Hillenbrand Announces Fiscal Fourth Quarter and Full Year 2021 Results
Date 2021-11-17 | Earning Reports
Hillenbrand Announces Fiscal Fourth Quarter and Full Year 2021 Results
Fiscal Fourth Quarter 2021 Highlights:• Revenue of $755 million increased 9% compared to prior year or 12% on a pro forma basis
• GAAP EPS of $0.74 compares to a loss of $0.09 in the prior year; adjusted EPS of $1.00 increased 9%
• Total backlog of $1.72 billion increased 43% compared to prior year on a pro forma basis
Fiscal Year 2021 Highlights:• Record revenue of $2.9 billion increased 14% year over year; record pro forma revenue of $2.8 billion increased 13%
• GAAP EPS of $3.31 compares to a loss of $0.82 in the prior year; adjusted EPS of $3.79 increased 19%
• Record order intake for the Advanced Process Solutions and Molding Technology Solutions segments of $2.7 billion, up 28% over prior year on a pro forma basis
• Record cash flow from operations of $528 million increased $174 million compared to the prior year
• Total year-over-year synergies realized from the Milacron integration of ~$30 million exceeded fiscal year 2021 target of $20-25 million
• Returned $185 million in cash to shareholders through share repurchases and quarterly dividends
• Completed portfolio simplification through announced divestitures of Red Valve and ABEL during fiscal year 2021 and TerraSource Global in October 2021
• Fiscal 2022 guidance: Full Year adjusted EPS of $3.70 - $4.00; Q1 adjusted EPS of $0.87 - $0.94
BATESVILLE, Ind., November 17, 2021 --/PRNewswire/ --Hillenbrand, Inc. (NYSE: HI) reported results for the fourth quarter and full fiscal year, which ended September 30, 2021.
“Fiscal 2021 was a great year for Hillenbrand, as we achieved record levels for order intake, revenue, earnings, and cash flow,” said Joe Raver, President and Chief Executive Officer of Hillenbrand. “I am proud of the resiliency and dedication of our associates, as they executed at a high level throughout the year in the face of significant inflation, global supply chain disruptions, labor market shortages, and the continued impact from COVID-19. In addition to our strong operating results, we streamlined our portfolio through the divestitures of Red Valve, ABEL, and, in October, TerraSource Global. We exceeded our integration synergy targets for the year and remain on track to deliver our year-three run-rate synergy goal of $75 million. With a healthy balance sheet and strong backlog, I believe Hillenbrand is well positioned for growth in fiscal 2022 and beyond.”
“As I will be retiring at the end of 2021, I wanted to take the opportunity to thank our over 10,000 employees around the world, our leadership team, and the Board of Directors for their support and partnership over my past eight years as CEO, as well as our customers, suppliers, and shareholders. It has been an honor to serve this great organization and I am excited for the next chapter under Kim’s leadership as she prepares to take the helm in 2022.”
“We are well positioned to build upon our proven track record of execution as we head into fiscal 2022,” said Kim Ryan, Hillenbrand’s Executive Vice President and incoming Chief Executive Officer. “Our performance in fiscal 2021 was a testament to the talent of our people, the strength of the Hillenbrand Operating Model, and the trust our customers place in us. I am excited about the opportunities ahead and confident in our ability to execute through the near-term macroeconomic challenges and deliver continued value to our shareholders.”
Fourth Quarter 2021 Results
Revenue of $755 million increased 9% compared to the prior year driven by growth across all three segments, partially offset by the divestitures of Red Valve and ABEL. Excluding the impact of foreign currency exchange, revenue increased 8%. On a pro forma basis, which excludes the divested Red Valve and ABEL businesses from the Advanced Process Solutions segment, revenue increased 12% year over year, or 11% excluding the impact of foreign currency exchange.
Net income of $55 million, or $0.74 per share, increased from a loss of $0.09 in the prior year, which included non-cash impairment charges that did not repeat to the same magnitude in fiscal year 2021. Adjusted net income of $74 million resulted in adjusted EPS of $1.00, an increase of $0.08, or 9%, primarily due to higher volume in Molding Technology Solutions and a lower adjusted effective tax rate. The adjusted effective tax rate for the quarter was 29.2%, a decrease of 290 basis points from the prior year, primarily due to a reduction for taxes from distributions from foreign subsidiaries, partially offset by an increase in the provision for uncertain tax positions.
Adjusted EBITDA of $140 million decreased 1% year over year. On a pro forma basis, adjusted EBITDA increased 2%, while adjusted EBITDA margin of 18.5% decreased 180 basis points compared to a year ago primarily due to inflation and unfavorable mix, which more than offset operating leverage from higher volume, and pricing and productivity improvements.
Advanced Process Solutions (APS)
Revenue of $340 million increased 3% compared to the same period in the prior year, or 2% excluding the impact of foreign currency exchange. On a pro forma basis, which excludes the divested Red Valve and ABEL businesses, revenue increased 9% year over year, or 8% excluding the impact of foreign currency, primarily driven by an increase in large plastics projects and separation equipment.
