future growth and success for Milacron's associates and customers, as well as for Hillenbrand's shareholders.' Bain Capital's Special Situations team is making this investment following the successful close of its second vintage of funds, which raised over $9 billion. Bain Capital Special Situations has $22 billion in assets under management and has invested more than $16 billion since inception in 2018, providing bespoke capital solutions to meet the diverse needs of companies, entrepreneurs and asset owners. With a long track record of supporting industrial and manufacturing businesses globally, the team brings deep expertise in driving operational growth and long-term value creation. The transaction is expected to close at the end of the Company's fiscal second quarter or beginning of the fiscal third quarter. Deutsche Bank is serving as exclusive financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor to Bain Capital. About Bain Capital Founded in 1984, Bain Capital is one of the world's leading private investment firms. We are committed to creating lasting impact for our investors, teams, businesses, and the communities in which we live. As a private partnership, we lead with conviction and a culture of collaboration, advantages that enable us to innovate investment approaches, unlock opportunities, and create exceptional outcomes. Our global platform invests across five focus areas: Private Equity, Growth & Venture, Capital Solutions, Credit & Capital Markets, and Real Assets. In these focus areas, we bring deep sector expertise and wide-ranging capabilities. We have 24 offices on four continents, more than 1,850 employees, and approximately $185 billion in assets under management. To learn more, visit Follow @BainCapital on LinkedIn and X (Twitter). 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. Its portfolio is composed of leading industrial brands that serve large, attractive end markets, including durable plastics, food, and recycling. The Company pursues excellence, collaboration, and innovation to consistently shape solutions that best serve our associates, customers, communities, and other stakeholders. Forward Looking Statements This press release contains forward-looking statements, including statements that are within the meaning of the Private Securities Litigation Reform Act of 1995 that are intended to be covered by the safe harbor provided thereunder, which reflect the current views of Bain Capital and Hillenbrand regarding future events, expectations, plans, and prospects for Milacron following the announced transaction. These statements are based on assumptions and involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. Forward-looking statements include, but are not limited to, statements regarding: the expected benefits of the transaction; Milacron's future growth, market position, and business strategy; anticipated industry trends, including implications with respect to growing supply chain resilience and domestic manufacturing; and the expected timing of the transaction closing. Any number of factors, many of which are beyond Hillenbrand and Bain Capital's control, could cause Hillenbrand and Bain Capital's performance to differ significantly from what is described in the forward-looking statements. These factors include, but are not limited to: the ability to recognize the benefits of any acquisition or divestiture, including the Milacron injection molding and extrusion business sale (the 'Proposed Transaction'), including potential synergies and cost savings or the failure of Hillenbrand and Bain Capital or any acquired company, or the Proposed Transaction, to achieve its plans and objectives generally; any failure by the parties to satisfy any conditions to the Proposed Transaction; the possibility that the Proposed Transaction is ultimately not consummated; potential adverse effects of the announcement or results of the Proposed Transaction on the market price of the Hillenbrand's common stock; and risks related to diversion of management's attention from Hillenbrand's ongoing business operations due to the Proposed Transaction. There can be no assurances that the Proposed Transaction will be consummated. 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 in Hillenbrand's filings with the U.S. Securities and Exchange Commission. The forward-looking information in this release speaks only as of the date on which it is made. Hillenbrand and Bain Capital undertake no obligation to publicly update or revise any forward-looking statement, whether written or oral, made to reflect new information, future developments or otherwise. For Bain Capital: Charlyn Lusk / Scott Lessne [email protected] / [email protected] (646) 502-3549 / (646) 502-3569 Corporate Communications for Hillenbrand: Gladstone Place Partners Lauren Odell / Danielle Fornabaio Phone: 212-230-5930 Email: [email protected] SOURCE: Bain Capital Copyright Business Wire 2025. PUB: 02/05/2025 04:23 PM/DISC: 02/05/2025 04:23 PM
