HI - Earnings call transcript Q2 2024

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Operator

Greetings. Welcome to Hillenbrand's Second Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

At this time, I'll turn the conference over to Sam Mynsberge, Vice President of Investor Relations. Mr. begin now may you your presentation. Mynsberge,

Sam Mynsberge

we Ryan; operator. Call posted our for you, I'm Bob by CEO, VanHimbergen. that Good and to IR Vice Fiscal to morning, Earnings Hillenbrand's joined the Kim today's and call. President your to I'd Welcome our our our CFO, on on reference XXXX. Senior President everyone. Year Thank and direct Second attention like of Quarter slides supplemental website

operating that our safe Turning may X, differ the to course currency and remind you are not comparisons during the the organic materially. the we for of Slide forward-looking our our certain to could segments, securities will from rates. are Also that performance, harbor comments foreign statements measures, certain of statements I contain and performance of acquisitions, future guarantees divestitures actual laws. excluding including subject call, These provisions results non-GAAP impact exchange this be discussing

which X forward-looking risk for will be operations of Also, well Slide discontinued of as a our of be could impact non-GAAP in appendix as we that website factors the on found divested statements review you results. basis, which our last the the a discussing February operations XX-Q, to on we and I excludes Batesville, of encourage which our results presentation year. discussion the continuing deeper can information, and actual our

the to I'm that, to turn going over With Kim. call

Kimberly Ryan

you, for us Thank joining on today's morning, good call. Sam, and Thanks everyone.

our give more Food of which in quarter, decisions XXXX, our and in our acquisition with the of and seeing updated further to the uncertainty Process but across we're volume operate or outlook this the we're line of business for parts FPM, demand of color by XX%, macroeconomic Performance delivered of first, driven in the continues in total adjusted the We'll we're expectations. discuss We response dynamics as $X.XX, customer a taking growth the environment little was had per I'll Schenck challenging business. and segments our continue a we we share on order in facing. Starting global to headwinds remainder many impact actions Materials to revenue earnings with

order in did rebound expected to both sequentially rates while However, improved they coming levels not we year. the segments, the into

a performance In our demand and aftermarket from Advanced for output Process the to advantage. polyolefin our allowing capabilities us highest cycle strong and and customers, our segment, competitive continue has remained see the Solutions strong we investment resilient, where technological gives quality solid

offset other mid-sized pipelines test lower-than-expected utilization was for our facilities projects and by high. this capital in orders However, Order remain end remains of markets. robust

segment's decisions However, expected, to which line final for impacting year. negatively top continue slower is customer than be the the

strict targeted expansion and limitations the we have quarter, the of actions hiring, began I'm saw discretionary during and the the been the cost response, including actions, adjusted quarter. restructuring that these other In on points basis to continue XXX to in costs. teams which which we contribute implementing with EBITDA travel, margin in pleased implementing urgency

costs expected will be we returning disciplined orders see these levels. come of some back, to anticipate we While we'll until

of margin Additionally, and that Linxis, FPM good these expansion operating we ahead leveraging the we're make pleased we're continue which schedule. with the Hillenbrand model businesses, to getting and to tracking is progress integrate traction on in

fiscal businesses to for drive have highly in opportunities confident these put later we or We fiscal which volumes. Nevertheless, larger some see pressure a few delayed in XXXX, we growth and to on for early long-term the seen year value remain the near-term Hillenbrand. projects get

optimistic will the cautiously which in updated not see remain with but as trough, that is We a in improve demand a point orders more but the consistent Bob orders XXXX, experienced were we've recovery to our hit our pleased Turning we've expect we're guidance Segment, in over environment, cover quarter reflected yet the in in Technology throughout relatively to sequentially, Molding inflection do last see clear to XX% fiscal detail material what that year. in the we call. later

to high-margin continue to to we see Additionally, in previously pressure headwind margin hot products runner our short-cycle, a be our mix causing expected profile.

