Hillenbrand Inc

Greetings and welcome to the Hillenbrand Fiscal Third Quarter 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 during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Trent Schwartz, Executive Director, Investor Relations for Hillenbrand. Thank you. You may begin.

Thank you, operator, and good morning, everyone. Welcome to Hill & Brand's fiscal third quarter conference call. With me today is our president and CEO, Kim Ryan, and our interim CFO, Megan Wacke. I'd like to direct your attention to the supplemental presentation posted on our IR website that will be referenced on today's call. 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 certain non-GAAP operating performance measures. I encourage you to review 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. Finally, the results we will be discussing today for the fiscal third quarter exclude the divested Millicron injection molding and extrusion, or MIME, business in both our consolidated results and in the molding technology solution NTS segment results. With that, I'll now turn the call over to Kim.

Thanks, Trent, and good morning, everyone. Thank you for joining today's call. Today, I'll discuss our execution against our strategic initiatives and share a high-level overview of our fiscal third quarter performance. Megan will then provide details on our financial results and outlook. We'll then be happy to take your questions. With more than three quarters of our fiscal year complete, I wanted to provide an update on the work undertaken this past year, which positions Hill & Brand well as the market recovers. Entering the 2025 fiscal year, our focus was on further simplifying our portfolio, reducing debt, and advancing the integration and commercial synergy potential of our food, health, and nutrition businesses. Relative to portfolio and debt reduction, we've made significant progress against these objectives as we completed our MIME divestiture, simplifying our portfolio and generating approximately $265 million in net proceeds. In addition, we closed on the sale of our minority interest in the TerraSource business, with net proceeds of approximately $115 million. Proceeds from these two transactions were used to reduce debt by over $300 million during the fiscal year, strengthening our balance sheet. With these calculated moves behind us, our focus is on our remaining higher margin, higher growth, and higher ROIC businesses serving the performance materials and food, health, and nutrition end markets. Within our food, health, and nutrition business, we've now achieved the targeted $30 million in run-rate cost synergies from the Linksys and FPM acquisitions, 20 months post-close, versus our original three- to five-year estimate. Our teams continue to come together as we further integrate these businesses. Additionally, we are in the early innings of realizing the commercial synergies as we ramp up cross-selling efforts and as we leverage our legacy Coperian's extensive geographic footprint. Additionally, we have a far greater opportunity to offer more fulsome system solutions, creating a greater value for our customers as we leverage the historical Coperian strength of systems capabilities into the food, health, and nutrition markets. Our momentum and excitement in this area continues to build, and I'm very pleased with the team's progress. In May, we launched the unified approach of our market-leading FHN brands and technologies at the May Eva Bakery and Confectionery Trade Show in Dusseldorf, Germany. This growing and less cyclical end market now represents more than 25% of our global revenue. I'd like to give a brief overview of our fiscal third quarter and then provide an update on the current macro environment as well as the actions we're taking to further strengthen the enterprise. During our fiscal third quarter, we continue to experience cautious order behavior from customers amid continued global macroeconomic uncertainty and tariff announcements. It's important to emphasize that we do not believe these pushouts represent project cancellation, but rather delays on project decisions until trade policy becomes clear. Of note, we continue to see strong quoting and test facility activity, which is encouraging. We delivered revenue ahead of and adjusted earnings per share in line with our expectations coming into the quarter. Given the dynamic operating environment, our teams across the globe continue to work closely with customers to be ready to act when order decisions are made, while we continue to closely monitor strategic initiatives across the enterprise to optimize our cost structure. I'll now dive a little deeper into each segment. Starting with our Advanced Process Solutions, or APS segment, we saw year-over-year decline in capital orders as tariff uncertainty resulted in customers continuing to delay investment decisions. This was not unexpected coming into the fiscal year with our lower starting backlog position. While conversion of quotes to orders remains delayed, interactions with customers, quote pipelines, and test facility utilization continue to be strong across key end markets and geography. We believe as the macroeconomic environment stabilizes, customer comfort levels will return and order patterns will normalize. In fact, since the end of the third quarter, we've seen an uptick in market activity and have won several key orders, which is very encouraging. We remain confident in the underlying market and the APS segment serves and in our share position. Although we have achieved the targeted cost synergies of FHN, we continue to focus on driving further integration opportunities, particularly around commercial initiatives, including full solution capabilities and our service offerings. On the cost side, we continue to drive synergies by executing optimization projects in response to the dynamic environment. Moving to MTS, orders again remain stable in the quarter. with hot runner quoting activity for electronics and packaging across China and India growing, and areas like the Americas beginning to see pockets of momentum. While we see increased quoting activity from existing customers, we are also seeing incremental quote requests from new customers, as well as orders for our controller products accelerating, typically indicating forthcoming demand for hot runners. External market indices again hovered near expansion, as mold-making activities show signs of modest growth. With that, let me now provide an update on the evolving tariff landscape and the actions we've taken to mitigate the impact. Significant progress has been made on the near-term action, and I'm very thankful to our teams for their relentless work in this area. We have implemented surcharge pricing where necessary across the portfolio and have adjusted contract terms to address potential additional tariffs. should they go into effect. We also continue to progress on localizing supply chain while also strategically shifting inventories and manufacturing capabilities to complete our in-region, for-region initiatives where warranted. While the trade environment has affected order decision timing, the work we executed post-COVID to strengthen our manufacturing and supply chain footprint to primarily serve in-region, for-region demand has greatly reduced our direct exposure to tariffs. Before I wrap up, I wanted to share that we are progressing with our CFO search and are actively engaged with our search partner and many candidates for the role. In the meantime, I'm very pleased to have Megan Wacke join us on today's call. Megan was appointed Interim CFO at the end of June and brings a wealth of knowledge as our Chief Accounting Officer and Corporate Controller. We're very fortunate to have someone with Megan's skills to lead our finance organization while we continue the search for a permanent CFO replacement. With that, I'll hand the call over to Megan to discuss our financial performance and outlook.