BATESVILLE, Ind., May 6, 2020 /PRNewswire/ --
- Revenue of $649 million was
40% higher year over year given the addition of Milacron; organic
revenue decreased 3%
- GAAP EPS of ($0.99) decreased
$1.59 primarily as a result of
impairment and acquisition-related charges; adjusted EPS of
$0.53 decreased 16% primarily driven
by incremental amortization from the acquisition of Milacron and
interest expense
- Order backlog increased 22% year over year to $1.17 billion driven primarily by the addition of
Milacron; Process Equipment Group backlog of $982 million increased 2% year over year and 9%
sequentially mainly due to continued demand for large plastics
projects
- Cash flow from operations of $28
million increased 150% compared to prior year driven
primarily by improved working capital requirements
- Completed divestiture of Cimcool during the quarter in a
transaction valued at approximately $224
million
- Have taken actions to address the impact of the COVID-19
pandemic with a focus on protecting the health and safety of
associates, continuing to serve customers globally, and bolstering
capital position through cost management and other measures; as of
May 6, 2020, all significant global
production locations operating at or near normal production
levels
Hillenbrand, Inc. (NYSE: HI) reported results today for the
second quarter of fiscal 2020, which ended March 31, 2020.
"We delivered solid operating results for the fiscal second
quarter, despite the current economic environment. We continued to
see strength in large polyolefin systems projects, which
contributed to record backlog, and Batesville delivered solid top- and
bottom-line results. Demand remained soft across certain key
industrial end markets, including automotive, which weighed heavily
on the Milacron segment's performance. In addition to the quarter's
operating performance, we were pleased with the timing and
execution of the divestiture of Cimcool, and we remain on track
with our Milacron integration plans. We look forward to capturing
the full benefits of the combined companies, beginning with our
projected year one synergies," said Joe
Raver, President and CEO of Hillenbrand.
Second Quarter 2020 Financial Highlights
Revenue of $649 million increased
40% compared to the prior year. The Milacron segment added 43% to
revenue in its first full quarter as part of Hillenbrand, which was
partially offset by a decrease of 3% in organic revenue. Excluding
the negative impact of foreign currency exchange, total revenue
increased 41%.
Net loss of $74 million, or
($0.99) per share, decreased
$1.59 per share compared to the prior
year, primarily as a result of impairment and acquisition-related
charges. Non-cash impairment charges of $83
million in the quarter were primarily related to the
company's flow control businesses. Adjusted net income of
$40 million resulted in adjusted EPS
of $0.53, a decrease of $0.10, or 16%, primarily driven by incremental
amortization from the acquisition of Milacron and interest
expense.
Adjusted EBITDA increased 48% to $111
million, primarily due to the Milacron acquisition, which
contributed $32 million. Adjusted
EBITDA margin of 17.0% expanded 90 basis points compared to a year
ago. On an organic basis, adjusted EBITDA increased 5% and adjusted
EBITDA margin increased 140 basis points.
The adjusted effective tax rate for the quarter was 28.1%, an
increase of 220 basis points from the prior year, primarily due to
unfavorable geographic mix of pretax income and an increase in the
reserve for unremitted taxes.
Balance Sheet, Liquidity and Capital Uses
Hillenbrand generated cash flow from operations of $28 million in the quarter, an increase of 150%
compared to the prior year, primarily a result of improved working
capital requirements, partially offset by increases in payments for
interest and acquisition, disposition, and integration costs.
During the quarter, the company returned nearly $16 million to shareholders in the form of
quarterly dividends.
Net debt at the end of the quarter was $1.5 billion, and the net debt to adjusted EBITDA
ratio was 3.5x. We remain focused on maintaining financial
flexibility, and believe the company has sufficient liquidity to
operate in the current business environment. As of March 31, 2020, the company had liquidity of
approximately $534 million, including
$374 million in cash on hand and
$160 million of borrowing capacity
immediately available under its revolving credit facility. The
company has one near-term debt maturity in the amount of
$150 million due July 2020.
Regarding capital deployment activities, Hillenbrand continues
to prioritize paying down debt following the Milacron acquisition.
