Sign in

You're signed outSign in or to get full access.

HI

Hillenbrand, Inc. (HI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 results were in line with internal expectations: revenue $0.707B (down 9% YoY), GAAP EPS $0.09, and adjusted EPS $0.56 (down 19% YoY) as lower volumes and cost inflation outweighed pricing, synergies, and restructuring benefits .
  • The company announced a portfolio action: sale of ~51% of Milacron (MTS injection molding/extrusion) to Bain Capital for $287M; net proceeds ~$250M earmarked for debt paydown. FY2025 guidance was adjusted to remove Milacron’s H2 consolidation; core business outlook maintained .
  • Guidance lowered: FY2025 revenue now $2.625–$2.790B, adjusted EBITDA $411–$447M, adjusted EPS $2.45–$2.80, FCF ~$105M; Q2 FY2025 adjusted EPS guided to $0.53–$0.58 .
  • Demand remains soft, notably for mid-sized APS projects and NA/EU auto in MTS; APS aftermarket orders hit a record, and FHN integration synergies are running ahead of plan—a potential margin tailwind as end-markets normalize .

What Went Well and What Went Wrong

What Went Well

  • “We delivered first quarter results in line with our expectations” with continued momentum in cross-selling and cost synergies in Food, Health & Nutrition (FHN) .
  • APS aftermarket orders reached a record; proactive modernization projects and installed base strength underpin resilience despite weaker capital equipment demand .
  • Integration execution ahead of plan: management reaffirmed on-track $30M run-rate FHN cost synergies by year-end FY2025; cross-selling opportunities expanding across baked goods, pet food, snacks, cereals, and pharma, led by North America .

What Went Wrong

  • Consolidated revenue -9% YoY to $706.9M and adjusted EBITDA -15% to $97.1M, driven by lower volumes and cost inflation; adjusted EPS fell -19% YoY to $0.56 .
  • APS backlog -17% YoY to $1.58B as customers delayed mid-sized capital equipment orders amid interest rate, inflation, and geopolitical uncertainty; consolidated backlog -15% YoY to $1.82B .
  • MTS demand remains tepid with pricing pressure; revenue -5% YoY to $195.8M, adjusted EBITDA -15%, margin down 170 bps to 14.0% (softness in NA auto; Europe sluggish; Asia stabilizing) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$786.6 $837.6 $706.9
GAAP Diluted EPS ($)$(3.53) $0.17 $0.09
Adjusted Diluted EPS ($)$0.85 $1.01 $0.56
Adjusted EBITDA ($USD Millions)$131.0 $143.8 $97.1
Adjusted Effective Tax Rate (%)28.6% 27.4% 29.2%

Segment breakdown:

Segment MetricQ3 2024Q4 2024Q1 2025
APS Revenue ($MM)$569.4 $591.1 $511.1
APS Adjusted EBITDA ($MM)$109.2 $117.1 $82.8
APS Adj. EBITDA Margin (%)19.2% 19.8% 16.2%
APS Backlog ($MM)$1,735.7 $1,681.4 $1,580
MTS Revenue ($MM)$217.2 $246.5 $195.8
MTS Adjusted EBITDA ($MM)$34.6 $42.0 $27.4
MTS Adj. EBITDA Margin (%)15.9% 17.0% 14.0%
MTS Backlog ($MM)$238.5 $231.1 $233

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Consolidated Backlog ($USD Billions)$1.712 (organic) $1.846 (pro forma) $1.820
Net Debt ($USD Billions)$1.865 $1.694 $1.698
Liquidity ($USD Millions)$680 $799 $632
Cash from Operations ($USD Millions)$46 $166.5 $(11.3)
Capital Expenditure ($USD Millions)~$16 $13 ~$10
Dividend per share ($)$0.2225 $0.2225 $0.2250

Estimate comparison:

  • Wall Street consensus via S&P Global for Q1 FY2025 was unavailable at time of analysis due to service error; thus, beat/miss vs Street cannot be assessed. (Consensus unavailable via S&P Global.)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($B)FY2025$2.925–$3.090 $2.625–$2.790 Lowered (Milacron H2 removed)
APS Revenue ($B)FY2025$2.050–$2.175 $2.050–$2.175 Maintained
MTS Revenue ($B)FY2025$0.875–$0.915 $0.575–$0.615 Lowered (Milacron H2 removed)
Adjusted EBITDA ($MM)FY2025$452–$488 $411–$447 Lowered
Adjusted EPS ($)FY2025$2.80–$3.15 $2.45–$2.80 Lowered
Free Cash Flow ($MM)FY2025~$150 ~$105 Lowered
Revenue ($MM)Q2 FY2025N/A$685–$705 New quarterly guide
Adjusted EPS ($)Q2 FY2025N/A$0.53–$0.58 New quarterly guide

Transaction context:

  • Milacron sale impact: ~($300M) revenue, ~($41M) adj. EBITDA, ~($0.35) adj. EPS, ~($45M) FCF, partially offset by lower interest and equity income post-close .

