HI - Earnings call transcript Q4 2019

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Operator

Good morning everyone, and welcome to Hillenbrand's Earnings Teleconference for the Fourth Quarter of Fiscal 2019. A replay of this call will be available until midnight Eastern Time November 28, 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 2084256. This webcast will be archived on the company's website at ir.hillenbrand.com through December 13, 2019.

If you ask a question during today's call, it will be included in any future use of this recording. Also, note that any recording, transcript or other transmission of the text or audio is not permitted without Hillenbrand's written consent.

my Director turn of it's to call time, Dudley, Rich Investor this pleasure the to over At Relations. Mr. Dudley, please go ahead.

Rich Dudley

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

an pending today's we'll discuss year financial of for outlook the for then call, call fourth fiscal year open our During up our and XXXX, update Milacron. We'll provide for we'll results, acquisition quarter and on businesses the full Q&A.

recognize a addressing results, questions appreciate you and there we While outlook questions interest on we closing remain and we Hillenbrand be not future is quarterly any in we Milacron's their your performance, will until focusing regarding of topics. companies specific separate their lot or

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

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

Joe Raver

Rich. morning Thanks Good everyone.

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

deliver create employees be and mission exceptional professional which to for customers, for opportunities for our our great we responsible the to operate in value shareholders. value is our communities provide to Our

growth Our key four strategy pillars. has profitable

economically both achieve marketplace. build and strengthen business to scale is platforms and first in The to the

foundation Hillenbrand to growth, second is utilizing scalable build the a The for operating model.

cash fourth free cash flow flow. that is run Third And for to effectively deploy is Batesville the shareholder to value. create to strong

our in the year fourth encouraged share. delivering growth and including and finished We record adjusted with by fiscal systems strategy XXXX per earnings in challenging in a environment. revenue progress results, in financial the at margins We're Batesville's made as executing polyolefin quarter large resiliency as Coperion continued cash flow healthy solid demand well and

and the to integration business. BM&M During which Milacron, the our is the our transformation. successful integrate within Solutions year, we largest Screening step the we're now in of acquisition our completed preparing separation next And history major in represents which

with aligned will our along and strategy. growth. our The Coperion is businesses acquiring portfolio, leading with sizable which good focus and future strong be Milacron businesses technology. very acquisition well our main with to We're We're platform adding two business for brands our investment

near expect to to Hillenbrand operating the million And to drive the the scale other to get we driven model. longer-term, of innovation. of cross-selling shared we through expect year end by as and synergies rate of redundant benefits the the efficiencies we procurement term, cost over costs, in synergies and application operational In the run related medium company by public three, achieve $XX revenue

parts the couple of and tensions, showed past. the a ago, seen business very their slowdown from trade facing global of the in that have have we that fiscal impact reported of some challenges in may that you effects third results we different managed As our not and from headwinds, quarter through of days are the the Milacron effectively industry

long-term long-term this $XX is in our transformational targeted creating million synergies not highly we a change value. do And achieving cost Milacron's in remain and third quarter acquisition. that strategic earnings belief confident shareholder

me revenue. let Milacron you in Milacron, Milacron you give a engineered opportunity is For of and runner the strong highly quick have global are and injection we're leader with snapshot customized positions particular brands equipment in plastic in a billion ahead industry about with and is a than technology and processing recognized us. excited $X systems, metalworking as and who of those leader in in They more and why fluids. annual of unfamiliar hot systems molding

in Milacron operates three segments.

bases that Melt advanced MDCS MDCS. the highly it hot business a technically First, runner or is systems is Milacron Systems and well-known engineered, brand, control which for is serves. global and in its the Delivery mold manufactures industries & and designs components. process Mold-Masters Control leader

designs Processing Technologies Advanced injection the including systems, India. America and In the APPT brand. extrusion molding equipment, leader Milacron molding, plastics Second, processing a is business APPT. under manufactures North auxiliary in and or Plastics and recognized Milacron is injection equipment and systems

and And a CIMCOOL customers fluids its global production help metalworking third is operating business the metrics reduce financial the presence. CIMCOOL attractive It's under that brand. fluids a strong with provides business costs.

of compelling believe deal. merits continue the in strategic to We the

We extruded together. for are expect Hillenbrand We scale. opportunity with leader the Today base engineering in strong value there resin to a emerging is plastics untapped and will an expanded have and stronger products think across chain and capabilities we Milacron we production and become global be capabilities and recycling. plastics, in Hillenbrand increased

durable us and processes end deep in including plastics biodegradable expertise enable our shaped We these on product trends our our and all areas recycling. across foster where products. reach to industry plastics into will offering processing, capitalize that believe plastics innovations emerging innovation is expand will the into across Milacron and extend in these

light electric are the improve improved an consumer long run, plastics, We delivery and more durability and and expect where drug in durability. and for including industries and automotive, less to critical with plastics demand safety, goods therapy weighting medical of fuel-efficient plastics more over continue the grow becomes require as durable maintenance; to for that and increased benefits vehicles; increasingly recognizing the construction, demand on with focus products particularly

proposed more we've July, progress durable diligently planning made process and is while on we products. focused Milacron's plastic combination products equipment announced in single-use than substantial the highlight that transaction, towards day readiness. It's important integration one rather to closing the the Since

also people oversight. integration, the partnered a best to have consulting and firm leading structure our leading have We and provide with