The company previously announced the temporary suspension of share
repurchases and curtailment of merger and acquisition activity,
which remain in effect.
Second Quarter 2020 Segment Performance
Process Equipment Group
Process Equipment Group revenue of $311
million decreased 5% compared to the same period in the
prior year. Excluding the impact of foreign currency exchange,
revenue decreased 3%. The revenue decline was driven by lower
demand for capital equipment, including screening and separating
equipment used to process proppants for hydraulic fracturing,
partially offset by favorable pricing and a 4% increase in
aftermarket revenue. Adjusted EBITDA margin of 18.5% increased 150
basis points mainly due to pricing improvements, increased mix of
higher margin spare parts, productivity improvements, and decreased
discretionary operating expense, partially offset by the increased
proportion of lower margin, large systems projects and the decline
in demand for higher margin separating equipment. Record order
backlog of $982 million at the end of
the second quarter increased 2% compared to the prior year, or 4%
excluding the impact of foreign currency. Sequentially, backlog
increased 9% over the quarter ended December
31, 2019.
In April, we continued to see normal order activity related to
large polyolefin systems, and existing projects remained on track.
Order patterns slowed for aftermarket parts and service and for
capital equipment for the remainder of the segment.
Milacron
Milacron revenue of $199 million
decreased 20% year over year with continued softness in demand for
injection molding equipment and hot runner systems in certain end
markets, including automotive. Demand pressure was further
exacerbated by the impact of the COVID-19 pandemic. Adjusted EBITDA
of $32 million decreased 32%, and
adjusted EBITDA margin of 16.0% decreased 290 basis points year
over year. Order backlog of $187
million decreased 17% year over year driven by a decrease in
injection molding and extrusion equipment orders; however, backlog
increased 28% sequentially with growth in hot runner systems and
injection molding.
Injection molding and extrusion equipment saw a sequential
increase in orders in the fiscal second quarter, but that momentum
slowed in March and continued to decline in April. Order rates for
hot runner systems, however, improved in March and April versus
January and February, as government shutdowns in China were relaxed or lifted, and demand for
medical and pharmaceutical projects increased due to the COVID-19
pandemic.
Batesville
Batesville revenue of
$139 million was 1% higher year over
year. The increase was primarily driven by higher volume, despite
an estimated decrease in North American burials driven by an
increased rate at which families opted for cremation. Adjusted
EBITDA margin of 23.1% was 20 basis points higher than the prior
year, mainly driven by productivity initiatives and the higher
burial volume, partially offset by inflation in wages and
benefits.
Batesville experienced
increased demand late in the fiscal second quarter, which continued
through April, in certain markets reporting increased mortality
associated with the COVID-19 pandemic.
Integration Update
The integration of Milacron is proceeding as planned, and all
key workstreams are on track. Hillenbrand's dedicated Integration
Management Office team remains focused on project management,
synergy capture, and change management. We are leveraging the
Hillenbrand Operating Model to support the integration and share
best practices across the business. We have made decisions on key
leadership positions and have laid the groundwork for broad
cultural integration. We have also advanced a number of initiatives
that have positioned us well to realize the targeted year one cost
synergies of $20 million to
$25 million within fiscal 2020.
Raver continued, "I am impressed by the seamless integration of
our company cultures and the energy, sense of ownership, and
collaboration displayed by team members across our businesses.
Despite the challenging economic landscape, there remains
significant near- and long-term opportunity as we take this time to
streamline our operations and deploy the Hillenbrand Operating
Model to drive operational efficiency and growth activities. We
have a track record of successfully executing through different
economic environments and I'm confident that the strong
foundational work currently being executed, including shared best
practices, will position Hillenbrand for opportunities to achieve
continued long-term profitable growth."
COVID-19 Update
On April 6, 2020 Hillenbrand
issued a COVID-19 Business Update. The company is committed to
protecting the health and well-being of employees and their
families, serving customers' critical needs, and supporting the
communities in which we work and live.