Adjusted EBITDA of $69 million increased 2% year over year. On a pro forma basis, adjusted EBITDA increased 8%, while adjusted EBITDA margin of 20.3% decreased 30 basis points as pricing, productivity improvements, and operating leverage from higher volume was more than offset by inflation, unfavorable mix, and strategic investments.
Backlog of $1.3 billion increased 41% on a pro forma basis compared to the prior year primarily driven by increased demand for large plastics projects. Sequentially, backlog decreased 2% compared to the quarter ended June 30, 2021.
Molding Technology Solutions (MTS)
Revenue of $260 million increased 20% year over year with higher sales across all product lines, led by injection molding equipment. Excluding the impact of foreign currency, revenue increased 18%.
Adjusted EBITDA of $54 million increased 6%, while adjusted EBITDA margin of 20.6% decreased 270 basis points primarily due to unfavorable mix from a higher proportion of sales for injection molding equipment, and inflation, which more than offset operating leverage from higher volume, and pricing and productivity improvements.
Backlog of $366 million increased 51% year over year primarily driven by increased demand for injection molding equipment. Sequentially, backlog decreased 6% compared to the quarter ended June 30, 2021.
Revenue of $155 million increased 5% year over year primarily due to higher average selling price and an increase in burial casket volume resulting from an estimated increase in deaths associated with the ongoing COVID-19 pandemic.
Adjusted EBITDA of $33 million decreased 6% year over year and adjusted EBITDA margin of 21.6% decreased 270 basis points primarily due to cost inflation and higher transportation and manufacturing cost premiums required to respond to the increased demand driven by the ongoing COVID-19 pandemic.
Fiscal Year 2021 Results
Hillenbrand’s full year revenue of $2.86 billion increased 14% compared to the prior year driven by growth across all three operating segments. Excluding the impact of foreign currency exchange, revenue increased 11%. Revenue of $2.84 billion increased 13% year over year on a pro forma basis, which excludes Red Valve and ABEL in Advanced Process Solutions, and the Cimcool business in Molding Technology Solutions, and assumes the Milacron acquisition closed on October 1, 2019. On a pro forma basis, Advanced Process Solutions revenue of $1.22 billion increased 5%, and Molding Technology Solutions revenue of $996 million increased 25%. Batesville revenue of $623 million increased 13%.
Net income of $250 million, or $3.31 per share, increased from a loss of $0.82 in the prior year, primarily due to prior year non-cash impairment charges that did not repeat to the same magnitude in fiscal year 2021 and lower costs in fiscal year 2021 related to the Milacron acquisition. Adjusted net income of $286 million resulted in adjusted EPS of $3.79, an increase of $0.60, or 19%. The adjusted effective tax rate for the year was 28.7%, an increase of 90 basis points over the prior year. Adjusted EBITDA of $538 million increased 16% year over year.
On a pro forma basis, adjusted EBITDA of $534 million increased 20% and adjusted EBITDA margin of 18.8% increased 100 basis points primarily due to operating leverage from higher volume, productivity improvements, and favorable pricing, partially offset by inflation and unfavorable mix. Pro forma adjusted EBITDA margin for Advanced Process Solutions of 18.8% decreased 30 basis points, while pro forma adjusted EBITDA margin for Molding Technology Solutions of 20.3% increased 170 basis points. Batesville’s adjusted EBITDA margin of 25.7% increased 270 basis points.
Balance Sheet, Cash Flow and Capital Allocation
Hillenbrand generated cash flow from operations of $528 million in the year, an increase of $174 million year-over-year, primarily driven by favorable timing of working capital, higher earnings, and lower costs in fiscal year 2021 related to the acquisition of Milacron. During the year, the Company repurchased approximately 2.8 million shares for $121.1 million at an average share price of $43.37, and returned $64 million to shareholders in the form of quarterly dividends. Subsequent to the year-end, the Company purchased an additional 620 thousand shares through November 15, 2021 for $28.9 million at an average share price of $46.30.
As of September 30, 2021, net debt was $767 million, and the net debt to adjusted EBITDA ratio was 1.4x, down from 2.7x at the beginning of the fiscal year. We had liquidity of approximately $1.3 billion, including $446 million in cash on hand and the remainder available under our revolving credit facility.
As previously announced, the divestiture of TerraSource Global was completed on October 22, 2021. This transaction was preceded by the divestitures of Red Valve and ABEL in fiscal year 2021 and completes the portfolio simplification plan announced in August 2020.
Fiscal 2022 Outlook
For fiscal year 2022, Hillenbrand is reinstating its practice of providing annual guidance. Revenue and EBITDA margin guidance is on a pro forma basis, excluding the divested Red Valve and ABEL businesses from the prior year, as well as the divested TerraSource Global business from the prior year and the period of October 1, 2021 through October 22, 2021. As the basis of our outlook, we expect supply chain disruptions, elevated transportation costs, and labor market shortages to persist through the majority of the fiscal year. Additionally, we expect commodity costs to remain elevated through at least the first half of the fiscal year.