Exhibit 99.1
Hillenbrand First-Quarter Revenue Increases 31%
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K-Tron revenue grows 17 percent over prior year; order backlog increases 19 percent
sequentially. |
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Batesville continues solid operating performance in a challenging business
environment. |
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Net income decreases 8 percent, primarily driven by acquisition-related items and
taxes; adjusted EBITDA increases 13 percent. |
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Hillenbrand reaffirms 2011 guidance. |
BATESVILLE, Indiana, February 2, 2011, Hillenbrand, Inc. (NYSE: HI)
Consolidated Summary
For the first quarter of fiscal 2011, which ended December 31, 2010, Hillenbrand reported revenue
of $211 million, a $49.5 million (31 percent) increase over the prior year, resulting primarily
from the April 1, 2010, acquisition of K-Tron International. K-Tron generated revenue of $51.1
million, which was 17 percent above results it reported separately in the prior year, and
Batesvilles revenue declined slightly less than 1 percent to $159.9 million.
Consolidated gross profit margin was 43.2 percent in the quarter, a decline from 44.6 percent in
the prior year, due primarily to increased commodity costs in the Batesville segment, particularly
for steel and fuel. Both net income ($27.1 million) and earnings per share ($0.44) decreased 8
percent, primarily as a result of increased interest expense and amortization connected with the
K-Tron acquisition, and a 36 percent quarterly tax rate, representing an increase of 200 basis
points over prior year. Operating expense was also affected by last years recovery of $4.1 million
in overpaid sales tax, compared to recovery of $600,000 in the first quarter of 2011.
K-Tron Performance
K-Trons strong revenue growth was accompanied by a 19 percent sequential increase in order
backlog, an encouraging sign for future quarters. Even with this increased revenue, operating
expense remained flat, excluding acquisition accounting, resulting in increased operating margin
leverage. K-Tron was accretive to earnings, net of purchase accounting amortization and interest
expense, and continues to perform in line with, or modestly above, expectations at the time of the
acquisition.
Batesville Performance
Batesville continued to post solid results, despite a 1 percent decline in revenue resulting from
an estimated 4 percent decline in the North American burial markets. Operating expenses, excluding
the previously mentioned sales tax recoveries, were flat to prior year. Although affected by spikes
in commodity costs, Batesville maintained attractive margins and continues to be the foundation of
Hillenbrands financial strength.
EBITDA
Despite strong revenue growth and solid operating results, net income declined, largely due to the
expenses arising from Hillenbrands acquisition strategy and certain non-operating costs.
Therefore, in an effort to help investors better understand the operating performance of the
business, Hillenbrand has begun to provide EBITDA and adjusted EBITDA as additional metrics to
yield insight into the cash generation capability of the operations.
For the first quarter of 2011, EBITDA of $50.5 million increased $4.8 million (11 percent) over the
prior year, and $5.9 million (13 percent) on an adjusted basis. Both Batesville and K-Tron have
attractive EBITDA margins. However, K-Trons margins are somewhat lower than Batesvilles due to
higher operating expenses at K-Tron given the technical nature of its products and related customer
support. As a result, adding K-Trons relatively lower-margin business to Hillenbrands mix means
that the companys overall adjusted EBITDA growth of 13 percent was below the revenue growth of 31
percent.
Cash Flow
Cash flow from operations was $27.8 million, a decrease of $8.6 million (24 percent), resulting
primarily from the prior years timing of vendor payments and an increase in incentive compensation
earned in 2010, but paid in the first quarter of 2011. This was partially offset by the infusion of
operating cash flow from K-Tron and lower income tax payments.
CEO Comments
Were pleased with a first quarter that is beginning to show the very positive effect of K-Trons
operations, said Kenneth A. Camp, Hillenbrands president and chief executive officer. Consistent
with our strategy, K-Tron is achieving profitable growth on the early stages of improvement in the
global economy, and Batesville continues to generate robust cash flow while maintaining attractive
margins. Both companies are delivering the results we anticipated and the level of K-Trons growing
order backlog gives us confidence in continued growth for 2011.
Conference Call and Webcast
The company will host a conference call and simultaneous webcast with investors and financial
analysts Thursday, February 3, at 8 a.m. ET to discuss the results for the first quarter of fiscal
2011, which ended December 31, 2010. The webcast will be available at http://ir.hillenbrandinc.com
and will be archived on the companys Web site through February 3, 2012, for those unable to listen
to the live webcast.
To access the conference call, listeners in the United States and Canada may dial 1-888-395-3237,
and international callers may dial 1-719-325-2390. A replay of the call will be available until
midnight ET, Thursday, February 17, 2011, by dialing 1-888-203-1112 in the United States and Canada
or 1-719-457-0820 internationally, and using the replay passcode 3811400.