Safety Protocols
Hillenbrand has instituted enhanced protocols and provided a
number of new protections for the health, well-being and safety of
our employees, including:
- Initiated regular communication regarding impacts of the
COVID-19 pandemic, including health and safety protocols and
procedures
- Required telework for those employees who can conduct their
work remotely
- Implemented temperature screening of employees at the majority
of manufacturing facilities
- Instituted additional sanitization protocols, including
increased frequency of disinfecting high-traffic areas
- Established new physical distancing procedures for employees
who need to be onsite
- Provided additional personal protective equipment (PPE) and
cleaning supplies
- Implemented protocols to address actual and suspected COVID-19
cases and exposure
- Prohibited all domestic and international non-essential travel
for all employees
Raver continued, "During this unprecedented time, our thoughts
are with the people directly impacted by the COVID-19 virus, the
healthcare workers caring for them, frontline responders and the
countless volunteers working to stop the spread. Since the
beginning of the pandemic, our first priority has been to protect
the health and well-being of our employees and their families."
Operations and Supply Chain
As of May 6, 2020, all significant
global production locations are open and able to operate at or near
normal production levels. A majority of our businesses continue to
manufacture products essential to critical infrastructure, health
and safety, food and agriculture, energy, and death care.
As a result of temporary government restrictions related to the
COVID-19 pandemic, we have experienced disruptions at some of our
smaller production facilities in locations such as India. We expect that these impacted
facilities account for approximately 5% of projected annual
consolidated revenue. Certain of these sites have been permitted to
resume limited operations.
We are closely managing the supply chain, taking actions as
needed to mitigate disruptions. We have been in regular
communication with our suppliers and customers to preserve business
continuity and to anticipate and prepare for developments. We have
not experienced any significant disruptions in our supply chain to
date.
Cost Management
Given the current global economic environment and continued
uncertainty, we have implemented proactive measures to help
mitigate the financial and operational impact of the COVID-19
pandemic, including reducing expenses and conserving cash. These
measures include:
- Voluntary reduction in CEO base salary by 30% through at least
the end of fiscal year 2020
- Voluntary waiver by the Board of Directors of its scheduled
cash compensation increase for 2020
- Cancellation of all regularly scheduled merit-based salary
increases for salaried US- and Canada-based employees for 2020
- Suspension of all hiring for exempt and nonexempt positions,
except for critical positions
- Reduction in capital spend while prioritizing critical
maintenance, safety and regulatory projects
- Employee furloughs and reduced work arrangements at several
locations due to lower demand
- The company's share repurchase program remains suspended
Raver concluded, "I am proud of the commitment our organization
has demonstrated as we moved with a sense of urgency to adapt to
the quickly changing landscape. We took decisive actions to manage
the immediate challenges and are taking additional steps to
maximize free cash flow to maintain financial flexibility. The
integration of Milacron will provide additional opportunities to
capture cost and revenue synergies. With a legacy dating back to
1906, I'm confident that Hillenbrand will emerge an even stronger
company post the COVID-19 pandemic."
Fiscal 2020 Outlook
As previously communicated on April 6,
2020, Hillenbrand temporarily suspended fiscal 2020 guidance
due to the uncertain duration and impact of the COVID-19 pandemic
on operational and financial performance. We intend to reintroduce
our full year outlook as the situation allows. At this time,
Hillenbrand anticipates its fiscal third quarter performance will
be lower year-over-year based on reduced global economic
activity.
A Note on Financial Reporting
In consideration of the Milacron acquisition, beginning in the
fiscal third quarter of 2020, the company plans to report
adjusted EPS results that exclude after-tax acquisition-related
intangible asset amortization. The company believes reporting
adjusted EPS in this manner better reflects its core operating
results and offers greater consistency and transparency.
Applying this approach, adjusted EPS for the second quarter of
2020 was $0.70, an increase of
$0.17 over the adjusted EPS for the
quarter reported above, which excludes $18
million of intangible asset amortization in addition to the
backlog amortization that has already been excluded.
A full reconciliation between GAAP and adjusted measures is
included at the end of this release.