Associated Press
05-02-2025
- Business
- Associated Press
Hillenbrand Reports Fiscal First Quarter 2025 Results and Announces Sale of Majority Stake in Milacron Injection Molding and Extrusion Business
Updates Full Year Guidance to Reflect Transaction; Maintains Outlook for Remaining Businesses BATESVILLE, Ind., Feb. 5, 2025 /PRNewswire/ -- Hillenbrand, Inc. (NYSE: HI), a leading global provider of highly-engineered processing equipment and solutions, reported results for the fiscal first quarter, which ended December 31, 2024, and announced the majority sale of its Milacron injection molding and extrusion business, within the Molding Technology Solutions (MTS) segment, to an affiliate of Bain Capital. Reported results for the fiscal first quarter include Milacron in both the consolidated and MTS results. Hillenbrand's annual guidance has been updated to reflect the impact of the transaction. Revenue of $707 million decreased 9% compared to prior year, in line with Company expectations GAAP EPS of $0.09 decreased from $0.24 in the prior year; adjusted EPS of $0.56 decreased 19% compared to prior year, in line with Company expectations Portfolio Transformation: The Company has entered into a definitive agreement to sell a majority stake in its Milacron injection molding and extrusion business for $287 million; expected net proceeds after tax of approximately $250 million to be used for debt paydown Transaction represents continued execution of Hillenbrand's transformation by enhancing overall margin profile and focusing portfolio on less cyclical, higher growth opportunities Fiscal 2025 Outlook: Updating guidance for Milacron transaction but maintaining previous outlook for remaining businesses with adjusted EPS of $2.45 - $2.80; Q2 adjusted EPS of $0.53 to $0.58 'We delivered first quarter results in line with our expectations, with continued momentum in executing cross-selling and cost synergies within our food, health, and nutrition portfolio. Our teams remained focused on advancing our integration initiatives and managing discretionary costs, as total order volumes remained soft, which we had anticipated. Our customer quote pipelines remain healthy, reinforcing our confidence in our long-term strategy. Despite the challenging macro environment, we believe our strong competitive positioning will enable us to deliver significant value to our customers as end markets recover, driving profitable growth across our business.' 'The agreement to divest a majority stake in the Milacron business reflects the continuation of Hillenbrand's transformation as we've significantly reshaped our portfolio toward less cyclical, higher-growth opportunities. Over the last few years, we have exited our secularly declining death care segment and pursued several strategic acquisitions, building scale in the attractive food, health, and nutrition end markets, which now comprise just under 30% of our total revenue mix on a pro forma basis. We believe this transaction not only delivers value for Hillenbrand and our shareholders, but also Milacron and its customers, as they have a strong partner in Bain Capital to help drive their next phase of growth,' said Kim Ryan, President and Chief Executive Officer of Hillenbrand. Summary of First Quarter 2025 Results1 Net revenue of $707 million decreased 9% compared to the prior year primarily due to lower volume, partially offset by favorable pricing. Net income of $6 million, or $0.09 per share, decreased from $0.24 per share in the prior year primarily due to an increase in business acquisition and integration costs, lower volume, and cost inflation, partially offset by productivity, favorable pricing, synergies, and the impact of cost actions, including the MTS restructuring completed in the prior year. Adjusted net income of $40 million resulted in adjusted EPS of $0.56, a decrease of $0.13, or 19%, and adjusted EBITDA of $97 million decreased 15% compared to the prior year primarily due to lower volume and cost inflation, partially offset by productivity, favorable pricing, synergies, and the impact of the MTS restructuring actions completed in the prior year. The adjusted effective tax rate for the quarter was 29.2%, an increase of 60 basis points compared to the prior year. Total backlog of $1.82 billion decreased 15% compared to the prior year primarily driven by lower order intake in the Advanced Process Solutions segment, while MTS backlog increased 1%. Advanced Process Solutions (APS) Net revenue of $511 million decreased 10% compared to the prior year primarily due to lower volume, partially offset by favorable pricing. Adjusted EBITDA of $83 million decreased 14% due to