we As to announced this $XX diligently million its segment. is the a had charge March. additional reflected include last we we execution been quarter, in charge executed million took increased was the $XX an we've launched of higher for announced. previously than quarter, restructuring This consolidation, which scope and working the facility We've program MTS program which we this the in on

once We also well-positioned expect million, prolonged to savings an estimate believe be We and and demand up from program demand necessary are million. the growth profitability the $XX previous we're with be to associated increase our actions $XX recovers. rate in the given we'll of of annual and these levels to appropriate confident run higher that softness, approximately return

back debt term, not move changed. deleveraging cash acquisitions confident time transformation, performance has will priority put pressure cost the order implemented our ongoing priorities with line in as our controls, the allocation. together and of to continued We're we flow our drive reduction that in optimization #X initiatives, have impact but half the working forward. stronger near strategic capital completing negatively our on enabled our Since have terms that Sustained capital been delays

to to will Across in the these end secular portfolio global key our long the term, global allow over expertise markets perform the the us anticipated and our as transformation and technological enhanced performance actions by markets. our for remain take underpin differentiated ourselves We the our and that engineering drive charged will reach capabilities, energized teams trends that enterprise, and believe to business we've success. necessary position

now to With provide and that, performance the more over Bob turn to on financial call our detail I'll outlook.

Robert VanHimbergen

everyone. and good Thanks, Kim, morning,

offset X% were X. by MTS. Adjusted inflation lower to EBITDA and as acquisition XX.X%, year, prior offset increase restructuring lower Turning than product revenue increase capital more volume, the delivered flat pricing by adjusted decreased more MTS an due compared pricing, organic impact prior more revenues of year-over-year an containment revenue was cost, containment acquisition, delivered margin $X.XX XX% higher FPM aftermarket volume led mix We $X.XX We volume. reported decrease million the in per essentially increased On cost consolidated organic and expense. to in were cost offset basis, our lower of million Slide $XXX of year. net prior expense, from of interest year an as $XXX and to as of to organically, of the the X% than tax by than which but consolidated on cost were of performance inflation, decreased or the share, We and actions, EBITDA higher million, down the equipment XX%, $X a by lower and cost GAAP pricing, FPM. income

earnings share of increased Adjusted $X.XX per X%. $X.XX or

was our Our XX.X%, expectations. line adjusted effective with quarter tax rate which in was in the

$X of million flow advances. to cash on was approximately expectations, primarily capital working large million operations from down the in $XX prior projects below the the due Our from and quarter, customer requirements timing and year our lower

efficiency basis operating improvement. percentage trade sequential We payables as model continue to of an where the points as receivables, saw inventory, deploy over sales and a to around XXX drive working of as improvement we year-over-year Hillenbrand well capital

of our volumes result the versus $XXX year full roughly However, lower to of million the range to we lower advances, as for our of expect be now $XXX million. previous customer free in flow million, $XXX and a expectation cash

year-over-year segment Now higher particularly revenue volume, by moving offset million capital aftermarket Organic Slide $XXX XX% the on FPM. Revenue lower prior equipment as starting midsized to driven performance, flat was compared APS X. of and on to were volume systems. pricing in increased year, by

EBITDA product progress Backlog foreign offset the equipment year, an due primarily XX% by driven points XXX prior Sequentially, EBITDA on We $XXX quarter XX%, by to mix, was initiatives. which lower favorable capital prior cost basis cost XX% was Adjusted FPM. was basis, billion volume. delivered X% backlog favorable adjusted up by partially increased the driven integration cost exchange. in up compared year-over-year organic decreased On increased backlog price year, and containment, of X%, and excluding margin million over the and of X%. down containment, but $X.X was flat to of primarily organically,

MTS X. volume for $XXX molding year-over-year, to driven XX% on equipment. Revenue by of injection Slide lower turning primarily decreased million, Now

molding good runner job demand a against exceeded the performance comparable expectations by revenue America. year, teams but tough largely North in from our to project the performance hot softer a our due injection the execution did prior as accelerating backlog, softer-than-expected faced for product line, largely While in the offset was quarter this

operating leverage driven Adjusted EBITDA basis offset decreased prior partially by price year, volume pressure. XX% points of cost $XX XX.X%, by containment. margin of due impact and lower EBITDA XXX the cost largely to on of cost volumes inflation, lower the Adjusted to million compared and decreased

facilities to help of In runner operating We've back quarter North in efficiencies America. cost addition, pursued our in we've aggressively isolated the these identified actions given X during hot challenges. profitability half support