We day integration kicked-off management the Operating Model, our day President hit teams readiness, Hooven to working through a These dedicated day of by ground teams across Hillenbrand and Vice centralized organizational one. structure are process Jim and led we're running functional integration office XXX on short, with one and synergy In the the a model preparing achievement. of the on development key areas. combined

drive us running on to The focused structure core dedicated synergy businesses, enables realization. set our while remain we've integration up teams

generate run rate synergies with years reduced company of to significant from expect we million within approximately cost public a $XX reminder, annualized a As coming three portion costs.

Our complementary two limited commercial with are companies overlap. highly

Coperion core done as we We're in the this synergy to our in disruption successful before minimal has combined expect confident execute we can businesses our apply that earnings ability subsequent on share to effectively better. of we the acquisition after We'll the with and closed we plans. make transaction here. experience details businesses our calls. help We've and think integrate progress So additional and

November seek Milacron transaction. approvals to In the all the approval anticipated Milacron's on on is the shareholders. a The holding regulatory also their meeting reasonably conditioned of terms approval. XX timing, special received is of completion of we've merger for

to the close. be met that to are order vote, certain addition in In other there shareholder to customary need conditions

we these satisfaction issues, nor don't timing predict anticipate the the conditions, can't close. of we any with of While certainty specific the

merger is within all business of being close the three provides that The satisfied. agreement transaction days to conditions

the of be transition acute Beyond monitoring address all a sense delivering any that, integration arise. and that, running ensure to an personally urgency seamless the on customers. issues for we we're may focused We'll business that I will and maintain

Our the can't we ahead, significance to team of get and understands started. work the wait

me results. to let that, turn With our now

in and may record strong we release, revenue, cash press our have operating for earnings, seen the delivered quarter. you As flow record

a at seen to Turning to and win Group, continued to expansion The industrial we bright with markets have as in our share year the the expected projects spot face as believe positioned continue end are polyolefin Equipment the well to demand. We throughout other we capacity least of outlook for announced Asia. remains positive, remained even Process projects. new sluggish U.S. plastics

provide for in advantages systems, We deep for most unique partner of largest choice comprehensive expertise solutions the large have credit the the the ability competitive world. challenging projects to us polyolefin of end-to-end applications making we some and for

continue efficient equipment. We more innovative to volume deliver solutions our customers to higher for demand meet

win are addition, that and functions In making we compounding with to contribute customer Coperion business. features value. our machines and aftermarket and diagnostic have smarter helped extruders like also productivity monitoring These innovations increased digital

installed expertise opportunity maintain the system optimal customers efficiency plants our to ensure in we and We believe aftermarket a when on bring they base to business modernizing or the future. the represents appreciate service uptime. performing throughput, significant capitalize growing Our

remains our in automotive specific driven the business, of past part in the as see positive. capacity We remained to softness currently of partly ABS and over the and but for engineered types polycarbonate. was outlook the demand quarter reduced stable plastics investment for Moving plastics offset softness by demand that equipment such long-term industry, by

focused by we has expertise seen although around on grow pharmaceutical introducing and We're there in to leveraging these food In finished products. large with year stability applications recently. new to innovative continuing applications, in the In technical and growth. we've modest capabilities projects our general, activity been markets addition limited

there's These applications K-Tron markets potential growth solid technology, next-generation of of for attractive future. levels high-value believe Coperion for requiring example, introduced recently feeding For suited we its accuracy. and remain the ideally high

face demand other As the Group in fourth industrial expected, quarter. businesses in Process Equipment continue sluggish the the to

and in Capital unfavorable the proppants, driven in profits. forest sales products. Parts in quarter grew revenue face equipment the demand slowing year-over-year in mining modestly by of even were comparisons down and service

of control, the the industrial U.S. effects markets Europe. in and we and to the continue in flow slowdown feel In mining a

order seen businesses we've the in municipal In both activity modest On some flow total, quarter. other delivered up signs in in markets. revenue the volume control the encouraging and of sequential fourth hand, picking improvements

good in projects Overall we the of continued capital Group, large quarter. Process out for Equipment for coming fourth to see plastics momentum the

Going year, of and fiscal have into the pipeline polyolefin backlog strong a projects. we new robust new

discuss industrial in our the guidance Kristina later fiscal current continued in markets faced end XXXX weakness implications However, for macroeconomic the call. environment. other challenging will these

