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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q
 
 Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For the quarterly period ended December 31, 2023

OR

  Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For the transition period from _____ to _____

Commission File Number. 001-33794 
HILLENBRAND, INC.
(Exact name of registrant as specified in its charter)
Indiana 26-1342272
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One Batesville Boulevard  
Batesville,Indiana 47006
(Address of principal executive offices) (Zip Code)
(812) 931-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueHINew York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer Emerging growth company
Non-accelerated filerSmaller reporting company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  

The registrant had 70,151,784 shares of common stock, no par value per share, outstanding as of January 31, 2024.


Table of Contents

HILLENBRAND, INC.
INDEX TO FORM 10-Q
 
  Page
  
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
  
   
   
   
 
1

Table of Contents
PART IFINANCIAL INFORMATION

Item 1.                FINANCIAL STATEMENTS
 
Hillenbrand, Inc.
Consolidated Statements of Operations (Unaudited)
(in millions, except per share data)
 
Three Months Ended
December 31,
 20232022
Net revenue$773.3 $655.7 
Cost of goods sold522.3 448.1 
Gross profit251.0 207.6 
Operating expenses157.9 137.9 
Amortization expense25.5 19.1 
Pension settlement charge8.3  
Interest expense, net29.8 21.5 
Income from continuing operations before income taxes29.5 29.1 
Income tax expense10.0 2.3 
Income from continuing operations19.5 26.8 
(Loss) income from discontinued operations (net of income tax expense)(0.3)21.0 
Consolidated net income19.2 47.8 
Less: Net income attributable to noncontrolling interests2.0 2.3 
Net income attributable to Hillenbrand$17.2 $45.5 
Earnings per share
Basic earnings per share
Income from continuing operations attributable to Hillenbrand$0.25 $0.36 
Income from discontinued operations 0.30 
Net income attributable to Hillenbrand$0.25 $0.66 
Diluted earnings per share
Income from continuing operations attributable to Hillenbrand$0.25 $0.35 
(Loss) income from discontinued operations(0.01)0.30 
Net income attributable to Hillenbrand$0.24 $0.65 
Weighted average shares outstanding (basic)70.3 69.4 
Weighted average shares outstanding (diluted)70.5 69.8 

See Condensed Notes to Consolidated Financial Statements


2

Table of Contents
Hillenbrand, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
(in millions)
 
Three Months Ended
December 31,
 20232022
Consolidated net income$19.2 $47.8 
Changes in other comprehensive income, net of tax:
Currency translation adjustment (1)
49.3 43.0 
Pension and postretirement6.0 (0.2)
Change in net unrealized gain on derivative instruments0.9 3.7 
Total changes in other comprehensive income, net of tax56.2 46.5 
Consolidated comprehensive income 75.4 94.3 
Less: Comprehensive income attributable to noncontrolling interests2.0 2.1 
Comprehensive income attributable to Hillenbrand$73.4 $92.2 
 
(1)Includes gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature.