lower volume and cost inflation, partially offset by favorable pricing, productivity, and cost synergies. Adjusted EBITDA margin of 16.2% decreased 70 basis points. Backlog of $1.58 billion decreased 17% compared to the prior year primarily due to lower order intake. Molding Technology Solutions (MTS) Net revenue of $196 million was down 5% year over year primarily driven by lower volume. Adjusted EBITDA of $27 million decreased 15%, primarily due to lower volume, cost inflation, and price pressure, partially offset by cost actions, including savings from the restructuring program completed in the prior year. Adjusted EBITDA margin of 14.0% decreased 170 basis points from the prior year. Backlog of $233 million increased 1% compared to the prior year. Balance Sheet, Cash Flow and Capital Allocation1 Hillenbrand's cash flow from operations represented a use of $11 million in the quarter, an improvement of $13 million year-over-year, primarily driven by working capital improvements, partially offset by lower earnings. During the quarter, the Company had capital expenditures of approximately $10 million and returned approximately $16 million to shareholders in the form of quarterly dividends. As of December 31, 2024, net debt was $1.7 billion, and the net debt to adjusted EBITDA ratio was 3.4x, which was in line with Company expectations. Liquidity was approximately $632 million, including $208 million in cash on hand and the remainder available under our revolving credit facility. Milacron Transaction On February 5, 2025, the Company entered into a definitive agreement to sell an ownership stake of approximately 51% in its Milacron injection molding and extrusion business to an affiliate of Bain Capital for $287 million, subject to customary closing adjustments. The Company will retain an ownership stake of approximately 49%. This transaction reflects the continued execution of Hillenbrand's portfolio transformation and profitable growth strategy. The net proceeds after tax are expected to be approximately $250 million and will be used for debt paydown. The transaction is expected to be completed at the end of Hillenbrand's fiscal second quarter or beginning of the fiscal third quarter, subject to customary closing conditions. Following the close of the transaction, Hillenbrand's consolidated results will include a proportionate share of Milacron's net income (or loss) as equity income at corporate. In fiscal year 2024, Milacron generated $526 million in revenue and $64 million in adjusted EBITDA. Fiscal 2025 Outlook Hillenbrand is updating its annual guidance range to reflect the majority sale of the Milacron business. This change includes the removal of Milacron's consolidated results from the second half of the fiscal year, partially offset by reduced interest expense and the expected income generated from the ownership stake following the transaction's close. The Company is maintaining its previous range for the remaining businesses based on its original assumption for foreign currency exchange rates. The Company is actively monitoring the potential impacts of tariff policy and the effects of foreign currency exchange rate fluctuations that may extend beyond its original assumptions for the year. The outlook does not assume a material impact from these factors. Additionally, the outlook does not assume a broad-based recession. *Net of expected benefit from reduced interest expense and portion of Milacron equity income after closing Updated Guidance $ millions, except EPS Total Hillenbrand Advanced Process Solutions Molding Technology Solutions Revenue $2,625 - $2,790 $2,050 - $2,175 $575 - $615 YoY (18)% - (12)% (10)% - (5)% (36)% - (31)% Adj. EBITDA $ / Margin % $411 - $447 18.0% - 18.5% 17.0% - 18.0% YoY (20)% - (13)% (50) - 0 bps 110 - 210 bps Adj. EPS $2.45 - $2.80 YoY (26)% - (16)% Free Cash Flow ~$105 Q2 Revenue $685 - 705 Q2 Adj. EPS $0.53 - $0.58 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. 2These are non-GAAP financial measures, which are unaudited. See the reconciliations of Non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release. Conference Call Information Date/Time: Thursday, February 6, 2025, 8:00 a.m. ET Dial-In for U.S. and Canada: 1-877-407-8012 Dial-In for International: +1-412-902-1013 Conference call ID number: 13751135 Webcast link: under the News & Events tab (archived through Thursday, March 6, 2025) Replay - Conference Call Date/Time: Available until midnight ET, Thursday, February 20, 2025 Replay ID number: 13751135 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 ( 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 financial measures are referred to as 'adjusted' measures and generally exclude the following items: business acquisition, divestiture, and integration costs; restructuring and restructuring-related charges; intangible asset amortization; pension settlement (gain) charge; inventory step-up costs; other individually immaterial one-time costs; the related income tax impact for all of these items; and the revaluation of deferred tax balances resulting from fluctuations in currency exchange rates and non-routine changes in tax rates for certain foreign jurisdictions. 