Hillenbrand Announces Fiscal Second Quarter 2021 Results
Hillenbrand, Inc. reported results for the second quarter of fiscal 2021, which ended March 31, 2021.
“We delivered solid results in the second quarter as our teams continued to execute well in a strong demand environment,” said Joe Raver, President and Chief Executive Officer of Hillenbrand. “Despite higher inflation and transportation costs, our teams took successful proactive steps to offset these higher costs while ramping up growth investments to capture increasing demand we are seeing across our industrial businesses, which is reflected in our record backlog. In addition to the strong operating performance, we made further progress on streamlining our portfolio by closing on the sale of ABEL, and we remain on track with our plan to divest TerraSource Global. Our priorities are focused on driving growth in our large platform businesses and capturing the full benefits of the Milacron integration. We remain well positioned to deliver strong performance in the second half of 2021 with the strength of our balance sheet and backlog.”
Second Quarter 2021 Results
Revenue of $722 million increased 11% compared to the prior year, driven by strong growth within the Molding Technology Solutions segment and COVID-19 related demand at Batesville. Excluding the impact of foreign currency exchange, total revenue increased 8%. On a pro forma basis, revenue increased 18% year over year, which excludes the Red Valve and ABEL businesses in the Advanced Process Solutions segment and the Cimcool business in the Molding Technology Solutions segment.
Net income of $78 million, or $1.03 per share, increased from a loss per share of $0.99 in the prior year, due to a gain on the sale of ABEL, prior year impairment, and inventory step-up charges related to the acquisition of Milacron in 2020 that did not repeat. Adjusted net income of $75 million resulted in adjusted EPS of $0.98, an increase of $0.28, or 40%, primarily driven by strong growth in Molding Technology Solutions and Batesville. The adjusted effective tax rate for the quarter was 27.1%, a decrease of 100 basis points from the prior year, due to a change in the geographic mix of income year over year.
Adjusted EBITDA of $134 million increased 21%, driven by growth in Molding Technology Solutions and Batesville. Adjusted EBITDA margin of 18.6% expanded 160 basis points compared to a year ago.
Advanced Process Solutions (APS)
Revenue of $301 million decreased 3% compared to the same period in the prior year. Excluding the impact of foreign currency, revenue decreased 8%. The decline was largely driven by a decrease in large polyolefin systems sales and lower aftermarket parts and service revenue, partially offset by favorable pricing. Adjusted EBITDA of $56 million decreased 3% year over year, and adjusted EBITDA margin of 18.5% remained flat compared to prior year.
On a pro forma basis excluding Red Valve and ABEL, revenue of $295 million was flat compared to the prior year. Excluding the impact of foreign currency exchange, revenue decreased 5%. Record backlog of $1.2 billion increased 22% on a pro forma basis compared to the prior year, or 16% excluding the impact of foreign currency on a pro forma basis. Sequentially, backlog increased 10% on a pro forma basis compared to the quarter ended December 31, 2020.
Molding Technology Solutions (MTS)
Revenue of $255 million increased 28% year over year primarily driven by an increase in demand for injection molding and hot runner equipment, and aftermarket parts and service. Excluding the impact of foreign currency, revenue increased 26%. Adjusted EBITDA of $51 million increased 59%, largely driven by robust sales growth. Order backlog of $362 million increased 93% year over year and 24% sequentially from last quarter, primarily driven by injection molding equipment demand.
On a pro forma basis, which excludes the Cimcool business, Molding Technology Solutions revenue increased 47% year over year. Excluding the impact of foreign currency exchange, revenue increased 45%. Pro forma adjusted EBITDA was $51 million, an increase of 89% year over year, and adjusted EBITDA margin of 20.0% increased 440 basis points.
Revenue of $166 million increased 20% year over year driven by an increase in burial casket sales primarily due to an estimated increase in deaths due to the COVID-19 pandemic. The increase was partially offset by an estimated increase in the rate at which families opted for cremation. Adjusted EBITDA of $45 million increased 39% year over year, and adjusted EBITDA margin of 26.9% was 380 basis points higher than the prior year driven by higher burial volume and productivity initiatives, partially offset by incentive compensation, commodity inflation, and higher transportation and manufacturing costs required to respond to the surge in demand driven by the COVID-19 pandemic.
Balance Sheet, Cash Flow and Capital Allocation
Hillenbrand generated cash flow from operations of $193 million in the quarter, an increase of $165 million year over year, driven by favorable timing of working capital requirements and strong customer advances. During the quarter, the company returned $16 million to shareholders in the form of quarterly dividends and reduced debt by $182 million, providing greater financial flexibility to pursue growth initiatives.
As previously announced, during the quarter the company issued $350 million in senior unsecured notes at 3.75% due in 2031 in order to secure long-term financing at attractive rates for general corporate purposes, including to repay debt, and to replenish available cash after debt repayment.
Net debt at the end of the quarter was $867 million, and the net debt to adjusted EBITDA ratio was 1.7x, a sequential improvement of 0.6x from December 31, 2020. As of quarter end, we had liquidity of approximately $1.2 billion, including $345 million in cash on hand and the remainder available under our revolving credit facility.
Fiscal Q3 2021 Outlook
Hillenbrand is providing guidance for the fiscal third quarter 2021. Given the continued uncertainties regarding the duration and severity of the COVID-19 pandemic including vaccine rollout and effectiveness, resurgence of the virus in various parts of the world and supply chain uncertainties, the Company has provided the following outlook on the assumption that a gradual stabilization of the global economy continues, with no significant increase in pandemic-related disruptions to the Company’s businesses.
Total quarterly revenue expected to be between $665 and $695 million, or increase 13% – 17% year over year on a pro forma basis which excludes Red Valve and ABEL
–Advanced Process Solutions revenue expected to be between $312 and $326 million, or increase 18% – 23% on a pro forma basis, which excludes Red Valve and ABEL
–Molding Technology Solutions expected to be between $228 and $239 million, or increase 23% – 28%
–Batesville revenue expected to be between $125 and $130 million, or decrease 7% – 11%
Adjusted EPS of $0.70- $0.80
For the complete press release, 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.