HI - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to the Hillenbrand Q1 Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Kaveh Bakhtiari, Senior Director of Investor Relations. ahead. go Please

Kaveh Bakhtiari

and morning posted fiscal Good President welcome Hillenbrand's will to on Vice to CEO, to referenced I Thank your be our direct conference everyone IR call. quarter attention President Senior our XXXX Raver; supplemental our call. Kristina I'm first Cerniglia. Joe want slides you. the and and CFO, on joined today's and that by website

are contain business. three, for These slide that pro you friendly to over certain the certain provisions statements forward-looking Harbor a of discussion operating and With call that our guarantees statements and to performance of forma encourage laws. may to our actual Turning the slide future our of found our our Joe. of statements that, be a that risk discussing materially. differ non-GAAP website can results. this I'll performance the factors reminder for could comparisons Also subject not on the turn I three including securities course Safe our deeper we the call, XX-Q, and be presentation comments the results could review impact to during forward-looking actual are measures of will which

Joe Raver

close strategic This we and Milacron our Hillenbrand to acquisition. our like in Thank managing I'd We customers, their our pandemic. in hope into to believe good will us now through employees the begin of you continued vigilant position you, joining acknowledging meet of marked anniversary needs and of the safe morning initiatives business health ensure we we well-being Hillenbrand's well. Kaveh by commitment families, of and today the and are and remain for one-year and everyone. for quarter future. that Thanks and the your and dedication the past the families to execute to COVID-XX the well the employees

progress rapid capturing have year, Over the teams integrating synergies. and the past made our business

results. also year about build the successfully to quarter and Solutions the achieved challenges expansion ended We momentum, on fiscal volume in benefit also continue to segment of top meaningful XXXX strong Batesville XXXX, first adapt that Technology position brought by Molding We strong continued Each to line fiscal exceeded the the and segment driving to in a margin expectations delivering the of by COVID-XX. our higher bottom-line. in

the against pandemic strategically and execution of track In value. And TerraSource while we plan acquisition, to first progress Control operating performance our the benefits with the made regarding businesses, on addition I'm environment on quarter. to the in profitable capture businesses, pleased to solid drive we plan long-term our remain platform quarter, our deploy to the announced in ABEL, navigating remains, full growth with cash and our Valve flow we in exit Overall, focused uncertainty Flow divest previously the large significant Red our the are and drive to Milacron shareholder Global.

as just me highlights outlined few of on on minutes get execution into of strategy the I five. the the spend our let Before slide quarter, a

As we've industrial strategic work executing focused Hillenbrand we pillars build on key we global a consistently to are world-class company. into four communicated, as

base industry-leading strategic acquisition and The strengthen major and pillar. M&A. build the runner complementary execution platforms, represented both the through business of Milacron, and to in With is first organically Milacron step added chain Hillenbrand hot The a we increasing the product our scale, to strengthening lines entire plastics way customer through resin capabilities our the value enhancing further from our molding portfolio, recycling. all production across the global injection and and offering,

business both increase and platforms on we expect a our MTS. over and building sheet focus to continue materially strengthening that growth investments, have we and with the Given improved organically large year, to balance inorganically in our APS past

Batesville manage that plays has grow of to pay important is and can industrial a we excellence long we flow our solid burial invest pillar for strategic in role quarters, several which the the Batesville's debt, predictable to manufacturing caskets down used platforms. cash our underscores second history cash. with over cash flow past to in portfolio. Batesville Our outstanding Batesville

quality third our scalable opportunity transform a strategy build Milacron through which improve safety, The pillar quality, to using spend growth operating and and is efficiencies, foundation are many and a We're finance. efficiencies business us best Management the efforts, business standardize services areas to the drive companies such across and of that is Group foundation combined model. HR, practices our The our the providing scalable to a and and our and welfare driving leveraging globally, and Global processes of functional meaningful to for in will by operations as also shares to in driving Hillenbrand processes and capital. We working Hillenbrand practices really lean operating Supply best scale of provide back-office growth. of improve unique for effectiveness our future core the operating and acquisition model IT, practices, cost health believe leverage for benefits delivery,

to cash flow. Our fourth deploy strong and final free effectively pillar is

X.X quickly We maintaining record This past reduced net through reducing we of our by leverage approximately we track grow a a ratio strategic acquisitions to a flexible turn debt-to-EBITDA. so and have times history quarter, following X.X sheet, balance can leverage of acquisitions.

