HI - Earnings call transcript Q3 2019

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Operator

Good morning everyone and welcome to Hillenbrand earnings teleconference for the third quarter of fiscal 2019. A replay of this call will be available until midnight Eastern time Aug 15, 2019 by dialing 1-800-585-8367 toll free in the United States and Canada or +1-416-621-4642 internationally and using the conference ID number of 6642849. This webcast will be archived on the company's Website at ir.hillenbrand.com through August 30, 2019.

If you ask a question during today's call that will be included in any future use of this recording. Also note that any recording, transcripts, or other transmission of the text or audio is not permitted without Hillenbrand's written consent. is Richard to Relations. Dudley, it call the time to over Director the my turn pleasure conference At of Investor Mr. please go Dudley, ahead.

Richard Dudley

third and and CEO, Good welcome Raver along call. operator. everyone Senior Joe Cerniglia. joined quarter Vice our Hillenbrand's President I'm President you conference Kristina fiscal our Thank by with XXXX CFO, morning to and

recently quarter for our outlook today's During announced of results, acquisition financial call we will the Milacron. and discuss our third businesses,

the We up call will Q&A. open then for

the operating to comments forward-looking that Safe a take this of transaction get Also Before website the and forward-looking non-GAAP could and not me at be our and future you certain X look statements are related will Securities let we presentation found at the performance impact call XX-Q and that guarantees we measures. risk encourage you that the performance materially. are of discussion X during the our results. results of our may a the remind to XX-K deeper actual and These of contain be statements can slide statements actual I course Harbor to our of differ factors Laws. results matters, discussing which certain Provisions for subject could slides our

with refer more on our presented recent to call. please to most of slides our financial non-GAAP use GAAP operating and For measures information this reconciliation measures and the XX-Q the

like I'd Now turn over the to Joe. call to

Joe A. Raver

Rich. Thanks Good everyone. morning

Hillenbrand to record success diversified company proven industrial Hillenbrand model. of at global is the by with vision a build class, world Our driven a operating

the importantly in for for returns our our provide which shareholders. our create we to employees, great customers, is and value professional mission for superior operate, opportunities communities improve Our

billion engineered ago we $X in customized systems with annual highly technology and announced Milacron, revenue. About in more three and the than processing in global plastics of leader a acquisition weeks

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Hillenbrand's customers across run over long reach to production the emerging and capitalize on help the industry our trends acquisition and innovations biodegradable from all expand us process that compounding in plastics, enable and plastics including serve Milacron deep injection will us our better, processing innovation, to the value polyolefin molding plastics and products steps plastics recycling. believe chain including across these the The will of We expertise to extruded engineering recycling. across foster

reduce of scale the footprint shared our services to costs. improved to expect procurement, service increased reduce and We strengthen penetration, company after us reap drive network global public costs, to company's the model leverage enable market and and combined benefits Milacron's

first in $XX XX first million rate savings annual months. years three that to in million of cost We million the the within $XX $XX generate with coming expect to run

value above Milacron the significant we shareholders. all this Hillenbrand both create believe and For deal will outlined reasons for

XXXX Milacron. additional near-term any be of because we'll Following the deal expect not potential year of become pursue industrial We're deals significant on the combined focused in class excited we and Hillenbrand's a our vision of We're as on next paying and the the world to company. it quarter to full very integrating debt. close planning this see achieving we will which be focused very down global to complete companies a acquisition about step in in the we first calendar diversified

was sustained of Revenue continued of results. bright quarter Okay, with for Hillenbrand's $XXX the that the third a prior extrusion $XXX of handling some material more from growth repeat. of remained strong helped expectations. industrial basis. over level systems line results demand in the to That market million, million XX% levels up year. we record below total per Plastics an earnings adjusted that not offset customer $X.XX softer year the and large with a last was quarter slightly at year-over-year. on increase us and flat slightly our a third was revenue upfront In other was prior I decreased delivered revenue in quarter's particularly healthy a in essentially Backlog of will now quarter end but year quarter contract returned number but Batesville spot or incentive markets. of highlights cover $X.XX as remained the share in did normal the a prior with performance,

our Equipment the Group, quarter mentioned earlier plastics outlook I our and as business to in process well Turning of the performed remains positive.

