Hillenbrand, Inc. (HI) is a global industrial powerhouse that has undergone a remarkable transformation over the past several years. Once known primarily for its Batesville death care business, the company has strategically repositioned itself as a leading provider of highly-engineered, mission-critical processing equipment and solutions across a diverse array of attractive end markets.
Business Overview: Hillenbrand was founded in 1906 as the Batesville Casket Company, a manufacturer of burial caskets and related funeral home products based in Batesville, Indiana. The company was originally established by John Hillenbrand and grew steadily over the following decades, becoming a leading provider of caskets and other funeral-related products in the United States.
In 2008, the company underwent a significant transformation when it acquired Coperion, a leading global manufacturer of compounding systems and materials handling equipment. This acquisition marked Hillenbrand's strategic shift away from the funeral services industry and into the broader industrial manufacturing sector. The company was rebranded as Hillenbrand, Inc. to reflect this change in focus.
Over the next several years, Hillenbrand continued to expand its industrial equipment portfolio through a series of acquisitions, including the purchases of K-Tron in 2010 and Rotex in 2011. These deals strengthened the company's presence in the plastics, chemicals, and minerals processing industries. Hillenbrand faced some challenges during this period of rapid growth, including integrating the new businesses and aligning their operations with the Hillenbrand operating model.
In 2015, Hillenbrand completed the acquisition of Milacron Holdings Corp., a global leader in plastic processing technologies and industrial fluids. This transaction significantly bolstered Hillenbrand's position in the attractive plastics and polymer end markets. The integration of Milacron's injection molding, extrusion, and hot runner equipment businesses with Hillenbrand's existing Coperion and K-Tron brands created a comprehensive industrial solutions platform. However, the company had to navigate some headwinds in the Milacron business, including softness in certain end markets and pricing pressures.
Today, Hillenbrand operates through two primary reportable segments: Advanced Process Solutions (APS) and Molding Technology Solutions (MTS). The APS segment is a leading global provider of highly-engineered process and material handling equipment, systems, and aftermarket parts and services for a variety of industries, including durable plastics, food, and recycling. The MTS segment is a global leader in highly-engineered equipment, systems, and aftermarket parts and service for the plastic technology processing industry.
Financial Performance:
Financials: Hillenbrand's financial transformation has been equally impressive. In fiscal year 2024, the company reported revenue of $2.8 billion and adjusted EBITDA of $411 million, reflecting a healthy adjusted EBITDA margin of 14.7%. This compares to revenue of $2.4 billion and adjusted EBITDA of $350 million in fiscal year 2023, representing year-over-year growth of 16.7% and 17.4%, respectively.
For the most recent quarter ended December 31, 2024, Hillenbrand reported consolidated net revenue of $706.9 million, a decrease of 9% compared to the prior year period. Net income for the quarter was $6.4 million, down from $17.2 million in the same period last year. The decreases were primarily driven by lower volume, cost inflation, and an increase in business acquisition, divestiture, and integration costs, partially offset by favorable pricing and productivity improvements.
Operating cash flow for the quarter was negative $11.3 million, while free cash flow was negative $21.5 million. The company's performance by geographic markets shows that 47% of revenue came from the Americas, 27% from Asia, and 26% from Europe, the Middle East, and Africa.
Liquidity: The company's balance sheet also remains strong, with a net debt to adjusted EBITDA ratio of 3.4x as of the end of the first quarter of fiscal year 2025. Hillenbrand has prioritized debt reduction, using the proceeds from the recent sale of a majority stake in its Milacron injection molding and extrusion business to pay down outstanding obligations.
As of December 31, 2024, Hillenbrand had $208 million in cash and cash equivalents, with $653.3 million of borrowing capacity under its $1 billion revolving credit facility, of which $424.3 million was immediately available. The company's debt-to-equity ratio stood at 1.44, with $1.91 billion in total debt and $1.42 billion in total shareholders' equity. Hillenbrand's current ratio was 1.34, and its quick ratio was 0.86, indicating a solid liquidity position.
Strategic Initiatives and Outlook: Hillenbrand's strategic transformation has been guided by its focus on pursuing excellence, collaboration, and innovation to consistently shape solutions that best serve its people, customers, and communities. This has involved a combination of organic initiatives and strategic acquisitions to expand the company's product and service offerings, enhance its technological capabilities, and strengthen its presence in high-growth end markets.
Looking ahead, Hillenbrand remains well-positioned to capitalize on several key secular trends that are driving demand for its solutions, including the growing global middle class, increasing focus on efficient and sustainable manufacturing, and the evolving global supply chain. The company's strong customer relationships, extensive technical expertise, and global footprint provide a solid foundation for continued growth and value creation.
Despite the near-term macroeconomic headwinds, Hillenbrand has maintained its fiscal year 2025 guidance, targeting revenue of $2.63 billion to $2.79 billion and adjusted earnings per share of $2.45 to $2.80. The company's recent divestiture of a majority stake in its Milacron business is expected to further strengthen its financial profile and strategic focus, positioning Hillenbrand for long-term success.
For the second quarter of fiscal year 2025, Hillenbrand expects revenue of $685 million to $705 million and adjusted EPS in the range of $0.53 to $0.58. The company noted that the updated full-year guidance reflects approximately 6 months of Milacron's performance, as the transaction is expected to close at the end of Q2 or early Q3. Hillenbrand is also monitoring the potential impact of the recent strengthening of the U.S. dollar, which could be a translation headwind, as well as potential tariff policy changes.
Risks and Challenges: As with any industrial conglomerate, Hillenbrand faces a range of risks and challenges that could impact its financial performance and growth trajectory. These include ongoing global supply chain disruptions, inflationary pressures, and geopolitical tensions that could affect customer demand and project timing.
Additionally, the company's reliance on strategic acquisitions to drive growth introduces integration and execution risks, as well as the potential for overpaying for target companies. Hillenbrand must also navigate the cyclical nature of certain end markets, such as the automotive and construction sectors, which can create volatility in its financial results.
Despite these challenges, Hillenbrand's diversified business model, strong market positions, and disciplined approach to capital allocation have demonstrated the company's resilience and ability to navigate turbulent market conditions. As Hillenbrand continues to execute on its strategic transformation, investors will be closely watching the company's ability to deliver on its growth and profitability targets.
Conclusion: Hillenbrand's journey over the past decade has been nothing short of remarkable. By strategically repositioning its portfolio and bolstering its presence in high-growth industrial end markets, the company has transformed itself into a global leader in highly-engineered processing equipment and solutions. With a strong financial profile, a focus on operational excellence, and a clear vision for the future, Hillenbrand appears well-positioned to capitalize on the compelling long-term trends shaping its industry. As the company continues to execute on its strategic initiatives, investors will be closely watching to see if Hillenbrand can maintain its momentum and deliver sustainable value creation.