Hillenbrand, Inc. Consolidated Statements of Income
(Unaudited)
(amounts in millions, except per share data)
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Three Months Ended |
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December 31, |
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2010 |
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2009 |
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Net revenues |
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$ |
211.0 |
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$ |
161.5 |
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Cost of goods sold |
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119.8 |
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89.5 |
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Gross profit |
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91.2 |
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72.0 |
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Operating expenses (including business acquisition costs) |
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49.1 |
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30.9 |
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Operating profit |
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42.1 |
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41.1 |
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Interest expense |
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(2.8 |
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(0.2 |
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Investment income and other |
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3.0 |
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3.7 |
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Income before income taxes |
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42.3 |
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44.6 |
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Income tax expense |
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15.2 |
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15.1 |
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Net income |
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$ |
27.1 |
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$ |
29.5 |
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Income per common share basic and diluted |
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$ |
0.44 |
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$ |
0.48 |
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Weighted average common shares outstanding basic and diluted |
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62.0 |
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61.8 |
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Cash dividends per common share |
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$ |
0.1900 |
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$ |
0.1875 |
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Hillenbrands full financial statements on Form 10-Q were filed jointly with this release and are
available on the Companys website (www.HillenbrandInc.com).
Hillenbrand, Inc. Reconciliation of Non-GAAP Measures* (Unaudited)
(amounts in millions, except per share data)
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Three Months Ended |
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Three Months Ended |
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December 31, 2010 |
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December 31, 2009 |
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Pre- |
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Income |
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Post- |
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Pre- |
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Income |
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Post- |
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Tax |
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Taxes |
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Tax |
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Tax |
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Taxes |
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Tax |
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GAAP income |
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$ |
42.3 |
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$ |
15.2 |
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$ |
27.1 |
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$ |
44.6 |
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$ |
15.1 |
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$ |
29.5 |
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Certain non-operating costs: |
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Antitrust litigation |
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0.3 |
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0.1 |
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0.2 |
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0.2 |
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0.1 |
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0.1 |
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Business acquisition |
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0.3 |
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0.1 |
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0.2 |
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2.8 |
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1.0 |
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1.8 |
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Sales tax adjustment |
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(0.6 |
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(0.2 |
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(0.4 |
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(4.1 |
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(1.4 |
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(2.7 |
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Adjusted income |
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$ |
42.3 |
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$ |
15.2 |
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$ |
27.1 |
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$ |
43.5 |
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$ |
14.8 |
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$ |
28.7 |
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Adjusted diluted net
income per share |
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$ |
0.44 |
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$ |
0.46 |
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* |
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Non-GAAP Financial Disclosures and Reconciliations for Fiscal Year 2011 |
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While Hillenbrand, Inc. reports financial results in accordance with U.S. GAAP, this press release
includes non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a
substitute for, GAAP measures. Hillenbrand uses the non-GAAP measures to evaluate and manage its
operations and provides the information to investors so they can see the results through the eyes
of management. Hillenbrand further believes that providing this information better enables
investors to understand the ongoing operating performance of the company. Investors should consider
non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial
performance prepared in accordance with GAAP. |
Hillenbrand, Inc. Adjusted EBITDA Reconciliation to GAAP (Unaudited)
(amounts in millions)
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Three Months Ended December 31, |
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2010 |
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2009 |
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GAAP net income |
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$ |
27.1 |
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$ |
29.5 |
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Interest income |
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(3.3 |
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(3.6 |
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Interest expense |
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2.8 |
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0.2 |
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Income tax expense |
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15.2 |
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15.1 |
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Depreciation and amortization |
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8.7 |
) |
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4.5 |
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EBITDA |
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$ |
50.5 |
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$ |
45.7 |
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Certain non-operating costs: |
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Antitrust litigation |
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0.3 |
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0.2 |
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Business acquisition |
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0.3 |
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2.8 |
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Sales tax adjustment |
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(0.6 |
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(4.1 |
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Adjusted EBITDA |
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$ |
50.5 |
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$ |
44.6 |
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Management believes that earnings before interest, taxes, depreciation and amortization
(EBITDA) is a useful measure for providing additional insight into the companys operating
performance. EBITDA may not be comparable to similarly titled measures presented by other
companies. |
Hillenbrand, Inc. Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in millions)
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Three Months Ended December 31, |
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2010 |
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2009 |
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Net cash provided by operating activities |
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$ |
27.8 |
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$ |
36.4 |
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Net cash (used in) provided by investing activities |
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(1.8 |
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3.9 |
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Net cash provided by (used in) financing activities |
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8.3 |
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(71.5 |
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Effect of exchange rate changes on cash and cash equivalents |
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3.3 |
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0.1 |
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Net cash flows |
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37.6 |
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(31.1 |
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Cash and cash equivalents: |
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At beginning of period |
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98.4 |
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35.2 |
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At end of period |
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$ |
136.0 |
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$ |
4.1 |
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Guidance for Fiscal Year 2011
The company is reaffirming the following guidance for fiscal year 2011.
