HI - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to the Hillenbrand Third Quarter 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. to President conference and like host, to now Raver, Joe CEO. would turn over the your I Please proceed.

Joe Raver

Thank the on want you, earnings us Vice Financial safe Vice for hope operator, Officer, Chief President for and Investor and our CEO you and you Kim to by your that fiscal referenced good well. morning, and announced I'm third our direct families recently and quarter your will call, successor, joined posted Ryan; on we President and everyone. and are supplemental Thank Executive attention website Relations today's to Cerniglia. our our I slides Senior be Kristina call. joining

turning So Slide to X.

markets, engineering a construction that, on With most of in can revenue capital third across demand industrial key I'll solid growth, the information, quarter, harbor reminder contain forward-looking electronics. results laws. comments the pro flow. end segments, may well for securities now the appendix operating X that be free risk XX-Q guarantees that These deeper call, to review cash certain We the the saw statements record a discussing and and are course for website, statements solid our our and are be materially. will including XX-K, results. discussion continued which plastics, encourage and future differ our momentum excellent actual to our non-GAAP of orders I turn backlog the our as found quarter. and provisions presentation and performance, our comparisons with and and not impact equipment the segments. factors forma automotive, a of polyolefins certain for we you our of statements Just during had of including with We safe Also of as could forward-looking Slide actual subject measures, non-GAAP performance strong our to that the could

orders this year-over-year the area by strong increases and be quarterly expect and saw backlog. year. fourth brands industrial our aftermarket into in fiscal profitable We're we and orders next quarter encouraged an sequential to head fourth in our of All as both growth of increase

Before our from in the which global for supply resiliency now of continued dedication their to and acknowledge associates I want I move face shortages. inflation labor chain rising COVID-XX, on, uncertainty includes and disruptions,

beyond Our to execute needs and safely our the employees of gone have customers strategy. meet above our and

Now I've last about end years X. I'd on like decided take transition CEO, calendar June XX the we year. to retire X talk as to at After the and to Hillenbrand a announced this the moment leadership with of

Our worked decade over has the to announcement, have about elected year CEO of and developing plans businesses, engaged the been their learning senior company Kim Hillenbrand. Coperion, Since and execution. fiscal have But been formerly our a Board strong now transition the culture, close knowledge executive Directors more to plan, extensive closely and Hillenbrand strong current has easy. for XXXX. presidents, new effective been in with of leadership Hillenbrand's instrumental X, and our and and a of time. Kim to member integral that global reflection, an is operational I XXXX for expertise the was careers developing deep executing -- that operating the with actively and not Kim was much year. of January She's Kim after record beyond, me driving a decision right clear of fiscal throughout My retire right track this it's and our team strategy. company as President and our Ryan, Kim at I

continue will in do Kim transition leadership to flexible of on portfolio, Milacron smooth the and entire The to ensuring position proceeding focused the a few a growth, the is remainder integration focused future. well. to drive sheet, team, job experienced We're to profitable strong I make Hillenbrand a like balance is the know We Kim that, through of invite very more and have an a I'd a team comments. and strong into calendar leading great year. With a

Kim Ryan

well Thanks, over model everyone. our a profitable selected around smooth the XX,XXX into our transition. the build thank as with have last for is I'll back which it with the on of step me Hillenbrand's by our It's I Directors this talented role. And continuing as decade. of to leadership turn And good the team Joe, team Joe. work the next lead I to forward look have to truly world to advance in strategy. growth. communicate upon morning Hillenbrand their of to an and you execution, record track a to opportunity associates successful Hillenbrand we've growth operating to to I and the honor developed been leadership excited work chapter with I I'm its Board into want to guided to now We're confidence positioned to

Joe Raver

this once Kim, Thanks, congratulations on exciting again opportunity. and

challenging to touch it's that strategy we We've shareholder such our executing remain world-class pillars key industrial as X into highlights we let Hillenbrand strategic drive focused times critical our some communicated value. on order that global in and me will long-term a believe on consistently Now quarter. these, company. And strategy for build the during

is through pillar strengthen and and first M&A. build business platforms, to organically The both

across total as develop the and order which end in into intake, billion. products products solutions growth our for the we quality of provides past core backlog, fourth at segments we've costs. our of consecutive $X.X innovative beyond. industrial This by year continued markets the record years, that our and positions a invested This customers' has to as strong a and fiscal us quarter foundation to evidenced enabled their to total leading strong improve stands lower our Over next of several quarter head record build

well we've and through in investments less strategic which focused to other quarters, long-term last of have over development markets pipeline. tend key strategic end our and on than targeting such good industrial investing trend prospects. continue as area as We the grow. We're We're several recycling, these markets food accelerating our larger markets, large platforms development you our that capture be and and scale, the in been our continue Given an MTS will these tremendous APS M&A end growth more cyclical excel. these flow many to product towards us cash know, investments to in markets our innovative demanding of we And needs meet solutions of demand believe this to position in customers' is growth as in to which technically applications.

