(Batesville, IN) – Hillenbrand, Inc., a leading global provider of highly-engineered processing equipment and solutions, reported results for the fourth quarter and full fiscal year, which ended September 30, 2024.
“As we’ve completed our first full year as a pure-play global industrial company, we remain confident in the capabilities of our leading brands and differentiated technologies to deliver world-class solutions for our customers,” said Kim Ryan, President and Chief Executive Officer of Hillenbrand. “I am proud of our team’s resiliency and determination in delivering a strong finish to the year in the face of persistent macroeconomic challenges. We accelerated cost saving and working capital initiatives, diligently managed discretionary costs, and made significant progress on our integrations. As a result of these efforts, we drove strong cash generation in the fourth quarter and exceeded our goal for FPM’s margins in the year.”
“Heading into fiscal 2025, our pipeline of customer opportunities is healthy, and we remain confident in the underlying growth trends that support our end markets over the long-term. While we are cautious in our near-term revenue outlook, we are committed to controlling what we can through innovation, continued cost discipline, and driving operational efficiencies across the enterprise to better position us for success once end market demand recovers.”
Summary of Fourth Quarter 2024 Results
Net revenue of $838 million increased 10% compared to the prior year primarily due to the FPM acquisition. On an organic basis, which excludes the impacts of acquisitions and foreign currency exchange rates, net revenue decreased 1%, as favorable pricing and higher aftermarket parts and service revenue were more than offset by lower capital equipment volume.
Net income of $12 million, or $0.17 per share, decreased from $0.24 per share in the prior year primarily due to an increase in business integration costs, higher tax expense, cost inflation, lower volume, and higher interest expense, partially offset by a gain in the quarter related to the previously announced sale-leaseback transaction, the FPM acquisition, and favorable pricing.
Adjusted net income of $71 million resulted in adjusted EPS of $1.01, a decrease of $0.12, or 11%, primarily due to cost inflation, lower volume, and an increase in interest expense, partially offset by the FPM acquisition, favorable pricing, and cost actions, including savings from the previously announced restructuring. The adjusted effective tax rate for the quarter was 27.4%, a decrease of 100 basis points compared to the prior year.
Adjusted EBITDA of $144 million decreased 2% year over year. On an organic basis, adjusted EBITDA decreased 13%.
Advanced Process Solutions (APS)
Net revenue of $591 million increased 15% compared to the prior year primarily due to the FPM acquisition. On an organic basis, net revenue was down 2%, as favorable pricing and higher aftermarket parts and service revenue were more than offset by lower capital equipment volume.
Adjusted EBITDA of $117 million was essentially flat year over year. On an organic basis, adjusted EBITDA decreased 14% due to cost inflation and lower volume, partially offset by favorable pricing and cost actions. Adjusted EBITDA margin of 19.8% decreased 300 basis points.
Backlog of $1.68 billion decreased 10% compared to the prior year and was down 3% on a sequential basis.
Molding Technology Solutions (MTS)
Net revenue of $247 million was essentially flat year over year.
Adjusted EBITDA of $42 million decreased 8%, primarily due to cost inflation and unfavorable product mix, partially offset by cost actions, including savings from the previously announced restructuring. Adjusted EBITDA margin of 17.0% decreased 150 basis points from the prior year.
Backlog of $231 million decreased 1% compared to the prior year and was down 3% on a sequential basis.
Summary of Fiscal Year 2024 Results
Hillenbrand’s full year net revenue of $3.18 billion increased 13% compared to the prior year primarily due to the FPM acquisition. On an organic basis, net revenue was down 5% as favorable pricing and higher aftermarkets parts and service revenue was more than offset by lower capital equipment volume. Full year organic APS net revenue was down 2%, while MTS net revenue was down 11%.
Net loss of $213 million, or $(3.03) per share, decreased $4.53 compared to the prior year largely due to $265 million in non-cash impairment charges incurred in the fiscal third quarter related to the MTS segment, as well as an increase in business integration and restructuring costs, lower volume, cost inflation, higher interest expense, and non-cash pension settlement charges, partially offset by the FPM acquisition, favorable pricing, and a gain related to the previously announced sale-leaseback transaction.
Adjusted net income of $234 million resulted in adjusted EPS of $3.32, a decrease of $0.20, or 6%, primarily due to lower organic volume, cost inflation, and an increase in interest expense, partially offset by the FPM acquisition, favorable pricing, and the impact of cost actions, including savings from the previously announced restructuring. The adjusted effective tax rate for the year was 28.1%, a decrease of 140 basis points compared to the prior year.
Adjusted EBITDA of $512 million increased 6% year over year. On an organic basis, adjusted EBITDA decreased 12%. Adjusted EBITDA margin of 16.1% was down 100 basis points.
Balance Sheet, Cash Flow and Capital Allocation
Hillenbrand generated cash flow from operations of $191 million in the year, a decrease of $16 million year-over-year, primarily driven by lower earnings and fewer customer advances due to a decrease in capital equipment orders, partially offset by reduced inventory and cash received as part of a one-time pension plan settlement completed in the year. Capital expenditures were approximately $54 million in the year. During the year, the Company returned approximately $63 million to shareholders in the form of quarterly dividends.
As of September 30, 2024, net debt was $1.69 billion, and the net debt to pro forma adjusted EBITDA ratio was 3.3x. Liquidity was approximately $799 million, including $199 million in cash on hand and the remainder available under our revolving credit facility.
Fiscal 2025 Outlook
Hillenbrand is providing annual guidance for fiscal year 2025 and quarterly guidance for fiscal Q1 2025.
“Entering fiscal 2025, we continue to operate in an uncertain global macroeconomic environment. Due to lower starting backlog and expected trajectory of orders, we anticipate total company revenue will be down mid-single digits at the midpoint, primarily driven by our APS segment. Debt reduction remains our top priority for cash, though we expect the timeframe for returning to our net leverage guardrails to extend beyond fiscal 2025 due to the uncertain timing of order recovery. We remain focused on driving productivity and managing costs appropriately as we navigate these near-term headwinds, while continuing to innovate across our leading product offerings to keep us well positioned for long-term growth,” said Bob VanHimbergen, SVP and Chief Financial Officer of Hillenbrand.
(Hillenbrand, Inc. press release)