in projects to expansion subdued Asia. seen quarter of very America we've at in level. expected to in but volume is earlier are invest third indications and the year the order a remained strong new North especially continuing in As more customers pipeline capacity compared polyolefin and that was solid The

anyone something system for and rise. cost In have partner us continue for of the better world. else. projects addition our can We've most complex seen making the to than output of plant we increase customers higher our more to to efficient plants solutions capacities deliver demanded business construction the believe reduce Customers the innovative new choice we've total which developed output with equipment the Coperion largest of is capabilities ownership around

risk grows work we modernizing the significant future. In As when a while the opportunity OEM Coperion the as systems costly of installed minimizing downtime. to in aftermarket believe to prefer performing large business our customers we service these capitalize with efficiency system or base maintain ensure optimal on to they experience plants of have the the

business healthy as has we're but see remained The markets. end engineered plastics in watching mixed generally demands key cautiously we

plastics one tend to ABS, shorter long-term engineered said All more to as demand to longer as shifts end the see are for hand cycles softness markets to we cycles other see recycling quickly active plastics and engineered overall automotive remains and positive. investment in that On the in but in in on we the hand We industry. growing. such see polyolefin customers polycarbonate, PVC, our outlook continue react compared the

expanded We outlook. long-term fiscal have has a Demand that stable food remained modestly attractive growing these in pharmaceutical and this applications presence in an year. with areas

and We continue participation targeting, end to time increase horizon longer in additions. our a markets look over improved for these new line through innovation, product product opportunities customer to

market quarter. the Our in industrial dynamics encountered businesses more other challenging third

we ship and previously As Process to in lower this expected face business separation capital customers some for delay demand to expected orders Equipment quarter. cases we've had continued

weaker aftermarket in and Additionally customers utilization the for lower resulted quarter. in process machine sales these

separation mixed. overall areas We market has to industrial like demand investment positives and in us for temper see has some in for Municipalities been continue softness led but has mining challenges expectations American the the by than faced business to lower where flow similar and control We our North near-term. in fertilizers expectations projects been

while we quarter. especially for the plastics weakness In projects in move polyolefin in opportunities summary, remain to markets we're solid end fourth as industrial other expecting continued

and We continue effects to to help operating the cost offset Hillenbrand initiatives savings drive productivity demand. of leverage model weaker to the

on comment Batesville. me let Now

possible to position and business strong generate and run to its predictable initiatives. operating flow for fuel business as leadership strategy Batesville Hillenbrand the to is Our Hillenbrand build efficiently on model the growth the cash as leverage

in weak a As contribute to flu the quarter. decline recall in burial you steep second will season a volume

volume out year far. to played half second it expected so that's stabilize the of We how over has the and

Batesville third EBITDA result expectations performed our the margin a terms in revenue As in of with line and quarter. in

constantly employ efficiency, secular to organization. and working operate improve the lean and flexible the Hillenbrand model decline. We're manage business a through We continue help a costs, to operating reduce to

for Additionally flow strong industrial leverage our growth we to to our in investments continue Batesville's fuel businesses. cash

remainder me third financial to Kristina and to let for turn outlook call Now quarter the the over Kristina. our of XXXX. results review the

Kristina A. Cerniglia

the essentially Thanks which flat year-over-year. We Joe million third everyone. total was and $XXX reported of quarter in revenue morning good

Group of basis of while business tax basically X%. quarter share was largely largely full effective million as $XX the revenue a down was per or of for restructuring was was net FX X% tax and as result Process charges. was cost The Act. up a acquisition $X.XX the $X.XX last revenue cuts GAAP of XXX Excluding flat. year-over-year rate result income XX.X% Jobs compared up and implementation year Batesville per down to points the revenue year-over-year share Equipment

of operating income dividends. of primarily Adjusted of XX.X% driven was EBITDA in primarily XX.X%. $X.XX decreased million by X% decreased in partially net which million was per form rate adjusted the million margin and flow, million Adjusted to by year's million cash $XX prior tax the productivity cost $XX point improvements. unfavorable mix effective returned share offset We $XX inflation basis timing EBITDA with of The third are requirements. and adjusted We year. the XX due or line last of capital shareholders working cash our quarter than about pricing to $XX generated $XX lower of and