cash. manage to for is pillar strategic second Our Batesville

growth product XX% Batesville portfolio, platforms, a of becoming industrial smaller continue to revenue. part of drive in company is we the total our As comprising about

lower reducing due basis performed While this saw Batesville quarter, the business on Batesville's death solid the our a quarters key role in outstanding important us debt COVID-XX, with than plays associated cash accelerate which role played several Batesville on last flow. decline allowing the portfolio. a we cash to expected and in over better focus flow our year-over-year to our investments, free and underscores generated growth

the well operation's to business well, go areas our operating integration opportunities by The The Hillenbrand capabilities center in growth our provided scalable HR unique continues the has of and foundation strategy IT, and of of management for operational using are pillar to third processes to excellence. for to build the of a the the transform the acquisition Milacron finance model us model. opportunity applying as and our encouraged improve through we is Hillenbrand operating across a functional by supply continued as team our global the The enterprise.

process Our environment. the improving develop perspective, leverage global team inflationary a to our our and achieve from in costs rising to and procurement mitigate to ability supply management a talent combined synergy spend current targets continues both

to enable actively global engineering the our reduce accelerate We supply that center across agreements has and the to strategic strategies management the established footprint challenges improved and India supply of expansion the excellence consolidations, implementing management realization through group integration the chain the targeted of we're in is will organization. manage through building engineering capabilities believe us acquisitions. to of cycles global our drive The efficiencies capacity outsourcing addition, economic and the In to the across enterprise. flexibility and operation's impact future processes that we've of synergy center

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

strategic the continue investments APS of forward to and opportunistic focused can In X.Xx proven free a the cash that $XXX less last generated quickly our acquisition us nearly record and quarter have track evaluating product we our share improved the remaining has Milacron balance large than We've debt-to-EBITDA over value. of We'll And approximately months. of through we MTS cycles. of opportunities following shareholder allowing X the to acquisitions, maximize economic maintain X.Xx going July, in deleveraging growth We invest shares. month so repurchased on and net a accelerating flow the through sheet XX of million since $XXX over ago. inorganic while million to consider continue years repurchases platforms in through long-term flexible

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

issue progress, and and better to Kristina, grounded of on our ESG. our turn our by to our our of in report sustainability and the assessment. implementation our We're impact We and understanding environment, currently to sustainability sustainability give our share building internal in processes on building update strategy, to call public and practices. August, efforts capture stakeholders on the on on working overall Before calendar disclosure emissions. in past particularly measure of committed and in second plan brief stakeholders the the materiality our remain transparency over I the focused to year. made driving sustainability with usage energy areas accountability progress with want I we've to we the around At aging We're a end journey the external

side, diversity a in On impressive services. system; global CEO skill Compliance the health digital Board: of set, of Virtua Inderpreet integrated strategy. Hillenbrand's next-generation Pullin, the and of Sawhney, Dennis a X $X have Officer support backgrounds new Inderpreet Counsel and billion directors Infosys and complement leader Chief governance to President Group we and Board's expertise our and and in General Limited, nonprofit Dennis Health, added

XXXX and provide as focused employees, final macro priorities of performance acquisition summary, details remaining shareholder and benefits quarter long-term of on specific ensuring fiscal enter outlook. financial health and of Milacron the turn strategically safety year, to on Kristina full With environment performance, integrity the current deploying our the of supply offset segment prepare capturing our and for the value. navigating in vigilant inflation our drive to are over the our to the maintain So cash we overall call next our that, and chain, more I'll the to in

Kristina Cerniglia

good exclude Red which year year-over-year referencing ABEL I results my and everyone. provide comparisons forma deck. the the better assessment Joe, section, and of pro will comparisons basis, find Valve a morning, will earnings forma prior a pro ongoing XX Slide these be APS believe our Thanks, of and Throughout of a on segment. as reported on pro comparison We you of slide and operations, results forma the from