repurchase our ability our consideration a to confident organically of and returning maintain we are while balance leverage, bolt-on resume to continue our capital Today, program grow shareholders. and our inorganically strong to strategic in current the and generate suspension lifting robust free company, flow, acquisitions. we both are given will of sheet We share cash temporary

remain approach in will our cash. As to disciplined always, deploying we

performance casket turn associated exceeded some segment, and for driven highlights the me pandemic led by growth higher in company demand. Batesville our COVID-XX runner the MTS Now Total and quarter. to the with let strong at burial hot medical expectations systems by demand packaging

The our segments. all our XX% drove we growth Batesville was above productivity quarter Additionally, the of at expectations. across in and well synergies

quarter both in increase is volume in for reflect And that. we demand significant unfortunate handle well increase this were and the unprecedented, casket the burial to Batesville. positioned this results at While

team has past the few in operations, made in and chain. and improving evident of operating way the was the bottom drove costs years, the Over demand in supply Batesville progress to spike reducing simplifying the line. responded And significant that benefits the to leverage the

have such Before funeral I a and to segments, the during to moment staffs, large is markets sincere due tirelessly in overall, were polyolefin from on I a no equipment. thanks high and projects this our project other in customers. express their our of lower physical backlog. ability those in had the I fiscal the in offsetting by quarter for We've home remain service project The and sales pandemic. goods In were specific smaller spoke to This of of strong quarter year-over-year soft level communities and the its proud heroically large we projects to regions This execute within company to this continues of the large Batesville large electronics. in incredibly the India. year their demanding first prior runner challenged. challenges but In an significant, modestly industrial XXXX, they been past honor in injection sequentially, living with China, is like mid-sized this of in is be strength quarter. came and we The the to Sales move to mission margins delays molding you segment, worked of continue and faster year. markets, several employees, automotive cancellations the to lives polyolefin I'd to mental be in to to and love. families Solutions all my our were end food have The to saw markets Process and to truly pharmaceutical a take the North continue and partly we delivery compared serve continued continued Advanced lower last year. that saw also packaging, into for end who Molding pandemic backlog at compared of than to delays Solutions, would and demand sales with made their end revenue have including hot Parts uptick were Technology revenues up We projects. medical sales expected team and our environment. be levels. American despite deliver who up to demand worked customers offset commitments historical particularly higher resilience Batesville associated consumer their for continued and thank type our end a strong which and helping on to at strength in the for is like hard have the system who the personal to terrible over sacrifices when lower Other

increased highly for expertise. injection backlog on year-over-year strong a orders real XXX% continued basis, sign driven molding applications solutions for company over to Total a forma $X.X backlog increased a engineered of basis, in pro equipment. primarily new Our on XX% continued year-over-year forma of record billion pro a strength MTS by and demand our

and all We revenue, COVID-XX protocols and convert well for believe the we while well managing safety positioned to customer-induced quarter changes. continue the the to to following are schedule executed businesses take the I necessary in Overall, our steps backlog appropriate future.

discuss I want Kristina to efforts. sustainability a to the our the turn minutes for over spend in call few I to Before detail quarter, additional

and year, some coordinated topic our in working efforts actions one been step recently guiding forward years more of Hillenbrand. is our have been in our on In we committee, we stakeholders, way signed conducted and SDGs, and the Leveraging the reduced One in summer community number greatest including of areas the topics sustainability impact on a our took SDG by program a effective the focused we've Nations we seen improve our has that UN One our we instrumental XXXX, activities is of first identifying our cross-functional that of stakeholders education, that forming we our incorporating Development impactful identify quality important in that past employees, to undertaken. of issued our As that's in particularly have on global assessment environment. annual or released enterprise. in and with In which One sustainability across to you focusing of of inclusion a Hillenbrand for In United efforts impact most entire and the may steering in the a we've the Campaign. society Sustainable Campaign in Global the sustainability and to One an including report, big focused Campaign and that on the to at materiality Compact, a investors. and has health a initiative And inequalities In XXXX, XXXX, the materiality also the the that important production. all believe our diversity important company, call Goals, the the society. we activities years, will engagement In well-being. report, sustainability-related good shares some our same our responsible company have on SDGs most recent the been because we focus consumption aspects assessment on business XXXX, can the results customers and sustainability to is

number volunteering our a currently, support community. to Batesville fact, local vaccination In in a are clinic employees our of

pandemic the initiative the and lending world, about nation in talents is we too. impact communities and strongly the COVID-XX time which across an feel this the Given operate in our of we and

more overall outlook. provide that, to with our performance, and turn on performance call details over I'll So specific Kristina financial the segment to

