Executive Summary

Q3 2025 delivered revenue of $598.9M, ahead of internal expectations, and adjusted EPS of $0.51, in line, with demand headwinds from tariff uncertainty; GAAP EPS improved to $0.03 from $(3.53) YoY on lapping a prior-year impairment charge .
Wall Street consensus implied a modest beat: revenue $598.9M vs $572.5M* and EPS $0.51 vs $0.495*, continuing beats in Q1 and Q2 as well (see Estimates Context) .
Guidance updated: total revenue raised and narrowed to $2.595–$2.630B, adjusted EPS narrowed to $$2.20–$2.35 (midpoint maintained), operating cash flow trimmed to ~$60M; APS/MTS margin ranges revised given tariffs and mix .
Strategic and capital actions underpin the narrative: $115M TerraSource minority stake sale and $375M note redemption reinforce deleveraging and flexibility; integration synergies in Food, Health & Nutrition reached $30M run-rate earlier than plan, supporting longer-term margin lift .

What Went Well and What Went Wrong

What Went Well

Early achievement of $30M run-rate cost synergies in the FHN business (Linxis and FPM) and tangible progress on commercial synergies; management highlighted “proof points” in recent quarters .
APS and MTS delivered price/productivity offsets against inflation and mix pressure; APS backlog remains sizable at $1.57B despite lower capital orders, with sequential backlog down only 2% .
Deleveraging momentum: $115M TerraSource proceeds (0.2x leverage improvement to ~3.7x) and full redemption of $375M notes due 2026, amending/extension of credit facilities to push maturities and enhance flexibility .
CEO tone on preparedness and customer intimacy amid tariff uncertainty: “we delivered revenue ahead of and adjusted EPS in line… despite customers continuing to delay purchasing decisions” .

What Went Wrong

Consolidated net revenue down 24% YoY (pro forma down 10%); adjusted EPS down 40% YoY on MIME divestiture and lower APS volume; adjusted EBITDA down 36% (pro forma down 28%) .
APS adjusted EBITDA margin fell 340 bps YoY to 15.8% on unfavorable operating leverage and mix; MTS pro forma adjusted EBITDA margin declined 170 bps to 19.9% on inflation/tariffs despite productivity .
Operating cash flow use of ~$2M in the quarter (vs +$45.6M prior year) driven by lower customer advances from decreased orders; full-year OCF cut to ~$60M (from ~$120M) .
Management acknowledged book-to-bill softness in APS and continued competitive pricing environment in MTS; tariff-driven delays keep larger project decisions cautious near term .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$706.9	$715.9	$598.9
GAAP Diluted EPS ($)	$0.09	$(0.58)	$0.03
Adjusted Diluted EPS ($)	$0.56	$0.60	$0.51
Adjusted EBITDA ($USD Millions)	$97.1	$98.8	$84.3
APS Revenue ($USD Millions)	$511.1	$494.0	$507.0
APS Adjusted EBITDA ($USD Millions)	$82.8	$78.9	$80.1
APS Adjusted EBITDA Margin (%)	16.2%	16.0%	15.8%
MTS Revenue ($USD Millions)	$195.8	$221.9	$91.9
MTS Adjusted EBITDA ($USD Millions)	$27.4	$32.2	$18.3
MTS Adjusted EBITDA Margin (%)	14.0%	14.5%	19.9%

Segment breakdown (Q3 2025 vs prior year):

Segment Metric	Q3 2024	Q3 2025
APS Revenue ($USD Millions)	$569.4	$507.0
APS Adjusted EBITDA ($USD Millions)	$109.2	$80.1
APS Adj. EBITDA Margin (%)	19.2%	15.8%
MTS Revenue ($USD Millions)	$217.2	$91.9
MTS Adjusted EBITDA ($USD Millions)	$34.6	$18.3
MTS Adj. EBITDA Margin (%)	15.9%	19.9%
MTS Pro Forma Revenue ($USD Millions)	$93.6	$91.9
MTS Pro Forma Adj. EBITDA ($USD Millions)	$20.2	$18.3
MTS Pro Forma Adj. EBITDA Margin (%)	21.6%	19.9%

KPIs and balance sheet:

KPI	Q3 2025
APS Backlog ($USD Millions)	$1,569.6
MTS Pro Forma Backlog ($USD Millions)	$54.6
Consolidated Pro Forma Backlog ($USD Millions)	$1,624.2
Net Debt ($USD Millions)	$1,513.4
Net Debt / Pro Forma TTM Adjusted EBITDA (x)	3.9x
Liquidity ($USD Millions)	~$512 (cash $163; rest revolver)
Operating Cash Flow ($USD Millions)	$(1.5) (use)
Capital Expenditures ($USD Millions)	~10
Dividend per share (quarter) ($)	$0.2250

Q3 2025 vs Wall Street consensus:

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$572.5*	$598.9	+$26.4M / +4.6%*
Primary EPS ($)	$0.495*	$0.51	+$0.015 / +3.0%*