Turning of $XXX engineered pro demand MTS. volume On quarter, backlog million, company basis and a increased highly volume APS. to and strong new solutions a a as-reported total teams to of increase the an our a by revenue forma year, XX% a basis. forma in XX% within an driven prior billion, growth MTS XX% continued of of performance. increase sign APS We and Record $XXX total orders $X.X year-over-year delivered our from XX% strong sequentially, products on revenue pro both strong a for the of double the drove a record million basis, delivered on increase and

a exchange, Excluding an on Adjusted EBITDA as-reported forma EBITDA an basis, of of impact XXX a to on driven investments, pro margin forma increased cost total adjusted productivity $XXX by favorable leverage strategic from which the than On our basis of and EBITDA unfavorable revenue pro increase pricing. on basis. basis X%. mix forma million Adjusted offset decreased XX.X% volume, and increased operating a XX% primarily X% pro more XX% points higher increased inflation, foreign in or basis volume. due increased

segment inflation. rising we been were actively help offset to coverage million quarter, price of and within XX% approximately the have Batesville. XX% able in coverage pricing $XX We industrial experienced price/cost with the mitigate of approximately We to inflation XX% in through our actions and taking impact

appropriate. continue our action We further pricing to will and take evaluate as structures

took our guidance we quarter, across normal stringent are segments, prior our a year. the of containment in operating costs Additionally, as cost of in following we each actions the return seeing mentioned last

million, prior XX% share, deferred increase to to of another well We recognition through the great the compared segments $X.XX the earnings. million fourth the in reported expect German an prior million $XXX to and into recent next adjusted flow earnings year. quarter net the with of net of or year advances timing cash This capital was as legislation. an higher of increase from taxes requirements driven in strong increase tax fiscal an increase of of increase $X.XX income on million rate year. share the foreign particularly due and an to $XXX impact tax of as We The favorable quarter was compared by see operations of unfavorable per the basis quarter beginning this unremitted XXX to MTS from generation, impact or both had the customer of points year. primarily increased APS and Adjusted working the cash of continue $XX GAAP or We effective income $X.XX or XX.X%, for per $X.XX prior $XX of due the X%.

we regarding restructuring Germany. works local within facilities the Weingarten an Stuttgart with During agreement our and council quarter, German plan in reached a in

and cash are to expenditures million million and by costs approximately of end incur be to of the to calendar costs these XX to The expected over next expect year majority in We the $XX severance of paid substantially future related other XX months. XXXX. result will the $XX

we quarter, recognized expense. million During the approximately of $X

We are within target run through realized quarter and and exceed million million, have positioning the end total to the actions greater were customer synergy support the In also realization approximately the quarter, we repurchased due we to and We related track million rate year. long to million million of of than demand $XX expenditures approximately on approximately to year-to-date, million form towards for shareholders our repurchased July $XX and us will to to anticipated timing. meet $XX acquisition. the efficiencies respond over million quarter, our lower this synergies $XX $X Subsequent $XX confident Milacron project share further rate the our million drive $XX Capital us XXX,XXX returned continued million well we or providing term. shares authorization. operations, the X.X million for incremental an target remaining flexibility remain X-year run million of in quarter, approximately million dividends. of $XX under additional shares the to our synergies repurchase the to $XXX these $XX in quarterly to of We synergies $XX achieve X-year in

or increased segment performance. increased impact and particularly XX% large pro revenue of APS prior favorable XX% plastics driven by compared of in the foreign excluding impact to $XXX On or X%, increase plastics foreign the primarily million Moving of excluding a exchange. year was exchange. applications revenue forma XX% projects, engineering basis, to pricing. The

demand service Turning increased for consecutive we APS. Revenue stabilized, orders the for sequentially as and to has strong saw fourth quarter. parts and aftermarket

billion, backlog driven an from forma large leverage XX% on pricing variable and a operating pro an new of record increase pro XX% quarter. area the for in primarily in fourth the including EBITDA higher this investments as basis begin year-over-year higher systems sequentially a basis, but basis grow. We and for prior basis increase see to expect of was strategic growth to a growth while Adjusted in XX.X% margin to term, polyolefin by offset points a synergies, forma high large to reached base increased we into pro our expected on $XX inflation, than continue forma million down orders EBITDA productivity, volume. opportunity these Order XX% to see systems. adjusted compared on XXX revenue quarter. more and to favorable continues profitable of of than higher the compensation coming translate Longer Cost installed year $X.X growth of