Kristina Cerniglia

will XXXX. forma business and the as-reported segment which MTS was closed comparison slide October better Thanks, Red pro results provide the referencing pro Valve everyone. in morning, and which in Joe, results divested the a segment. and XXXX, We I It on my be results and on ongoing Milacron operations of deck. exclude will APS comparison you on forma the our section, also these forma Throughout assumes XX the acquisition of good find X, a believe slide earnings XX, Cimcool March pro of

of We and solid caused Turning teams sustained an our revenue better $XXX significant anticipated, cash continued flow. of million, margin by growth, given revenue finished that than momentum, results free were the the the increase expansion strong We delivered XX%. quarter with pandemic. to particularly their with we quarter, total uncertainties

at revenue XX% and forma increased EBITDA Excluding On forma XX% increased of $XXX XX.X%, million hot driven basis of the in increased EBITDA $XXX MTS. a of foreign was adjusted EBITDA On points. basis exchange, impact sales pro margin margin a million, adjusted EBITDA and XXX XX%. increased revenue increased adjusted demand X%, XX%. casket runner burial strong basis of pro and systems by Batesville total Adjusted

the recognized primarily With of $XX expanded contain primarily benefit a million due XX%, the Red per increase increase cash quarter. increase XXX all higher of to share of for lower $XX on foreign $X.XX, Milacron, reported of Milacron XXX year associated prior forma integration associated an acquisition over orders. million reduction from Capital income deferred adjusted adjusted an the to un-remitted in expenditures EBITDA MTS taxes basis operations rate the rate. were the and an the the million, compared to and generated And, year, cash in the Batesville. million in costs year. actions, flow basis points per year income a by related MTS with is the $XX statutory and generated Batesville The India's net prior of resulted or on anticipated. Adjusted strong additional pro approximately by quarter, the million costs the prior from with of integration this increase strong in an benefit volume of The of lower volume our driven $XX points was tax along tax the sale year. we payments increase advanced tax across by decrease over acquisition margin, gain to than and $X.XX earnings slightly we've the net with We earnings increase due increase an taken segments primarily in quarter GAAP share, of within basis. effective of Valve adjusted on prior strong from performance. Hillenbrand was mainly $X for to This prior XX.X%, driven $X.XX costs and

rate incremental debt We $XX down the of million We And of of this returned to of to $XXX total and quarter. to expect the $XX cash acquisition. Milacron synergies synergies $X shareholders, $XX million recognized million form we in to synergies, also on three-year deliver million million We to run the paid $XX dividends. in our million track year. remain achieve related the

price, estimated performance XX% of average a volume, segment rate as Batesville's driven COVID-XX in which increased deaths higher families opted to the associated selling Moving partially and for $XXX revenue increased at by result offset with an million, increase year-over-year, higher cremation. of by

Batesville's able execution the our meet capabilities to to and the distribution XX.X%, our benefits Strong of we operating year points With Hillenbrand volume evident first more employees, offset performance. commitment exceptional the quarter margin of model the are margin leverage was And in footprint, the prior to the our elevated Batesville manufacturing over respond to were of outstanding. inflation quarter. in customers' results. than operating and X,XXX basis productivity initiatives, EBITDA the contributed improved Adjusted and needs.

pro Solutions, APS revenue Process decreased decreased Advanced to forma $XXX million basis, of On revenue $XXX a of also X%. Turning million X%.

projects, driven with to on service revenue by lower certain and COVID-XX decreased Excluding by sales, associated the delays impact was primarily system the in and large polyolefin delays pandemic. revenue due driven currency, The of decline a to customer-driven revenue X%. decrease parts

down at see and continue in basis of this as was opportunity Adjusted points, continued installed restrictions. aftermarket begun aftermarket stabilize, partly cost we and business down points systems, to from on and due year-over-year exacerbated, to $X.X to a an on was continue EBITDA basis a XX.X% pro remotely. productivity the travel our increase and the reached innovate important service a improvements. offset projects, see basis. pro to grow. lower to growth forma has record first of But basis. softness decrease couple to end to large margin the base XX XX% for margin service Valve high backlog lower containment adverse Order XX term, of of area, of continues forma for provide by and actions a Longer billion the COVID-XX we've quarter, The We by strategically plastics new volume excluding mix Red field

increased to basis high. Sequentially pro to the Excluding XX%. record backlog the increased exchange, previous foreign impact backlog on a XX% currency from of forma

are over contribute projects XX% to to of demand XX for comparison expected $XXX basis convert next pipeline quarter year. prior forma several the revenue backlog from including new revenue continue see months. solid about to These the large quarters Asia. to during a in projects We primarily in next the the increased beyond expected to pro revenue of million XX% and X% the the to on MTS plastics

