Hillenbrand Inc

Greetings and welcome to the Hillenbrand fourth quarter fiscal year 2023 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 conference over to your host, Sam Minesburg, Vice President and Best Relations for Hillenbrand. Thank you. You may begin.

Thank you, operator, and good morning, everyone. Welcome to Hill & Brand's fourth quarter and fiscal 2023 year-end earnings call. I'm joined by our president and CEO, Kim Ryan, and our senior vice president and CFO, Bob VanHembergen. 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 will be discussing certain non-GAAP operating performance measures, including organic comparisons for our segments, which exclude the impacts from acquisitions, divestitures, and foreign currency exchange. Additionally, as a reminder, the divested Batesville segment is classified as discontinued operations for all periods presented, and our commentary will be based on the performance of our continuing operations. I encourage you to review the appendix and slide three of the presentation, as well as our 10-K, 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 now turn the call over to Kim. Kim?

Thank you, Sam, and good morning, everyone. Thanks for joining us today as we review our fiscal 2023 and provide our outlook for fiscal year 2024. I'd like to start by recognizing our associates for their resiliency and dedication throughout the year as we executed our strategy and significantly transformed Hill & Brand through the completion of three strategic acquisitions and the divestiture of our legacy death care segment. Their commitment and diligence made that transformation possible. These actions have strengthened the foundation for Hill & Brand's long-term success as a pure plate global industrial company now characterized by a portfolio of leading brands and highly engineered industrial processing technologies and solutions serving a variety of industries, including durable plastics, food, and recycling, which we believe are supported by long-term secular growth trends. Most notably, with the completion of Schenck Processed Food and Performance Materials, or FPM, on September 1st, We've now increased the scale of our food and pharma business to roughly $800 million on a pro forma 2023 basis, up nearly tenfold from what we had in 2022. This attractive end market leverages the systems and applications engineering expertise and the technological capabilities that are at the core of what we do well at Hill & Brandt and build upon this backbone of products, process, and portfolio. Additionally, we believe these acquisitions provide us a less cyclical growth platform as we move forward. While we're still in early innings of the integrations for these acquisitions, the businesses have been performing ahead of our expectations and the teams are absolutely energized by the opportunities that lie ahead to create significant value for our associates, our customers, and our shareholders. Now turning to our performance. We finished the year by delivering strong margins in APS and adjusted earnings per share in the quarter at the high end of our guidance range. Revenue in the fourth quarter was in line with our expectations. Additionally, we added a one-month contribution from FPM as a result of our September 1 close. We continued to face a soft order environment for capital equipment in our MTS segment, and we experienced ongoing customer decision delays for several large projects within our APS segment. APS orders did improve modestly on a sequential basis, including winning a record order in our recycling business of nearly $30 million in the quarter. We're excited to continue to build on this momentum as we move through 2024. I also want to congratulate our recycling team for recently being selected as the first place winner from over 100 companies considered for the Stuttgart Innovation Award for Sustainability, related to our recycling technologies. We're thrilled to be recognized for the strong technological capabilities we can provide our customers in this exciting end market where we see significant growth potential over the coming years. Building upon the momentum we've seen throughout the year, our recently acquired food businesses continue to deliver strong performance, as did our aftermarket business with record quarterly aftermarket revenue in both segments. Our operating cash flow was below expectations, primarily driven by the continued push out of large orders and the corresponding customer advances. However, we made continued headway in reducing inventory and unbilled customer receivables, highlighting the ongoing execution of our working capital improvement initiative. For the full year, We grew consolidated revenue by 22%, driven by acquisition performance and robust organic growth of 9% in our APS segment. This growth was partially offset by a 2% decline in our MTS segment, primarily driven by lower revenue for our hot runner equipment, which persisted throughout the year. While the pipeline of customer inquiries and projects remains solid across our key product categories, the global economic and geopolitical environment continues to pose a challenge to the timing of some customer decisions, and we are entering the year with lower organic backlog levels compared to the record levels we saw entering fiscal 2023. As a result, we are being grounded in our 2024 demand outlook, which Bob will cover in more detail later in the call. Nevertheless, we firmly believe we are well-positioned for long-term growth with our leading brands and technologies, and we remain focused on controlling what we can by executing our backlog, driving innovation and productivity initiatives, and integrating our recent acquisitions to accelerate costs and commercial synergies. Before I turn the call over to Bob, I'd like to take a moment to reflect on another key accomplishment this year. This past May, we published our fourth annual sustainability report, showcasing how our organization has embraced our purpose, shaped what matters for tomorrow, and furthering our commitment to transparency by disclosing our Scope 3 emissions, water usage, and approach towards reducing our emissions. I'm proud of the progress we've made on these critically important efforts, exemplified by the recognition we've received in our most recent upgrade by MSCI to a AA rating, and in being named a finalist in the Reuters Responsible Business Awards for our purpose launch. With that, I'll now turn the call over to Bob to cover our financial performance and our outlook.