Backlog to flat on of prior $XXX a but year, was decreased XX% essentially the sequential million basis. compared

consumer the particularly but weakness demand America, electronics for in As QX. packaging of line, and North on particularly fully we not recover bright runner in mentioned, weighed shortfall improved Kim equipment, saw but product orders higher-margin spots goods molding mentioned. sequentially, experienced I as We and applications, did for injection our hot automotive in

was billion, X. X.Xx. the the EBITDA end debt-to-adjusted $X.XX Slide was and to debt Net of Turning quarter at ratio second net

the with above increase As cash our our and remains slightly modest was orders. expectations leverage, priority, disappointed flow in to we're our net debt due which the weaker reduction #X

to of by second actions and within for remainder aggressively more revisit it further X.Xx outlook leverage XXXX. time be We'll for XXXX. but with efficiencies, will to now cost to we have these leverage, Given continue order fiscal visibility conditions, our the pursue patterns a line we'll net previously target our stated our revised deleverage working returning the to have normalizing. I'll but to X.Xx our reduce turning goal to guardrails wrap of to guardrails of quarter our achieve once up of capital challenge

mentioned, updating the consequently, to demand expectations. trends. As remained in current market patterns yet material our to are outlook And in original underlying conditions. our below reflect shift quarter see We've order we

now in $XXX For is expect $X.XX. to previously million $X.X Hillenbrand for full EPS now to billion billion to expected $XXX $XXX to be to we of billion. to million, be of to to Adjusted EBITDA revenue $X.X previously $X.XX range previously $X.XX, the total million billion, $X.X year now million. $XXX is $X.XX $X.X expected Adjusted XXXX,

APS, changes actions unfavorable the cost due $X within For isolated cost partially partially million lower timing fixed in-year In seeing inefficiencies impact order offset benefits. of recent performance hot product mix, MTS and line, of we're reflect product volumes acquisitions. leverage, roughly pressure pricing and and by within our MTS, operating runner margin accelerated by offset the to the restructuring

some given through expectations, performance injection to our a product as this but in reminder, seeing We're QX, in original orders a better that comes margin. line larger came molding relative compared our at lower in

as in optimization hot fourth efforts, higher-margin product putting than our facilities, And experiencing return expected, quarter. capacity in remains restructuring to runner which inefficiencies start margins. line actively to North particularly I is X expected of operating levels on we're and to expect we our mentioned, hot Our working of which seeing pressure the softer we're Through additional running America. efficiency, in

For Slide QX, earnings Please guidance X of sequential share to both assumptions. segments review targeting performance range per $X.XX we are improved moderately additional on $X.XX, in adjusted a in for reflecting the basis.

the and to navigate challenging environment. taking actions recognize we summary, In the business to facing, enable this we're we're headwinds

remain necessary. actions we At We the expansion growth about and we businesses the the excited for same over opportunities the will remain as see time, vigilant term. long margin for additional and pursue

turn I'll that, the With Kim. over to call back

Kimberly Ryan

Thanks, Bob.

a and our have softer with continue morning initial our beyond I'll taking Before final various questions, orders our to more few this We expectations. parts as end headwinds that of be acknowledge cyclical remarks. business throughout persisted presentation

of in and in process trajectory brands our diligent internal that to our of the complex execution anywhere world. and I As remain reflects conditions Bob navigate our rest the processing current most have guidance revised discussed, their the best-in-class businesses market solve will strong conviction and us our initiatives the strong that term, technologies the through customers' throughout year. ability range the expected and near the needs

as plastics Finally, be ago, announced a NPE, we'll Orlando, we show, Florida. number weeks week's of featuring in a at next our trade few brands

elements for pellet the great highlight from this supporting hosting within Coca-Cola, as from shows of as breadth education world is the challenge where this sustainability focused around plastics opportunity with one critical value production key the come plastics member within of industry We'll and of engage year world, Impact plastics to circular capabilities and innovations the to experts our together and leading circular again to As a featuring plastics well of in promote largest in economy. a products the customers the partnership the sessions in innovation the on recycling. to the our us the manufactured be trade Net all teams industry and annual business with chain,

that, for With your the questions. we'll now line open

Operator

Our Matt of first question Instructions] Summerville today [Operator from with Davidson. line D.A. is the

Matt Summerville

you level maybe segments. sequential you can of improvement markets does -- that? about you've What driving both little order and that Just mentioned the across a at indicate seen quarter-on-quarter sustainability? talk in geographies seen thus far bit least some April, you've And what are

Kimberly Ryan

all, Well, both I Matt. a morning, of good like question kind and first this hammer bit. Bob of

we side, in APS the on So orders projects. larger saw those

what break of some would were we were would of And say the to of things than our I fair is And on, we decisions to pleased what that quarter. say the with obtaining they more as is that those while some did so were of I last waiting we share those seeing came start in order kind those pass.