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 financial measure Hillenbrand uses is adjusted earnings before interest, income tax, depreciation, and amortization ('adjusted EBITDA'). A part of Hillenbrand's strategy is to selectively acquire companies that we believe can benefit from the Hillenbrand Operating Model ('HOM') to spur faster and more profitable growth. 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. 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 financial 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 2025 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 December 31, 2024 2023 Net revenue $ 706.9 $ 773.3 Cost of goods sold 471.9 522.3 Gross profit 235.0 251.0 Operating expenses 171.1 157.9 Amortization expense 25.2 25.5 Pension settlement (gain) charge (1.7) 8.3 Interest expense, net 25.1 29.8 Income from continuing operations before income taxes 15.3 29.5 Income tax expense 6.4 10.0 Income from continuing operations 8.9 19.5 Loss from discontinued operations (net of income tax expense) — (0.3) Consolidated net income 8.9 19.2 Less: Net income attributable to noncontrolling interests 2.5 2.0 Net income attributable to Hillenbrand $ 6.4 $ 17.2 Earnings per share Basic earnings per share Income from continuing operations attributable to Hillenbrand $ 0.09 $ 0.25 Income from discontinued operations — — Net income attributable to Hillenbrand $ 0.09 $ 0.25 Diluted earnings per share Income from continuing operations attributable to Hillenbrand $ 0.09 $ 0.25 Loss from discontinued operations — (0.01) Net income attributable to Hillenbrand $ 0.09 $ 0.24 Weighted average shares outstanding (basic) 70.6 70.3 Weighted average shares outstanding (diluted) 70.6 70.5 Cash dividends per share $ 0.2250 $ 0.2225 Condensed Consolidated Statements of Cash Flows (in millions) Three Months Ended December 31, 2024 2023 Cash flows (used in) provided by: Operating activities from continuing operations $ (11.3) $ (24.0) Investing activities from continuing operations 9.5 (15.1) Financing activities from continuing operations 26.8 (17.1) Effect of exchange rates on cash and cash equivalents (14.4) 5.6 Net cash flows 10.6 (50.6) Cash and cash equivalents: At beginning of period 227.9 250.2 At end of period $ 238.5 $ 199.6 Reconciliation of Non-GAAP Measures (in millions, except per share data) Three Months Ended December 31, 2024 2023 Income from continuing operations $ 8.9 $ 19.5 Less: Net income attributable to noncontrolling interests 2.5 2.0 Income from continuing operations attributable to Hillenbrand 6.4 17.5 Business acquisition, divestiture, and integration costs (1) 18.1 5.6 Restructuring and restructuring-related charges (2) 2.4 0.6 Inventory step-up costs — 1.5 Intangible asset amortization (3) 25.2 25.5 Pension settlement (gain) charge (4) (1.7) 8.3 Tax adjustments (5) 0.5 0.3 Tax effect of adjustments (6) (11.4) (10.6) Adjusted net income from continuing operations attributable to Hillenbrand $ 39.5 $ 48.7 Diluted EPS from continuing operations attributable to Hillenbrand $ 0.09 $ 0.25 Business acquisition, divestiture, and integration costs (1) 0.26 0.08 Restructuring and restructuring-related charges (2) 0.03 0.01 Inventory step-up costs — 0.02 Intangible asset amortization (3) 0.36 0.36 Pension settlement (gain) charge (4) (0.02) 0.12 Tax adjustments (5) — — Tax effect of adjustments (6) (0.16) (0.15) Adjusted Diluted EPS from continuing operations attributable to Hillenbrand $ 0.56 $ 0.69 _______________________________________ (1) Business acquisition, divestiture, and integration costs during the three months ended December 31, 2024 and 2023, primarily included costs associated with the integration of recent acquisitions. (2) Restructuring and restructuring-related charges primarily included severance costs during the three months ended December 31, 2024 and 2023. (3) 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. (4) The pension settlement (gain) charge during the three months ended December 31, 2024, was due to one-time premium refunds received related to the termination of the Company's U.S. pension plan. The pension settlement (gain) charge during the three months ended December 31, 2023, was due to lump-sum payments made from the Company's U.S. pension plan to former employees who elected to receive such payments. (5) For three months ended December 31, 2024 and 2023, this primarily represents the net impact from certain non-recurring tax items, including