Hillenbrand Reports Fiscal First Quarter 2021 Results
Hillenbrand, Inc. results for the first quarter of fiscal 2021, which ended December 31, 2020.
“We delivered strong operating results for the quarter, and with one full year since the close of the Milacron acquisition, momentum is picking up in that part of our portfolio with solid demand for both hot runner systems and injection molding equipment. Batesville again delivered strong operating results on COVID-related burial casket demand that was higher than our expectations for the quarter. In addition, we executed on our previously announced plan to exit the flow control businesses, Red Valve and ABEL, and remain on track with our plan to divest TerraSource Global. We believe we are well positioned for the remainder of fiscal year 2021 with a solid balance sheet and healthy backlog, and we remain focused on driving growth in our large platform businesses and capturing the full benefits of the Milacron integration,” said Joe Raver, President and Chief Executive Officer of Hillenbrand. “Finally, I would like to acknowledge the continued dedication of our Hillenbrand associates throughout the world in meeting our customers’ needs and managing through the challenges of the COVID-19 pandemic.”
First Quarter 2021 Results
Revenue of $693 million increased 22% compared to the prior year, driven by strong COVID-19 related demand at Batesville and 50 additional days of revenue from Milacron (now Molding Technology Solutions). Excluding the impact of foreign currency exchange, total revenue increased 19%. On a pro forma basis, revenue increased 6% year over year, which excludes the Red Valve business in the Advanced Process Solutions segment, the Cimcool business in the Molding Technology Solutions segment, and assumes the Milacron acquisition closed on October 1, 2019.
Net income of $76 million, or $1.01 per share, increased $1.06 per share compared to the prior year, primarily driven by lower costs related to the Milacron acquisition, as well as higher income from that business, a gain on the sale of Red Valve, and higher volume at Batesville. Adjusted net income of $72 million resulted in adjusted EPS of $0.96, an increase of $0.21, or 28%, primarily driven by the strong Batesville and MTS performance. The adjusted effective tax rate for the quarter was 28.5%, an increase of 650 basis points from the prior year, primarily due to the prior year tax benefit recognized for the reduction in India’s statutory tax rate.
Adjusted EBITDA of $138 million increased 50% driven by the addition of Milacron, strong sales and margin performance at Batesville, and pricing and productivity improvements. Adjusted EBITDA margin of 19.9% expanded 370 basis points compared to a year ago.
Advanced Process Solutions (“APS”)
Revenue of $291 million decreased 5% compared to the same period in the prior year. Excluding the impact of foreign currency exchange, revenue decreased 9%. The revenue decline was primarily driven by a decrease in large polyolefin systems sales and lower aftermarket parts and service revenue driven by delays associated with the COVID-19 pandemic. Adjusted EBITDA margin of 16.7% decreased 10 basis points primarily due to lower volume, mostly offset by cost containment actions and productivity improvements. On a pro forma basis excluding Red Valve, Advanced Process Solutions revenue of $283 million decreased 5% compared to the prior year. Record backlog of $1.1 billion at the end of the first quarter increased 21% compared to the prior year on a pro forma basis, or 12% excluding the impact of foreign currency, driven by demand for large plastics projects. Sequentially, backlog increased 10% on a pro forma basis compared to the quarter ended September 30, 2020.
Molding Technology Solutions (“MTS”)
Revenue of $237 million increased 78% year over year due to the 50 additional days of ownership in the current fiscal year, and adjusted EBITDA of $48 million increased 84%. Order backlog of $292 million increased 100% year over year on a pro forma basis and 20% sequentially, driven by injection molding equipment demand.
On a pro forma basis, Molding Technology Solutions revenue increased 7% year over year driven by strong demand in hot runner systems. Excluding the impact of foreign currency exchange, revenue increased 5%. Pro forma Adjusted EBITDA of $48 million increased 47% year over year, and Adjusted EBITDA margin of 20.4% increased 560 basis points driven primarily by strong volume, favorable mix, cost synergies and cost containment actions. The company remains focused on leveraging the Hillenbrand Operating Model to drive sustainable operational improvements in MTS.
Revenue of $165 million was 30% higher year over year. The increase was driven by strong burial volume demand due to increased mortality associated with the COVID-19 pandemic. Adjusted EBITDA margin of 31.7% was 1,360 basis points higher than the prior year, mainly driven by higher burial volume and productivity initiatives, partially offset by higher inflation and variable compensation.
Balance Sheet, Cash Flow and Capital Allocation
Hillenbrand generated cash flow from operations of $66 million in the quarter, an increase of $48 million year over year. During the quarter, the company returned $16 million to shareholders in the form of quarterly dividends and retired $157 million of debt.
Net debt at the end of the quarter was $1.1 billion, and the net debt to adjusted EBITDA ratio was 2.2x, a sequential improvement of 0.5x from September 30, 2020. Given the strength of the balance sheet and with leverage within our targeted range, the company will resume consideration of share repurchases and strategic acquisitions.
Fiscal Second Quarter 2021 Outlook
Hillenbrand is providing guidance for the fiscal second quarter 2021. Given the continued uncertainties regarding the duration and severity of the COVID-19 pandemic, the company has provided the following outlook on the assumption that a gradual stabilization of the global economy continues, with no increase in pandemic-related disruptions to the company’s businesses.
Total quarterly revenue expected to increase 12% to 16% year over year on a pro forma basis:
– Advanced Process Solutions: down 4% to flat
– Molding Technology Solutions: up 37% to 40%
– Batesville: up 20% to 25%
Adjusted EPS of 0.85 – $0.95
For the full first quarter results, click here.
Hillenbrand (www.Hillenbrand.com) is a global diversified industrial company with businesses that serve a wide variety of industries around the world. We pursue profitable growth and robust cash generation to drive increased value for our shareholders. Hillenbrand’s portfolio includes industrial businesses such as Coperion, Milacron Injection Molding & Extrusion, and Mold-Masters, in addition to Batesville, a recognized leader in the death care industry in North America. Hillenbrand is publicly traded on the NYSE under “HI.”
Source: Hillenbrand, Inc.