Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hillenbrand Inc (NYSE:HI) completed the divestiture of a 51% interest in the Milliron injection molding and extrusion business, allowing the company to focus on core strengths.
• The company reported revenue of $716 million and adjusted earnings per share of $0.60, which exceeded expectations despite a challenging macroeconomic environment.
• The Advanced Process Solutions (APS) segment saw year-over-year improvement in capital orders for food, health, and nutrition products.
• Hillenbrand Inc (NYSE:HI) has implemented a comprehensive strategy to mitigate the impact of tariffs, including alternative sourcing and surcharge pricing.
• The company is well-positioned with a strong global footprint and regional approach, which reduces direct exposure to tariffs.

Negative Points

• Global macroeconomic uncertainty, particularly due to tariffs, has heavily impacted demand and resulted in delays in customer investment plans.
• Revenue decreased by 9% compared to the prior year, primarily due to reduced volume from a lower starting backlog.
• Adjusted EBITDA decreased by 19% due to lower volume and cost inflation, with a margin decrease of 180 basis points.
• The backlog decreased by 15% compared to the prior year, largely due to increased macro uncertainty from tariffs.
• The company has adjusted its outlook for the remainder of the year, anticipating further demand pressure and a soft order environment.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with HI.

Q: Can you describe the order trends you saw in the business as the quarter unfolded, particularly in the APS segment? A: Bob Van Hembergen, CFO: Orders were stable through February, but larger orders, especially in food health nutrition, were delayed due to tariff considerations. In APS, orders were generally stable, but macro uncertainty caused pauses. In MTS, there was a hard pause on orders in China, with potential shifts to India.

Q: Could you discuss the synergies from recent acquisitions, particularly in the FHN-related businesses? A: Kim Ryan, CEO: We are on track to achieve synergies ahead of schedule. Integration efforts include global functions, supply management, and service leadership. The FHN team has adapted quickly, integrating with other acquired companies.

Q: What are the four levers you are targeting to offset tariffs, and which will have the most immediate impact? A: Bob Van Hembergen, CFO: Dual sourcing will have the largest immediate impact. Surcharge pricing is targeted, with stronger pricing power in the APS business. A pricing desk analyzes market conditions to ensure appropriate pricing.

Q: Regarding the $15 million tariff impact, is any mitigation included in that number? A: Bob Van Hembergen, CFO: A small portion of mitigation is included, but we aim to reduce this exposure. Some actions will be quick, while others may take months to implement, with potential upside in 2025.

Q: Can you explain the Terasource divestiture and the timing of cash proceeds? A: Bob Van Hembergen, CFO: Terasource was sold for $245 million, with Hillenbrand receiving approximately $100 million. The transaction is expected to close by the end of Q3 or early Q4, with proceeds used to pay down debt.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.