Hillenbrand Inc

Greetings and welcome to the Hill & Brand second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Sam Hinesburg, Senior Director of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Hill & Brand's fiscal second quarter of 2022 earnings call. I'm joined by our President and CEO, Kim Ryan, and our new Senior Vice President and Chief Financial Officer, Bob Van Hamergen. I'd like to direct your attention to the supplemental slides posted on our IR website that will be referenced on today's call. Turning to slide three, a reminder that our comments may contain certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance, and our actual results could differ materially. Also, during the course of this call, we'll be discussing certain non-GAAP operating performance measures, including pro forma comparisons for our segments. I encourage you to review the appendix and slide three of the presentation, as well as our 10Q, which can be found on our website, for a deeper discussion of non-GAAP information, forward-looking statements, and the risk factors that could impact our actual results. With that, I'll turn the call over to Kim. Kim?

Thank you, Sam, and good morning, everyone. Thank you for joining us today, and I hope you and your families are safe and well. I'd like to start off with a warm welcome to Bob Van Hembergen as our new CFO. Bob brings over two decades of global financial and operational leadership experience, including 15 years in various leadership positions at Johnson Control, most recently as Vice President and Corporate Controller. I'm excited to have Bob join our executive team as we continue to execute on our profitable growth strategy and deliver long-term value to shareholders. I'd also like to recognize our former CFO, Christina Cernelia, for her many contributions over the last eight years. As most of you know, Christina stepped down as CFO at the end of April. Christina played a key role in advancing Hill & Brand's transformation as a world-class global industrial company, and we wish her all the best. Before we discuss our results, I'd like to comment on the devastating humanitarian crisis brought on by the war in Ukraine. We recognize the tragic impact that this war has already brought to many, and our hearts go out to the people of Ukraine. While Helen Brand has only a small presence in the region, I want to assure everyone that we are complying with all U.S. and international sanctions and restrictions, and we are no longer accepting orders for this region. Now I'd like to touch on some key performance highlights. and give an update on what we are seeing across the global operating environment. Overall, I'm pleased with our solid execution in the quarter, which wouldn't be possible without the continued significant and unprecedented commitment by our employees around the world to serve and support our customers. Demand for our industrial products and solutions remained healthy, and we continue to have near-record backlog. As a reminder, order intake can be lumpy based on project decision timings, but our project pipelines remain robust across most of our key applications and end markets. Additionally, Batesville continued to deliver on its mission and performed above our expectations in the quarter. While COVID-related deaths were higher than expected due to the unfortunate effects of the Omicron variant, we saw the daily death rate fall significantly towards the end of March compared to earlier in the quarter, and we have seen this pattern continue through the start of our third quarter, which is in line with what we previously communicated. Like most companies, we are seeing an unprecedented rise in global supply chain disruptions, inflationary pressures, labor constraints, and foreign currency headwinds, which have intensified with the return of COVID-related shutdowns in China and the war in Ukraine. We expect these headwinds will remain through at least the rest of our fiscal year. We are actively monitoring the potential impact of these headwinds on the demand environment and will take action aimed at protecting margins as needed. Our proven track record of execution through challenging economic cycles is enabled by the Hillenbrand operating model, the resiliency of our portfolio, our healthy balance sheet, and the strength of our backlog, all of which gives us confidence in our ability to respond to the current challenges we face. We continue to leverage our global supply management team to help mitigate supply issues, take further pricing actions to help offset additional inflation, and deploy the Hillenbrand operating model to improve productivity throughout the enterprise. I'd now like to take a moment to remind you of our key priorities as we move forward. First, to maintain rigorous focus on managing the business during this challenging operating environment through continued deployment of the Hillenbrand operating model. Second, to maintain our momentum as we complete the third and final year of the Millicron integration. I'm pleased that we continue to remain on track to achieving our target of $75 million in run rate synergies by the end of year three. Third, to pursue profitable growth through product innovation, expansion into emerging end markets and applications, and strategic bolt-on acquisitions that we believe will position us for continued growth. Next, to further incorporate sustainability into how we operate and ensure that our company culture, values, and working norms are aligned to the needs of the evolving global workforce with a committed focus on DEI. And finally, to remain agile and ensure our strategy evolves to meet the needs of the future. I'm excited to announce that we plan to host an Investor Day in New York in