Hillenbrand(US:HI)2025-08-11 20:32PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited consolidated financial statements for Q3 and YTD 2025/2024, including key statements and notes on Milacron and TerraSource divestitures Consolidated Statements of Operations Net revenue decreased for both periods, with a nine-month net loss improving from prior year's impairment, and Q3 2025 showing net income Consolidated Statements of Operations Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $598.9 | $786.6 | $2,021.7 | $2,345.2 | | Gross profit | $202.6 | $266.4 | $674.0 | $768.1 | | Impairment charges | $0.0 | $265.0 | $0.0 | $265.0 | | Loss on divestiture | $1.5 | $0.0 | $56.1 | $0.0 | | Net income (loss) attributable to Hillenbrand | $1.9 | $(248.9) | $(32.6) | $(225.6) | | Diluted EPS attributable to Hillenbrand | $0.03 | $(3.53) | $(0.46) | $(3.20) | Consolidated Balance Sheets Total assets decreased to $4.68 billion from $5.24 billion, primarily due to Milacron divestiture impacts on goodwill, intangibles, and inventories Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Total current assets | $1,286.3 | $1,509.9 | | Goodwill | $1,685.0 | $1,835.7 | | Intangible assets, net | $1,158.9 | $1,285.9 | | Total Assets | $4,676.5 | $5,238.7 | | Total current liabilities | $1,030.1 | $1,189.1 | | Long-term debt | $1,663.6 | $1,872.4 | | Total Liabilities | $3,324.3 | $3,781.3 | | Total Shareholders' Equity | $1,352.2 | $1,457.4 | Consolidated Statements of Cash Flows Net cash used in operating activities was $11.5 million, a decrease from prior year, with investing providing $84.4 million and financing using $107.0 million Cash Flow Summary (in millions) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(11.5) | $24.8 | | Net cash provided by (used in) investing activities | $84.4 | $(40.2) | | Net cash (used in) provided by financing activities | $(107.0) | $13.4 | | Net cash flows | $(37.9) | $(25.6) | Condensed Notes to Consolidated Financial Statements Details accounting policies, revenue recognition, and key corporate actions, including Milacron divestiture loss, segment performance, and TerraSource divestiture - On March 31, 2025, the company divested its majority interest in the Milacron injection molding and extrusion business to an affiliate of Bain Capital, retaining a 48.74% minority ownership. This resulted in a pre-tax loss of $56.1 million for the nine months ended June 30, 20253033 - As of June 30, 2025, the company's backlog was $1,624.2 million. Approximately 75% of this is expected to be recognized as revenue over the next twelve months28 - Subsequent to the quarter end, on July 1, 2025, the company completed the divestiture of its joint-venture TerraSource to Astec Industries for $245.0 million, expecting to record a pre-tax gain of approximately $66.0 million99 - In the prior year (Q3 2024), the company recorded significant impairment charges of $265.0 million, consisting of a $238.0 million goodwill impairment and a $27.0 million trade name impairment within the Molding Technology Solutions segment4849 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses operational and financial results, highlighting Q3 and YTD revenue decreases due to Milacron divestiture and lower volumes, alongside liquidity and financing Operations Review — Consolidated Consolidated net revenue decreased 24% for Q3 and 14% for nine months, driven by Milacron divestiture and lower APS volume, with stable gross margin Revenue and Gross Profit Comparison (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $598.9 | $786.6 | (24%) | | Gross Profit | $202.6 | $266.4 | (24%) | | Gross Profit Margin | 33.8% | 33.9% | -10 bps | - The effective tax rate for Q3 2025 was 61.3%, a significant increase from 4.1% in Q3 2024, driven by an unfavorable geographic mix of earnings and an increase in unrecognized tax benefits127 Operations Review — Advanced Process Solutions APS segment net revenue decreased 11% to $507.0 million due to lower volume, with gross margin contracting 290 bps and backlog decreasing 10% - Q3 Net Revenue decreased 11% YoY to $507.0 million, primarily from lower volume139 - Order backlog stood at $1,569.6 million at June 30, 2025, a 10% decrease from the prior year, mainly due to a decrease in capital equipment orders140 - Q3 Gross profit margin fell 290 basis points to 33.1%, impacted by cost inflation and unfavorable product mix141 Operations Review — Molding Technology Solutions MTS segment net revenue sharply declined 58% to $91.9 million due to Milacron divestiture, yet gross margin improved 980 bps, and backlog fell 77% - Q3 Net Revenue decreased 58% YoY to $91.9 million, primarily due to the Milacron divestiture152 - Order backlog decreased 77% YoY to $54.6 million, also due to the Milacron divestiture152 - Q3 Gross profit margin improved significantly by 980 basis points to 38.0%, driven by productivity improvements and restructuring actions153 NON-GAAP OPERATING PERFORMANCE MEASURES Consolidated adjusted EBITDA from continuing operations decreased 36% to $84.3 million for Q3 2025, driven by lower APS volume and cost inflation Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Consolidated net income (loss) | $4.1 | $(246.9) | $(25.6) | $(219.1) | | Interest, Taxes, D&A | $60.5 | $60.4 | $181.5 | $215.3 | | Impairment charges | $0.0 | $265.0 | $0.0 | $265.0 | | Loss on divestiture | $1.5 | $0.0 | $56.1 | $0.0 | | Other adjustments | $18.2 | $25.6 | $68.1 | $70.1 | | Adjusted EBITDA from continuing operations | $84.3 | $131.0 | $280.1 | $367.8 | LIQUIDITY AND CAPITAL RESOURCES The company maintains sufficient liquidity, with $348.9 million available under its revolving credit facility and subsequent refinancing actions, including debt repayment - Subsequent to quarter-end, the company entered into a new Fifth Amended and Restated Credit Agreement, providing a $700 million revolving credit facility and two term loans ($175M and up to €240M)180182 - Effective July 21, 2025, the company repaid its $375 million senior unsecured notes due 2026 using proceeds from the TerraSource divestiture and new Euro Term Loans184 - The company had approximately $125.0 million remaining for share repurchases under its existing authorization as of June 30, 2025189 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures have occurred since the 2024 Form 10-K filing - There have been no material changes in quantitative and qualitative disclosures about market risk since the filing of the 2024 Form 10-K203 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting identified - The Certifying Officers concluded that the company's disclosure controls and procedures were effective as of the end of the period204 - No changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls were identified during the quarter206 PART II — OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is referenced in Note 14 to the Consolidated Financial Statements - Information regarding legal proceedings is located in Note 14 to the Consolidated Financial Statements207 Item 1A. Risk Factors Updates risk factors, highlighting potential negative impacts from U.S. global trade policy uncertainty and proposed tariffs on operations - A key risk factor is the uncertainty in U.S. global trade policy, including recently announced or proposed tariffs on imports from various countries, which could increase costs and negatively impact operations209210 Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the third quarter of fiscal 2025213 Item 6. Exhibits Lists exhibits filed with Form 10-Q, including credit agreements, compensatory plan forms, and officer certifications