Hillenbrand Reports Fiscal Second Quarter 2022 Results
Hillenbrand, Inc. reported results for the fiscal 2022 second quarter, which ended March 31, 2022.
“We delivered another solid quarter of results as demand continued to be healthy for our industrial products and solutions, and Batesville performed above expectations due to the unfortunate effects of the Omicron variant,” said Kim Ryan, President and Chief Executive Officer of Hillenbrand. “Our employees remain relentlessly focused on executing through this challenging operating environment, despite escalating headwinds from supply chain disruption, inflation, and foreign currency, which have been exacerbated by a return of COVID-related shutdowns in China and the war in Ukraine. With our healthy balance sheet and strong backlog, we remain well positioned to generate long-term value for our shareholders.”
Second Quarter 2022 Results
Revenue of $742 million increased 3% compared to the prior year primarily driven by increased pricing and growth in large plastics projects in the Advanced Process Solutions segment, partially offset by the divestitures of ABEL and TerraSource Global. Excluding the impact of foreign currency exchange, revenue increased 5%. On a pro forma basis, which excludes the divested ABEL and TerraSource businesses from the Advanced Process Solutions segment, revenue increased 5% year over year, or 8% excluding the impact of foreign currency exchange.
Net income of $54 million resulted in $0.74 per share, a decrease from $1.03 per share in the prior year primarily due to a gain on the sale of ABEL in the prior year that did not repeat. Adjusted net income of $74 million resulted in adjusted EPS of $1.01, an increase of $0.03, or 3%, as favorable pricing, productivity improvements, and higher volume were partially offset by inflation, a higher tax rate, increased strategic investments, and the impact of foreign currency exchange. The adjusted effective tax rate for the quarter was 30.1%, an increase of 300 basis points from the prior year due to the timing of discrete items.
Adjusted EBITDA of $137 million increased 2% year over year. On a pro forma basis, adjusted EBITDA increased 4%, while adjusted EBITDA margin of 18.5% decreased 20 basis points compared to a year ago primarily due to inflation, increased strategic investments, and the impact of lower volume in Batesville, which more than offset favorable pricing, productivity improvements, and operating leverage from higher volume in Advanced Process Solutions.
Advanced Process Solutions (“APS”)
Revenue of $315 million increased 4% compared to the same period in the prior year, or 9% excluding the impact of foreign currency exchange. On a pro forma basis, revenue increased 11% year over year, or 16% excluding the impact of foreign currency, primarily driven by an increase in large plastics systems, favorable pricing, and higher aftermarket parts and services revenue.
Adjusted EBITDA of $65 million increased 17% year over year. On a pro forma basis, adjusted EBITDA increased 24%, or 30% excluding the impact of foreign currency exchange, while adjusted EBITDA margin of 20.7% increased 210 basis points as favorable pricing, operating leverage from higher volume, and productivity improvements more than offset inflation and increased strategic investments.
Backlog of $1.3 billion increased 13% on a pro forma basis compared to the prior year, or 17% excluding the impact of foreign currency exchange, primarily driven by large plastics systems and aftermarket parts and service. Sequentially, backlog was down 3% compared to the quarter ended December 31, 2021.
Molding Technology Solutions (“MTS”)
Revenue of $251 million decreased 2% year over year, but was flat excluding the impact of foreign currency exchange, as favorable pricing and higher volume from the hot runner product line was offset by a decline in volume from the injection molding and extrusion product lines.
Adjusted EBITDA of $50 million was down 1% compared to the prior year, or flat excluding the impact of foreign currency exchange, while adjusted EBITDA margin of 20.1% increased 10 basis points as favorable pricing and productivity improvements were mostly offset by inflation.
Backlog of $418 million increased 15% year over year primarily driven by injection molding equipment. Sequentially, backlog increased 3% compared to the quarter ended December 31, 2021.
Revenue of $176 million increased 6% year over year primarily resulting from the price surcharge implemented in January 2022 to offset the significant increase in commodity costs. Burial casket volume was lower compared to the prior year primarily due to an estimated increase in the rate at which families opted for cremation.
Adjusted EBITDA of $37 million decreased 17% compared to the prior year, while adjusted EBITDA margin of 21.1% decreased 580 basis points primarily due to inflation and the impact of lower volume, partially offset by pricing actions and productivity improvements.
Balance Sheet, Cash Flow and Capital Allocation
Hillenbrand generated cash flow from operations of $46 million in the quarter, a decrease of $147 million year-over-year, primarily due to timing of working capital. During the quarter, the Company repurchased approximately 583,000 shares for $26.6 million at an average share price of $45.62 and returned approximately $16 million to shareholders in the form of quarterly dividends. Subsequent to the quarter, the Company repurchased an additional 926,000 shares through May 5, 2022 for $40.5 million at an average share price of $43.76.
Net debt at the end of the quarter was $769 million, and the net debt to adjusted EBITDA ratio was 1.4x. Liquidity at the end of the quarter was approximately $1.3 billion, including $445 million in cash on hand and the remainder available under our revolving credit facility.
As previously announced, effective April 30, 2022, Bob VanHimbergen became Hillenbrand’s Senior Vice President and Chief Financial Officer following a transition period that began in March. Mr. VanHimbergen is responsible for leading Hillenbrand’s global finance organization, ensuring the Company’s continued strong financial and operational performance, and helping lead the evolution and execution of Hillenbrand’s long-term profitable growth strategy. Mr. VanHimbergen was most recently Vice President and Corporate Controller at Johnson Controls.
Fiscal 2022 Outlook
Hillenbrand is updating its annual guidance for fiscal year 2022 and providing adjusted EPS guidance for fiscal third quarter. Revenue and EBITDA margin guidance is on a pro forma basis, excluding the divested Red Valve, ABEL, and TerraSource businesses.
For the full second 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.”
Sam Mynsberge – Sr. Director, Investor Relations – email@example.com – (812) 931-5036
Source: Hillenbrand, Inc.