Earnings Call Themes & Trends

TopicQ3 2024 (Jun)Q4 2024 (Sep)Q1 2025 (Dec)Trend
Order timing / BacklogHeightened delays in APS midsized projects; customers conserving CapEx amid rates/inflation/geopolitics Lower starting backlog; cautious outlook; Q1 guide down Soft volumes as anticipated; quote pipelines healthy; APS backlog -17% YoY Soft but stable
AftermarketRecord levels; strategic focus; strong mid- to high single-digit growth Record aftermarket revenue again; supports margins Record aftermarket orders; modernization projects spanning 7–10 months Improving
FHN integration/synergiesSynergies ahead of schedule; cost actions accelerated FPM margins ahead of plan; integration momentum On track for $30M run-rate by FY-end; cross-selling momentum Improving
Pricing pressure (MTS)Hot runner pricing pressure; competitors moving up mid-tier MTS price-cost <100%; APS >100% Ongoing price pressure; NA auto weakness; Europe sluggish Stabilizing at low level
Tariffs / LocalizationNot explicitTrade/policy uncertainty cited Local-for-local mitigated China tariffs; monitoring Canada/Mexico Monitoring
Geographic trendsIndia strong; China hot runner stabilized YoY & seq; NA soft China slight improvements; India strong; NA hot runner muted India strong; Asia stabilizing; NA/EU soft (auto, packaging) Mixed
Leverage/debtNet debt/EBITDA 3.5x Improved to 3.3x; debt paydown priority 3.4x; post-sale expected low-3s by FY-end Improving post-close

Management Commentary

  • “Despite the challenging macro environment, we believe our strong competitive positioning will enable us to deliver significant value to our customers as end markets recover, driving profitable growth across our business.” — Kim Ryan, CEO .
  • “Debt reduction continues to be our top priority… we anticipate leverage will increase modestly in Q2 before dropping to the low 3s by the end of the fiscal year.” — Bob VanHimbergen, CFO .
  • “Our customer quote pipelines remain robust… aftermarket orders in APS reached a new record level.” — Kim Ryan .
  • “We will be reporting approximately 49% of Milacron’s net income as equity income at corporate after close.” — Bob VanHimbergen .

Q&A Highlights

  • APS ordering catalysts: Customers await clarity on interest rates, tariffs, inflation; large projects less rate-sensitive, mid-sized more so; pipelines healthy in India/Saudi Arabia .
  • Aftermarket mix and trajectory: Aftermarket near “high 30s” share of orders in Q1; modernization projects recognized over 7–10 months; aiming ~30% of revenue for the year .
  • Milacron transaction economics: Face multiple ~9x but adjusted for capital structure ~6–7x; ~ $250M net proceeds for debt paydown; retain 49% stake with ~$4M equity income assumed H2 .
  • MTS margin potential: Normalized margins mid-to-high 20s over medium term; deleveraging aided by restructuring benefits (~$12M incremental in FY2025) .
  • Geographic/sector color: India robust; China stabilized at lower levels; NA auto weak amid tariff uncertainty; medical end-market seen as positive over 12 months .

Estimates Context

  • S&P Global consensus for Q1 FY2025 EPS and revenue was unavailable due to service error at time of request; as a result, we cannot determine Street beat/miss for Q1. The company’s prior guidance for Q1 (from November) was adjusted EPS $0.52–$0.57; actual adjusted EPS was $0.56 (in line with prior internal guidance) .
  • Q2 FY2025 guide: revenue $685–$705M; adjusted EPS $0.53–$0.58 .

Key Takeaways for Investors

  • Portfolio simplification and deleveraging are the near-term equity story; net proceeds from the Milacron sale go to debt paydown, with leverage expected to move to low 3s by FY-end post-close .
  • Demand headwinds persist for APS mid-sized projects; watch rate/tariff developments and order normalization timing—aftermarket strength and FHN integration are mitigating margin pressure .
  • MTS remains cyclically soft (NA auto, Europe) with pricing pressure; Asia/India improving; restructuring benefits provide a cushion until a broader recovery .
  • FY2025 guidance reset reflects Milacron deconsolidation in H2; core APS guidance maintained—execution on synergies and aftermarket should drive flow-through when volumes recover .
  • Near-term trading: stock likely pivots on deal close timing, leverage trajectory, and Q2 delivery versus guidance; medium-term thesis hinges on FHN-led margin expansion and APS order recovery cycle .

Appendix: Additional Q1 2025 Press Releases

  • Hillenbrand Q1 FY2025 earnings press release and Milacron sale details (transaction expected to close end of Q2 or early Q3; equity method thereafter) .
  • Bain Capital majority investment announcement corroborating transaction terms and strategic rationale .