Workflow
Hillenbrand(HI) - 2025 Q2 - Earnings Call Transcript
HIHillenbrand(HI)2025-04-30 12:00
Filings
Slide

Financial Data and Key Metrics Changes - Revenue for the second quarter was 716million,down9716 million, down 9% year-over-year primarily due to reduced volume from a lower starting backlog [19] - Adjusted EBITDA decreased 19% to 99 million, with a margin of 13.8%, down 180 basis points compared to the prior year [20] - GAAP net loss was 41million,comparedtoincomeof41 million, compared to income of 6 million in the prior year, largely due to a non-cash loss on the majority sale of Milacron [20] - Adjusted earnings per share were 0.60,adecreaseof210.60, a decrease of 21% year-over-year but exceeded expectations due to favorable interest expense [20] Business Line Data and Key Metrics Changes - Advanced Process Solutions (APS) segment saw year-over-year improvement in capital orders for Food, Health, and Nutrition (FHN) products, but larger investments were paused due to tariff uncertainties [12][19] - Molding Technology Solutions (MTS) revenue was 222 million, a decrease of 2% year-over-year, with stable orders for hot runner and mold-based components [23] - Backlog for MTS was 55million,excludingtheMilacronbusiness,indicatingastableorderenvironmentdespitemacrochallenges[24]MarketDataandKeyMetricsChanges−Theongoingglobalmacroeconomicuncertainty,drivenbytariffs,hasledtoadeclineinbusinessandconsumerconfidence,resultingindelaysincustomerinvestmentplans[10]−Thecompanynotedastrongprojectpipelinebutfacedslowconversiontoordersduetotheunpredictableenvironment[9][10]−Tariffshavesignificantlyimpactedcustomersentiment,particularlyinChina,leadingtoapauseinordersforthehotrunnerbusiness[14]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonitscorestrengthsinhighlyengineered,value−addedprocessingtechnologiesandsystems,targetinglesscyclicalglobalendmarkets[6]−Astrategicshifttowardsleveragingexpertiseinsystemsdesignandprocesstechnologyisemphasizedtodrivelong−termgrowth[7]−Thecompanyisactivelymanagingitssupplychaintomitigatetariffimpacts,includingdualsourcingandadjustingcontractterms[15][16]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedcautiousoptimismabouttheprojectpipelinebutacknowledgedthatelevateduncertaintyisexpectedtopersistinthenearterm[10][18]−Theupdatedoutlookanticipatestotalrevenueofapproximately55 million, excluding the Milacron business, indicating a stable order environment despite macro challenges [24] Market Data and Key Metrics Changes - The ongoing global macroeconomic uncertainty, driven by tariffs, has led to a decline in business and consumer confidence, resulting in delays in customer investment plans [10] - The company noted a strong project pipeline but faced slow conversion to orders due to the unpredictable environment [9][10] - Tariffs have significantly impacted customer sentiment, particularly in China, leading to a pause in orders for the hot runner business [14] Company Strategy and Development Direction - The company is focusing on its core strengths in highly engineered, value-added processing technologies and systems, targeting less cyclical global end markets [6] - A strategic shift towards leveraging expertise in systems design and process technology is emphasized to drive long-term growth [7] - The company is actively managing its supply chain to mitigate tariff impacts, including dual sourcing and adjusting contract terms [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the project pipeline but acknowledged that elevated uncertainty is expected to persist in the near term [10][18] - The updated outlook anticipates total revenue of approximately 2.56 billion to 2.62billion,significantlydownfrompreviousguidanceduetolowerorders[27]−Managementremainsconfidentinthelong−termdemanddriversfortheirendmarketsdespitecurrentchallenges[30]OtherImportantInformation−ThecompanyhasenteredintoadefinitiveagreementtoselltheTerraSourceglobalbusinessfor2.62 billion, significantly down from previous guidance due to lower orders [27] - Management remains confident in the long-term demand drivers for their end markets despite current challenges [30] Other Important Information - The company has entered into a definitive agreement to sell the TerraSource global business for 245 million, with expected net proceeds of approximately 100milliontobeusedfordebtreduction[26]−Thecompanyhasincludedapproximately100 million to be used for debt reduction [26] - The company has included approximately 15 million in direct tariff costs in its updated outlook for the remainder of the year [17] Q&A Session Summary Question: Can you describe the order cadence you saw in the business as the quarter unfolded? - Orders were stable through February but faced delays due to tariff considerations, particularly in Food, Health, and Nutrition [34][35] Question: Can you talk about synergies related to the FHN businesses? - The company is on track to achieve synergies ahead of schedule, with significant integration initiatives already completed [40][41] Question: Which lever to offset tariffs is expected to have the most immediate impact? - Dual sourcing is expected to have the largest near-term impact, with targeted pricing actions also being implemented [47] Question: Can you provide an update on the TerraSource divestiture? - The TerraSource divestiture is expected to close by the end of Q3 or early Q4, with proceeds aimed at debt reduction [51][52] Question: What is the outlook for the macro environment? - The company anticipates a mild recession, with orders expected to decline from 2024 levels [78]