of a but projects capital improving As efficiency can working focused a our remain timing conversion large the initiatives have on drive on we to effect cash capital reminder significant cash metric. through

free flow to fiscal income XXX%. Our and the nearly quarter conversion over we exceeds of generate cash year goal basis the year-to-date full with on net a finished that rate a remains

the Turning to with of to me Equipment essentially was Process prior $XXX performance million year. Group. let Process cover The in revenue Equipment beginning flat Group segment comparison the slide next the

grew revenue Excluding headwinds foreign currency X%.

We demand see Despite softness system service parts for serving growth proppants weakness large markets demand other has with polyolefin way. related material sales continue machine handling and aftermarket overall extrusion the remained to leading capital That solid. and business from where the plastics was end by the production in equipment moderated. to primarily proppants for projects offset in revenue these

future. proportion cost basis to continued higher proppants project due Adjusted prior margin which by significantly systems been to EBITDA adjusted the issue our quality expectations mix, supplier flat in compared systems onetime a to large Consistent had and margin we to would productivity growing was the quality and revenue for initiatives. inflation, improvements a issue by pricing which higher EBITDA XX.X% the have were XXX strategic lead projects will of over production and for margin Without decreased used carry The down offset short-term installed a quarter. sourcing points large buyout the of and supplier expect pressure however, these the higher of partially year. highly base content the driven margin lower we onetime polyolefin due parts create systems new strategic a appointment profitable service with opportunities margin in some separation

the number delivered Order the last down record although A backlog year are XX% included in majority of of $XXX over year projects the quarter's from fiscal are large which in level. systems million was prior scheduled be increased X% of it to XXXX. backlog,

we said new a growing great of to to opportunity capacity. installed continue healthy see to this Joe projects As of We pipeline related continue systems. base see investment polyolefin to production our build a as in

the expectations that increased compared Moving prior did to to Batesville the in million in X% was line contract quarter. due for business for $XXX of repeat. to upfront incentive an not customer year prior with of performance year impact the our Revenue the renewal

by basis productivity mainly Excluding despite lower incentive was driven revenue contract the the was cost margin which XX.X% lower demand. flat EBITDA by inflation of XX gains. year was prior offset Adjusted points partially than

inflation. actions to the impact cost the executed pricing continued targeted moderate During we of and actions restructuring quarter

We end XX% continue to the Batesville margins. expect year at to EBITDA

In capital to focus business main Milacron we've said growth. in terms allocation our is vision. in profitable inorganically is organically acquisition strategic priorities and our investment our furthering our that The reinvesting accelerate of both a

remained close the third of times X.X position with quarter good leverage the to as putting in prepared EBITDA Our deal. us we a debt net to in low finishing

temporarily our expect of pro close net modifying is EBITDA. capital deployment acquisition are Post not the While to strategy times we prioritizing be approach will our we be and changing, deleveraging. X.X approximately leverage our forma

XX seek to leverage post to ratio bring down We below times X.XX our close. pay within will net down to debt aggressively months

and in ability confident our we to committed the debt reduce our are ratings maintaining over to meaningfully investment grade are near-term. We

pay returning strategic cash when we ratio executing share our leverage We per shareholders also to our reach repurchases. will acquisitions resume to to dividend current continue focus plan share and targeted through we on and our

remain provide strategy balance and in outlook to allocation. profile our our fiscal We and a disciplined to for execute continue remainder the to a that our will With sheet XXXX. that maintain expect to will liquidity strong turn capital of flexibility we I'll

We forecast to continue within be revenues to existing the ranges.