Now Batesville. comment let me on

business Our Hillenbrand's the cash and business to leadership run generate business build the strong possible Batesville which understand fuel with at as decline on cremation. as who primarily predictable is position secular estimated families increase initiatives. in a strategy for the that our efficiently are you the to facing the casket leverage opt is due to the Those for Operating growth flow Hillenbrand Batesville to and Model burial demand, familiar rate of in

of benefits the fourth Margin performance undertaken year. quarter flat was our restructuring at and realized was Batesville lower the Revenue targeted expected quarter and end year, low for the compared to solid the essentially productivity full as gains demand of the was despite burial quarter. for actions in last prior range the

continue flexible and efficiency, in to a Model the help environment. employ Operating the to reduce And we're manage continually organization. operate to lean Hillenbrand and costs We business demand declining a improve working

our Before Kristina, strategies in discuss align to pledge of principles turning increasing and closely the call programs rights, over to taken responsible mission look develop We've corporate principles. commitment our to embedded let in the Being universally our practices. business execute responsibility Hillenbrand's signing to disclosures United more business voluntary forward human UNGC briefly to anticorruption. of we We of late increase Nations sustainable and corporate values joined September. Global the over and and areas citizen and other core labor, accepted a is a the Compact to to in our me X,XXX environment companies

Kristina I'll now more our detail for over to call Kristina? and on guidance. the results turn

Kristina Cerniglia

and over with an fourth revenue good total increase quarter, reported We $XXX Joe, our quarter X% start the I'll Thanks, of morning million prior everyone. year. for of the results.

was year-over-year. Excluding flat grew was The X%, the Group revenue acquisition driven X%. Equipment from FX, the includes BM&M. which of X% by Process revenue Batesville's growth increasing primarily essentially

performance and more primarily EBITDA $XX EBITDA offset prior productivity provide over million mix year. segment I I increased And by when improvements, of expanded the margin XX more inflation. cost details product margin X% than basis our results. review of which XX.X% adjusted about will driven Adjusted points, and pricing

XX.X%. These $X.XX GAAP $XX largely approximately per income costs total share down was were a as million in share net of or to charges. last acquisition million result per compared restructuring $XX costs of year, of $X.XX net and for $X.XX the or $XX XX% or million fourth in compared XXXX. was tax fiscal $X million adjusted Adjusted effective rate share The per year-over-year. income quarter the increased for quarter $X.XX to

solid million operating flow last lower the generated in cash year's quarter, to acquisition and was quarter primarily that We $XX of than costs. fourth about due $XX integration million

dividends. to shareholders million of form returned the our also $XX in We cash

slide. next the to Turning

cover compared me Group. the beginning prior revenue Process the of performance segment million to Let X% Equipment with year. Group $XXX Process grew Equipment

driven X%. capital for we growth of impact some was markets softness projects demand growth offset sales was exchange, by experienced out. across slower the equipment foreign production. pushing Excluding end by industrial revenue other systems primarily with continued Revenue That for currency plastics extrusion large increased in where demand

The points, quarter partially driven foreign parts of cost and the continued primarily in or sourcing and result system inflation. basis service X% strategic by business of projects pricing Adjusted the large productivity grew EBITDA by increased of margin lower-margin currency and restructuring targeted X% exchange. XX XX% This a improvements increased margin proportion as initiatives was by actions. and offset excluding

separators projects, profits. which used lower higher continue carry we and a lower mineral to screen to proportion a expected, As see a of of margin polyolefin large proportion system

head while year we and of systems installed projects We future. to as some in margin service the expect leads to revenue large the parts growing continue fiscal for these short-term, base create new into opportunities the pressure And this XXXX. higher-margin systems trend over

the Order to a of to over backlog of revenue year currency decreased the the and compared of comprise impact. sequentially third expected continue systems over the to of prior negative the $XXX backlog as contribute These increased of end XX% next to largely the timing million Backlog result the large excluding quarters. systems. foreign several or X% fourth quarter, at are about X% projects the half quarter

U.S., capacity base opportunity and with other we production mentioned, installed in expanding polyolefin the of a We pipeline new Joe in continue favorable this our the investment polyolefin great As China to Asia. a expected outlook parts see have of project as continued system. of

compared inflation higher year, and essentially and basis prior the lower prior pricing year business. productivity by the flat more for mainly than was the caskets. which burial to margin XXX Batesville lower was points Moving EBITDA despite volume. of XX.X% cost Batesville of million revenue $XXX Adjusted gains, than to driven demand offset

started we margin margins. last for EBITDA to in mentioned, commenced benefits Joe full of the was XX% and stabilize quarter we As to the to business XX.X% the we fiscal XX% the restructuring adjusted be actions range expect the of to year help targeted in the see Batesville's year XXXX.