items related to acquisitions and divestitures. (6) Represents the tax effect of the adjustments previously identified above. Three Months Ended December 31, 2024 2023 Adjusted EBITDA: Advanced Process Solutions $ 82.8 $ 96.0 Molding Technology Solutions 27.4 32.1 Corporate (13.1) (14.0) Add: Loss from discontinued operations (net of income tax expense) — (0.3) Less: Interest expense, net 25.1 29.8 Income tax expense 6.4 10.0 Depreciation and amortization 37.9 38.8 Pension settlement (gain) charge (1.7) 8.3 Business acquisition, divestiture, and integration costs 18.1 5.6 Inventory step-up costs — 1.5 Restructuring and restructuring-related charges 2.4 0.6 Consolidated net income $ 8.9 $ 19.2 Three Months Ended December 31, 2024 2023 Consolidated net income $ 8.9 $ 19.2 Interest expense, net 25.1 29.8 Income tax expense 6.4 10.0 Depreciation and amortization 37.9 38.8 EBITDA 78.3 97.8 Loss from discontinued operations (net of income tax expense) — 0.3 Business acquisition, divestiture, and integration costs 18.1 5.6 Inventory step-up costs — 1.5 Restructuring and restructuring-related charges 2.4 0.6 Pension settlement (gain) charge (1.7) 8.3 Adjusted EBITDA $ 97.1 $ 114.1 December 31, 2024 Current portion of long-term debt $ 20.9 Long-term debt 1,885.0 Total debt 1,905.9 Less: Cash and cash equivalents 208.0 Net debt $ 1,697.9 Pro forma adjusted EBITDA for the trailing twelve months ended $ 494.6 Ratio of net debt to pro forma adjusted EBITDA 3.4 Forward-Looking Statements Throughout this earnings release, we make a number of 'forward-looking statements,' including statements 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. These are statements about future sales, earnings, cash flow, results of operations, uses of cash, financings, share repurchases, 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. The following list, though not exhaustive, contains words that indicate a forward-looking statement: intend believe plan expect may goal would project position future outlook become pursue estimate will forecast continue could anticipate remain likely target encourage promise improve progress potential should impact strategy assume 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 continued volatility in the financial markets, including as a result of the United States ('U.S.') presidential election; the risk of business disruptions associated with information technology, cyber-attacks, or catastrophic losses affecting infrastructure; increasing competition for highly skilled and talented workers, as well as labor shortages; closures or slowdowns and changes in labor costs and labor difficulties; uncertainty related to environmental regulation and industry standards, as well as physical risks of climate change; uncertainty related to environmental regulation, including the Securities and Exchange Commission's ('SEC') final climate rules and litigation regarding its enforceability; increased costs, poor quality, or unavailability of raw materials or certain outsourced services and supply chain disruptions; economic and financial conditions including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; uncertainty in U.S. global trade policy and risks with governmental instability in certain parts of the world such as Germany; our level of international sales and operations; negative effects of acquisitions, including the Schenck Process Food and Performance Materials ('FPM') business and Linxis Group SAS ('Linxis') acquisitions, on the Company's business, financial condition, results of operations and financial performance; competition in the industries in which we operate, including on price; cyclical demand for industrial capital goods; the ability to recognize the benefits of any acquisition or divestiture, including the Milacron injection molding and extrusion business sale (the 'Proposed Transaction'), including potential synergies and cost savings or the failure of the Company or any acquired company, or the Proposed Transaction, to achieve its plans and objectives generally; any failure by the parties to satisfy any conditions to the Proposed Transaction; the possibility that the Proposed Transaction is ultimately not consummated; potential adverse effects of the announcement or results of the Proposed Transaction on the market price of the Company's common stock or on the ability of the Company to develop and maintain relationships with its personnel and customers, suppliers and others with whom it does business or otherwise on the Company's business, financial condition, results of operations and financial performance; risks related to diversion of management's attention from our ongoing business operations due to the Proposed Transaction; impacts of decreases in demand or changes in technological advances, laws, or regulation on the net revenues that we derive from the plastics industry; the impact to the Company's effective tax rate of changes in the mix of earnings or in 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 U.S. political and regulatory environment, including as a result of the U.S. presidential election and any proposed tariffs; adverse foreign currency fluctuations; and labor disruptions. There can be no assurances that the Proposed Transaction will be consummated. 