Hillenbrand, Inc. (Unaudited)
(amounts in millions, except per share data)
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Fiscal Year Ending September 30 |
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FY11 Range |
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FY10 |
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Low |
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High |
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Net revenue |
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$ |
749 |
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$ |
855 |
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$ |
875 |
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Tax rate |
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37.0 |
% |
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34.5 |
% |
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33.5 |
% |
Average diluted shares outstanding |
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62 |
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62 |
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62 |
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GAAP earnings per share |
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$ |
1.49 |
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$ |
1.76 |
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$ |
1.82 |
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Capital expenditures |
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$ |
16 |
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$ |
22 |
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$ |
26 |
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Excluding certain non-operating costs
(antitrust litigation) |
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Adjusted diluted earnings per share |
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$ |
1.80 |
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$ |
1.79 |
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$ |
1.85 |
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Disclosure Regarding Forward-Looking Statements
Throughout this release, we make a number of forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. As the words imply, forward-looking statements
are statements about the future, as contrasted with historical information. Our forward-looking
statements are based on assumptions and current expectations of future events that we believe are
reasonable, but by their very nature they are subject to a wide range of risks. If our assumptions
prove inaccurate or unknown risks and uncertainties materialize, actual results could vary
materially from Hillenbrands expectations and projections.
Words that could indicate were making forward-looking statements include the following:
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intend
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believe
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plan
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expect
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may
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goal
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would |
become
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pursue
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estimate
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will
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forecast
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continue
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could |
targeted
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encourage
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promise
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improve
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progress
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potential
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should |
This isnt an exhaustive list, but is simply intended to give you an idea of how we try to
identify forward-looking statements. The absence of any of these words, however, does not mean
that the statement is not forward-looking.
Heres the key point: Forward-looking statements are not guarantees of future performance, and our
actual results could differ materially from those set forth in any forward-looking statements. Any
number of factors many of which are beyond our control could cause our performance to differ
significantly from those described in the forward-looking statements. These factors include, but
are not limited to: recent global market and economic conditions, including those related to the
credit markets; volatility of our investment portfolio; foreign currency fluctuations; ongoing
involvement in claims, lawsuits and governmental proceedings related to operations; labor
disruptions; our ability to continue the successful integration of K-Tron International; the
dependence of our business units on relationships with several large national providers; increased
costs or unavailability of raw materials; continued fluctuations in mortality rates and increased
cremations; competition from nontraditional sources in the funeral services business; our ongoing
antitrust litigation; cyclical demand for industrial capital goods; and certain tax-related
matters. For a more in-depth discussion of these and other factors that could cause actual results
to differ from those contained in forward-looking statements, see the discussions under the heading
Risk Factors in item 1A of Hillenbrands Annual Report on Form 10-K for the year ended September
30, 2010, filed with the Securities and Exchange Commission (SEC) November 23, 2010. The company
assumes no obligation to update or revise any forward-looking information.
About Hillenbrand, Inc.
Hillenbrand (www.HillenbrandInc.com) is a diversified enterprise with multiple subsidiaries focused
around two separate operating businesses. Batesville Casket (www.batesville.com) is a leader in the
North American death care industry through the sale of funeral services products, including burial
caskets, cremation caskets, containers and urns, selection room display fixturing, and other
personalization and memorialization products. K-Tron International (www.ktroninternational.com) is
a recognized leader in the design, production, marketing and servicing of material handling
equipment and systems. The company serves many different industrial markets through two product
lines. The Process Group focuses primarily on feeding and pneumatic conveying equipment, doing
business under two main brands: K-Tron Feeders and K-Tron Premier. The Size Reduction Group
concentrates on size reduction equipment, conveying systems and screening equipment, operating
under three brands: Pennsylvania Crusher, Gundlach and Jeffrey Rader. HI-INC-F
CONTACT
Investor Relations for Hillenbrand, Inc.
Mark R. Lanning, Vice President, Investor Relations
Phone: 812-934-7256
E-mail: mr.lanning@hillenbrand.com
# # #