billion excluding remained projects Consolidated the caskets results. Process for the or X% increased Process revenue of growth as billion or Equipment $X.X partially demand Group offset excluding demand Batesville Moving grew to The annual of was Equipment the currency. in of impact X% X% foreign X% year. FX, Group segment. throughout by revenue plastics in lower $X.X burial strong for

was The increased Solutions down to Batesville's costs contributed repeat, XXXX trade of X% The approximately revenue charges per million acquisition year by $X.XX. of net growth. share Screening higher resulting goodwill impairment charges. the and restructuring income in taken name year. increase earnings mainly and did was prior that not $XXX of GAAP driven offset X% non-cash GAAP XX% for BM&M in of acquisition by revenue million of November $XXX the in partially

share delivered of net $XXX $X.XX, in currency X%. higher and foreign in of of growth that effective a million basis, per adjusted an adjusted We adjusted an the increase earnings X% of resulted tax a face On earnings income rate. headwind

adjusted of year due for increased basis unfavorable tax points Our primarily in pretax compared rate of XX.X% mix XXXX, XX.X% full effective income. geographic to to XXX the the the

prior the to and year, in Milacron related million $XXX of taxes. flow lower the increase for expenses acquisition to of cash cash primarily of was million paid than million $XX $XX Operating due an

year. conversion for Our approximately the of XXX% free rate net was cash income

the operating turns delivered Hillenbrand nine initiatives, efficiency We capital working working execution the of greater we of across approximately year. continue to focused times the capital to model With for drive leverage business.

also form we in year, the to of dividends. the $XX returned quarterly million shareholders During

allocation In terms are priorities, that our organically inorganically growth. to we accelerate of in our priorities and said business both capital reinvesting our profitable

strategic key a our in is acquisition vision. Milacron The investment advancing

under totaling As X.X% our completed $XXX of necessary we in commitments September fund financing announced October notes million term and includes million a XXth, which the senior loan we've $XXX two agreement of due on credit XXXX. transaction to the

our intend net to loan, transaction. to from In from and term fund the use borrowings proceeds addition we revolver to offering this the

to leverage X.XX low of net fourth good in position Our us the debt as with keeping quarter transaction. finishing EBITDA turns, a we to prepare remained the in close a

the have expect net approximately the on times we X.X depending of we in pro leverage mentioned close. As the forma be past, our to timing

rating. We will to then focus months times goals get retain within on aggressively paying investment-grade down debt credit below with our X.XX XX and

to down and in targeted pay our rapidly return leverage. confident We're debt ability to our

We recurring have up stream hold a economic all cycles. good in which well we revenue to expect

service a a and for non-cyclical is Equipment about have Batesville very Process good fairly we of Group strong which flow cash our third and parts which business and profitable. business accounts a revenue, is with stable

we big strength In deliver we quarters. which continue backlog over to the projects expect Coperion next with the addition, to several see in

Finally, cash with deploying execution Hillenbrand feel the our and focus Model, deleveraging have Operating multiple going our forward progress. generate to We of on about good to ability support the we working our meet our available capital levers efficiency, synergies, targets. and

Our long-term modifying temporarily approach prioritize by curtailing capital ratio. we and repurchases is not M&A our share improving strategy are changing, leverage deployment but our to

executing resume are back investments cash strategic we share to repurchases. and comfortably focus ratio, on shareholders target we our through will Once returning within our

flexibility to that to strong a sheet maintain will continue balance and liquidity our a execute expect to We profile strategy. provide

off we for In solid year summary, fourth performance Hillenbrand. successful it and had our capped expected quarter was a as

Milacron results. the driving we've and execution large now and the business flawless on synergies Our focus plastics in overall is momentum the deliver integration generated targeted on capitalizing projects on to

savings Milacron close. indirect As realizing years efficiencies. direct generate of synergies reducing costs, capturing operating The public we within run cost majority three a come from the annualized $XX approximately and expect anticipated opportunities, and of rate will spend company to following reminder, million

run to synergies approximately been deliver rate in one. year developed plans to $XX of $XX Work have million million

We our are on very synergies. the cost committed confident in deliver to ability

as the operations Model footprint we synergies cross-selling across throughout extruder as handling the we Furthermore, believe Operating well Hillenbrand to equipment and material opportunity global the is the there additional driving opportunities business our by revenue further utilizing of leverage and as penetrate aftermarket. leveraging

together results close to areas. We will better drive to define these plans after in work the

for turn this providing At fiscal now we business as are our outlook have on on to XXXX. will only time, Milacron. closed not guidance I year our current standalone we

the by the with next combined Milacron our revisit with completed then. expectation outlook transaction company will We the results have will for that quarter's we the

expect forward will significant in to Equipment Process that order X% Group at anticipate the revenue the of have our backlog. particularly growth fueled rates. exchange growth driven to business, Looking we by systems X% plastics projects the large We current be continue

contrast, X% X% to decline the which to the Batesville to project annual consistent down we expected grow In is continued pressure expect industrial forecasted a to in revenue across volume. X%. businesses. with basis, be burial we other is revenue X% consolidated On

are and margin driven basis Process We expansion targeting restructuring actions. the EBITDA points initiative of Equipment to XX by Group global in adjusted our procurement XX year, this

continued large year. offset pressure proppant We projects than from last expect screening machines more some fewer plastics mix and with

