Hillenbrand(HI) - 2025 Q4 - Annual Report

Merger and Acquisition Activities - For the fiscal year ended September 30, 2025, the company reported a merger agreement with Lone Star Fund XII, L.P., where each share of common stock will be converted into $32.00 in cash[221]. - The company incurred transaction expenses of $3.3 million related to the merger for the year ended September 30, 2025, recorded in selling, general and administrative expenses[222]. - The company completed the divestiture of its majority interest in Milacron for total consideration of $286.0 million, resulting in a pre-tax loss of $57.2 million[252][254]. - The company recorded a pre-tax gain of $68.1 million from the divestiture of its 46% interest in TerraSource to Astec Industries[255]. - Business acquisition costs were $1.3 million in 2025 and $0.2 million in 2024, divestiture costs were $8.9 million in 2025 and $0.4 million in 2024, and integration costs were $54.9 million in 2025 compared to $71.6 million in 2024[299]. Financial Performance - Net revenue for the year ended September 30, 2025, decreased by $509.0 million (16%) compared to the previous year[257]. - Gross profit for the same period decreased by $155.7 million (15%), but the gross profit margin improved by 50 basis points to 33.7%[258]. - Consolidated net income for fiscal 2025 increased by $254.1 million (126%) to $52.1 million, attributed to a decrease in non-cash impairment charges and favorable pricing[291]. - Consolidated adjusted EBITDA for fiscal 2025 decreased by $123.7 million (24%) to $388.0 million, primarily due to lower volume in the Advanced Process Solutions segment[292]. - Net revenue for Advanced Process Solutions decreased by $218.6 million (10%) to $2,069.4 million in fiscal 2025, primarily due to lower capital equipment sales volume and aftermarket parts revenue[268]. - Net revenue for Molding Technology Solutions decreased by $290.4 million (32%) to $604.4 million, primarily due to the divestiture of Milacron[276]. - Net revenue for the year ended September 30, 2025, was $369.8 million, a decrease of 53% compared to $784.3 million for the year ended September 30, 2024[320]. - Gross profit for the year ended September 30, 2025, was $126.7 million, down 41.2% from $215.2 million in the previous year[320]. Operational Metrics - Backlog is a significant operational measure, representing expected net revenue from awarded contracts, with fulfillment timelines ranging from days to 24 months depending on the project size[218][219]. - The company expects future net revenue to be influenced by order backlog, which does not include projects shipped within the same quarter[216]. - The company’s contracts may include provisions for cancellation or termination at the discretion of the customer, impacting backlog and revenue recognition[219]. - Order backlog for Advanced Process Solutions decreased by $159.0 million (9%) from $1,681.4 million at September 30, 2024, to $1,522.4 million at September 30, 2025, driven by a decrease in capital equipment orders[269]. - Order backlog for Molding Technology Solutions decreased by $179.3 million (78%) to $51.8 million, primarily due to the Milacron divestiture[277]. Impairment and Goodwill - The company’s goodwill and indefinite-lived intangible assets are tested for impairment at least annually, with significant judgments involved in the assessment[231][239]. - The company recorded a goodwill impairment charge of $82.3 million for the Molding Technology Solutions segment as of July 1, 2025, due to carrying values exceeding fair values[244]. - The estimated fair value for the three reporting units within the Advanced Process Solutions segment was determined to be 12% to 96% greater than their carrying values[243]. - Impairment charges for the year were $83.5 million, down from $265.0 million in the previous year[262]. Expenses and Cash Flow - Selling, general and administrative expenses decreased by $63.6 million (9%), but as a percentage of net revenue, they increased by 210 basis points to 24.3%[261]. - Selling, general and administrative expenses for Advanced Process Solutions decreased by $17.7 million (4%) to $433.4 million, with expenses as a percentage of net revenue increasing to 20.9%[272]. - Corporate expenses increased by $1.9 million (2%) to $89.3 million, with corporate expenses as a percentage of net revenue rising to 3.3%, an increase of 60 basis points[287]. - Operating cash flows from continuing operations decreased by $135.1 million (71%) from $191.3 million in 2024 to $56.2 million in 2025, primarily due to lower earnings and unfavorable working capital timing[310]. - Cash used in financing activities was $279.4 million in 2025, mainly for debt repayments and dividends, compared to $227.1 million in 2024[313]. Tax and Pension - The effective tax rate for fiscal 2025 was 2,270.8%, a significant increase from (46.5)% in fiscal 2024, primarily due to non-recurring tax benefits and restructuring activities[266]. - The pension settlement gain in 2025 was attributed to one-time premium refunds from the termination of the U.S. pension plan, while charges in 2024 were due to lump-sum payments to former employees[299]. - The anticipated contribution to defined benefit pension plans in 2026 is $10.1 million, with ongoing monitoring of funding levels and asset performance[302]. Debt and Liquidity - The company has a $700 million revolving credit facility and a $175 million term loan, with the maturity date extended to July 9, 2030[306]. - Total contractual obligations as of September 30, 2025, amounted to $633.3 million, with significant future cash outlays expected[317]. - The company reported a net cash flow of $(36.5) million in 2025, compared to $(22.3) million in 2024, reflecting challenges in cash generation[309]. - The company repurchased 4,143,000 shares for approximately $175.0 million under the share repurchase program, with $125.0 million remaining for future repurchases as of September 30, 2025[301]. Market and Currency Risks - The company calculates foreign currency impact on net revenue and other financial metrics to measure comparability between periods[217]. - A hypothetical 10% movement in end-of-period market rates would change the fair value of derivative instruments by $8.1 million as of September 30, 2025[328]. - The translation of financial statements from non-U.S. operations could result in a change in shareholders' equity of $131.5 million due to a 10% change in foreign exchange rates as of September 30, 2025[329]. - Variable rate debt obligations amounted to $681.3 million as of September 30, 2025, with a potential annual interest expense change of approximately $6.8 million for a 1% interest rate change[327]. - Current global supply chain disruptions may impact gross margins if commodity prices increase and firm pricing cannot be secured from suppliers[326].