Hillenbrand(HI) - 2025 Q3 - Quarterly Results

Fiscal Third Quarter 2025 Performance Overview Hillenbrand's Q3 2025 results show revenue declines from divestitures, improved GAAP net income, and strategic debt reduction and synergy realization Executive Summary & Key Highlights Hillenbrand's Q3 2025 results exceeded revenue expectations, met adjusted EPS, driven by strategic divestitures and synergy achievements - Strategic portfolio refinement and debt reduction were key activities, with over $300 million in debt paid down during the fiscal year from the MIME divestiture and the sale of a minority interest in TerraSource[3] - Achieved $30 million in run-rate cost synergies from the Linxis and FPM acquisitions earlier than planned, and is beginning to see commercial synergy potential[3][5] - Q3 revenue exceeded expectations and adjusted EPS met expectations, despite customer delays due to the dynamic tariff landscape[4] Q3 2025 Key Financial Metrics (in millions, except EPS) | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Revenue | $599 million | -24% | | Pro Forma Revenue | $599 million | -10% | | GAAP EPS | $0.03 | Increased from $(3.53) | | Adjusted EPS | $0.51 | -40% | Consolidated Financial Results (Q3 2025) Hillenbrand's Q3 2025 net revenue decreased 24% to $599 million due to divestitures, while GAAP net income improved and adjusted EPS fell 40% Q3 2025 Consolidated Financial Summary (in millions, except EPS) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $598.9 | $786.6 | (24)% | | GAAP Net Income | $1.9 | $(248.9) | 101% | | Adjusted EBITDA | $84.3 | $131.0 | (36)% | | GAAP Diluted EPS | $0.03 | $(3.53) | 101% | | Adjusted Diluted EPS | $0.51 | $0.85 | (40)% | | Pro Forma Net Revenue | $598.9 | $663.0 | (10)% | | Pro Forma Adjusted EBITDA | $84.3 | $116.6 | (28)% | - The significant increase in GAAP net income was primarily due to a non-cash impairment charge related to the hot runner product line within the MTS segment recorded in the prior fiscal year[7] - The decrease in adjusted EPS was mainly attributed to the divestiture of the MIME business and lower sales volume[8] Segment Performance Both APS and MTS segments experienced Q3 revenue declines, with APS down 11% and MTS down 58% (or 2% pro forma) Advanced Process Solutions (APS) APS segment revenue decreased 11% to $507 million due to lower capital equipment volume, with adjusted EBITDA falling 27% APS Q3 2025 Performance (in millions) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $507.0 | $569.4 | (11)% | | Adjusted EBITDA | $80.1 | $109.2 | (27)% | | Adjusted EBITDA Margin | 15.8% | 19.2% | (340) bps | - The decline in revenue was primarily due to lower capital equipment volume, which was partially offset by favorable pricing[10] - Backlog stood at $1.57 billion, a 10% decrease compared to the prior year and a 2% sequential decrease[12] Molding Technology Solutions (MTS) MTS segment revenue decreased 58% to $92 million due to MIME divestiture, or 2% pro forma, with margins contracting 170 basis points MTS Q3 2025 Performance (in millions) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $91.9 | $217.2 | (58)% | | Pro Forma Net Revenue | $91.9 | $93.6 | (2)% | | Adjusted EBITDA | $18.3 | $34.6 | (47)% | | Pro Forma Adjusted EBITDA | $18.3 | $20.2 | (9)% | | Pro Forma Adj. EBITDA Margin | 19.9% | 21.6% | (170) bps | - The significant year-over-year revenue decline was primarily due to the MIME divestiture[13] - Pro forma backlog increased 7% compared to the prior year, reaching $55 million[15] Balance Sheet, Cash Flow and Capital Allocation Hillenbrand's Q3 saw a $2 million cash use from operations, with net debt at $1.51 billion (3.9x leverage), reduced by $115 million post-quarter - Cash flow from operations was a use of $2 million in the quarter, primarily due to lower customer advances from decreased order volume[16] - As of June 30, 2025, net debt was $1.51 billion, with a net debt to pro forma adjusted EBITDA ratio of 3.9x[17] - On July 1, 2025, the company used ~$115 million in proceeds from the TerraSource divestiture for debt pay down, resulting in an approximate 0.2x favorable impact on net leverage[18] - The company redeemed its $375 million notes due in 2026 and amended its credit facilities to enhance operational and financial flexibility[19][20] Fiscal 2025 Outlook Hillenbrand updated its fiscal 2025 outlook, projecting total net revenue between $2,595 million and $2,630 million, maintaining adjusted EPS midpoint Updated Guidance Hillenbrand updated its fiscal 2025 outlook, projecting total net revenue between $2,595 million and $2,630 million, maintaining adjusted EPS midpoint - The company is updating its core outlook for fiscal 2025 but maintaining the mid-point of its full year adjusted EPS range[21] Fiscal 2025 Full Year Guidance (in millions, except EPS and percentages) | Metric | Total Hillenbrand | Advanced Process Solutions | Molding Technology Solutions | | :--- | :--- | :--- | :--- | | Net Revenue | $2,595 - $2,630 M | $2,005 - $2,030 M | $590 - $600 M | | YoY Revenue Change | (18%) - (17%) | (12%) - (11%) | (34%) - (33%) | | Adj. EBITDA | $370 - $385 M | 16.6% - 16.8% Margin | 16.0% - 16.7% Margin | | Adj. EPS | $2.20 - $2.35 | - | - | | YoY Adj. EPS Change | (34%) - (29%) | - | - | | Operating Cash Flow | ~$60 M | - | - | | CapEx | ~$40 M | - | - | Financial Statements and Reconciliations This section provides detailed unaudited consolidated financial statements, including statements of operations, cash flows, and reconciliations of GAAP to non-GAAP measures Consolidated Statements of Operations Unaudited Consolidated Statements of Operations show Q3 2025 net income of $1.9 million (or $0.03 per diluted share), a significant improvement from prior year's $248.9 million net loss Consolidated Statements of Operations Highlights (Three Months Ended June 30, in millions) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net revenue | $598.9 | $786.6 | | Gross profit | $202.6 | $266.4 | | Impairment charges | $— | $265.0 | | Income (loss) from continuing operations | $4.1 | $(246.9) | | Net income (loss) attributable to Hillenbrand | $1.9 | $(248.9) | Condensed Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, cash used in operating activities was $11.5 million, with investing activities providing $84.4 million and financing activities using $107.0 million Cash Flow Summary (Nine Months Ended June 30, in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | $(11.5) | $24.8 | | Investing activities | $84.4 | $(40.2) | | Financing activities | $(107.0) | $13.4 | | Net cash flows | $(37.9) | $(25.6) | | Cash at end of period | $190.0 | $224.6 | Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP measures, adjusting Q3 2025 GAAP net income and EPS to their respective adjusted figures Q3 2025 GAAP to Adjusted EPS Reconciliation | Item | Per Share Amount | | :--- | :--- | | Diluted EPS from continuing operations | $0.03 | | Business acquisition, divestiture, and integration costs | $0.18 | | Restructuring and restructuring-related charges | $0.08 | | Intangible asset amortization | $0.32 | | Loss on divestiture | $0.02 | | Other adjustments (net) | $(0.12) | | Adjusted Diluted EPS | $0.51 | Q3 2025 Consolidated Net Income to Adjusted EBITDA Reconciliation (in millions) | Item | Amount | | :--- | :--- | | Consolidated net income (loss) | $4.1 | | Interest expense, net | $21.3 | | Income tax expense (benefit) | $6.5 | | Depreciation and amortization | $32.7 | | EBITDA | $64.6 | | Business acquisition, divestiture, and integration costs | $12.7 | | Restructuring and restructuring-related charges | $5.5 | | Loss on divestiture | $1.5 | | Adjusted EBITDA | $84.3 | Net Debt to Pro Forma Adjusted EBITDA Ratio (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Total debt | $1,676.2 | | Less: Cash and cash equivalents | $162.8 | | Net debt | $1,513.4 | | Pro forma adjusted EBITDA (TTM) | $389.1 | | Ratio of net debt to pro forma adjusted EBITDA | 3.9x | Appendix The appendix provides details on the conference call, explanations of non-GAAP financial measures, forward-looking statements, and an overview of Hillenbrand's business Conference Call Information Hillenbrand will host a conference call and webcast on Tuesday, August 12, 2025, at 8:00 a.m. ET to discuss fiscal Q3 2025 results - The conference call to discuss results is scheduled for Tuesday, August 12, 2025, at 8:00 a.m. ET[23] About Non-GAAP Financial Measures This section explains Hillenbrand's use of non-GAAP financial measures, clarifying their purpose for internal evaluation and investor comparison - Non-GAAP 'adjusted' measures generally exclude items such as business acquisition and divestiture costs, restructuring charges, intangible asset amortization, and other non-recurring costs[24][27] - The company uses non-GAAP information internally to measure operating segment performance and believes it helps investors perform trend analysis by removing distortions from excluded items[25] - Backlog is defined as the amount of consolidated net revenue expected to be realized on awarded contracts, though it is not a term recognized under GAAP[31] Forward-Looking Statements This section contains standard forward-looking statements, cautioning that future results may differ materially due to various risks and uncertainties - The document contains forward-looking statements that are subject to risks and uncertainties, and actual results could vary materially from expectations[43] - Key risk factors include global market conditions, trade policies, competition, supply chain disruptions, and risks related to acquisitions and divestitures[44] About Hillenbrand Hillenbrand is a global industrial company providing highly-engineered processing equipment and solutions for end markets like durable plastics, food, and recycling - Hillenbrand is a global industrial company providing highly-engineered processing equipment and solutions to customers worldwide[47] - The company's portfolio serves end markets such as durable plastics, food, and recycling[47]