Conference Call Information
Date/Time: Thursday, May 7, 2020, 8:00 a.m. ET
Dial-In for U.S. and Canada:
1-833-241-7251
Dial-In for International: +1-647-689-4215
Conference call ID number: 5866796
Webcast link: https://ir.hillenbrand.com (archived through
Friday, June 5, 2020)
Replay - Conference Call
Date/Time: Available until midnight
ET, Thursday, May 21, 2020
Replay ID number: 5866796
Dial-In for U.S. and Canada:
1-800-585-8367
Dial-In for International: +1-416-621-4642
Hillenbrand's financial statements on Form 10-Q are expected to be
filed jointly with this release and will be made available on the
company's website (https://ir.hillenbrand.com).
In addition to the financial measures prepared in accordance
with United States generally
accepted accounting principles (GAAP), this earnings release also
contains non-GAAP operating performance measures. These non-GAAP
measures are referred to as "adjusted" measures and exclude the
following items:
- business acquisition, disposition, and integration costs;
- restructuring and restructuring related charges;
- impairment charges;
- inventory step-up charges;
- backlog amortization;
- debt financing activities related to the acquisition of
Milacron;
- net loss on divestiture of Cimcool;
- the related income tax impact for all of these items; and
- non-recurring tax benefits and expenses related to the
interaction of certain provisions of the Tax Cuts and Jobs Act of
2017 (the "Tax Act") and certain tax items related to the
acquisition of Milacron and divestiture of Cimcool.
In consideration of the Milacron acquisition, beginning with the
quarter ended June 30, 2020, the
company plans to report adjusted EPS results that exclude after-tax
acquisition-related intangible amortization, in addition to backlog
amortization listed above. The company believes reporting adjusted
EPS in this manner better reflects its core operating results and
offers greater consistency and transparency.
Refer to the Reconciliation of Non-GAAP Measures for further
information on these adjustments. Non-GAAP information is
provided as a supplement to, not as a substitute for, or as
superior to, measures of financial performance prepared in
accordance with GAAP.
Hillenbrand uses this non-GAAP information internally to make
operating decisions and believes it is helpful to investors because
it allows more meaningful period-to-period comparisons of ongoing
operating results. The information can also be used to perform
trend analysis and to better identify operating trends that may
otherwise be masked or distorted by items such as the above
excluded items. Hillenbrand believes this information provides a
higher degree of transparency.
An important non-GAAP measure Hillenbrand uses is adjusted
earnings before interest, income tax, depreciation, and
amortization ("adjusted EBITDA"). A part of Hillenbrand's strategy
is to pursue acquisitions that strengthen or establish leadership
positions in key markets. Given that strategy, it is a natural
consequence to incur related expenses, such as amortization from
acquired intangible assets and additional interest expense from
debt-funded acquisitions. Accordingly, we use adjusted EBITDA,
among other measures, to monitor business performance. Adjusted
EBITDA is not a recognized term under U.S. GAAP and therefore does
not purport to be an alternative to net (loss) income.
Further, Hillenbrand's measure of adjusted EBITDA may not be
comparable to similarly titled measures of other companies.
Another important non-GAAP operational measure used is backlog.
Backlog is not a term recognized under GAAP; however, it is a
common measurement used in industries with extended lead times for
order fulfillment (long-term contracts), like those in which our
Process Equipment Group and Milacron businesses compete.
Backlog represents the amount of consolidated revenue that we
expect to realize on contracts awarded to the Process Equipment
Group and Milacron. For purposes of calculating backlog, 100%
of estimated revenue attributable to consolidated subsidiaries is
included. Backlog includes expected revenue from large
systems and equipment, as well as replacement parts, components,
and service. The length of time that projects remain in backlog can
span from days for replacement parts or service to approximately 18
to 24 months for larger system sales within the Process Equipment
Group. The majority of the backlog within Milacron is expected
to be fulfilled within the next twelve months. Backlog includes
expected revenue from the remaining portion of firm orders not yet
completed, as well as revenue from change orders to the extent that
they are reasonably expected to be realized. We include in
backlog the full contract award, including awards subject to
further customer approvals, which we expect to result in revenue in
future periods. In accordance with industry practice, our
contracts may include provisions for cancellation, termination, or
suspension at the discretion of the customer.
