Hillenbrand (HI) Q3 2024 earnings summary

Executive summary

• Q3 revenue increased 10% year-over-year to $787M, driven by the FPM acquisition, but organic revenue declined 8% due to lower capital equipment volumes and order delays, especially in APS.

• GAAP net loss was $249M (EPS $(3.53)), mainly due to a $265M non-cash impairment charge in Molding Technology Solutions; adjusted EPS was $0.85, down 11% year-over-year.

• Adjusted EBITDA was $131M, up 4% year-over-year, but down 14% organically; margin at 16.7%, down 90 bps.

• Restructuring and cost-saving initiatives are underway, targeting $20M in annual run-rate savings in FY25.

• FPM integration exceeded synergy expectations, with EBITDA margins over 300 bps ahead of plan.

Financial highlights

• Total revenue: $787M (+10% YoY); organic revenue down 8%.

• Adjusted EBITDA: $131M (+4% YoY), margin 16.7% (down 90 bps YoY); organic adjusted EBITDA down 14%.

• GAAP net loss: $249M (EPS $(3.53)), primarily due to impairment charges.

• Operating cash flow: $24.8M–$46M, down significantly year-over-year due to working capital timing and lower customer advances.

• Net debt: $1.87B; net leverage ratio: 3.5x; liquidity: $680M.

Outlook and guidance

• FY24 revenue guidance lowered to $3.13–$3.16B (11–12% growth), reflecting lower orders and backlog.

• Adjusted EBITDA guidance revised to $502–$512M; adjusted EPS guidance now $3.20–$3.30.

• Q4 adjusted EPS expected at $0.90–$1.00.

• Free cash flow outlook revised to ~$100M; capex and depreciation each at ~$55M.

• 85% of $1.97B backlog expected to be realized in the next 12 months.