demand pro quarter a end markets. basis in primarily and injection in productivity higher the volume, these driven backlog equipment improvements. optimistic operational future initiatives the We're higher remain orders demand. $XXX by goods, of increase with by sequentially, medical sales on increased compared forma goods. Excluding automotive and cautiously hot on to compared revenue driven a medical but injection and about in encouraged of the strong strongest improvement roughly synergies increased flat India XXX% $XX on basis particularly increased forma packaging results favorable forma remain Hillenbrand including on hot an continues and year-over-year, exchange, of on focused points markets and year leveraging solid consumer year uptick continued in end to sustainable XX.X% double in XXX XX% the systems. foreign a and orders. molding cost mix was the We Order XX% impact prior packaging all and X%. markets EBITDA XX% of prior digits a rebound increasing improved margin particular million basis across equipment on extrusion demand to of Sales with molding basis. the EBITDA runner sequential systems adjusted to medical, on of slight Activity a basis. Adjusted and increased consumer operating saw of end XX% and and drive model million runner was pro pro electronics The margin were in

billion to the $X.X Net the was half the end sheet. turn net at debt sequentially times. of balance ratio EBITDA the X.X to fell by quarter to adjusted and debt a Turning

we of $XXX quarter, of $XX including billion the in sale $XXX from proceeds had million. As of available million debt $X.X under cash and term revolver. were our with including of in of cash approximately on quarter hand the loan Valve borrowings. paid revolver remainder our cash the XXXX the end, due prepayment In Red liquidity hand and down million on We

Hillenbrand near-term business. no maturities leverage efficiency we'll have continue to the to We drive across model debt greater and the operating

efforts our particularly focus We continue capital segment. efficiencies improving working the to on MTS in

capital company progress, greater aggressive pleased grow are inorganically. to the flexibility to organically deleveraging which deployment, with Turning gives our we both and

focus down pay our be within While comfortably our still to will leverage guardrails. more we debt, now are

We Joe will to as continue strategic begin share to repurchase reinstate high-return acquisitions. bolt-on on and in consider focus mentioned the will investments as reinvesting with earlier, well we strategic And opportunities. as business our program

me fiscal economy includes our stability gradual see ABEL. disruptions. my remarks the are for outlook, second related uncertainty Let Amid of near-term XXXX prepared continued only the guidance to which in COVID without broad-based that continue new we'll conclude any assumption we providing under the quarter with global

quarter in total to to expect range second Hillenbrand's XX%. year-over-year We XX% a revenue of increase

with elevated Starting due burial expect trend of quarter, of at revenue of In adjusted range. for the million the of earnings We $XXX to the increase share an EBITDA in to $XXX the the $X.XX year-over-year quarter, expect $X.XX midpoint second casket to XX% a the range pandemic. in volumes million basis we a year-over-year XX% continued XX% on second on to based per to the and of increase range Batesville. adjusted

efforts We and margin in by continued second quarter, the performance operating expect driven drive strong productivity. to leverage

expedite and to which XX% XXX long-cycle shipments. margin prior and higher transportation the includes stabilization we is of the in markets basis large our an paid a service, demand premiums parts in of we down of we over long-cycle, and for to service. Partly X% XX%, within quarter Advanced capital and momentum and We're points Solutions, experiencing equipment the parts XXX year. revenue expect including due mid-cycle Process range flat in and systems and In seen offsetting areas commodity aftermarket are mid plastics EBITDA to However, year-over-year, adjusted have of customer-driven targeting equipment couple cost, inflation increase a capital food of end delays with polyolefin primarily to that projects. to second timing

We from productivity XX.X% to XX% expect by volume, mix modestly cost perspective, adjusted headwind to containment as year-over-year project lower continued lower partially XX and targeted our EBITDA a to and down the certain XXX offset investments points, be from initiatives. basis margin is of

molding second Turning year will lines. shutdowns COVID-related Solutions, strong Molding includes Last in Technology which hot growth prior service, product aftermarket molding short-cycle and injection to of quarter China repeat. runner as both equipment, systems and mid-cycle hot revenue and year, expect over a do XX% in range parts XX% strong to in demand to be continues that runner expect we we injection not had we

XX.X% an inflation to the higher be We will line. Higher XX.X%, are margins carry drive and bottom than EBITDA continued typically XXX we higher targeting to from as improvements making adjusted investments of a improvement impact points, volume benefit to molding targeted to first of basis margin lower to about On mix of productivity quarter commodity basis, costs a sales, transportation the margin. XXX and lower sequential flow due growth. the injection are and a which

for turning full our Now to year. expectations the

Process impact providing Batesville's for and remains the second to the a effectiveness year-over-year the segment, In newly Batesville half, The we lower of due forma make we a the are deaths, strains single and the to full Solutions from fewer specific are Batesville guidance, higher the the the COVID-related of the In longer-term of coronavirus continue lower vaccination volume speed terms expecting for basis, hard uncertainty low demand increase basis to revenue on along on year. second digits for the of impact year, half of that not due the with segment commodity Advanced we to be the and revenue of In identified to the predict. expect inflation. pro primarily margins pandemic. given outlook in rollout the to