Hillenbrand expects that future revenue associated with the
Process Equipment Group and Milacron will be influenced by backlog
because of the lead time involved in fulfilling engineered-to-order
equipment for customers. Although backlog can be an indicator of
future revenue, it does not include projects and parts orders that
are booked and shipped within the same quarter. The timing of order
placement, size, extent of customization, and customer delivery
dates can create fluctuations in backlog and revenue. Revenue
attributable to backlog may also be affected by foreign exchange
fluctuations for orders denominated in currencies other than U.S.
dollars.
Hillenbrand calculates the foreign currency impact on net
revenue in order to better measure the comparability of results
between periods. We calculate the foreign currency impact by
translating current year results at prior year foreign exchange
rates. This information is provided because exchange rates can
distort the underlying change in sales, either positively or
negatively.
See below for a reconciliation from GAAP operating performance
measures to the most directly comparable non-GAAP (adjusted)
performance measures. Given that there is no GAAP financial
measure comparable to backlog, a quantitative reconciliation is not
provided.
Hillenbrand, Inc. Consolidated
Statements of Operations (Unaudited) (in millions, except
per share data)
|
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
revenue
|
$
|
648.9
|
|
|
$
|
464.6
|
|
|
$
|
1,215.8
|
|
|
$
|
874.9
|
|
Cost of goods
sold
|
455.2
|
|
|
303.7
|
|
|
850.3
|
|
|
567.0
|
|
Gross
profit
|
193.7
|
|
|
160.9
|
|
|
365.5
|
|
|
307.9
|
|
Operating
expenses
|
136.0
|
|
|
93.7
|
|
|
293.4
|
|
|
184.4
|
|
Amortization
expense
|
24.0
|
|
|
8.6
|
|
|
38.8
|
|
|
16.4
|
|
Impairment
charges
|
82.5
|
|
|
—
|
|
|
82.5
|
|
|
—
|
|
Interest
expense
|
20.9
|
|
|
5.4
|
|
|
35.6
|
|
|
10.9
|
|
Other (expense)
income, net
|
(0.7)
|
|
|
0.1
|
|
|
1.2
|
|
|
0.6
|
|
(Loss) income before
income taxes
|
(70.4)
|
|
|
53.3
|
|
|
(83.6)
|
|
|
96.8
|
|
Income tax expense
(benefit)
|
1.8
|
|
|
13.8
|
|
|
(10.6)
|
|
|
28.3
|
|
Consolidated net
(loss) income
|
(72.2)
|
|
|
39.5
|
|
|
(73.0)
|
|
|
68.5
|
|
Less: Net income
attributable to noncontrolling interests
|
1.8
|
|
|
1.5
|
|
|
4.1
|
|
|
2.2
|
|
Net (loss) income
attributable to Hillenbrand
|
$
|
(74.0)
|
|
|
$
|
38.0
|
|
|
$
|
(77.1)
|
|
|
$
|
66.3
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Hillenbrand — per share of common stock:
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share
|
$
|
(0.99)
|
|
|
$
|
0.60
|
|
|
$
|
(1.07)
|
|
|
$
|
1.05
|
|
Diluted (loss)
earnings per share
|
$
|
(0.99)
|
|
|
$
|
0.60
|
|
|
$
|
(1.07)
|
|
|
$
|
1.05
|
|
Weighted average
shares outstanding (basic)
|
75.1
|
|
|
62.9
|
|
|
71.7
|
|
|
62.9
|
|
Weighted average
shares outstanding (diluted)
|
75.1
|
|
|
63.4
|
|
|
71.7
|
|
|
63.4
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
$
|
0.2125
|
|
|
$
|
0.2100
|
|
|
$
|
0.4250
|
|
|
$
|
0.4200
|
|
Condensed
Consolidated Statements of Cash Flows (in
millions)
|
|
|
Six Months Ended
March 31,
|
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
$
|
45.3
|
|
|
$
|
46.5
|
|
Net cash used in
investing activities
|
(1,282.4)
|
|
|
(34.4)
|
|
Net cash provided by
(used in) financing activities
|
1,212.6
|
|
|
(11.3)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(0.5)
|
|
|
