Hillenbrand(HI)2025-02-06 16:48Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was 0.56, consistent with expectations [28] - Adjusted EBITDA was 511 million, down 10% year over year, with adjusted EBITDA of 196 million, down 5% year over year, with adjusted EBITDA of 1.6 billion, while MTS backlog increased by 1% to 287 million [8][9] - The strategy includes concentrating resources on core businesses, enhancing margin profiles, and reducing cyclicality [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth outlook despite current macroeconomic uncertainties, including inflation and interest rates [12][25] - The company anticipates a modest increase in leverage in Q2 before reducing it to the low threes by the end of the fiscal year [35][40] Other Important Information - The company plans to use net proceeds from the Milacron sale for debt reduction, with an expected close by the end of Q2 or early Q3 [36][37] - The updated fiscal year guidance reflects approximately six months of Milacron's performance, with revenue expectations adjusted to 2.8 billion [40][41] Q&A Session Summary Question: What factors are influencing customer order decisions in APS? - Management noted that geopolitical issues and interest rate clarity are significant factors affecting customer decisions, with strong pipelines in regions like India and Saudi Arabia [47][50] Question: What percentage of revenue does aftermarket represent, and what is the outlook? - Aftermarket orders accounted for nearly 40% of total orders for the quarter, with expectations to maintain a target of around 30% for the year [55][57] Question: What drove the decision to sell a majority stake in Milacron? - The decision was based on a regular review of assets, determining that this structure would create the best return for shareholders while allowing Milacron to pursue growth opportunities [70][72] Question: What are the expected EBITDA margins and growth for MTS post-divestiture? - MTS is expected to recover to mid-twenties margins with low single-digit growth in the medium to long term [78][96] Question: What is the expected free cash flow conversion capability post-divestiture? - The target remains at 100% conversion, with expectations to be closer to that number in eighteen months as integration efforts conclude [98]