of the second the aftermarket projects year. increased of stabilization and the expect half business large revenue We in fiscal during plastics

forma the EBITDA to basis, be on expect down due also year-over-year pro a slightly mix project and in We unfavorable business. to investments margins

the Turning segment. Technologies Molding to

a we goods year, mid-teens in and gradual packaging medical, pro the continued markets, such end the of basis, automotive. by on improvement forma driven For expect and year-over-year strength consumer revenue in increase to as

as moderate volume partially productivity expect by EBITDA improvement inflation. a and We leverage on additional are mix offset basis, margin year unfavorable year-over-year full and

world. We our that, the expect have and the has the recognize second and I continue that I'll year, around our in fiscal and pressure the on investments Having margins over Joe. degree portfolio, through momentum. to achieve our the the turn for prior team to challenging execute ability due of And injection to versus mix a said year back we business. high and in call half unfavorable molding now Overall additional of these demonstrated in there the results uncertainty ability is circumstances, still confidence to volatility

Joe Raver

Kristina. Thanks,

run beginning we their in track the and accelerate million rate three year financial million Let acquired synergies, and strong achieved across synergies you bullish to confident we of EBITDA and well takeaways call the leave at your me with growth in Batesville particular, delivered board We quarter. a before performance performance Milacron The deliver questions. Batesville $XX in and and $XX remain long-term million. margin final to we on robust the in to businesses benefits. deal's open achieving year few MTS. two exceptional executed are the on In an strategic we We're to $XX remain

positioned the We enabled further project an backdrop we despite divesting With a delever cash believe that, we to pandemic. to pace macro drive any of Continued line robust strategy open are ongoing we'll accelerated our over Red long-term. ended the record by portfolio growth the quarter us overcome at an performance and your and flow and divest a free We remain to ABEL. challenges strong with the our well in finally, focused And quarter in the agreement signing for Valve questions. near-term has backlog pipeline. will the confident profitable to COVID-XX

Operator

question-and-answer Our Daniel CJS question proceed be session. first a of we this Thank question. Instructions] today you. At from conducting with time, is [Operator your Securities. will Moore Please

Daniel Moore

questions thanks morning, and Maybe Process Kristina the Solutions. Joe, good Advanced the for with color. start taking

mentioned You Asia.

significant resilient about at been? all coming just demand a at you where auto? incremental is other it's the Are end And markets? Just pickup you surprised seeing talk are how Are from. there

Joe Raver

Dan. morning, good the Thank Yeah, for you question.

regarding is strong now. is to capacity the Asia is in orders the largely strength very due really So of China right their APS in it's continued and And the where and strong. expansion quote country. pipeline, very

so self-sufficient area demand their desire it's base two And for And I engineered probably we One, and a build see by things. strong. local really just resins again, that around to up continue think and pretty really driven And capacity strength that's plastics that momentum. production consumption the more to It's plastics. world. around be the in of secondly, economy strongest is there the our of and

Daniel Moore

were very just Very helpful. good the charts. off again, at Batesville good the And But margins – gave pretty you color.

Maybe team to in be will congrats on has back normalization quarter, terms we of will toward modeling the of longer-term about settle the half obviously the this the the a the business? path the which of Kristina the just and on the volume-dependent. strong. I know, year So where it glide beyond incrementals execution. back talk in settled dust side out maybe once Batesville But do be

Kristina Cerniglia

Yeah.

So obviously us – going looking are from is steel that's to of difficult, volume. a wood. tell we you because lot can half, inflation see the around back particularly I and at this the hit

And that experienced so in area. we deflation have

going inflation So there. have we're to

is, normal take simplify focus has team on what to not that I'm to their sure is we continued think I operations. productivity, what look and to actions the as business, their

back we believe XX%. EBITDA our margin XX% to just to of I long-term, kind around think will that if go we be

Obviously assumption good a probably that's volume think I stabilizes. move to that with. is forward when

think long-term, it's if you a on XX% the think see I more drop can expect probably so, about see we pressure that to in XX%. probably But the margins. fair And for to to significant volume

Daniel Moore

China. helpful started molding And one see before more X, that where the and maybe on quarters now Solutions Thank MTS, particularly revenue in Really Molding some were is how remind backlog we injection side? XX where compared to Tech us convert pressure backlog you. where typically ago to Milacron does to quickly --

Kristina Cerniglia

Yes.

strong So backlog. very we have

Going back quarters probably in to is X the XX highest or that so highest seen backlog the we've backlog. It X, it's quarters, business. the

And between so on is that think convert the nine going to when we months. it six of backlog, to average conversion about

a that at other look it go around XX one as just are thing say would couple in But there to around thing are of there would -- one believe was we will I projects months. that -- pent-up I this another six average have Dan, nine months. that demand. do on We say backlog converts we

obviously strong so a very quarter. And we had

bit probably So nonetheless strong little But exit we through backlog position it. to very the year. go come expect as we down backlog a

Joe Raver

the really strong good really not the Yes. business driving It's the hot MTS But as both that's one well the that. business pretty of runner It's on are really position just business with lines business, backlog. inside both of injection as all lines good molding in across sides.