2.1
|
|
Net cash
flows
|
(25.0)
|
|
|
2.9
|
|
|
|
|
|
Cash, cash
equivalents, and restricted cash:
|
|
|
|
At beginning of
period
|
399.4
|
|
|
56.5
|
|
At end of
period
|
$
|
374.4
|
|
|
$
|
59.4
|
|
Reconciliation of
Non-GAAP Measures (in millions, except per share
data)
|
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net (loss) income
attributable to Hillenbrand
|
$
|
(74.0)
|
|
|
$
|
38.0
|
|
|
$
|
(77.1)
|
|
|
$
|
66.3
|
|
Impairment charges
(1)
|
82.5
|
|
|
—
|
|
|
82.5
|
|
|
—
|
|
Business acquisition,
disposition, and integration costs (2)
|
8.0
|
|
|
0.5
|
|
|
61.8
|
|
|
1.1
|
|
Restructuring and
restructuring-related charges (3)
|
0.7
|
|
|
0.7
|
|
|
3.1
|
|
|
1.2
|
|
Inventory step-up
(4)
|
27.5
|
|
|
0.1
|
|
|
37.1
|
|
|
0.2
|
|
Backlog amortization
(5)
|
5.8
|
|
|
1.1
|
|
|
10.0
|
|
|
1.4
|
|
Net loss on
divestiture (6)
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
Debt financing
activities (7)
|
0.4
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
Other
(8)
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
Tax effect of
adjustments (9)
|
(29.8)
|
|
|
—
|
|
|
(48.0)
|
|
|
(1.0)
|
|
Tax adjustments
(10)
|
15.4
|
|
|
(0.6)
|
|
|
8.0
|
|
|
1.8
|
|
Adjusted net
income attributable to Hillenbrand
|
$
|
39.9
|
|
|
$
|
39.8
|
|
|
$
|
82.8
|
|
|
$
|
71.0
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(0.99)
|
|
|
$
|
0.60
|
|
|
$
|
(1.07)
|
|
|
$
|
1.05
|
|
Impairment charges
(1)
|
1.10
|
|
|
—
|
|
|
1.15
|
|
|
—
|
|
Business acquisition,
disposition, and integration costs (2)
|
0.11
|
|
|
0.01
|
|
|
0.86
|
|
|
0.02
|
|
Restructuring and
restructuring-related charges (3)
|
0.01
|
|
|
0.01
|
|
|
0.04
|
|
|
0.02
|
|
Inventory step-up
(4)
|
0.37
|
|
|
—
|
|
|
0.52
|
|
|
—
|
|
Backlog amortization
(5)
|
0.08
|
|
|
0.02
|
|
|
0.14
|
|
|
0.02
|
|
Net loss on
divestiture (6)
|
0.04
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Debt financing
activities (7)
|
—
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Other
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tax effect of
adjustments (9)
|
(0.40)
|
|
|
(0.01)
|
|
|
(0.67)
|
|
|
(0.02)
|
|
Tax adjustments
(10)
|
0.21
|
|
|
—
|
|
|
0.11
|
|
|
0.03
|
|
Adjusted
Diluted EPS
|
$
|
0.53
|
|
|
$
|
0.63
|
|
|
$
|
1.15
|
|
|
$
|
1.12
|
|
|
|
|
|
(1)
|
Hillenbrand recorded
impairment charges to goodwill and certain intangible assets within
both the Process Equipment Group and Milacron reportable segments
during the three and six months ended March 31,
2020.
|
(2)
|
Business acquisition,
disposition, and integration costs during the three and six months
ended March 31, 2020 primarily included $3.9 and $57.7,
respectively, of expenses for the settlement of outstanding
Milacron share-based equity awards, professional fees, and
severance and employee-related costs in connection with the
acquisition and integration of Milacron. The remaining costs
incurred during the three and six months ended March 31, 2020
were primarily related to professional fees and other transaction
costs in connection with the divestiture of Cimcool. Business
acquisition, disposition, and integration costs during the three
and six months ended March 31, 2019 primarily included
professional fees.
|
(3)
|
Restructuring and
restructuring-related charges primarily included severance costs,
unrelated to the acquisition and integration of Milacron, during
the three and six months ended March 31, 2020 and
2019.