deliver we well same $X.XX adjusted earlier, share of be the continued year. forecasting At growth range. for be per are Adjusted there are growth the results is the earnings the mentioned We to we Batesville targeted XX% time, macroeconomic projected reflects believe X% $X.XX. feel can the XX% I range That global to is As confident range for EBITDA at positioned for we XXXX midpoint. to of the EPS margins within around outlook. and to trade uncertainty in recognize we earnings and

greater cash top deliver priority a our free goal to our generation remains and Cash remains than income. net flow

rate is tax XX%. effective forecasted be adjusted to approximately Our

the outlook As for results. a reminder, our we'll combined with quarter's company the next revisit

timing. briefly comment on I'll Finally,

margin of fiscal We to tough in not heavily some proppants half and year. to will expect to the the timing quarter earnings for of quarter repeat. the in more comps last be the weighted We separation anticipate based equipment first driven on projects that backlog incremental large year's first by pressure growth higher back our

driven season. keep in quarter Also In profitable we can The Hillenbrand. and fiscal positive severity is summary, year we seasonal. fiscal drive of in generally confident XXXX part revenue the by Batesville's growth our the the for are build flu largest, continue in momentum is mind, to second

I time turn back this call the At will Joe. to

Joe Raver

Kristina. Thanks,

in As solid and plastics a delivering volume I in share. mentioned their for record large had of the by results, the Batesville's as good performance input and with lower fourth per finish systems year quarter's to including of encouraged production costs. higher in growth earlier, We're adjusted well the face margins we revenue as financial earnings healthy

strategy the Group. strong project robust teams order the we a With fiscal focused we Process new Our begin backlog in as organic our pipeline, remain executing on anticipate Equipment and healthy year. growth a

our we'll also the hard Milacron and execute Hillenbrand. welcome We're of of take to full potential deliver to customers working plans acquisition. Together strategy to the our continue care to on and

concludes prepared to We're take ready questions. remarks. That your our

regarding performance. As a will questions quarterly reminder, not we be Milacron's addressing

I'll that the lines. ask With operator open to the please

Operator

Thank Summerville comes of Davidson. Instructions] first from you [Operator D.A. Matt The question

open. Your line is

Matt Summerville

Good Thanks. Couple morning. of questions.

you businesses projects, Valve, the provide, in if First, refer and your And industrial respect engineered PEG. maybe large for forecasting what you X% aggregate general of just expectation to bit respect Rotex, to Can would with the is to that? business what for organic to ABEL, them out Red a that little Coperion want then and service? the be TerraSource between X% in parse the terms parts maybe with plastics you're expectation to as

Joe Raver

and Yes. Kristina weigh start Thanks, Matt. I'll may then in.

in the larger projects in systems. again So at we're look Coperion's by Process expecting higher the Group Equipment driven when business growth we polyolefin

a backlog of so see a growth good pipeline expect And there. projects see continued and there good we there. We

global of modest like cetera. et nice an PVC, some But we and plastics see end perspective, seen as see we've do pressure engineering we -- also from projects in in some growth slowdown. engineering a some demand we From polycarbonate, plastics kind see markets

rate. So that's modest growth a

service currency And to into head expect service parts perspective, parts a that continued expect continue fiscal growth a XXXX. on as this then year, and and we service good parts especially basis and from constant good growth. We and we a saw

the as first of general kind see for we'll little businesses, used flattish rest year-over-year. we've for industrial look And softness related the just growth markets of screening industrial tough that it's say bit sort we around comps proppants. of equipment world. We've got half to in pretty a pressure of seen around then I'd in the the

comes projects. the see markets the in a that We of end plastics well large PEG cyclical engineering with given then some growth do the solid for the those related strongest on to flattish So of rest from plastics demand other particularly some as business. and balanced the again, projects we've more down out side certain types of growth

Matt Summerville

the And made as drawing The had into fiscal the board of there. can you relative that? you put and the respect on fiscal more characterization then you XXXX. on maybe Is Coperion, in into maybe there funnel XXXX behind headed any maybe little to things what of sort heading the activity, numerical XXXX project large with you comment versus projects quantification granularity number bit a or about the the funnel of within side

Joe Raver

Yes.

years. handful numerical really like share quantification. publicly a list comparable you don't the couple of are these we've I pipeline is to these. that and there But say spreadsheet. we over as it's It's projects, really the So, It's would short large projects, And project are the very then long announced not of pretty can projects. past a -- relatively of similar a the what seen large imagine

around gas, bit oil-based and And of the focused polyethylene. continue that's feedstock the shale related pretty to And see more typically little where or products America, for particularly polypropylene we in a again use to then North Asia, be oriented. pipeline a growth where tends to the

sort places the in as And geographies business mix so those see we continue large projects. for of same to key of those that

Matt Summerville

back get I’ll guys. Thanks, queue. in

Joe Raver

Thank, Matt.