Daniel Moore

thank I All follow-up maybe will and queue for Well right. and a back I two questions, have you. in XXX jump more get but

Joe Raver

Dan. Thanks

Operator

The from of next Chris is question Howe Research. Barrington

Chris Howe

Kristina and you question. taking thank Good for morning Joe,

Kristina Cerniglia

Good morning.

Chris Howe

could of consistently has those business? versus the versus an there other mentioned down last other Good part second injection molding the the pressure morning. Starting road adjusted the on Is margin versus in high part about the molding. EBITDA shown some further a you which margins the to year business improve talk of very the of on injection margins. injection opportunity due to MTS Perhaps molding higher segment mix outlook you half

Joe Raver

right. think so, you're exactly Yes I

second margin in that run over And revenue in driving good we see of of a So business. do part molding of business margins longer practices the molding larger through runner the And the percentage of business the seeing the year. of orders part in be business. model injection And that to side, as side. the strength opportunities we into It half business. go a on operating improve particularly will we're injection on really part Hillenbrand the lean hot higher the is the that's

want to will add longer with focused both to capital, supply anything that? Kristina and to And group so margins over very the we're but that process drive to you continue improvements run. that working also improve chain working

Kristina Cerniglia

think between hot the difference EBITDA think EBITDA So the business as -- molding the Chris about a a in I margin. the margins there's runner injection when just business essentially and reminder we XX-point

going those with margins this our not to agree lines, going overnight. expect the those molding. close going is model margins And Hillenbrand gap It's take And improved get in so to certainly that it's to focus deploy can with the the We to don't product that half. why but margins to pressure entire ensure injection on there throughout the molding. you're Obviously see we we I back Joe, in is injection anticipate time. to integration in increase operating

Chris Howe

to cash the great. where in set it's in look to And increasing flow upside different it. XX% at And the the you certainly Assuming a not view generate the the provides? on pandemic the different strategic you That's rise, sheet. cash years? and follow-up hard only to tremendous for about what how uncertainty three Batesville you some normalizing quarter certainty to versus this I'm ignore the at the these segment previously. are the is continue but for This one talk continue months it's opportunity much three mentioned XX% has created stable, company to market you opportunity leverage to business ago? envision to could combined with infections Perhaps in getting to that do Can strains the I balance going

Joe Raver

Yes.

right quarters three So tremendous demand generated continuous the of now cash I'll into exactly the of over the pandemic. the tell has strong you're Batesville fourth you, that going to really business amount past, a due quarter

Just hard like. to looks the to expect We deaths number related start to of the future predict drop. the it's do what to pandemic, very

enabled the almost help of strains we But reached think normal strains us more faster maybe and ago, we'll than February debt XX of this we we had over mean it's see pay down a very longer what to sort flow had not the over us peak back asked has ago you'd start clear. is expected. the new cash if rate this And to drop year certainly at expected quickly and months deaths than term also the and number a fact, frame. that mean get clear. if the we've exactly time to we not In of virus March When various

to or over continue projects on on. considering And being to for And next really last the we've so that solid get high-return in pretty also released open focused acquisitions strategic quarter good we we the over pay more or debt expect investment quarters down we're so, growth the bolt-on acquisitions, we have returns would to organic profitable more projects. as business strategy. X.X a have And so

that cash really with in So we a And good position business balance the better think quarters yes, sheet definitely few our expected to contributed we're with I flow. Batesville again than ago.

Chris Howe

Thanks, system perhaps polyethylene some know One what's projects on follow I there. and How that we're wanted in conference last large That’s more outlook Kristina. in regard picking North made your up may. just the North it's in and call I on slow, some the steam there? America. but if quarter? Joe right. to was America And I the been comments to you up

Joe Raver

it to polyethylene large that America projects. in -- No, remains relatively right related North now challenged the

period pretty seen other Asia some there world some would And reasonable projects expect the to out of large work shift in was of significant in time. so a close. to through of way the -- and terms we've and all we are that It to parts

strength see right America stable expect pretty North we So we more other the in stable again, China world. American intake. in remains -- of of weak continue And and of offset terms by North to forward. it it's be But in than go right order now to now But we business. it sort expected more pretty parts as

Chris Howe

my taking Great. questions. Thanks for

Kristina Cerniglia

Chris. Hey,

I EBITDA When said Batesville Just as XX% talked long-term, to one margin. well. I XX% about clarification

clear. You that mentioned sure to want I you XX% to have XX%, make that, just

Chris Howe

Thank it. Got you. Yes.