|
(4)
|
Represents the
non-cash charges related to the fair value adjustment of
inventories acquired in connection with the acquisitions of
Milacron and BM&M during 2020 and 2019,
respectively.
|
(5)
|
Represents the
amortization of backlog acquired in connection with the
acquisitions of Milacron and BM&M during 2020 and 2019,
respectively.
|
(6)
|
Hillenbrand recorded
a pre-tax net loss on the divestiture of Cimcool during the three
and six months ended March 31, 2020.
|
(7)
|
Debt financing
activities primarily included the net interest expense on our
$375.0 senior unsecured notes for the period during fiscal 2020
prior to completing the Milacron acquisition, along with certain
other Milacron acquisition financing costs incurred during the
three and six months ended March 31, 2020.
|
(8)
|
Other primarily
included incremental expenses, such as costs for sanitary supplies,
directly attributable to the COVID-19 pandemic during the three and
six months ended March 31, 2020.
|
(9)
|
Represents the tax
effect of the adjustments previously identified above.
|
(10)
|
For three and six
months ended March 31, 2020, this represents the net impact
from certain tax items related to the acquisition of Milacron,
including the revaluation of deferred tax balances in connection
with enacted statutory tax rate reductions in certain foreign
jurisdictions, as well as the discrete recognition of tax expense
on the divestiture of Cimcool. For the three and six months ended
March 31, 2019, this represents the revaluation of the
deferred tax balances, the tax on unremitted foreign earnings, and
change in deferred tax liability as a result of revising our
permanent reinvestment assertion on earnings of foreign
subsidiaries driven by the Tax Act.
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
March 31,
|
Shares used in
computing non-GAAP per share amounts:
|
2020
|
|
2019
|
|
2020
|
|
2019
|
GAAP Weighted average
shares outstanding (diluted)
|
75.1
|
|
|
63.4
|
|
|
71.7
|
|
|
63.4
|
|
Non-GAAP dilutive
shares excluded from GAAP EPS calculation (1)
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
Pro forma weighted
average shares outstanding (diluted)
|
75.1
|
|
|
63.4
|
|
|
71.8
|
|
|
63.4
|
|
|
|
|
|
|
(1)
|
Due to the occurrence
of a net loss on a GAAP basis for the three and six months ended
March 31, 2020, potentially dilutive securities were excluded
from the calculation of GAAP earnings per share, as they would have
an anti-dilutive effect. However, as net income was earned on a
non-GAAP basis, these shares have a dilutive effect on adjusted EPS
and are included here.
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
Process Equipment
Group
|
$
|
57.5
|
|
|
$
|
55.5
|
|
|
$
|
109.0
|
|
|
$
|
101.7
|
|
Milacron
|
31.9
|
|
|
—
|
|
|
58.2
|
|
|
—
|
|
Batesville
|
32.0
|
|
|
31.6
|
|
|
55.0
|
|
|
58.3
|
|
Corporate
|
(10.8)
|
|
|
(12.2)
|
|
|
(19.7)
|
|
|
(21.0)
|
|
Less:
|
|
|
|
|
|
|
|
Interest
income
|
(0.6)
|
|
|
(0.2)
|
|
|
(1.9)
|
|
|
(0.4)
|
|
Interest
expense
|
20.9
|
|
|
5.4
|
|
|
35.6
|
|
|
10.9
|
|
Income tax expense
(benefit)
|
1.8
|
|
|
13.8
|
|
|
(10.6)
|
|
|
28.3
|
|
Depreciation and
amortization
|
38.6
|
|
|
15.1
|
|
|
64.5
|
|
|
29.2
|
|
Impairment
charges
|
82.5
|
|
|
—
|
|
|
82.5
|
|
|
—
|
|
Business acquisition,
disposition, and integration costs
|
8.0
|
|
|
0.5
|
|
|
61.8
|
|
|
1.1
|
|
Restructuring and
restructuring-related charges
|
0.7
|
|
|
0.7
|
|
|
3.1
|
|
|
1.2
|
|
Inventory
step-up
|
27.5
|
|
|
0.1
|
|
|
37.1
|
|
|
0.2
|
|
Net loss on
divestiture
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
Other
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
Consolidated net
(loss) income
|
$
|
(72.2)
|
|
|
$
|
39.5
|
|
|
$
|
(73.0)
|
|
|
$
|
68.5
|
|
Forward-Looking Statements
Throughout this release, we make a number of "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. As the words imply, these are statements about
future plans, objectives, beliefs, and expectations that might or
might not happen in the future, as contrasted with historical
information. Forward-looking statements are based on assumptions
that we believe are reasonable, but by their very nature are
subject to a wide range of risks. If our assumptions prove
inaccurate or unknown risks and uncertainties materialize, actual
results could vary materially from Hillenbrand's (the "Company")
expectations and projections.