X%. impact face revenue a revenue for reminder our We've currency continued now X% negative includes headwinds consolidated a from expect we to translation. and foreign guidance As growth of from FX consolidated to X%

including are X%. to pressure. forecasting Group X% approximately Due industrial of Equipment at of prior grow negative X% Our range was lower estimate Process X% we the FX revenue slowing end end markets our to to

for Our segment prior pressure this FX estimate to X%. was

Process flat previous as further estimate to year relatively our year-over-year mixed XX pressure full a compared Equipment expect margins now XX volume. to lower We Group's point to of EBITDA be basis of increase a and result

Batesville end project full to be to to the the continue range margin adjusted at We of year XX%. with decrease EBITDA X% for the sales approximately of lower X% of

and industrial a In we're expecting higher end addition slowing markets to rate. FX continuing tax headwinds

of to earnings For X% compared adjusted XXXX effective full approximately now rate per $X.XX The prior for $X.XX. to be our tax impact of reflects compared these a of updating estimate EPS to XX% approximately guidance. an XX%. currency negative to is the we're Adjusted prior projected adjusted reasons share year earnings to for of foreign estimate $X.XX range $X.XX our and

actions will reductions targeted In have as pressures response the we're outlook. I model external operating long-term focused to same offset always our and remain to implemented these our spending more At back to we to constantly our and strategy. efficient. leveraging this executing call time turn businesses discretionary Hillenbrand near-term we the better pressure And restructuring on time Joe. to the At make the

Joe A. Raver

our industrial was weakness in were below expectations markets. plastics end results continued offset by our Thanks third in Kristina. Overall modestly other as quarter strength

see the potential operating on Hillenbrand acquisition. execution growth. with of operational our However, drive model and profitable We're Milacron efficiency and the leveraging we're the future excited and tremendous to we focused company about the

on concludes we preparing as at integration for time the customers and with that continue of class remarks. finish customers, the addition diversified teams of prepared We're of world company industrial our that In take open beat the ensure please global don't we're Milacron lines. in the same that deliver our I'm XXXX full the eyes shareholders. deal. into communities, strong transform employees, your while and That Operator the ready for a year to would we groundwork you questions. confident will potential our laying our the our a our to to our the miss we

Operator

Instructions]. [Operator

CJS Your first Dan from from question of comes Moore Securities. the line

now line Your is open.

Unidentified Analyst

Good of and the quarters steady and plastics morning, projects Could this in are aren’t brighter geographies the interest? for already growing is significant John Dan. standing with pipeline spots that you bit past polyolefins in us on the you and seeing a that one give start color to lift little more two most what backlog over more and is in a

Joe A. Raver

morning good make try everything of if sure you get hit to I'll I John. all again didn't that, Okay, there. ask

year is number a in so I So in one both growth bright these And those right. and smaller systems projects Asia plastics you is we're plastics bit think the engineering centered plastics the quarter announced these bringing terms projects. mostly so a projects are slowing hand. and bit of in little spot very the automotive the in in large spot of this I so of and continued polyolefin then and value on side mix North of and some demand little we demand pipeline see think it a think These of the seeing projects. down -- global the bright the are are I and which solid economy projects to America seen continue got We've a on

to strong seen to other projects for in polycarbonate continue we demand hand and and PVC grow ABS, really related On the we've recycling.

is a have quote at but we it's pipeline market little looks stable beginning of different it's number stable would a up and I slightly terms market a the and so this sequentially. at quarter pretty our the remains as engineering net-net and year in the it and of looked projects out expected than so this in of the the week example stable business value plastics there So pretty an it maybe just

of So the we plastics good side on to demand business. see continue the

positive And the quarter. probably so for story the that's

more variable And quarter then quarter, but light I plastics Batesville in season a if flu think real year-over-year you the secondly the go not and in was performance secondly second the in to perhaps be where the beyond to the quarter. and a third I the the think it I'm with another that demand was that comparable. business really Batesville sure importantly story quarter so challenge we normal saw expected this We want market tough but and market for in well return Batesville also market performed was and more to good

Unidentified Analyst

for impact Thank comment and versus of at this the on again, all volume you just that what great. Okay, could quarter? was the mix color that Batesville price

Kristina A. Cerniglia

our we call was essentially was flat. essentially and up what So ASP volume

Joe A. Raver

volume Yeah, this we Batesville mix price unusual in didn't see was quarter. in and what happening anything on