Operator

of comes Moore question from CJS Daniel Securities. next Your

Your open. line is

Daniel Moore

Kristina, Joe, the questions. Thanks good for taking morning.

Kristina Cerniglia

morning. Good

Joe Raver

Good morning, Dan.

Daniel Moore

with you'll closes. start deal -- Milacron with of let's pro forma kind the Well, platforms have once Joe three that mentioned you key

Beyond you to generation and delever possibly cash the just some opportunities have potentially capture, synergy portfolio? non-core in businesses the what faster of the those business to smaller organic relative do

Joe Raver

Yes.

and we've we continue the I -- platforms. marketplace revenue have to current cetera economically good very et the businesses scale size, Dan or our position you're million for mean we're we've scaled or we last have -- to also aware where also strategy years that in more and So but we say scale serve. we scale few in to build in strengthen platforms which $XXX marketplace the about think When platforms, but the our industries talked having that a with is then

the so as they we're and of And one stronger handling. extrusion of around Milacron sort those the think business businesses get strategic and we stronger, cross-sell intents. gets with And I technology, excited Milacron acquisition, material fits and because business both Coperion think the it is products share can particularly the

the And in sizable we the two I as get in platforms then mentioned I new business the think remarks, MDCS and prepared APPT business.

to we we and paid to that expect scaled that course, highest be look we we we larger out would as of where capital get the after returns building So allocation, down platforms expect more forward debt, and of allocate some we capital would about think in we've the have.

this businesses constantly think every twice at portfolio. smaller we're of, time a call, our once We at full looking a formally say perspective, From some of constantly the portfolio, we year, I the we, look on with sort the it at Board. we look

we've And think owner capital for best going the so to we're returns always a in better looking we businesses, that portfolio going get we're about at can the those we where as there if and where would past, as I of forward of businesses we be if of open one those to think said that. or with divestiture the right, one value shareholder is create we and allocate

course, the we to debt. transaction first of to would a to that's related in debt, priority happen that mean, the happen, proceeds XX And coming I something certainly down months. to if like then pay XX were use our would

Daniel Moore

gears. Very Maybe just helpful. shifting

terms Process It outsized some Coperion, the two. seems like share. in Maybe features. over of some differences to Equipment, of feel alluded the been Any those you've the like yourself winning? share or the there you talk you're you be in winning -- distancing your an of helpful. win you're of commentary -- technologies the percentage about specifically mentioned You the just would expect you Do to over last -- that opportunities year you're

Joe Raver

Yeah.

talk a share about too in we're because business. to it's hesitant So little long-term much really this a business,

You awarded. over look how size of the projects of to years, and number really they're have a given the

they've feel of pieces increase we that about But places. our smaller good undertaken. focused really Coperion the business around equipment, think continue is One very And the costs. systems to been with innovations two energy to with throughput I has less some of

base. for our that's strength. to larger to customer the really and really the our very larger so that and in marketplace projects And plays beneficial continues And demand

secondly, to make efficient understanding person and call optimize we're that of of complete systems think And to comprehensive size and where there's productive equipment the offer customer a and the there benefits for only and all to those of when their the the them their certain ability we that to of, issue goes one our sort our to customers. how make and system work system offer system together the all those an handling fine both pieces can that. have understand we we system, that entire are then more tune the material really footprint, around provider extrusion I around can the

we as things Europe, very then strong have very in significant trend So this projects of terrific course increasingly a the America of around a for large us really Asia global kinds well. those in large we strong number positioned world. in North And of have think footprint, and projects, well of

advantages like the and good feel have we we marketplace. so about real feel position our And competitive competitive in some

Daniel Moore

the here to Kristina, on back. seeing targets the that any helpful. in longer-term of short-term. of you last But for in in Does impact to jump Very for $XXX any ballpark the have And Milacron free me alluded that your is of cash fiscal I'll maybe XXXX but softness -- somewhere getting flow? million

Kristina Cerniglia

Yeah.

So I long-term Dan. think not has changed, our thinking

the that At will years. first we that and XXXX. of were $XXX $XXX out that And point, hopefully thinking So in long-term guidance. the what expect it's coming still the right $XXX next free with cash buying is hasn't to execute by same couple we blip. close of also knew We -- We the still changed. we'll the do year. now, get that of we and million. more this combined quarter, we a that It's hit to by expect talk be But million flow the synergies about end little million will in

Daniel Moore

Very jump for Thanks helpful. now. color. the I’ll

Joe Raver

Thanks, Dan.

Operator

next question Franzreb of Instructions] [Operator The Sidoti comes Company. from John &

Your line is open.

John Franzreb

Just a projections process. the on little bit in margin

that Joe, of outlined, how you the projects achieve margin, XX EBITDA points mix? margin in to polyolefin the mean given in basis pressure mix I the businesses, the XX lower do you business Given

Joe Raver

Yeah.

a is put that couple years from initiative a that we come driver procurement big those kicked a of we've So together gains off ago.

driving big So well efficiencies business. that's us, margin for the the number of as in as projects of operational other driver a improvement

And so projects. those are longer-term

We have backlog. and the projects some into visibility into those

global our efficiencies good that the pretty driver we cost largely we've And efficiency actions of is gains But so taken big then also that feel margin guidance. about the profile organization. outlined it's again we've some procurement the the in and of

John Franzreb

Okay.