were we with that. So pleased

As you see on to betting whether is some pipeline that where kind several the of compounding place quarters. that's large a projects, or is we of lines lines anticipated that been midsized over continued the next know, larger is in there on. projects the have those come is delays robust food some those to of we've order decision-making still The whether that

offering for for going of consolidated time of instance, that pipeline as some that. systems in our those for to ones first portfolio even our Some building we are the a as the market, we're are

of performance, to become is, acquisitions, brands, good we part organization little service announced bit food of cycle global continued on also are quick have a the new service of where kind the those slowness. of a that to like organization see and of all the strength, basis some across seen places the So recently business, we've the the a The for of business, has great service going APS.

be we we're of so synergy expansion them to the that talked And business, the having really a efforts so the we'll forward can we that looking focus on part a that about there standpoint. traction begin structure our service of to the gain there, entire from

MTS the North we the area, On injection molding. side, in a in was bit of recovery, automotive what in America, saw specifically the

so to the pleased last This the They in have low. so been quarters. our been order a quarters at in molding over they've the where see intake And highest business is this we that. were period injection X or on of side X

with and that. So hopefully, we've pleased of the to we seen that a bit. were starting And are trough out come

runner is market continue On us and America softness, we and that to the for see North side, hot China primarily. some

the service We the largest We geographies. aren't European have footprint of Those part India. the market though. in

market the in our U.S. market So primarily and the is dictated runner market. hot space China by the

consumer in decently runner an on side. We yet goods, not recovered footprint hot which has the sized that area have a is

least, on our to in that be, anticipate, the of monitor I we've begin are did as to side, to hot relevant some optimistic we us they seen see would say, outlook the pickups injection some molding markets at again, some to upticks. for anything those on in as handle? Bob, the businesses, But that talk else continue nice continues we not I that areas and So the runner side.

Robert VanHimbergen

everything. covered No, you I think

Kimberly Ryan

you mentioned? that all that Is

Matt Summerville

issues stages so believe incremental you in that a the calendar Yes. in little typical realizing then price latter moves you to as acquired much sure, that could on. is versus guide. cycles, cost With the back that. maybe Can gone MTS. and And had bit how past inefficiency as Yes, no. that late a touched regarding business? the respect back bit also takedown I little understand studied if pressure is curious, of parse you 'XX, -- a Absolutely. in margin price downturn EBITDA in delineate MTS and you've I of Thank out between adverse maybe in customer But that Bob this that the behavior you I'm the you, I'm commentary Kim. seen in gone the you've you've

Robert VanHimbergen

Sure, yes.

decline, first just years X pressure. different it, there's the So these question, little But expect the call I the manufacturing efficiencies of as pressure Matt, is your a we now from up, it, and X/X probably we levels It's the margins, that pricing downturn probably what restructuring, last then because the it isn't as China the is again, that was, mix we'll is bit in get really typical there ago. a that pricing cycle, thought at it or as growing mentioned. to this out QX, have and when is versus so probably, during of probably And margin you cycles. X/X. is the And it to pricing X/X unfavorable well, call clean far pressure typical is as X pricing

Operator

with from next are Our line Instructions] questions Daniel [Operator of CJS the Securities. Moore

Dan Moore

Kim appreciate color. and the Bob,

what Forgive at me a But seeing in delays. question It order stability? you get cancellations is to seeing equipment it the this rehash of they Like the And Is geopolitical you're this customers from what APS. on? it just terms first need looking are what the turn midsized extent. it key hearing any lower like of some at Matt's if is projects Are you interest investments in holdup? stage? Is that's to rates? sounds back your to

Kimberly Ryan

to those pellet typically midsized projects. large of mid-sized around those we've So I what one they exciting had going the that on things is be that we're projects, hearing projects, is this think where follow

that. like coming go typically, that projects online, these midsized has things And and somewhere. compounding So to is capacity lines capacity as are then

been area footprint geographies, us, us in for big certain for large wasn't that a which compounding investment China historically. example, Now, as has a an

is formulations moves for is these do. as point of encouraging quality the are increasing, are what we our are view requirements However, seeing the output and the that that from requirements that products, these what we towards and requirements increasing,

are lot we And of into that demand. where because these of we've get the been opportunities on to projects, putting lot increasing a a into relationships that these think project where the new large for to investments some of midsized complexity so markets us in of will themselves opportunities there capital see in continue foster we space

pretty so we road. From And bullish the for of be us. would coming say some the kind will point an exciting down of opportunity feel about view, that's I of that opportunities that that

have continue consumer see out to think leveling there? What expectations are to I a we in demand.

