Hillenbrand Inc

Greetings, and welcome to the Hillenbrand's fourth quarter fiscal year 24 earnings call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sam Meinberg, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Hill & Brand's fourth quarter and fiscal year-end 2024 earnings call. 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, please note 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 our results on a continuing operations basis, which excludes any impact from the discontinued operations of Batesville, as well as certain non-GAAP operating performance measures, including organic comparisons for our segments, which exclude the impacts from acquisitions, divestitures, and foreign currency exchange rates. I encourage you to review the appendix and slide three of the earnings call presentation, which can be found on our website, as well as our 10-K, which will be filed later this month for a deeper discussion of non-GAAP information, forward-looking statements, and the risk factors that could impact our actual results. Finally, as a reminder, on August 1st, the Schenck Processed Food and Performance Materials business was rebranded under our existing Coperian brand, but will be referred to as FPM throughout today's call. With that, I'll turn the call over to Kim.

Thanks, Sam, and good morning, everyone. Thank you for joining us today. I'd like to start by recognizing our Hillenbrand associates for their dedication and determination throughout the year. While we face demand pressure from persistent macroeconomic challenges, our teams rose to the occasion by accelerating initiatives to optimize our cost structure and drive trade working capital efficiencies, by diligently managing our discretionary costs, and by delivering stronger than planned FPM margins through the execution of our integration. Guided by our purpose to shape what matters for tomorrow, we continue to pursue excellence, collaboration, and innovation for our customers, our colleagues, and our communities. And I'm truly grateful for a team that embodies that purpose each and every day. As we've completed our first full year as a pure-ply global industrial company, we remain confident about our future. Throughout our transformation, we've established a portfolio of leading brands and highly engineered processing technologies, serving large and attractive end markets with long-term growth that's driven by an expanding global middle class and an increasing focus on sustainable solutions. The breadth of our product offering, world-class applications engineering and process technology expertise, and exceptional systems integration capabilities enable us to offer a compelling value proposition to our customers. We are able to deliver the highest quality and highest output equipment and systems anywhere in the world, and then leverage our global network of service professionals to maintain, upgrade, and modernize this equipment to maximize its value for our customers throughout its lifecycle. This fosters strong, enduring partnerships and positions us as a preferred and trusted supplier for our customers' future needs. While demand for large polyolefin systems and aftermarket parts and service was robust for the year, orders for midsize equipment were more challenged than originally expected as uncertainty around inflation, interest rates, geopolitical events, and global economic activity slowed capital investments. Project quoting pipelines remained very active and test labs remained full, but many of our customers significantly delayed their capital investment decisions across several key end markets. In response, we executed a number of strategic initiatives during the year to help mitigate the impact to the bottom line. We will continue to evaluate and implement additional actions as necessary until the demand environment normalizes. Now, touching on our Q4 performance, we delivered revenue of $838 million, up 10% in total, but down 1% organically. So this reflects an improvement from prior quarter. This was slightly above our expectations coming into the quarter, supported by another record level of aftermarket performance. Teams in both segments also did an excellent job executing orders from backlog. With the incremental volume and continued cost discipline, our adjusted earnings per share of $1.01 was just above the high end of our previous guidance. Additionally, our ongoing focus on working capital and cash optimization resulted in $167 million of operating cash flow in the quarter, allowing us to reduce our leverage to 3.3 times, down sequentially from 3.5 times. This underlines our stated priority of debt paydown. For the full year, consolidated revenue increased 13%, primarily driven by the FPM acquisition and strong aftermarket growth. Organically, total revenue was down 5%. Organic revenue in our advanced process solutions, or APS segment, was down 2%, reflecting customer decision delays on capital equipment orders, which more than offset record aftermarket performance. Revenue in our molding technology solutions, or MTS segment, declined 11%. primarily driven by lower backlog entering the year for injection molding equipment and ongoing soft demand for hot runners globally, but particularly within North America. While we remain cautious in our demand outlook over