December, where we will further expand on our strategic priorities our vision for growth, and provide long-term performance targets. We will share more details soon, and I do hope you will be able to join us. Now I will quickly touch on our strategy, which as you know is comprised of four key pillars. First, to strengthen and build business platforms both organically and through M&A. As we invest for growth within our industrial platforms, there are several key macro factors that we believe will support long-term demand for our equipment and solutions. First, expansion of the global middle class increases demand for durable plastics, which can be created or shaped using our systems. Durable plastics are a key enabler of quality and efficiency across many end markets and applications, including lightweighting of automobiles for improved fuel efficiency, more effective packaging for better food preservation, and more durable and energy-efficient materials used in construction, just to name a few. Next, we believe that the desire for more sustainable solutions will create pathways to long-term growth. Customers, consumers, and regulators are demanding an increase in recycling, recycled and bio-based polymers, alternatives to animal-based proteins, and alternatives to fossil fuels. We believe we are well positioned to meet the growing demand for these applications because of our capability to deliver solutions that produce technically advanced materials with high quality and high output. We are able to achieve this through our innovative products and systems, our applications engineering expertise, and our global manufacturing and service footprint. In addition to investing in product innovation and test labs, and forming strategic partnerships to further the development of our own organic offerings in these areas, we continue to evaluate strategic bolt-on targets within our M&A pipeline where we see the opportunity to accelerate our growth and create long-term value for shareholders. Our next strategic pillar is to manage Batesville for cash. As we continue to grow our industrial product platforms, Batesville is becoming a smaller part of the portfolio. Batesville continues to be a well-run business that generates stable and predictable cash flows in support of our profitable growth strategy. Our third strategic pillar is to build scalable foundations for growth using the Helen Brand Operating Model. We have demonstrated our ability to deliver solid margin performance in both up and down cycles, which has been enabled by the consistent deployment of the Helen Brand Operating Model across our enterprise. Throughout the Millicron integration, we have enhanced the HOM with world-class processes established through our global functions, leveraging our scale, and implementing best practices across all of our operating segments. We believe this foundation will be a key enabler of future growth, as it helps us to accelerate our ability to create value from future acquisitions. The HOM keeps us focused on continuously identifying efficiencies in all areas of the enterprise, which is critical during challenging times such as these. We are also focused on the expansion of the HOM to continue to support our growth, specifically in the areas of innovation, digitization, and commercial excellence. Our fourth and final pillar is to effectively deploy strong free cash flow. Helen Brand has a proven track record of generating cash through economic cycles and deploying that cash through our disciplined capital allocation framework. The strength of our balance sheet gives us confidence as we operate through this uncertain environment and provides flexibility to continue investing for growth, both organically and inorganically, while also evaluating share repurchases. As evidenced by nearly $70 million we repurchased during the quarter and subsequently through May 5th. As always, we remain focused on generating robust free cash flow and using that cash to maximize long-term shareholder value. Before I turn the call over to Bob, I want to provide some key updates on our efforts around sustainability and ESG. Since our last call, we have made several announcements that highlight Hillenbrand's commitment to embedding sustainability into how we operate. In April, Hillenbrand was named the national sponsor of the Girls Inc. STEM and College and Career Readiness Program. We're proud to support the Girls Inc. mission as we look to develop a talented and diverse workforce for the future. Earlier this month, we also announced our partnership with Net Impact, a global nonprofit focused on engaging students on critical social and environmental issues. Through this partnership, we will be engaging with the next generation on the topic of plastic circularity, furthering our commitment to be a sustainability leader within the plastics value chain. Turning to the governance side, in February, our board announced that Helen Cornell was elected to the role of vice chairperson and that she will become our board chairperson in 2023. After the planned retirement of Joe Locri, our current board chair, Joe and Helen are working closely together to ensure a smooth transition. We are excited to have Helen step into this role and greatly value the perspective that she will bring to the position. Lastly, we are excited to be publishing our third annual sustainability report, expected in June. We will plan to begin disclosing Scope 1 and Scope 2 emissions, as well as our energy reduction strategy. I look forward to continuing to share our progress with you as we move forward on our sustainability journey. With that, I'll now turn the call over to Bob to provide details about our overall financial performance, segment performance, and outlook.