Words that could indicate that we are making forward-looking
statements include the following:
intend
|
believe
|
plan
|
expect
|
may
|
goal
|
would
|
project
|
become
|
pursue
|
estimate
|
will
|
forecast
|
continue
|
could
|
anticipate
|
target
|
impact
|
promise
|
improve
|
progress
|
potential
|
should
|
|
This is not an exhaustive list, but is intended to give you an
idea of how we try to identify forward-looking statements. The
absence of any of these words, however, does not mean that the
statement is not forward-looking.
Here is the key point: Forward-looking statements are
not guarantees of future performance, and our actual results could
differ materially from those set forth in any forward-looking
statements. Any number of factors, many of which are beyond our
control, could cause our performance to differ significantly from
what is described in the forward-looking statements. These factors
include, but are not limited to: the impact of contagious diseases
such as the COVID-19 pandemic and the societal, governmental, and
individual responses thereto, including supply chain disruption,
loss of contracts and/or customers, erosion of some customers'
credit quality, closure or temporary interruption of the Company's
or suppliers' manufacturing facilities, travel, shipping and
logistical disruptions, loss of human capital or personnel, and
general economic calamities; the outcome of any legal proceedings
that may be instituted against the Company, or any companies we may
acquire; risks that the integration of Milacron or any other
integration, acquisition, or disposition activity disrupts current
operations or poses potential difficulties in employee retention or
otherwise affects financial or operating results; the ability to
recognize the benefits of the acquisition of Milacron or any other
acquisition or disposition, including potential synergies and cost
savings or the failure of the Company or any acquired company to
achieve its plans and objectives generally; global market and
economic conditions, including those related to the credit markets;
volatility of our investment portfolio; adverse foreign currency
fluctuations; involvement in claims, lawsuits and governmental
proceedings related to operations; our reliance upon employees,
agents, and business partners to comply with laws in many countries
and jurisdictions; labor disruptions; the impact of the additional
indebtedness that the Company has incurred in connection with the
acquisition of Milacron and the ability of the Company to comply
with financial or other covenants in its debt agreements or meet
its de-leveraging goals; the dependence of our business units on
relationships with several large providers; increased costs or
unavailability of raw materials or certain outsourced services;
continued fluctuations in mortality rates and increased cremations;
competition in the industries in which we operate, including from
nontraditional sources in the death care industry; our level of
international sales and operations; cyclical demand for industrial
capital goods; impacts of decreases in demand or changes in
technological advances, laws, or regulation on the revenues that we
derive from the plastics industry; certain tax-related matters; and
changes to legislation, regulation, treaties or government policy,
including any resulting from the current political environment. For
a more in-depth discussion of these and other factors that could
cause actual results to differ from those contained in
forward-looking statements, see the discussions under the heading
"Risk Factors" in Part I, Item 1A of Hillenbrand's Form 10-K for
the year ended September 30, 2019,
filed with the Securities and Exchange Commission ("SEC") on
November 13, 2019, and in Part II,
Item 1A of Hillenbrand's Form 10-Q for the quarter ended
March 31, 2020, filed with the
Securities and Exchange Commission on May 6,
2020. The forward-looking information in this release speaks
only as of the date covered by this report, and we assume no
obligation to update or revise any forward-looking information.
About Hillenbrand
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."
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SOURCE Hillenbrand, Inc.