Unidentified Analyst

it, exposure some cash pro you, SPF pull pretty the risk here? downside attractive looking flow numbers way then levers protect at and stock trading Got times including your recession forma and China we to you walk those digesting you the value that what us typical because to in that, how XXXX hit or around maybe stocks much when seems through and is there the market that thank sensitivity just your can can concern to and for deal of leverage the you free about that at is is seven goal if and/or that a finally number Milacron now synergies, with can expected

Joe A. Raver

And week generation you as but cash what's flow in look we course bunch can So company our cash a through own costs to business can be that look synergies we again to that is million which we we look in procurement this services on their follow the us earnings forecast forward indirect so. the in have so XX that at from their million good leveraging their few months they stock forward I the that prospects believe see on model years their estimated just have Milacron and of that and or so both we we chunk also in and restructuring are rate comes we over happening sort both with and operating They've run but of using as then direct business business -- the million and side you call of redundant then well that the have $XX business public And from. we as see impacted shared can as think opportunities opportunities side operating the past a $XX good. when model. of $XX done and of first where then hit cash efficiencies that the the the flow we Hillenbrand walk

about the to good the feel to generate and those hit we us numbers ability flow. for So cash

least think and which stable flow driven you forward when looking backlog tend other solid and piece get And business, that's at really big non-cyclical cash by we the stable have business to I then right the is don't projects history. cash in so about business million over parts a those secular service Batesville cancelled, a good that of backlog the very is to it a and think revenue. trends, it's A our element projects our $XXX there. Coperion flow really be

have economic So up recurring holds good stream cycles. revenue well really we all which a

to cash publicly associated our generate down pay with targets So meet feel ability our the good forward and going we've about stated deal. we that

Unidentified Analyst

you very thank much. Great,

Operator

from of Matt comes question next Summerville line D.A. from Your Davidson. the

line now Your open. is

Matt Summerville

and you remedied that exactly quality Thanks, this point? described magnitude hedge what questions, that have at may the the it's quantify couple been issue of whether quarter in supplier and you fully from can issue the you took

Kristina A. Cerniglia

Yeah, sure.

So have I our quality EBITDA PEG that mentioned issue been the supplier would had flat. without

million. $X we rectified, did If been it that you would have onetime convert expect has to pennies supplier $X.XX you not repeat. would or issue and it was that know say you a I to tell about been about it item,

Matt Summerville

you well and been is like is proppant then the to I some with impact the quantify what guys can have right, it the side to business, the maybe quarter? during permanent respect sounds that you to as things cancellation, may may that of that guess slipped And slippage, be

Kristina A. Cerniglia

to work not nice what that taken are is kind that about we What those proppants with obviously were utilization tell take. trying about impact equipment a they from seeing some we and down these are see to payments that The in customers not is are to that push so or take products. shipments in know don't they some lower that going total also we in Okay, of we if perspective significant of would in those have do thing are revenue. is to I $X scheduled we some you not. have roughly proppants that but only did because worth cancel customers cash we seeing total the million the capital was our spare parts originally

that margin to And can generally equipment. tend our carry because at those so equipment through so than higher assume flows or roughly XX% capital average PEG margin you

And temporarily equipment to whether working get placed. real that it's not or so it's hard to say and try but pushed hard permanently or we're

Matt Summerville

you in can sticking area quarter and during that, Coperion you what sort a organic for maybe proppants much business experienced you how was down the PEG year-over-year on business that growth quantify to effect the of with With guys? and

Kristina A. Cerniglia

really primarily growth So it's businesses. outlook. in our industrial about so of of I continues have that impact European that's we for most business FX But we're other that were to would some part think Coperion impact seeing and have that significant tell hit you did if continues offsetting some wellness high you did the FX grow single-digits they some to that that did based experience business. that so they business roughly see positive to and organic of

Matt Summerville

proppants was then down year-over-year? how And Kristina much

Kristina A. Cerniglia

down was million Proppants $XX I am in going say year-over-year, revenue. to about

Joe A. Raver

is larger high the compared also capital majority projects as margin Coperion future larger margin for us. most to but Coperion business the -- that spare And they parts utilization vast that that's consumable in profitable part the for are projects of also reduced really capital, which the to mentioned and in market. of upside parts, And we generate lots includes for that of us at that spare that's Kristina the of parts that's challenges, saw

Matt Summerville

you Got it, thank guys.