So it's dependent? not really volume

Joe Raver

always including profile. down with flex different important is an those to procurement, supply improvement volume our be piece of of But they volume. projects able we've up be important, And lot to volume certainly independent happen and volumes. to chain flexible, more our is of built a will margin but Well,

we on we a do, gains through basis. so get expect percentage again, And those the to as move year

John Franzreb

that assuming And much EBITDA Can of Got margin in an a Batesville, to projecting of of XX% bit, sequentially similarly, you're erosion? how you're is a in that's What's seasonally the little is commodities? there much weak volume? down talk competition Batesville for How margin XX% quarter. you that Okay. the it.

Kristina Cerniglia

we we is Kristina. inflation a think Batesville significant are to headwinds, going commodity have inflation. probably non-commodity going this forward, we aren't John, -- but When to we have about going So,

So typical and XX% that's wages the really we're and EBITDA lower XX% getting remember combined benefits it's with -- because that cost how business a margin. why fixed to high volume,

John Franzreb

weakness does one year in sticking to you Okay. Milacron horizon? enable that that is the -- you And, it of million further to and three-year sooner? $XX I know Or Does guess, right you I the does the last pushed realize guess, the mentioned question. said one, $XX in those to $XX savings million the to Milacron's is savings million. I

Kristina Cerniglia

No.

million one, the time that about that million to that still we year $XX we rate. the within think see frame savings, And run to of when and of year costs $XX the indirect are end $XX So, three-year annual million. achieving run direct tied one $XX procurement lot company savings public that at remember a there's that of and $XX savings rate to million million

to we're rate confident and of the year that that then of performance year we the to one the going million million regardless $XX business, feel run by million savings get three. still $XX very in $XX So

is, other The I we be are would close. post other highlight thing on will there that working opportunities that

deploying revenue model. we'll on operating to just alluded be our Hillenbrand further then Joe So, and synergies operational synergies, working that

John Franzreb

in Thanks, Kristina. to queue. Okay. get back I'll

Joe Raver

John. Thanks,

Kristina Cerniglia

John. Thanks,

Operator

comes Moore question of Your CJS from Securities. next Daniel

Your open. is line

Daniel Moore

Thank again. you,

Just the cadence of granularity a little on guide. more the

QX proppants last would fiscal did Kristina So in fiscal And ballpark in how guidance range expect much how of your revenue revenue record you overall? much you year? XXXX

Kristina Cerniglia

Yes.

about year million. last was first in proppants $XX So quarter

As baked guide. our we capital any look at this quarter, we revenue proppants have don't into

about proppants $XX the full had year, million we For of revenue.

the lighter really first again the and And little heavy equipment. And fourth that then, third So revenue in lapse second really quarter. a capital proppants that's in quarter. and quarter in for was

Daniel Moore

guide little as in essentially, full to the year near And XXXX none well?

Kristina Cerniglia

no have for in XXXX the we proppants guide. Dan, capital

Daniel Moore

some it. stuff. Got And then, Very helpful. housekeeping

think, we said XX% year You now? heard right I core thinking are of rate, CapEx for I next Hillenbrand, what tax

Kristina Cerniglia

Roughly X% of revenue.

Daniel Moore

could month. customary all the it well things closing if And of Great. as conditions close -- the control, the your of this XX, everything I but obviously end the by mean, out lastly, theoretically Is mentioned on as you fell votes fell, X% correct? of are Joe, that that could, shareholder revenue.

Joe Raver

Yes.

mentioned in are that the the I the within if all example, is the we'd the as closing contract Then satisfied close contract So for remarks. my conditions by that's business vote calls three prepared shareholder the -- an means longest. at that days -- on as XX, XX, on

a stress expect just to really I line. to into want time looking and But again, fell have probably We be then, to fall issues, expect kind everything at going line that all but is don't that happen. of of things time and at place can't but shortest. into I the how think, towards relatively things some that's any what the you're predict we'd fast pretty play if place So, perfectly, to at towards that there's of number going the somewhere I end -- the the it's And out, those mentioned, as Kristina longest are quarter. a

quarter. So to during this happen we expect it

Daniel Moore

Very good. again. Thanks. Thanks

Joe Raver

Dan. Thanks,

Operator

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

open. is line Your

Matt Summerville

going some conversely, so into in of your around dig Thank the and in of the -- exposed a follow-up. deeper, to proposed potentially really little business this I be plastics." has as I regulatory be frame of of exposed where about how forward, moment. recycling of a for to side Milacron's you. your and sort to maybe you products And content want that then, areas much or a talk it to way sort Is just try post-consumer on plastics European to a to potentially included things how want work well? business bit little a for flip Just matter, "war around how business to and sort there areas up of, sort could have bit commentary leveraged is, regulations much