Operator

Davidson. Matt next is Summerville of with question. The question your Please proceed from D.A.

Matt Summerville

I understand couple in sort hot molding. expect to I injection to versus A Thanks. MTS should questions. pertains sure, cadence runners make of want it as of the we

QX. for year So what there to categories and mid-teens? those expectations would the to context you Can two growth be the that in about put would XX% in of product you XX% get the you talked the that balance of

Kristina Cerniglia

are we see seeing. It's single-digit going runner continue to to the maybe in we high going come on And the we've going then fourth little growth are MTS to runner – so see that we They that's in what for a going generally third business, -- when down quarter that quarter going the going really completely is little bit a business. about to you're flip. the been you're bit. for hot to stabilize the to the see think Yes, see to growth hot growth

see injection on business. the molding to significant You're going growth

And growth so to back you see teens the injection molding. can your for – expect half high probably in quarter that

Matt Summerville

given in then in rates, you then it. Got can in just with the you've a that thus far comment second seen And respect And want spend incoming on year to that you overall result all business, of to what touching kind MTS? on order I delays, right calendar auto. auto. I the pandemic of demand would some there pushed a as launches be platform all seemingly model I the of in pent-up of the think think have this been new to would would

it? now when seeing not will you see that you're if So

Joe Raver

business just Yes, break of out think auto, so I let MTS. related the in parts to me two

Mold-Masters runners. the hot the some on or of branded side seeing hot are the – side runner business, We the products, demand Mold-Masters

to in back But we to seeing solid not demand like still but again, levels So an there. demand grow. sort there. It's of are room historic increase

converted has significantly on injection orders has the think to molding I seen picked up the pretty pipeline coat side, yet. not there we've

think lot – a And and side expansion business injection so replacement capacity really of if molding it's so, that's of driven the about you by much not new equipment models. about what the

starting really not but pick has the we some to So model to seen – the we the And again up going increase sequentially. introductions those side to have replacement orders. injection orders that's see of not converted equipment have that's and where side there demand volume new It's are and hot business the runner drive the in overall molding pipeline quote closing.

Matt Summerville

Joe what activity date? you've talk And order about maybe just seen to then calendar year in your

Joe Raver

Across a the board segment? in particular or

Matt Summerville

board the across Sure would great. be

Joe Raver

Yes.

really that's pretty orders APS I won't obvious. about course, And at of cycle held well. Batesville short then, segment, So and talk you the have up if pretty look because

to demand side molding a And injection a see a far. expect sort runner like last little APS quarter. but a to in side. on not expect the continue strong And what continuous bit large the through growth MTS to demand the across see still continue had we hot hot we Service of segment. In build just sequentially had on sequential and that in in side. side spike injection molding improve we're year. to seeing we big on continue and in the close continued hot orders to really still We as demand see as solid runner So demand side the the then is runner the orders backlog solid challenged on the move on we've very segment, board there. grow see growth much sequential we've we thus strong service the expect been basis has We we a seen the that's in demand but the

Matt Summerville

I you to would bit exceed more rate probably a the Slide I'll net free income what will slide one good cash you year adjusted a wildcard. was in that And then space sort deck sneak realistic really with can. this would indicated XX – if off a that you be XXXX? little expect here just bright need recognizing of be fiscal conversion In expect of But a we coming of hand a Kristina what

Kristina Cerniglia

Yes, I about XXX%. would say

year really strong half. last last quarter we back So had a back –

expect kind XXX% in the I year a we capital As got We're of conversion. large projects using look in business Coperion our at this of half. lot working about would delivering. back we've we're that

Matt Summerville

you, guys. Thank Got it.

Kristina Cerniglia

Yes.

Joe Raver

Thanks, Matt.

Operator

Franzreb The question your question. Sidoti of Please from proceed with John next & is Company.

