Hillenbrand(HI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q4 revenue of $838 million, a 10% increase year-over-year, but a 1% decrease organically, reflecting an improvement from the prior quarter [8][18] - For the full year, consolidated revenue increased 13% to $3.18 billion, primarily driven by the FPM acquisition and strong aftermarket growth, but organic revenue was down 5% [9][24] - Adjusted EBITDA for Q4 was $144 million, a 2% decrease year-over-year, and down 13% organically due to cost inflation and lower volume [18][24] - GAAP net income for Q4 was $12 million, down from $17 million in the prior year, largely due to increased business integration costs [18][24] - Adjusted net income for the full year was $234 million, resulting in adjusted earnings per share of $3.32, a decrease of 6% compared to the prior year [25] Business Line Data and Key Metrics Changes - In the Advanced Process Solutions (APS) segment, Q4 revenue was $591 million, a 15% increase year-over-year, but organic revenue decreased 2% [20] - The Molding Technology Solutions (MTS) segment reported Q4 revenue of $247 million, essentially flat compared to the prior year, with adjusted EBITDA of $42 million, down 8% [22][24] - APS backlog decreased 10% year-over-year to $1.7 billion, while MTS backlog decreased 1% to $241 million [20][22] Market Data and Key Metrics Changes - Demand for large polyolefin systems and aftermarket parts was robust, but orders for mid-sized equipment faced challenges due to macroeconomic uncertainties [7][9] - The company noted improved orders in India for injection molding equipment, while hot runner demand in China showed slight improvements but remained low [10][11][51] Company Strategy and Development Direction - The company aims to optimize its cost structure and enhance trade working capital efficiencies while focusing on aftermarket performance [4][5] - The integration of the FPM acquisition is progressing well, with a target of achieving $30 million in run-rate cost savings [14][16] - The company is committed to leveraging its global footprint and operating model capabilities to achieve margin expansion and top-line growth once demand normalizes [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future despite ongoing macroeconomic challenges, emphasizing the strength of its market position and the health of end markets [5][32] - The outlook for fiscal 2025 anticipates total revenues of approximately $2.93 billion to $3.09 billion, reflecting a decline primarily driven by the APS segment [27][28] - Management highlighted that while demand remains subdued, there are expectations for modest improvements in order volume as capital budgets are unlocked [35][36] Other Important Information - The company published its first task force on climate-related financial disclosures report, demonstrating its commitment to sustainability [17] - Recent updates included the election of Joseph Lower to the Board of Directors, enhancing the Board's financial expertise [16] Q&A Session Summary Question: Order trends for fiscal 2025 - Management indicated that capital budgets are currently locked down, but expects orders to trickle in starting in the fiscal second quarter as budgets are unlocked [35] Question: Hot runner demand across industries - Management noted stability and slight growth in the hot runner market, particularly in India and China, with ongoing efforts to expand into new end markets [37] Question: Confidence in food and pharma markets - Management stated that consumer demand is a key driver for capital spending in food and pharma, and while stable, it is too early to predict pent-up demand [39][40] Question: Factors influencing APS segment performance - Management highlighted that lower volumes, timing of incentive compensation, and a mix of lower-margin projects impacted APS performance [43] Question: Pricing pressures in MTS - Management confirmed ongoing price pressures in MTS, with expectations of muted pricing recovery in fiscal 2025 [45] Question: Integration success and future M&A plans - Management acknowledged successful integration of FPM and indicated active considerations for future M&A opportunities [68]