Hillenbrand Inc

Greetings and welcome to the Hildebrandt first quarter and full year 2025 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sam Minesburg, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Hill & Brand's conference call, where we will be discussing our fiscal first quarter performance, as well as the sale of a majority stake in our Millicron injection molding and extrusion business within the molding technology solutions, or MTS, segment that we announced in an 8K in our earnings release yesterday afternoon. I'm joined by our President and CEO, Kim Ryan, and our Senior Vice President and CFO, Bob Van Himbergen. 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 fall, our discussion of results will exclude any prior year impact from the discontinued operations of Batesville. as well as certain non-GAAP operating performance measures. The Q1 results we will be discussing today include Millicron on both a consolidated basis and within our MTS segment. Bob will discuss the impact of the transaction on our future report results later in the call. 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.

Thank you, Sam, and good morning, everyone. Thank you for joining us on today's call. Before we jump into the quarterly results, I'd like to provide an update on the portfolio announcement we made yesterday after market closed. Following an in-depth portfolio review, we've reached an agreement to sell approximately 51% of our Millicron injection molding and extrusion business to an affiliate of Bain Capital for $287 million. while we retain approximately 49% ownership. This transaction reflects the continuation of Hillenbrand's transformation as we significantly reshape our portfolio towards being a higher margin, higher growth, less cyclical portfolio of industrial leaders in highly engineered processing equipment and systems. As you know, we began this transformation journey a little over three years ago. And over that time, we've divested our secularly declining death care segment and completed several strategic acquisitions that increased our scale in the attractive food, health, and nutrition end markets, now representing just shy of 30% of our total revenue mix on a pro forma basis. We are confident this transaction will deliver value to Hillenbrand and its shareholders, as well as the Millicron team. Bain Capital has a proven track record of successful corporate partnerships, will provide greater focus and resources to help Millicron drive future growth and success for its associates and customers. The transaction will enable Hillenbrand to maximize shareholder value by concentrating our resources on growing our core business, accelerating our commitment to deleverage, enhancing our margin profile, and reducing our cyclicality. Additionally, by retaining an ownership stake, we maintain a potential for future returns from the Millicron business which we believe has many opportunities under this new structure. Bob will provide additional details regarding the transaction a bit later in the call. Now touching on our Q1 performance. As expected, this quarter was characterized by continuing uncertainty around inflation, interest rates, and government policy. Despite these persistent pressures, our performance reflects the hard work and dedication of our associates. I'm proud of their determination and focus, as they delivered revenue and adjusted earnings per share in line with our expectations. As anticipated, overall order volumes were relatively soft, largely driven by lower capital equipment demand related to plastics projects, partially offset by strong order performance within our food, health, and nutrition portfolio in our advanced process solutions, or APS, segment. Our customer quote pipelines remained robust across the enterprise. Test lab utilization continued to be high, and aftermarket orders in APS reached a new record level. Consolidated revenue in the quarter was $707 million, down 9% year over year, and adjusted earnings per share of $0.56 was down 19%, but as mentioned, this was in line with our expectations due to the lower starting backlog coming into the quarter. I'll now provide a little more color on the dynamics we are seeing across our segments. starting with polymers and performance materials and APS. We remain a market leader for high-quality, high-output feeding, extrusion and material handling solutions used in the production of base resins, engineering plastics, recycled materials, and other specialty chemicals. We strongly believe in the underlying secular trends that support long-term demand in these markets, a growing global middle class, increasing focus on efficient and sustainable solutions, and the evolving global supply chain. As investment in China returns to more normalized levels after significant wave which benefited us in recent years, future capital investment opportunities remain strong in India and the Middle East. These regions continue to be attractive for growth and our strong geographic footprint with local presence already in place positions us well to capitalize on these opportunities. Customer quote pipelines, especially in these regions, remain healthy despite persistent global macro uncertainty. We are closely monitoring the demand environment and have taken prudent cost actions in response to near-term volume levels, while also ensuring we remain well-positioned, given our long-term growth outlook. These actions include several facility consolidations, which create centers of excellence, adding to our flexibility, and creating more efficient capacity utilization for the long term. In our food, health, and nutrition, or FHNN, markets, Within APS, we are encouraged by signs of increased demand across all key application areas, including baked goods, pet foods, snack and cereals, and pharmaceuticals. This growth is supported by broad-based geographic strength led by North America. This improving demand environment was exemplified by record orders for our FHN end market in the quarter. I'm tremendously pleased with how our teams have accelerated our integration initiatives. as we delivered high teens margins again this quarter, remaining on track to achieve our $30 million run rate cost synergy target by the end of the fiscal year, which is significantly ahead of our initial timeline. Additionally, we are making great strides in cross-selling opportunities, which we expect to accelerate as market conditions continue to improve, and as customers respond positively to the breadth of our highly engineered process technologies, systems engineering capabilities, and geographic reach. Finally, turning to aftermarket and APS. As I mentioned, orders were a record in the quarter, largely driven by the value-added services we provide through our lifecycle of our equipment, such as large modernization projects. Our FHN business also continued to build momentum by driving a more proactive approach to aftermarket as part of our integration efforts. Aftermarket revenue in the quarter was negatively impacted by timing due to the large number of modernization projects and the naturally longer duration of these projects, which are recognized using percentage of completion accounting. These attractive upgrade projects are an important part of supporting our long-term customer partnerships. Now, turning to the MTS segment, I'd highlight that Q1 demand was in line with our expectations, reflecting typical seasonality and ongoing market slowness. We continue to see softness in North America, particularly in automotive, as tariff uncertainty has significantly slowed new investments in that sector. Europe also remains relatively sluggish across most areas, but we are observing a trend of improving stability in Asia with solid momentum in India, especially for packaging and consumer goods projects. Looking ahead, we expect the North America and European markets to remain fairly tepid in the near term as customers wait for more clarity regarding tariffs and inflation. As a reminder, our fiscal Q2 for Hot Runner product line usually remains relatively consistent with Q1 due to the impact of the Chinese New Year. This is reflected in the Q2 guidance Bob will cover in a moment. I'll now spend a few moments discussing our perspective on the recent tariff developments. Generally, our production is used to serve demand for the region in which we are producing. In response to COVID, we accelerated our efforts around localization, especially as it relates to China. We have largely mitigated the China tariff impact and continue to identify strategic sourcing opportunities to reduce the direct impact even further, while monitoring the dynamic trade policy discussions that remain ongoing for other regions. In summary, our first quarter was in line with our expectations, despite ongoing global macroeconomic uncertainty. That said, I remain extremely confident in our strategy and the long-term catalyst for our business. I'll now turn the call over to Bob to discuss the financials, the transaction, and our outlook in more detail.