John Franzreb

morning, Good everybody.

that the pent-up be come quarter. much of, Just when of some you, on Matt's you guess, seems second to the of equilibrium? in a expect the that I see going year? sense first of deferred to you give into thoughts demand. What in? pipeline quarter satisfaction may the there here. follow-up, pent-up coming demand opportunity is Joe, how And reaches is to us it Can like We're kind orders

Joe Raver

Yes.

each of --where for bit or different short they're businesses -- in -- terms the or of a whether medium they it little depends cycle cycle think, cycle. I long So, how it's

-- global part continue Europe has that economy as and to But through business. Europe. And going in the the think, so the I -- business, that really States with continued of in through in we've with improved. that of, Asia, in probably business aside in kind gain of the strength, back China North MTS, America hot seen again to -- just going just flow in putting improvement sort we'd runner Batesville particularly we've economy. so United global seen really and strength And see as and it's come business going expect we've particularly, the seen business, And to the

of, parts and would I service of more good grow. completely On clear exactly molding normalized much demand. quarters. strong big that continues. good in that had get how demand. say, continue strong couple back to We had Service the are -- we're orders last rates. not side, That's, injection now and the kind we've it's of a the demand spike really seeing It pent-up to we'll

think, couple think really -- sort forward a quarters we over pent-up fourth quarter also sequential I a we'll, In up bit first of the more quarter, sustainable. the was it I probably We upside it as in was nice in of little have A probably flattish we few bit had the out next level again, slightly quarters. last quarter row. of look demand. growth. automotive more feels so a the to And sort And little of,

of, segment. demand large really we've sort then projects. exceptionally segment, strong the MTS for that's the And So APS had

remains demand good. some in businesses. and other I Asia think, lot the And so a of by the of demand the that has long-cycle been mid-cycle world, of good, parts driven projects Again,

that seen of So machines modest, We've of, business. and compounding part feeders. growth in the think kind sequential about

been then and more in it's and And parts and starting demand be see so, as has challenged. economy been to around And challenged growth improve service that parts the to continues will sequential sustained I We're world. service. think, the

So and sustainable we to long-term. to be continue to on the that very solid that demand over expect grow

then projects forward pocket the projects that I APS we pushed I we, think this of, but some backlog, larger where out we those sort And air really, business released. have orders. have get in to the So think, have continue look are in as we take that

expect mid-cycle We And the see large world continue as some business projects improve economy continues and then service. see sequentially well. to the close continued as strength we'd then parts improve to in and will to

of may that little been though get that So helped bit sense have we complicated of how kind a a answer. hope normal... I see

John Franzreb

was of kind commodity about the outlined commodity costs them of for Joe. you forward? little impacts That depth in impact you the was exactly bit talk what but I in going Kristina, industrial platforms on looking costs Batesville, and a can that how

Kristina Cerniglia

Yes.

it the me by let take separate segments. So

So, our generally that. The business vendor. to in on we pass to APS that way pass able with are large projects, we're to able our essentially the works essentially

know the you can order. we So, as imagine

on price. so we our immediately can will that in order the lock our purchase We place vendor

inflation What commodity seeing is some MTS APS, is as are not we on it's MTS. we there while commodity, inflation. seeing and nearly are Batesville significant in So as

will see through year rest in of primarily continue the We steel. the to inflation

inflation year to of the in And so in about margin the MTS of we the due business. on expect XXX pressure points half that a in basis over little back

John Franzreb

to of And and $XX about the million the Excellent. and you. you of the that realizing can costs integration the $XX a $XX cadence Thank million regarding synergies realization for just talk little to current bit year, $XX million million?

Kristina Cerniglia

Yes.

that of already actions million we and $X had had see carryover that we synergy that that so from we of quarter taken hit quarter. amount a this was continue A to the carryover. fair So

the just about million you're of and $XX year. $XX the cadence synergies, to come pretty -- going evenly see across be would kind we the a good that four, of quarter by sorry, that the kind when divide million think I think to

million. the see those It's say As to second that you're higher, to it would say, going be cost, to to in the going fairly, I quarter in probably relates of million a $XX $XX bump of quarters. couple third and

Operator

like turn have call remarks. over closing we the for to for time Joe to questions the would I back today. Raver all That's

Joe Raver

operator. Thank you

with in execute, we're And continue to the to paid ability pandemic. regardless on what what and in our starting strength with close we debt in We're react and The and businesses. to we're in this and want our our hard the can Just ability But environment. working about happens with shape. of to deal down what very execute control. organization acquired challenging see to to confident in getting executing sheet flexible Milacron on to saying good be control we're is excited very focused balance resilient can't we increasing

continuing and growth. in And so forward look bullish profitable future we're on invest to the to

you. in I when thank We appreciate So, your in to forward in Hillenbrand, that, the results. want second you look we everyone quarter talking who Have interest day report today. May to with everyone. Thank are really we our great participating call again a and to

Operator

conference. today's concludes This

You your this your at may participation. Thank lines time. for you disconnect

Hillenbrand (HI) 4 Feb 212021 Q1 Earnings call transcript