with both quarters. quarter. remained in We solid revenue the continue contribute projects expected polyolefin for for The and are volume engineered new pipeline plastics to see demand projects several next order solid, the plastics These projects to Asia. record in to over particularly large

from expect our cancellations received project do not nor have customers We any to. large we

portions revenue processed growth not our and strong see significant foods. today, within continue although of opportunities for we recycling Finally, future to

in strong coming of product million growth quarter. saw Molding lines, margins our the both all and revenue $XXX Technology Revenue year-over-year XX%. and expectations to into Solutions. exceeded Turning We increased

driven will general of foreign XX%. goods consumer all ability both end have and across disruptions to markets inflation have Adjusted of EBITDA nearly we of Supplier XX exchange, compared impact as automotive, ongoing and year runner of our aftermarket and equipment, a volume Sequentially, and for to strong a increased and of fiscal due backlog in about driven injection year-over-year to prior comes the in which and an with growth. the result COVID-XX. points with leveraging increased quarter, and on regions, Sales and by segment for systems injection Demand focused the anticipate to hot significant later quarter for we product to hot due in an MTS within which We begun to volume to the our markets, India at operational revenue fourth to million the particularly the increased remained X%. compared all improvements molding EBITDA over lower improve India, our remain on XXX% increased return synergies. volume variable Excluding $XX term, million within margin including in and the of for when ship market increased revenue to compensation. molding shortage chip in expand decreased solid Hillenbrand introduce the operating molding, significantly in molding costs, extrusion guidance. solid and softness to by prior hot $XXX year an capital America shutdowns drive Adjusted impact service equipment working model electronics. machines a fourth normal margins year-over-year long operating impact end part proportion capital parts and runners, Order talk increased equipment. injection sustainable primarily this margin injection line. and opportunity due of I cost I of nearly remains the backlog order orders runner to North including in segment, order XX.X% due mix increase unfavorable this Record productivity, basis government-mandated impact largely XX%, strong see

decrease X% Turning higher down by selling offset Revenue the year-over-year, million exceeded decreased to margin. revenue partially of pandemic expectations our estimated average well COVID-XX Batesville. performance for debts $XXX both was the price. associated Batesville's as and with in

margin impact closely the of new quarter While we are COVID-XX to continue debts and variants, compared the monitoring XX.X% to the the to continued wages commodities of Adjusted to basis due including of declined volume. impact primarily compared COVID-XX, prior inflation during points to of fiscal year lower prior do rise in fourth we our EBITDA to XXX year. due anticipate decrease the and

of end the and $XXX to to turn Net to Turning the by net debt adjusted ratio EBITDA sheet. quarter was debt the sequentially balance fell million, at X.XX the X.Xx. over

had As facility. credit cash available of on under including billion, million the approximately revolving and $XXX hand remainder our of end, we $X.X liquidity quarter in

As debt XX, we of our June near-term had no and no on revolver due. maturities borrowing

capital Turning to deployment.

targeted to now are X.X. our X.X leverage below We of guardrails

profitable large be platforms to organically and main investments, we've As product and strategic our our focus MTS. accelerate said, both APS making will in growth in inorganically,

will return high been strategic the shareholders fit evaluating have long targets actively developing expect pipeline are we good provide our that that to We and a a term. M&A and over

other along repurchases, strategic investment share opportunities. opportunistic with evaluate to continue We

this referencing comparisons me conclude will section. quarter review be quarterly fourth the I results, prepared to guidance. my let with of in remarks Similar forma pro Now our

partially year-over-year Batesville. range in Hillenbrand's expect solid industrial growth X% in by offset by a driven total increase in to quarter our to decline We year-over-year X% revenue segments, fourth a of

range adjusted parts adjusted adjusted to to per to revenue year-over-year XX%. of to due growth $X.XX forma X% Process to XX% Advanced the $XXX and the range to pro revenue XX%. $X.XX, to in range primarily to EBITDA of share reflecting $XXX fourth to $XXX of EBITDA basis, of earnings Starting strength our expect fourth XX% to adjusted quarter XX% we in the with EPS from range large the in of revenue in Solutions, increase grow total a plastics expect of implies growth We to end $XXX the of of we with projects range some aftermarket million be in as projects full our the million markets, services delays is in pro as in On large persist recycling. Full with XX% year well other forma million, outlook plastics, and food see Hillenbrand approximately Though an representing polyolefin of strength quarter revenue. $X.XX and backlog, like engineering in still million year XX%, anticipated $X.XX.