Operator

from from Buckingham Your one next comes Clement question Jamie of Research.

now line is Your open.

James Clement

four quarter, with are follow-up. all about out Kristina the how are good is I of things a June Joe, between Joe and from and if perspective everybody. Hey, in years morning ago now you your XXXX, similarities the ask and macro there could there guess then Hey any of saw, of of you don't played seeing kind start environment XXXX what I there? I and any kind guys you kind similarities what you know, I'll

Joe A. Raver

a I to have know time. You to bit -- back take myself my back that little

I We challenging was markets. challenging. saw of think a number that pretty

terms to very up and of that's take again but and down business think going proppants a kind I'm the a its a I So believe when business to that sharp of down have love -- in cyclicality. back at point it's it's myself up I on cycle in we're we that so it's but because challenge

that think that. we're of so is related remains also thing the high utilization was experiencing would that similar that pretty last that the you I cycle we And is had there. tell equipment out I one to the

which saw consumable we least was at parts steadiness. or So good continued growth

the XX we're capital utilization. downturn of more seeing reduce and both resembles downturn this it's think where I

things, timeframe that from of business and Coperion a where in during pretty honest be relatively years. side perspective. Batesville I a us market things very the the Batesville are On were those for you perspective don't from but in believe flat was predictable the we It's stable recall period market. it a with I to

I would in going and experiencing we're that's project be the side. on strength on large difference And continued today the a been so I certainly projects large while. mean think for quite

that different. -- was that a be it one would would of the is that probably bit part that So different, be place probably

James Clement

the Okay. businesses have Hillenbrand That's to XXXX you you I yet? for you when too just then anticipate Kristina, in the thought quarter, really report color. to to fiscal guidance guiding for Or combined is the close the Or you're it shot Milacron early going rolling And a way just deal? -- you guys no, and very listen, the take September businesses? tell I given guiding appreciate on at would when helpful.

Kristina A. Cerniglia

It's way know to yet. too early

-- we guide guidance we update the will our September deal. will we business we then when and So close on in

James Clement

Okay, much. that's great. Thank you very

Operator

[Operator Instructions].

the question from next of Your from Sidoti. comes John line Franzreb

now line is Your open.

John Franzreb

pricing just downturn, bit getting on had that the the we to last on the follow kind last backlog high you. Joe, are Thank outlook with compared a especially basis? context you about they currently favorable, in they getting in the looks still of what putting could like talk up little to is thought, a relative the backlog, are time process of you a jobs relatively tougher,

Joe A. Raver

Sure.

tend -- tends bit pricing have of So, when a relatively to we better demand. we get high periods

engineering space been along all backlog. would pricing the I very the chunk we're so on and the but market terms pretty project -- solid in also that been seeing think pricing the in costs projects I good our quarters in the we've really as solid. constraints value passing pricing that chain out well. successful backlog of on we've number big so and are in capacity a been, has of plastic pretty you know a The as pretty They're there. in say is There's and So large of

backlog the about in So -- the good shape. is feel backlog, good we good feel about

John Franzreb

included the delays great and balance coming better or shipment is into it quarter than of they assumed just wondering fourth not the so for outlook? the guidance Great, proppants quarter they in fourth are be year, regarding the Okay, expected. the I'm the are to

Kristina A. Cerniglia

outlook. included No, fourth in they the are quarter not

John Franzreb

on maybe on you're understand what's it like and materialize if upside. case the revenue flat EBITDA for there? is they I looking the it. so margin, Batesville an looks so the relatively but Got going what's And the that drivers in improvement sequentially if Okay,

Kristina A. Cerniglia

some to we targeted the of couple had expect reductions quarter that and so Yeah, savings through. this of made you in restructuring see business we come so some there will things if are

In price and also margin we should for had so addition combined taken targeted actions an to the see those EBITDA Batesville. uplift two we

John Franzreb

Got last Joe. I it, And it. got one question guess

below you, this in refresh profitable of that, business for would Could a -- just what maybe your to You my business kind memory and prepared that a of you've margin bit the automotive on maybe remarks threw-in just there, great? kind be seen you around you, exposure margin profile, that you for sector. color what exposure is some have