the near term, I'm pleased with how our teams executed to finish the year. I'll now provide a little more color on the factors driving performance in each of our segments. Starting with MTS, we were pleased to see orders improve once again on both year over year and a sequential basis in the fourth quarter, primarily driven by injection molding equipment demand. Although this progress is encouraging, we have not yet seen enough demand growth to call this an inflection in the overall market. India, where we are a leading provider of injection molding equipment, continues to perform well. And China hot runner demand improved year over year and sequentially for the second consecutive quarter, though it remained low relative to historical levels. As I mentioned, we saw pockets of increased investment in the quarter for injection molding equipment in the U.S. and India. However, hot runner demand continues to be relatively flat globally. Our fiscal 2025 outlook for MTS assumes demand will remain relatively consistent with 2024. We expect relatively stronger injection molding performance, which comes at a lower relative margin, and continued price cost pressure is expected to partially offset productivity and the incremental $12 million of benefits from the previously announced restructuring program. In addition, we will continue to be disciplined on all discretionary costs. Turning to APS, orders were up sequentially this quarter, but overall capital equipment demand remains soft for midsize equipment. though generally in line with what we expected coming into the quarter. As I mentioned, coal pipelines and test lab demand remains robust, but we have experienced significant delays in customer decisions throughout the year across key end markets such as engineering plastics, recycling, pet food, and other specialty materials. As a result, backlog is down year over year, and given the longer lead time nature of projects in APS, This is expected to put pressure on revenue performance in fiscal 2025, but generally in line with the expectations we discussed on last quarter's call. Capital equipment investments remain subdued during the year, but we continue to see solid demand for aftermarket, particularly for larger modernization projects. And we're making great strides in driving aftermarket performance within our newer food businesses. Our focus on aftermarket, coupled with the strength of our install base, resulted in consecutive years of double digit organic expansion in aftermarket. While we expect growth rates to moderate going forward, we anticipate this more stable, highly profitable part of our business will continue to perform well in 2025. Finally, a key focus area this year has been the continued execution of our integration program, which progressed well throughout the year. We are pleased by the enhancements we've made across the combined food, health, and nutrition portfolio, including alignment of go-to-market strategies, standardization of pricing practices, and improved operational efficiencies as exemplified by the strong margin performance we've delivered in this part of the business. We remain on track to achieve our $30 million run rate cost savings, and with significant portion of that already realized, we have additional opportunities still ahead of us. While lower backlog coming into the year is expected to be a headwind in 2025, we continue to focus on accelerating initiatives around cost structure optimization, strategic pricing, and targeted commercial opportunities. We remain very confident in the strategic fit of these assets as we leverage our systems expertise, global footprint, and operating model capabilities across the APS segment. We believe there is a clear path to achieving continued margin expansion and solid top line growth once the demand environment normalizes. Now, before I turn the call over to Bob, I'd like to highlight some recent updates related to our board of directors and our sustainability disclosures. We are committed to the development of our board and ensuring the skill sets of our directors align with the strategic direction and priorities of the company. Last month, we announced the election of Joseph Lower to our board. Joe is a seasoned financial executive with deep skill set in finance operations, strategic planning, capital markets, and business development. We are excited for Joe to join the board on December 1st and look forward to leveraging his expertise as we work together to deliver long-term value for our shareholders. In addition, we announced the establishment of vice chairperson roles for two key committees, the Audit Committee and the Nominating and Corporate Governance, or NCG, Committee. Given Mr. Lower's extensive financial background, he has been named as the Vice Chairperson of the Audit Committee, and current Director Indipreet Soni has been named as Vice Chairperson of the NCG Committee. Finally, in October, we published our first Task Force on Climate-Related Financial Disclosures, or TCFD, report. This report demonstrates our continued transparency in sustainability disclosures and progress towards meeting the global regulatory requirements. I'm proud of the team's efforts in achieving this milestone. With that, I'll now turn the call over to Bob to discuss our financials and our outlook.