Hillenbrand Reports Fiscal First Quarter 2022 Results

BATESVILLE, Ind., Feb. 2, 2022 /PRNewswire/ --

Fiscal First Quarter 2022 Highlights:

• Revenue of $728 million increased 5% compared to prior year; pro forma revenue of $726 million increased 9%
• GAAP EPS of $0.67 decreased 34% compared to the prior year primarily due to the gain on the sale of Red Valve during fiscal year 2021; adjusted EPS of $0.94 decreased 2% primarily due to inflation
• Total backlog of $1.72 billion, up 30% compared to prior year on a pro forma basis
• New $300 million share repurchase program approved on December 2, 2021
• Completed CEO transition with the formal appointment of Kim Ryan effective December 30, 2021
• Fiscal 2022 guidance: updated full-year adjusted EPS range to $3.80 - $4.00 from $3.70 - $4.00; Q2 adjusted EPS of $0.96 - $1.02

Hillenbrand, Inc. (NYSE: HI) reported results for the fiscal 2022 first quarter, which ended December 31, 2021.

"We delivered a solid start to our fiscal year," said Kim Ryan, President and Chief Executive Officer of Hillenbrand. "Demand for our industrial products and solutions remained healthy, and our employees across the organization continued to execute at the highest level. Despite the continued impact from COVID-19 and the escalating macroeconomic challenges impacting the global supply chain and labor market, we remain relentlessly focused on mitigating the impact of inflation and supply chain disruptions through the deployment of the Hillenbrand Operating Model to achieve better pricing and improved efficiency. I am confident the execution of our strategy will continue to deliver meaningful long-term shareholder value, and I am excited about our opportunities for continued growth through the remainder of fiscal 2022 and beyond."

First Quarter 2022 Results

Revenue of $728 million increased 5% compared to the prior year primarily driven by growth in large plastics projects in the Advanced Process Solutions segment and favorable pricing, partially offset by the divestitures of Red Valve, ABEL, and TerraSource Global. Excluding the impact of foreign currency exchange, revenue increased 6%. On a pro forma basis, which excludes the divested Red Valve, ABEL, and TerraSource Global businesses from the Advanced Process Solutions segment, revenue increased 9% year over year, or 10% excluding the impact of foreign currency exchange.

Net income of $49 million resulted in $0.67 per share, a decrease from $1.01 per share in the prior year primarily due to a gain on the sale of Red Valve in the prior year that did not repeat. Adjusted net income of $69 million resulted in adjusted EPS of $0.94, a decrease of $0.02, or 2%, as inflation and unfavorable mix more than offset higher volume, favorable pricing, and productivity improvements. The adjusted effective tax rate for the quarter was 28.7%, an increase of 20 basis points from the prior year.

Adjusted EBITDA of $130 million decreased 6% year over year. On a pro forma basis, adjusted EBITDA decreased 4%, while pro forma adjusted EBITDA margin of 17.9% decreased 250 basis points compared to a year ago primarily due to inflation, unfavorable mix, and strategic investments, which more than offset favorable pricing, productivity improvements, and operating leverage from higher volume.

Advanced Process Solutions (APS)

Revenue of $317 million increased 9% compared to the same period in the prior year, or 12% excluding the impact of foreign currency exchange. On a pro forma basis, which excludes the divested Red Valve, ABEL, and TerraSource Global businesses, revenue increased 19% year over year, or 22% excluding the impact of foreign currency, primarily driven by an increase in large plastics projects, favorable pricing, and higher aftermarket parts and services revenue.

Adjusted EBITDA of $55 million increased 13% year over year. On a pro forma basis, adjusted EBITDA increased 18%, while pro forma adjusted EBITDA margin of 17.4% decreased 10 basis points as inflation, unfavorable mix, and strategic investments more than offset operating leverage from higher volume, favorable pricing, and productivity improvements.

Backlog of $1.3 billion increased 27% on a pro forma basis compared to the prior year, or 36% excluding the impact of foreign currency exchange, primarily driven by increased demand for large polyolefin systems. Sequentially, backlog was flat on a pro forma basis compared to the quarter ended September 30, 2021.

Molding Technology Solutions (MTS)

Revenue of $249 million increased 5% year over year, or 6% excluding the impact of foreign currency, with volume increases in both injection molding and hot runner equipment.

Adjusted EBITDA of $52 million increased 7%, while adjusted EBITDA margin of 20.8% increased 40 basis points as favorable pricing, productivity improvements, and operating leverage from higher volume more than offset inflation.

Backlog of $406 million increased 39% year over year primarily driven by increased demand for injection molding equipment. Sequentially, backlog increased 11% compared to the quarter ended September 30, 2021.

Batesville

Revenue of $163 million decreased 1% year over year primarily due to lower burial casket volume resulting from an estimated decrease in deaths associated with the COVID-19 pandemic and an estimated increase in the rate at which families opted for cremation, partially offset by higher average selling price.

Adjusted EBITDA of $41 million decreased 23% year over year and adjusted EBITDA margin of 24.9% decreased 680 basis points primarily due to inflation, including higher transportation premiums, and the impact of lower volume, which more than offset the impact of higher average selling price.

Balance Sheet, Cash Flow and Capital Allocation

Hillenbrand generated cash flow from operations of $45 million in the quarter, a decrease of $22 million year-over-year, primarily due to an increase in cash paid for taxes. As previously announced, the Company repurchased approximately 620,000 shares during the quarter for $28.9 million at an average share price of $46.30. On December 2, 2021, the Board approved a new $300 million share repurchase program, which replaced the remaining balance under the prior program.

Net debt at the end of the quarter was $766 million, and the net debt to adjusted EBITDA ratio was 1.5x. Liquidity at the end of the quarter was approximately $1.3 billion, including $447 million in cash on hand and the remainder available under our revolving credit facility.

Other Notable Items

In January, Hillenbrand appointed Aneesha Arora as Senior Vice President and Chief Human Resources Officer (CHRO). Ms. Arora is responsible for driving Hillenbrand's Human Resources strategy and talent management practices across the enterprise. Ms. Arora was most recently Vice President of HR Services at Honeywell International. 

Fiscal 2022 Outlook

Hillenbrand is updating its annual guidance for fiscal year 2022 and providing adjusted EPS guidance for fiscal Q2. Revenue and EBITDA margin guidance is on a pro forma basis, excluding the divested Red Valve, ABEL and TerraSource Global businesses.