Hillenbrand(US:HI)2026-02-09 21:36Merger and Acquisition - Hillenbrand's merger with Lone Star Funds is expected to close by the end of Q1 2026, with shareholders set to receive $32.00 per share in cash [86][85]. - The merger agreement was unanimously approved by Hillenbrand's Board of Directors, indicating strong internal support for the transaction [86]. - The company aims to selectively acquire companies to enhance growth, which may incur additional expenses related to amortization and interest [94]. Financial Performance - Net revenue for the three months ended December 31, 2025, decreased by $156.7 million (22%) compared to the same period in 2024, totaling $550.2 million [102]. - Gross profit decreased by $51.3 million (22%) to $183.7 million, with an improved gross profit margin of 33.4%, up 20 basis points from the previous year [103]. - Consolidated net income for the three months ended December 31, 2025, decreased by $7.9 million (89%) to $1.0 million, primarily driven by lower volume and cost inflation [126]. - Adjusted EBITDA decreased by $35.0 million (36%) to $62.1 million, influenced by the divestiture of Milacron and lower volume, partially offset by favorable pricing [127]. Divestiture Impact - The divestiture of Milacron resulted in a pre-tax loss of $57.2 million and transaction costs of $8.9 million for the year ended September 30, 2025 [89]. - The company reported total consideration of $286.0 million from the Milacron divestiture, which included $98.0 million in cash and $188.0 million in debt assumed by Bain Capital [87]. - Molding Technology Solutions net revenue decreased by $109.2 million (56%) due to the divestiture of Milacron, with a foreign currency impact increasing net revenue by 1% [117]. Backlog and Revenue Indicators - Hillenbrand's backlog includes expected net revenue from large systems and equipment, with fulfillment timelines ranging from days to 24 months [95]. - The company emphasizes the importance of backlog as an indicator of future net revenue, although it does not account for projects shipped within the same quarter [96]. - Order backlog decreased by $150.9 million (10%) to $1,432.7 million, primarily due to a decrease in capital equipment orders [111]. Expenses and Cash Flow - Selling, general and administrative expenses decreased by $21.9 million (13%) to $149.2 million, but as a percentage of net revenue, it increased by 290 basis points to 27.1% [105]. - Interest expense, net decreased by $4.9 million (20%) to $20.2 million, attributed to lower weighted average borrowings [107]. - Corporate expenses increased by $6.3 million (30%) to $27.0 million, with these expenses as a percentage of net revenue rising by 200 basis points to 4.9% [122]. - Operating activities used $27.4 million of cash during the three months ended December 31, 2025, compared to $11.3 million in the same period of 2024, reflecting a $16.1 million increase in cash used [138]. - Cash used in financing activities increased by $4.4 million during the three months ended December 31, 2025, primarily due to increased net borrowings [141]. Assets and Liabilities - Current assets as of December 31, 2025, were $1,638.5 million, down from $1,968.0 million as of September 30, 2025 [144]. - As of December 31, 2025, the company had guarantee arrangements totaling $668.0 million, with $363.3 million utilized for guarantees [130]. - Cash at foreign subsidiaries totaled $144.1 million as of December 31, 2025, supporting ongoing international operations [131]. Shareholder Returns - The company authorized a new share repurchase program of up to $300.0 million, with approximately $125.0 million remaining for repurchases as of December 31, 2025 [132]. - A quarterly cash dividend of $0.2275 per common share was paid, totaling approximately $16.1 million during the three months ended December 31, 2025 [134]. Pension Contributions - Anticipated contributions to defined benefit pension plans for fiscal 2026 are $10.1 million, with $1.9 million contributed during the three months ended December 31, 2025 [133]. Accounting Estimates - There were no significant changes to critical accounting estimates for the three months ended December 31, 2025 [100].