lower and a headwinds to improvements from offset We containment XX% projects, of inflation, spending a margin basis year-over-year year. EBITDA productivity of to mix by the expect come large adjusted lower proportion due higher down higher normal as are which place a XX and to actions the project prior the perspective, the XXX be volume, of put from plastics XX.X% points, margin, more impact relative a than price in patterns to following at return cost to in

a large projects revenue a in parts margin, to the we expect future. while As reminder, highly profitable them have the service generate and lower aftermarket plastics

Technology Turning to Molding Solutions.

led our product revenue ongoing accounted systems. ability to in by chip growth for our have range injection molding expect fourth quarter, machines. hot disruption shortage molding a for we the due the to within year, impacting quarter XX% guidance our solid over lines prior of ship fourth We continued In XX% injection strength our in to growth runner and

lower and to down We costs. EBITDA spending as volume than sales, of productivity benefit with year-over-year, runner be to investments higher and margins is expected higher to basis improvements systems, to the return a respect and inflation normal offset points other more which margin expect continued by injection carry hot XXX XX%, adjusted to XX.X% molding patterns of XXX

of inflation. up increase of this that a expect since segment high to be XXXX fiscal significant quarter backlog offset the price/cost the lag fourth molding will within We injection in in built we as the is prior through the there equipment work

to year-over-year in demand Batesville. with X% COVID-related in quarter, to revenue due in North fourth X% decline a expect decrease continued the we to deaths America. burial we In as year-over-year expect decrease Finally, a

We lower EBITDA partially to patterns, due of volume, inflation down versus to and spending return XXX XX% year rising of to the normal offset productivity. adjusted impact by points adverse primarily expect prior XXX margin XX%, basis of a

As a increase price reminder, next a beginning into at go will the year. fiscal effect the of

significant circumstances, Additionally, volume in year, behind our are on the the given the the back am execution resources Joe. demonstrated we of the that prioritized ability can initiatives to through of momentum the now as confident its the business quarter the to I'll execute over earlier meet slightly I And and challenging the Overall, team productivity our we has unprecedented continue last customer through to turn demand. year. call

Joe Raver

Thanks, Kristina.

in that, as inorganically this and will proceed $XXX that growth. with operating focus Hillenbrand of the final investing quarter supply a run-rate ensure and Applying chain into team to questions. on businesses. drive and create margins critical with to a well, of protect us questions. months, finally, the shareholder macro be integration to management lead your large and X-year on take we'll Kim's to our we well future, Let cash record to track takeaways with last and in to We disciplined committed and over is continuity before organically the ability work million generated leave achieve redeploying you open XX confident of over we And our a model long-term both continues platform the seamless ended Milacron in we $XX value environment. CEO global cash me remain to to free backlog, synergies for we We've growth profitable million. line inflationary I'm the positioning The remain transition. in the challenging your few Hillenbrand With drive our

Operator

[Operator Instructions].

is first with from Matt Our Davidson. Summerville D.A. question

Matt Summerville

couple A questions. of

QX? QX profitability about do regard number is math just that then inflationary as impact shortage What was unabsorbed chip million. fiscal in would your guidance also, the what you like in is like? your And revenue well? incorporated sounds QX, either $X Or it in look what or for If in the cost in the

Kristina Cerniglia

the to about so QX, going be it an to Matt, relates from inflation for as increase way is I think to QX. it's think it

So roughly fourth half in sorry, of we -- and we're be have that I'm really quarter, -- roughly XX% mean with cover going the to -- million only I $XX forecasting of able inflation we're price. to

a million fourth unabsorbed $XX.X for have we'll hit the P&L for to quarter the inflation. about So

to shortage, we that As fourth $XX million to it anticipate roughly relates the chip quarter. impact about the

Matt Summerville

Is that in is terms $XX or profit? -- be just that to clear, million of revenue

Kristina Cerniglia

Yes.

yes, Sorry. That is -- revenue. that's

Sorry, that's revenue.