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance (Apr 29)	Current Guidance (Aug 11)	Change
Total Net Revenue ($USD Billions)	FY2025	$2.555–$2.620	$2.595–$2.630	Raised top/bottom of range; narrowed
APS Net Revenue ($USD Billions)	FY2025	$1.980–$2.030	$2.005–$2.030	Raised bottom
MTS Net Revenue ($USD Millions)	FY2025	$575–$614	$590–$600	Narrowed; mid slightly higher
Adjusted EBITDA ($USD Millions)	FY2025	$363–$395	$370–$385	Narrowed; midpoint modestly higher
APS Adj. EBITDA Margin (%)	FY2025	17.0%–17.5%	16.6%–16.8%	Lowered
MTS Adj. EBITDA Margin (%)	FY2025	13.6%–15.5%	16.0%–16.7%	Raised
Adjusted EPS ($)	FY2025	$2.10–$2.45	$2.20–$2.35	Narrowed; midpoint maintained
Operating Cash Flow ($USD Millions)	FY2025	~120	~60	Lowered
CapEx ($USD Millions)	FY2025	~40	~40	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs/Macro	Outlook maintained for remaining businesses; monitoring potential tariff impacts; no broad recession assumed	Tariffs escalated; included ~$15M direct tariff EBITDA impact; customers pausing larger investments; cautious macro guide	Continued delays in decisions; surcharge pricing, dual sourcing, in-region-for-region footprint mitigations; APS book-to-bill dipped; signs of order pickup post quarter	Stabilizing/mitigated; still a headwind
Supply chain/in-region-for-region	HOM and footprint leveraged; integration continuing	In-region-for-region strategy reduces direct tariff exposure; ~5% of COGS with international suppliers	Actively localizing supply chains, shifting inventories, adjusting contract terms; “in-region for-region” emphasized	Execution progressing
FHN (Food, Health & Nutrition) integration/synergies	Cross-selling/margin synergy momentum; FHN ~30% of revenue mix pro forma	Year-over-year order growth in FHN; strong separation products demand; synergy track reaffirmed	$30M run-rate cost synergies achieved early; cross-selling ~$40M to date; systems solutions strategy emphasized	Positive acceleration
APS orders/backlog	Backlog down YoY; demand soft but pipelines healthy	APS backlog down 15% YoY; FX lifted sequentially; mild recession case embedded	Backlog $1.57B (-10% YoY; -2% seq); order uptick post quarter across plastics; diverse geographies	Early signs of improvement
MTS market/pricing	Pricing pressure persists; restructuring savings in place	Stable orders; pricing challenged; China hot runner pause; potential shift to India	Pro forma backlog +7% YoY to $55M; competitive pricing but improvement; controllers leading hot runner demand; India/China “local-for-local” launches	Gradual improvement
Capital structure/deleveraging	Net debt 3.4x; liquidity ~$632M; dividend continued	TerraSource definitive agreement; leverage expected stable near term	TerraSource closed ($115M); 0.2x leverage improvement; redeemed $375M notes; amended facilities	Strengthened

Management Commentary

CEO on Q3 execution: “we delivered revenue ahead of and adjusted EPS in line with our expectations, despite customers continuing to delay purchasing decisions due to the dynamic tariff landscape” .
CEO on FHN synergy: “we recently achieved the $30 million in run-rate cost synergies… earlier than planned… beginning to see proof points of the combined assets’ commercial synergy potential” .
CFO on guidance and orders: “we are raising the top and bottom of our revenue guidance… narrowing adjusted EPS… several key orders placed and down payments received… giving us confidence in our Q4 and full year outlook” .
CEO on APS orders post quarter: strength primarily in plastics (polyolefin and engineering plastics), across U.S. and Asia; close customer collaboration enabling rapid execution .

Q&A Highlights

APS orders/backlog cadence: APS book-to-bill dipped in Q3 but expected to normalize in Q4; early order wins across plastics post quarter; test labs and quote pipelines remain active .
MTS demand and pricing: Increased quoting/orders in India; controllers accelerating as a precursor to hot runners; China focus on local-for-local; pricing environment still competitive but improving .
Tariff mitigation: Near-term lever is dual sourcing; surcharge pricing targeted, stronger in APS; $15M direct tariff impact included with opportunity to mitigate more in FY2026 .
Cash flow/leverage: Quarterly OCF challenged by lower advances; progress payments structured to support cash; leverage expected to hover near current levels short term, improving with EBITDA recovery .
Dividend: Board reviews capital allocation regularly; no specific changes announced .

Estimates Context

Q3 2025: Revenue $598.9M vs $572.5M* (beat); EPS $0.51 vs $0.495* (beat) .
Q2 2025: Revenue $715.9M vs $691.0M* (beat); EPS $0.60 vs $0.538* (beat) .
Q1 2025: Revenue $706.9M vs $695.46M* (beat); EPS $0.56 vs $0.536* (beat) .
Values retrieved from S&P Global.*

Where estimates may adjust: APS margin recovery timing given tariff mitigation and order flow; MTS pro forma margin tracked higher; full-year OCF lowered to ~$60M could temper near-term cash assumptions .

Key Takeaways for Investors

Hillenbrand executed through tariff-driven demand delays, delivering a modest top-line and EPS beat vs consensus in Q3; internal guidance narrowed with EPS midpoint maintained—a constructive signal on near-term visibility .
APS backlog remains robust and early post-quarter orders across plastics suggest stabilization; watch Q4 order conversion and 2026 backlog trajectory for the poly markets .
FHN synergies hit $30M ahead of plan; commercial cross-selling (~$40M to date) and systems selling could support margins and diversify growth vs more cyclical plastics .
Capital structure strengthened via TerraSource proceeds and note redemption; expect deleveraging to track EBITDA recovery and advances from larger projects; liquidity remains ample .
MTS shows improving pro forma backlog and margin resiliency with local-for-local strategy; near-term pricing remains competitive but improving, with India as a growth node .
Near-term trading catalyst: evidence of APS order momentum and Q4 delivery vs updated ranges; medium-term thesis hinges on FHN integration synergies, APS order normalization, and continued portfolio optimization .

Additional Q3 2025 Press Releases

Notes redemption and credit amendments (July 22) .
TerraSource minority stake divestiture (July 1) .
Dividend declaration ($0.225/share on Sep 30) .

Hillenbrand, Inc. (HI)·Q3 2025 Earnings Summary