Joe Raver

Yes, sure.

does part comments. resin So, base and a a Coperion mostly large of is, plastics, couple I in polypropylene. what their polyethylene -- think is We so business of

all we of so, And don't really goes. that know where

or using of, general of metrics kind for we're general sort data that. so -- And industry

in XX% a single-use there's would assumptions say, plastics. be And attributed lot there, so would to so. about range we're that or the of probably Again, I

think, Again, less than issue some less around regulatory then plastics are X%, of be to estimates to the that's would of a or subject smaller of much track sort what where we ban course that a world. are I some of or regulatory subject ban regulatory sort and kinds our part. X%

kind Process that's how Equipment and that's about -- think Group. of the So, we in

So metrics. Equipment kind that's Group Process of

a So business, -- But to or when is sort we not kind really profiles and -- consumer they're business again, coffee frames. like more bowel goods, a automotive, plastics learn. company think where yet durable and areas so They're and Milacron company. think really you I in have construction pots, and focused furniture think medical, a the Milacron don't lot the about of own of they're bags

really big single-use they're not in so, plastics. a And player

I or place. that that So, actual in little bit terms more But single-use exactly in somewhere XX% and plastic to probably for or in similar something like. don't similar again of where us a range pretty bans maybe that is know legislative looks their policy what probably

that So, helps question. I your hope answer

recycling. which of look so anticipate the Coperion at have in We And some anticipate And -- in now as with larger -- in the recycling. very the good growth growth continued yes industry. been on providers we've recycling business systems we -- growth and we've then forward, had do and recycling focused the -- we we relationships for

parts As matter a fact, may of the the help line us we that offering. product think Milacron of our in

increase, recycling is as -- of and hold, systems. our plays that But in think continues recycling to we our products favor of we're as to strength larger volumes as catch sort

is moved it extruder, to out, gets an it through gets similar product virgin it And so, recycled pelletized, pneumatically. a comes a the that, goes product in sense it

grow the years. in we're few actively And business recycling. and our in again, last for so, last -- used And working that our have equipment been the to is of part

Matt Summerville

Joe. Thanks,

Joe Raver

Matt. Thanks,

Operator

next Your Company. question Sidoti of from Franzreb comes & John

is open. Your line

John Franzreb

Yes.

You pricing just the both some was guidance? you the in assumptions had what in are? in outlook 'XX wondering, realized pricing is your that fourth fiscal businesses Your quarter. I in

Kristina Cerniglia

about usually So Batesville, think mix. with as we is price offset

when around That's pricing specifically. flat. Equipment some doing When in things well pretty our been for to decline X% business, essentially and strategic roughly that, we think Process about to to we've our get how Group, for Process X% about down So, Batesville. of in think we X% Equipment we X% PEG specifically revenue the

Now see a going with that. businesses, recession into industrial environment we the don't

seeing volume. the Coperion this we're projects, large the large the that's primarily where business at So --

John Franzreb

in And businesses Kristina. business valves the pumps, the ahead? regards to other in the Thanks, in and concerned outlook about the industrial the which year nonplastics, Joe, it. you're the Got most screen, Great. with the

Joe Raver

they're at I capital that, the TerraSource. paper if And in to think we a like some headwinds. and pulp industry. have equipment follows anyone They're XX-year that continue a They industry parts low pulp facing paper and for business crushing prices. and provide

spare parts of which business, And in the purchases as the is capital a significant so, in segment seen we've a that business. slowdown segment relatively equipment of as well

that's continues for displace power crushing historically on coal natural that companies to coal see we're we parts, also, the but gas as country. mostly spare then And continue to across in pressure

So, that's challenges secular had of that little some cyclical business really bit a challenge. and a

other in in portfolio. fertilizer some business the Now may see business. markets now that industry side improve markets has right in some markets. may year. play rebound the We in the other our there toughest flip probably end that's is that the the during headwinds But We

John Franzreb

very much. Okay. you Great. Thank

Joe Raver

Thanks, John.

Operator

no to time. further will call I the are our questions presenters. at return this now There

Joe Raver

one, it that long-term sure run we're we well well. smoothly. our the for the And Thank very Milacron and our the you of as synergies deal. you, then very you long full realize for have to making and the achieving value a integration close everyone the integration, very joining run for the call. operator, thank as on focused and of focused running the on team, tell And businesses, and really, management focused the in I will the we're on, teams potential day set the prepared preparing short goes

We more quarter. deal the look forward that talking to call, and excited about remain in our about next extremely next

forward look day. acquisition. quarter first again the our thanks a Have talk good to in again we with Milacron we and So, for February today results about us joining as and speaking everyone

Operator

Thank and for this conference concludes call. gentlemen, Ladies today's you participating.

You may now disconnect.

Hillenbrand (HI) 14 Nov 192019 Q4 Earnings call transcript