Matt Summerville

Okay. to the clear, subset, then actionability. just with in on of the the terms if a M&A funnel you're could is comment Germany, outlook doing that respect million And you then be Milacron? with restructuring And of your in to total $XX as in savings contemplated also well as

Kristina Cerniglia

to Sure. I'll take the Joe. over restructuring question point, and then other I'll flip the

really it's achieving to So synergies. $XX Coperion related to or million in our Germany, of as restructuring it in relates

and in businesses. all as target initial from Hillenbrand As anticipating legacy synergies both was just are the plan And we you from along. the synergies, our were Milacron, but know, not also for coming setting this

savings. will achieve million $XX will it -- this be help that us So

Joe Raver

the question. take M&A I'll Yes.

So funnel we've over of years since active past Matt, couple been prior to in the been the is probably acquisition. Milacron quarters than more few we've good. And a the

So part our of there's focus high overall I've right as offering, are revenue. bolt-on we available. lots of small mentioned that of have I a out relatively and line that -- where multiples businesses there say looking mainly earlier, but we're is would now, are pretty our really of product particularly in food it's kind around the but good processed strategic areas acquisitions,

solid that's expected stable to We bioplastics. grow, -- that's a can market that, recycling expect and and and we good, grow then

lot and both are time. volume plastics quote from. relatively for those a of a those at when Both places there's where fast-growing markets those but couple so a small of the look and sort we activity, long and to alternative -- be And around we're make expect materials markets recycling our today, to of of activity they're investing, are both we

over strengths markets given unfold, markets so pretty lines. -- time these product our we're And particular all these good they continue in technically our to to as play of that

And to well then the particularly because that. and at plastic, the are the tend volumes output. better compounding more higher with, business, off And our engineering it other we material so do part with think good in is, the work of I to higher we challenging very we're the

And equipment -- capacities analogs more so move as costs suited they as those to scale companies like as larger things or look they our down. to more bring bioplastics, things, production to and meet becomes

places. of So those couple are a

it M&A, activity we're places lot perspective. And is we're targeting in market that So bolt-on very of sort active. an terms -- of again, a of from it's end

Operator

is next Securities. question Daniel Moore Our with from CJS

Joe Raver

maybe like we Dan. sounds it lost Operator,

Daniel Moore

about Kristina, My Joe, me? that. can you Sorry apologies. hear Kim,

Kristina Cerniglia

Yes.

Joe Raver

better Dan, Yes. you're now.

Daniel Moore

It as with Batesville. term? quickly the would a short maybe above sounds stay little not prepandemic as in Start normalizing have expect here to levels expected. quite bit you Do are we like volumes

Joe Raver

Yes. It's a really good question, Dan.

on a Batesville things So think few side. the I

right, down think expected. I deaths less You're had a than we bit were little

revenues our a in little terms market. were think I higher the bit of burial

year. the was spiked So rate last cremation

basis, huge rate. So in increase there on cremation not the a year-over-year a was

that better we So the through. flow volume and saw did burial expected, market than we

now. rates U.S. main in you and are Canada and mortality really look North pretty our is right if market. Now on at deaths low America the The what's happening --

recently So they've just the for a been seen but we've haven't seen the in variant. we -- while, uptick low Delta

but expect of clear last uncertainty what saw to the how not so a as little the lower year around going into some basis. normal our anything, what out. rate to to the fourth quarter number mortality to quarter But bit upside to normalized happen -- through play opposed fourth as head Clearly, and a associated -- compared it's we new with year, what's we mortality. if there's or with So be infections of still we downside there that's going -- into kind on may a to the of

Daniel Moore

All the gap And That's much close the helpful. ability talk your $XX in QX right. fiscal once goes inflation then increases September. about Batesville? the that round that effect kind expected of million price into of -- hit And annual guide, how unabsorbed is to in of of pricing

Kristina Cerniglia

Yes.

to best we'll understand, announcing obviously, And -- But point price cover you is half $XX to our that as will increase roughly So at time, of inflation. be that we X. the this in Batesville, million can be going we October Dan. do

working should think you aware other team productivity really that of thing is to -- the on initiatives. I the is be hard just their

with to inflation, and with continue productivity price, also not we offset will actions. so just that but And try

Daniel Moore

Got MTS it. might, if I more, one on the And side.

well. You are like a mentioned, driving or it's the like molding of continued of across as runners areas as kind as highlight growth obviously, it backlog seems that and of injection resurgence in board, in seems a the any but pickup well bit hot those

markets, So uptick you're whether last the seeing where geographies, few the months? most it's in end

Joe Raver

Yes. Thanks, Dan.