Joe A. Raver

we our of that automotive engineering makes most make so plastics. sure, to the equipment exposure Yes is

machines business And our so systems of compounding and sell. to so it's tend be that that we these part

plastics And so of part engineering and so for plastics. it's part relatively a the the engineering overall of driver a big it's demand of market

as business And continue have in strength some have seen to polycarbonate, by a it that's of we I offset recycling AVS, grow the space. automotive in so and relates seen especially other as parts PVC we then in the but -- mentioned some been we to softness

see keep there's tend to are the The we a one plastic we've in in making thing job those softness of that versus difference perspective end our the no kind but selling while would profitability into plastics our stable. that major our difference really make markets to equipment. so is a and profitability then there's the from that so of engineering business of little go automotive parts between to other other of size pretty not who difference for business. pickup of And the margin engineering customers between automotive a a seen part of the And pieces business -- lot plastics of

good, much offset and other end for in able bright quite other -- spot a of not to it somewhat we've has spot markets. that's but parts that's been a us we've felt weak it So bright because automotive right, kind been as

John Franzreb

I you Great, got in Joe. glad Thank am you sir. that

Operator

the Davidson. from And your Matt last from line question D.A. of comes Summerville

is Your line now open.

Matt Summerville

obviously costs to steel of in as talk with input outlook that have very into it if Thanks, cost kind can can particularly that significantly. also next side? year should just theoretically over about you you XXXX Batesville maybe respect tailwind your to looking pertains protect Hillenbrand well the calendar and follow-up, then rolled How margin on a PEG they've

Kristina A. Cerniglia

Okay, currently and that so contract we from pricing the buy through our of a year. us on contract will first perspective have quarter steel Batesville next we so take

And so price still these callers. coming is essentially the down happening what's even steel have with we

at pricing time. this market in than higher point steel paying we're So

in favor not as when prices prices Now that go worked were steel did going of past our our quickly. up, couple the up years

steel lag So a we're pricing. seeing in that

was some So what predict sorry is, it we we pricing see where if where is pricing. when then should in is steel hopefully hard depending it on question, relief expect next where to really stays your year And that renegotiate we steel other steel Matt.

Matt Summerville

on you Batesville in if you XX% what XXXX, margin at Well, how XXXX? that want the to margin headwind is much encountering fiscal ask look point follow-up said, in that, you EBITDA for that to I think are a fiscal I input XX% cost in

Kristina A. Cerniglia

look forward next we to think would are look -- stay I So margin. answer is the targeting at to XX% to the as way as the EBITDA we year organization question forward I we that that

a targeting And dynamics to you in of business there what to that we're so imagine as that so are lot go and that stay XX%. can is

be obviously XXXX that out And in be so but additional EBITDA September. than to anticipate will in coming guidance don't higher with we we margin

Matt Summerville

and about PEG cost right well? it my how may sort to prices to outlook lower tail side steel there of then what was, the the the these then benefit the input question the Got as way think first of business

Joe A. Raver

is, PEG more business the job. think I of then lot the So our the on close a job we quote side and

So are quote the current input we as we for the orders pricing able do quotes. the we reflect to all when costs

other have the We once a tends done to that unlike casket and be have books to ability cost increases. update year the we're the ability cover the to price pricing we where take to able actions ensure business also commodity

or price and to most were going our the you steel we margin of quote each the have job was if part Because make year up had this the sure the ability the on think individually quickly. ability number books and that we capturing to adjust pretty quarters so again And past when about for we side.

don't expect So we impact go it a impact, big on I as a to forward. don't margins have think we has big

Matt Summerville

guys. Got it, thank you

Operator

I There this time, remarks. are further back will questions no at for turn to Joe call over the closing

Joe A. Raver

operator we to report we thank again appreciate participating to fourth the to for when our in Hillenbrand I call you in in everyone today. November your want look forward Thank speaking We and and interest you quarter results.

So of summer. the have a great day. Enjoy rest the

Operator

This concludes call. today's conference

now may disconnect. You

Hillenbrand (HI) 3 Aug 192019 Q3 Earnings call transcript