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, 2024, filed with the SEC on November 19, 2024, and in Part II, Item 1A of Hillenbrand's Form 10-Q for the quarter ended December 31, 2024, filed with the SEC on February 5, 2025. The forward-looking information in this release speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statement, whether written or oral, made to reflect new information, future developments or otherwise. About Hillenbrand Hillenbrand (NYSE: HI) is a global industrial company that provides highly-engineered, mission-critical processing equipment and solutions to customers 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 people, our customers, and our communities. To learn more, visit: SOURCE Hillenbrand
Yahoo
05-02-2025
- Business
- Yahoo
Bain Capital Announces Majority Investment in Milacron, a Leading Global Provider of Highly Engineered Plastic Processing Solutions
Investment to accelerate Milacron's growth and strengthen its position as a global leader in highly engineered plastic processing solutions. Milacron's comprehensive suite of equipment offerings and services enables the production of everyday products used across the construction, automotive, packaging, consumer goods, and medical sectors. Hillenbrand (NYSE: HI), Milacron's current owner, will continue to remain a significant investor in the business. BOSTON & BATESVILLE, Ind., February 05, 2025--(BUSINESS WIRE)--Bain Capital, a leading private investment firm, today announced a majority investment in the Milacron Injection Molding and Extrusion business (or the "Company"), a globally renowned provider of highly engineered plastic processing equipment and services. Bain Capital will partner with Milacron's current owner, Hillenbrand, Inc. (NYSE: HI), who will remain a significant investor in the business to accelerate the Company's continued growth. Bain Capital entered into a definitive agreement to purchase an ownership stake of approximately 51% of Milacron for $287 million, subject to customary closing adjustments. Hillenbrand will retain an ownership stake of approximately 49%. Since 1968, Milacron has been a global provider of highly engineered plastic processing solutions including injection molding and extrusion equipment as well as aftermarket parts and services. Milacron has long been recognized as a market leader for its product and service expertise serving a variety of end-markets, including the construction, automotive, packaging, consumer goods, and medical industries. With the largest installed base of equipment in the U.S., Milacron serves as a complete lifecycle partner, leveraging its extensive support network to deliver comprehensive aftermarket parts and services solutions. "Milacron is an iconic American manufacturing business with a 50-year legacy of driving innovation in plastics," said Matt Evans, a Partner at Bain Capital Special Situations. "With manufacturers increasingly focused on supply-chain resilience and domestic production, we believe the U.S. is entering a manufacturing renaissance that will create significant opportunities for industry leaders like Milacron. With its advanced engineering capabilities, global reach, and deep customer relationships, Milacron is well-positioned to build on its strong foundation." "We are excited to partner with Mac Jones, the President of Milacron, and the entire Milacron team to support the next chapter of growth of one of the world's premier plastics processing solutions businesses," added Chris Sun, a Principal at Bain Capital Special Situations. "Milacron combines industry-leading engineering and manufacturing capabilities with innovative technology to enable the production of essential products used daily in the U.S. and around the world. We share a common vision with Milacron's associates, customers, and other partners to continue building on Milacron's more than 50-year legacy to create an even stronger future ahead." "Following an in-depth portfolio review, we determined that Milacron would be best positioned for the future through this partnership with Bain Capital," said Kim Ryan, Hillenbrand President & CEO. "Bain Capital has a proven track record of successful corporate partnerships and will provide greater resources to Milacron, which we believe will drive future growth and success for Milacron's associates and customers, as well as for Hillenbrand's