MTS the automotive, construction. seen just segment, goods, I really good in overall, So the electronics, consumer across would including board, we've really say, orders

orders. solid So

some orders. hot the quarters orders some as really strength high. had and momentum business. quarter, a runner to we -- We and business that know, of doing very backlog in good well, its high molding think we we're business, -- is really continuing continues had I is you The and quite good the injection see

of share positive. the MTS are we're a order the pretty businesses run multiple and are lion's done doing think mean normalized in across of rate. sort major very order again, of we've results of end normalized that make both I I in segment. at into settling geographies And We're run well. markets, that business, is rate our have geographies those both seen businesses, good good a well all -- all -- the which up of

in good good we MTS the and -- order segment. expect again, on So pattern, backlog, momentum continued

Operator

from Our Franzreb John is next question Company. Sidoti & with

John Franzreb

and Congratulations, both Joe Kim.

Joe Raver

John. Thanks,

John Franzreb

your to a that much How think much XXXX? has is do was like maybe How of kind you there? And from now been Joe, And the could out about lead I'd still deferred addressed of pent-up demand. lead you talk about little backlog. start maybe, historical times? thoughts kind versus with times bit

Joe Raver

Yes.

unpack maybe little try to I'll me a as let and So ask Kim weigh in then well. bit, question to that

we're believe I good I the So think, service the bit from really, think that, seeing you but little about I APS and on service, a service. orders that's back on don't that pent-up Maybe if demand segments side, think the downturn. drive the in solid momentum backlog,

projects so are of that that typically longer-term in business. And are kind the the part projects these of

one. that's demand really back, don't I number think come pent-up that's so And

quick which a little story I different is of business. bit hot business, think it's a the good on the runner The turn MTS a side. that's business, chunk MTS

the a coming seen now for of of quarters number that's momentum And so downturn. out

I there. So big related slug orders pent-up some previous of a in molding demand any really don't see there's think did We to injection quarters.

into And is sort to on order we're sort of so But pent-up that here that rate more kind settled demand the that I'd normal of run say will molding work view injection -- -- there the business. down. isn't normal patterns some a of continue consensus backlog,

normal sort rates growth more seeing order so there. And rates we're and of

what the market let quick Kim it that So backlog in particularly to talk she larger -- with little real maybe bit are and also maybe just looks. how the projects the that a me in she sees can turn -- how and

Kim Ryan

think that John, APS, the that in And the are thanks projects, can't are planning the oftentimes, without overall. these as of large about stop things everything especially projects these And that Joe I for increases huge with your cycle. to agree question. addition, these remember projects you the in cost and said. we that start years

tend they of planning literally through phase they the phase cycles years the the So and terms are because the planning. -- in to invest execution

on for least at some projects creates good. that us, which So stability is those

them those through virtually a quoted we've So the although last are. to we -- projects. year. continued projects we normally versus them seen quotes have We've of through and like continue quoted no differently, snows we've And have even being number

continued pipeline. have projects those to We see the in

-- queue projects they some in their been people elongating has quite for somewhat, the in plans resulted their lead sure frankly, seeing terms with moving businesses they the can projects of we're in been on, going in I the want to has times, out what think so had them they for marketplace. in that growth of of and really because obviously, get their are that execute make that for they is time, terms -- lead In times has which all line

little order of backlog. color that So to -- commentary adds bit a hopefully, the what we're seeing in

John Franzreb

just you longer And front? what on labor how are And the seeing lead that the regards in is P&L? to times, impacting the

Kim Ryan

last control to that have help couple as those we deal to this a to the us developing incremental of see increasing time Well, worked bit have over with started years, volumes fortunately, more. we we've lead we And started who volume over partners an to so ability times these develop that.