have that to sure online, now think we working been I on in number certain of make to continue plants coming geographies. the plants these years are for we've a

large the for that come it, free the come significantly As next project plant Remember, jobs online, one shorter step years X project the is investments cycle of those times those the will are between investments those that the see online. really might the time that the, conceived the break for and commissioned. process than the you of is call and for time

kind build in our with And we're on looking implementations large focus meantime, service of continue our continuing basis. what business to global a at. and the we're that's So to on that

Robert VanHimbergen

Yes. And to no we've pipelines. our in question, on orders your to specific then, be Dan, no and cancellations just cancellations had

interest certainly to built get is are Our continue decline, a of grow. on think I some those these start we'll and And unlocked. maybe as to pipelines those rate I factor. And active discussions, think

Dan Moore

in incremental the million, color eventually of not coming are it. or specifically the of the And Any more just margins we a Appreciate to restructuring think kind shorter efforts, on when from? the saves overall -- do of incrementals restructuring recover? the the Is how medium-term about helpful. kind cost incremental That's following incremental there program? $X but volume just benefit where terms starts

Robert VanHimbergen

Yes.

and $XX in million. we that our bring expected a take million increased million quarter announce, So to QX. therefore, last bit a We now in savings to charge obviously, we, million, $XX to call, $XX $XX did expectations our of from about we did up about then

in with that's XXXX Now XXXX. come million to to full rate $X benefit going expected run be coming about the in of

charges, our prepared that's particularly APS, those adjust As that pressure see really some in for America, are of highlight. near-term the did some order just remarks, you taking we product as North in lines we smaller far in and of targeted some to

and So projects. midterm small the

Kimberly Ryan

levels of And started one this this began the embrace in to know talked thing, we just about Dan. partners. APS, we again. but I'll kind before, develop expanding I when Remember, we've significantly order

So amount outside inside certain we execute capacity of business. that capacity certain we of partners have we and that a amount that that a developed have the

nearly response flex certain X that the of to look not or in So gives you that. goes if up does ability when have employees years, of what at doubling over doubled footprint And that or last a the to demand X business is it down. us the

what able without flex we then the flexing quarter, come were seen over costs. lot incremental back we and to in. were And you've down, quarters, to couple that of will do able the a last last be And orders of as up

So for orders large in come in, of a saw instance, projects. those we number

instance, So we quarters flex that. that, now at of for we we're capacity point offline the over back before couple need taken where had a that

us But developing years this over it's years. team develop, on a we're great Bartel muscle so lot all number I'll for give Coperion that a a working took partners of credit that to number the a a those to anticipating but the side tool company, been his over us and build of It's now. at and to and Ulrich of

been these still we're signed of the And while running quarter in right bit that business to now and we've as got of on so the that using kind waiting have a pipeline projects up we're new that flow get the are order through. last of trying again, pieces

Robert VanHimbergen

that's generally flex, APS, that because to that able flexibility, range. And incrementals question Yes. in of that of flow because how that's XX% your on maintain through. we're that And Dan, XX% and to

Dan Moore

cash is in me, one Last free the cash than as for flow, the Obviously, change than -- called guide. in revision you out, it. free flow the I'll certainly, back queue. jump EBITDA Got softer and higher

cash how us the free biggest to you rate to year? likely target? you get it that conversion typical And back the through would buckets anticipate walk long Just to impacting take more XX% this XXX% of kind

Robert VanHimbergen

Yes.

reductions, the timing half So related are to probably and half orders, Dan. of advances, earnings

Now the we've I'd offset improvement capital focused actions partially been say that's working trade by that on.

the focus improving continue AR, we to so trade around And fundamentals AP, inventory. on trade and our

in see And percent did over continued the good And I'd to improvement sales last areas also improvement year. some even both so as as trade And here the on I that's forward. acquisitions, of those the on mentioned, we capital expect but see a moving working legacy businesses.

And so as into again, in saw XX% And can fundamentals that those to the of frame. I QX. get meantime, in think released, we to we're that we back think But orders pending on finally XXX% some order range released be going be I the time get as orders 'XX, you that large focused to the control. get we'll

Operator

reached At the question-and-answer of this the Kim we've remarks. I'll time, turn end session. closing to the for call over Ryan

Kimberly Ryan

We and Thank ownership call appreciate interest in your and in to third for again the Hillenbrand. August report and again on to great day. a forward us we We results fiscal a wish quarter Thanks today. your all look week you. you you great when our joining talking

Operator

conclude will conference. This today's

disconnect thank have a your for wonderful you may at time. and We your lines this day. You participation,

Hillenbrand (HI) 1 May 242024 Q2 Earnings call transcript