shareholders." Bain Capital's Special Situations team is making this investment following the successful close of its second vintage of funds, which raised over $9 billion. Bain Capital Special Situations has $22 billion in assets under management and has invested more than $16 billion since inception in 2018, providing bespoke capital solutions to meet the diverse needs of companies, entrepreneurs and asset owners. With a long track record of supporting industrial and manufacturing businesses globally, the team brings deep expertise in driving operational growth and long-term value creation. The transaction is expected to close at the end of the Company's fiscal second quarter or beginning of the fiscal third quarter. Deutsche Bank is serving as exclusive financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor to Bain Capital. About Bain Capital Founded in 1984, Bain Capital is one of the world's leading private investment firms. We are committed to creating lasting impact for our investors, teams, businesses, and the communities in which we live. As a private partnership, we lead with conviction and a culture of collaboration, advantages that enable us to innovate investment approaches, unlock opportunities, and create exceptional outcomes. Our global platform invests across five focus areas: Private Equity, Growth & Venture, Capital Solutions, Credit & Capital Markets, and Real Assets. In these focus areas, we bring deep sector expertise and wide-ranging capabilities. We have 24 offices on four continents, more than 1,850 employees, and approximately $185 billion in assets under management. To learn more, visit Follow @BainCapital on LinkedIn and X (Twitter). 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. Its portfolio is composed of leading industrial brands that serve large, attractive end markets, including durable plastics, food, and recycling. The Company pursues excellence, collaboration, and innovation to consistently shape solutions that best serve our associates, customers, communities, and other stakeholders. Forward Looking Statements This press release contains forward-looking statements, including statements that are within the meaning of the Private Securities Litigation Reform Act of 1995 that are intended to be covered by the safe harbor provided thereunder, which reflect the current views of Bain Capital and Hillenbrand regarding future events, expectations, plans, and prospects for Milacron following the announced transaction. These statements are based on assumptions and involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. Forward-looking statements include, but are not limited to, statements regarding: the expected benefits of the transaction; Milacron's future growth, market position, and business strategy; anticipated industry trends, including implications with respect to growing supply chain resilience and domestic manufacturing; and the expected timing of the transaction closing. Any number of factors, many of which are beyond Hillenbrand and Bain Capital's control, could cause Hillenbrand and Bain Capital's performance to differ significantly from what is described in the forward-looking statements. These factors include, but are not limited to: the ability to recognize the benefits of any acquisition or divestiture, including the Milacron injection molding and extrusion business sale (the "Proposed Transaction"), including potential synergies and cost savings or the failure of Hillenbrand and Bain Capital or any acquired company, or the Proposed Transaction, to achieve its plans and objectives generally; any failure by the parties to satisfy any conditions to the Proposed Transaction; the possibility that the Proposed Transaction is ultimately not consummated; potential adverse effects of the announcement or results of the Proposed Transaction on the market price of the Hillenbrand's common stock; and risks related to diversion of management's attention from Hillenbrand's ongoing business operations due to the Proposed Transaction. There can be no assurances that the Proposed Transaction will be consummated. 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 in Hillenbrand's filings with the U.S. Securities and Exchange Commission. The forward-looking information in this release speaks only as of the date on which it is made. Hillenbrand and Bain Capital undertake no obligation to publicly update or revise any forward-looking statement, whether written or oral, made to reflect new information, future developments or otherwise. View source version on Contacts Media Contacts: For Bain Capital:Charlyn Lusk / Scott LessneStantonclusk@ / slessne@ (646) 502-3549 / (646) 502-3569Corporate Communications for Hillenbrand: Gladstone Place PartnersLauren Odell / Danielle FornabaioPhone: 212-230-5930Email: Hillenbrand@