Joe Raver

business. molding Yes. And have on MTS injection challenges the of particularly labor think business, that's APS I especially the John, some business. seen in we the true

about and remember, if revenue go we in year, we orders you some furloughed a pretty number back you low if quite had a people. So of

tell comes able labor. and I'm in I back runner much some quickly So labor the hot we the quarter. challenges, but but quarter, think, we're for work us, that. pressure, labor all we continuing hot building the also to runner it business solve world we wage that's to pretty the third especially the we and force, see But up to -- those during you don't I around the feel think were that side, through are missed revenue domestically, third when did at like that I in we during on to will second a challenge sorry, have continue

some rate have kind working times wage to get most much we has a business, I really with to segment, expand labor job those So just in we back haven't a of and positions of because more pressure. but mean, run normal the done shortages, we're to good In lead felt and than think, that that get business. APS, other of the summarize, seen filled I MTS

John Franzreb

Okay. I one sneak could in. And more if just

that price/cost Batesville. quarter, business. what's lag discussed injection You the a said last in we there's I in going on molding know

on lot. why What's molding? You there what's a injection less going price/cost in -- talked about in is APS a

Joe Raver

Yes.

question. good So

in remember, molding took you'll injection we the if business. orders So a bunch of

as there some demand. pent-up earlier, -- was I there mentioned was So

had very that was environment. inflationary to we high And pent-up few quarters of a the demand. orders that due So pre

have we to that margins off. backlog is -- costs and to so inflationary as And we going have the works set some are customer the then customer paying, where prices what pressure backlog the

we we it's And molding of have of subsequent inflation, have that, again, to inflation. price Now, to some series a due actions ensure some taken around course, we're mainly backlog compression margin that injection to do we've but equipment. where covering

Operator

next Our Barrington Chris is question from Research. Howe with

Chris Howe

taken have of still one growth the seems couple some and as with for for this these of the context Most been reoccurring mix MTS. it sequential of Talk to may of XX% indicate orders, increasing business, a in of here, into fourth it an but in seems The growth parts. the my of be piece and kind aftermarket forward what APS, aftermarket moving sequential predictability level to there this XX% It about sequential questions put increase business. -- other of parts remain. of your

Joe Raver

Yes.

a our the of historically last business. So point on around I think orders and you aftermarket probably 'XX, quarters, think mean, in and if and I look we -- I parts rising service had back this backlog quarter steadily few the at were we've first fiscal low first then

expect continue quarter the 'XX. fiscal so into go to into And we that as we fourth and

and profitable right, you're is of this stable a so And part the business.

is in some year, parts while I and the for but lot these polyolefin they we of and large is do and aftermarket a service to think chunk out, turn, just a quick a the scheduled to to pretty of be tend a few up they're out point scheduled thing other parts aftermarket also customers, cases, out quarters. service

see and and question. that to be services -- we fiscal parts hope I momentum followed year continued then end go fiscal that answered next we'll we've continued good into will -- this revenue year. your through the fiscal so orders, as of And with and from

Chris Howe

here Batesville well relative to I'll just ask the segment, continues one That's more do expectations. to our on good.

this week, talk this you lingers than about visiting Delta of to the But doctors, You like of environment perhaps mentioned cases stay-at-home lack the if of next the for number impact related how COVID-XX what that COVID-XX. variant variant death lower or rate? of may death the for longer, impact variant it for can was is rates or what outside a Delta

Joe Raver

Yes.

And you shutting the people would was we're down. if -- be doctors, really hospital and So COVID. the that sort And to recall, so were I of the believe, -- mortality have were you'll I the where saw spike, people we don't these pandemic stayed associated from away unless with emergency. early we think go that indirect an advised in

spike saw we that so early. And

takes ultimately figure that's the impact years data. that see I out to think in it fact, It's moderated hard somewhat. to what And is.

so And of this of the COVID-XX return go think stop return rise to -- hospitals seen and visits we'll or either kind I if once is I we've we've procedures kind Delta we'll seen the think don't thus of think even -- I of What patterns. seen away, variants and when a normal I with lot -- the we've normal far more think variant. doctors'

different it's normal early back And so ahead required. bit -- the hospitals the a their still that getting seeing going People different and little you're business. in it where operate pandemic the -- procedures than situation having it's was to physicians and are a come

look again, think mortality forward, we kind normal pattern is more a as forward. So of this, going much of our I expectation

Joe Raver

and the and ownership we've on call important Hillenbrand. I over today. business we thank reminder to We that, the to joining the excited of in do made us reminder, this one just progress And want of last really the our interest with on as report end appreciate for So a everyone your -- some August, we're year. part share are at last sustainability of second publishing our your

when November with in we quarter our full again then, we'll that, you and results. year so And talk to fourth report

great day. So a thanks, and everyone, have

Operator

conference. today's concludes This

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

Hillenbrand (HI) 7 Aug 212021 Q3 Earnings call transcript