Hillenbrand Inc

Hello, and welcome to the Hillenbrand Q1 Fiscal Year 2024 Earnings Call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Sam Minesburg, Vice President, Investor Relations. Please go ahead, Sam.

Thank you, Operator. Good morning, everyone. Welcome to Hill & Brand's earnings call for our first quarter of fiscal year 2024. I'm joined by our President and CEO, Kim Ryan, and our Senior Vice President and CFO, Bob Van Hembergen. 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. Also, we will be discussing our results on a continuing operations basis, which excludes the discontinued operations of Batesville, which we divested in February of last year. 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 now turn the call over to Kim.

Thank you, Sam, and good morning, everyone. Thanks for joining us on today's call. Our first quarter performance reflects the dynamic environment we continue to experience in certain parts of our business. Total revenue growth of 18% and adjusted earnings per share of 69 cents were in line with our expectations, led by strong performance from our recent FPM acquisition and our continued success in driving aftermarket expansion. We saw sequential and year-over-year order improvement within our APS segment, with solid demand for our leading technologies and systems serving the plastics and food processing industries. However, we experienced weaker than expected performance in our MTS segment with continued demand softness across most regions and end markets. Additionally, our cash flow was lower than expected due in part to softer orders within MTS and the continued push out of large project orders within APS and the corresponding customer advances which contributed to our leverage being slightly higher than expected while exiting the quarter. We're not pleased with this current level of performance So as we announced in our press release yesterday, we're responding by executing significant cost actions to optimize our MTS cost structure, including headcount reductions and footprint rationalization. We're confident these actions will not only strengthen our position within the current environment, but also ensure we're able to respond with higher levels of growth and profitability when demand recovers. We expect these actions will deliver annual run rate cost savings of $15 million with approximately 50% of that to be realized within the current fiscal year, which will help mitigate the demand headwinds within the MTS segment. Bob will discuss this further in a moment when he gives an update on our financial performance and outlook. I'll now provide a little more color on the end market dynamics we're seeing across both segments. Starting with MTS, as I mentioned, we continued to see a challenging demand environment in the quarter. with overall orders down both year over year and sequentially on the back of broad-based softness led by weakness in consumer goods and electronics. While we anticipated volumes to be down due to the lower starting backlog, performance came in below what we expected, particularly for orders and margin. We did close a few larger projects in January, but we've yet to see a meaningful improvement in the overall trajectory of market demand as customer investments remain pressured by elevated interest rates, low machine utilization, and uncertainty in consumer consumption patterns. We continue to focus on controllable factors inside the business as we navigate this difficult external environment, as evidenced by the meaningful cost actions we're taking. Now, turning to APS, starting with durable plastics. We were pleased with the healthy order demand for our large extrusion and material handling systems in Asia and the Middle East, though the timing of customer decisions continues to be lumpy. While global macroeconomic factors are a contributing factor to these delays, we've also seen the size of projects in both virgin plastics and recycling increase significantly, which in turn requires a longer relative quoting process. However, we also believe this trend is a competitive advantage for us, as our equipment systems are optimal solutions for high output requirements. Lastly, as we expected coming into the year, we're starting to see improved lead times both from our suppliers and as a result of HOM initiatives, which should allow us to convert our high backlog more efficiently going forward. Turning to food, we're excited to have FPM in the portfolio for a full quarter, as our teams remain energized as they execute integration plans and go to market as a leading global provider of food processing technologies and integrated solutions. The breadth of our geographic footprint and the technology offering enables us to be a world-class solutions provider across the applications we serve, including baked goods, pet foods, snacks, and cereals, and many more. We continue to see solid order patterns and customer quote activity across most key applications, and we remain excited by the growing pipeline of opportunities we see as a result of our enhanced portfolio. Our integration activities focused on both cost and commercial opportunities continues to progress as expected. While we certainly face a dynamic and often challenging macro environment, I remain confident in our ability to execute our objectives through the remainder of the year as we deploy the Hillman Brand operating model to drive synergy realization, productivity, and working capital initiatives across the enterprise. With that, I'll now turn the call over to Bob to provide more details on financial performance and outlook.