See Condensed Notes to Consolidated Financial Statements

3

Table of Contents
Hillenbrand, Inc.
Consolidated Balance Sheets
(in millions)
December 31, 2023 (unaudited)September 30,
2023
ASSETS  
Current Assets  
Cash and cash equivalents$198.4 $242.9 
Trade receivables, net352.5 398.7 
Receivables from long-term manufacturing contracts, net287.2 260.2 
Inventories, net607.5 592.6 
Prepaid expenses and other current assets131.9 113.2 
Total current assets1,577.5 1,607.6 
Property, plant, and equipment, net334.6 320.7 
Operating lease right-of-use assets, net118.8 111.3 
Intangible assets, net1,386.5 1,377.1 
Goodwill2,061.5 2,028.1 
Other long-term assets106.0 102.9 
Total Assets$5,584.9 $5,547.7 
LIABILITIES  
Current Liabilities  
Trade accounts payable$422.1 $451.5 
Liabilities from long-term manufacturing contracts and advances387.1 388.5 
Current portion of long-term debt20.3 19.7 
Accrued compensation85.1 99.6 
Other current liabilities316.2 331.7 
Total current liabilities1,230.8 1,291.0 
Long-term debt2,021.5 1,990.4 
Accrued pension and postretirement healthcare105.0 101.4 
Operating lease liabilities92.0 88.1 
Deferred income taxes345.7 351.2 
Other long-term liabilities70.9 62.7 
Total Liabilities$3,865.9 $3,884.8 
Commitments and contingencies (Note 15)
SHAREHOLDERS’ EQUITY  
Common stock, no par value (75.8 and 75.8 shares issued, 70.1 and 69.9 shares outstanding)  
Additional paid-in capital701.2 709.5 
Retained earnings1,321.0 1,319.6 
Treasury stock (5.7 and 5.9 shares, at cost)(242.7)(251.7)
Accumulated other comprehensive loss(90.9)(147.1)
Hillenbrand Shareholders’ Equity1,688.6 1,630.3 
Noncontrolling interests30.4 32.6 
Total Shareholders’ Equity1,719.0 1,662.9 
Total Liabilities and Shareholders’ Equity$5,584.9 $5,547.7 
 
See Condensed Notes to Consolidated Financial Statements
4

Table of Contents
Hillenbrand, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
Three Months Ended
December 31,
 20232022
Operating activities from continuing operations  
Consolidated net income$19.2 $47.8 
Adjustments to reconcile income from continuing operations to used in operating activities:
   Total loss (income) from discontinued operations (net of income tax expense)0.3 (21.0)
Depreciation and amortization38.8 31.0 
Deferred income taxes(22.4)(5.3)
Amortization of deferred financing costs1.1 0.9 
Share-based compensation5.2 5.1 
Trade accounts receivable, net and receivables from long-term manufacturing contracts36.7 (51.1)
Inventories, net(1.7)2.7 
Prepaid expenses and other current assets(22.0)(13.9)
Trade accounts payable(38.9)(11.6)
Liabilities from long-term manufacturing contracts and advances,
accrued compensation, and other current liabilities(57.7)14.8 
Income taxes payable14.9 (1.6)
Accrued pension and postretirement6.5 (1.9)
Other, net(4.0)(1.5)
   Net cash used in operating activities from continuing operations(24.0)(5.6)
Investing activities from continuing operations  
Capital expenditures(12.4)(15.3)
Proceeds from sales of property, plant, and equipment0.1 0.8 
Acquisition of businesses, net of cash acquired (627.5)
Other, net(2.8) 
Net cash used in investing activities from continuing operations(15.1)(642.0)
Financing activities from continuing operations  
Proceeds from issuance of long-term debt 200.0 
Repayments on long-term debt(2.5) 
Proceeds from revolving credit facilities31.4 756.3 
Repayments on revolving credit facilities(24.2)(326.3)
Payment of deferred financing costs (0.6)
Payments of dividends on common stock(15.6)(15.3)
Proceeds from stock option exercises 0.6 6.9 
Payments for employee taxes on net settlement equity awards(5.3)(9.2)
Other, net(1.5)(1.5)
Net cash (used in) provided by financing activities from continuing operations(17.1)610.3 
Cash used in continuing operations(56.2)(37.3)
Cash used in discontinued operations:
Operating cash flows (0.6)
Investing cash flows (4.5)
Total cash used in discontinued operations (5.1)
Effect of exchange rates on cash and cash equivalents5.6 0.6 
Net cash flows(50.6)(41.8)
Cash and cash equivalents:  
At beginning of period250.2 237.6 
At end of period$199.6 $195.8 

See Condensed Notes to Consolidated Financial Statements

5

Table of Contents
Hillenbrand, Inc.
Consolidated Statements of Shareholders’ Equity (Unaudited)
(in millions)
Three Months Ended December 31, 2023
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
SharesSharesAmount
Balance at September 30, 202375.8 $709.5 $1,319.6 5.9 $(251.7)$(147.1)$32.6 $1,662.9 
Total other comprehensive income, net of tax— — — — — 56.2 — 56.2 
Net income— — 17.2 — — — 2.0 19.2 
Issuance/retirement of stock for stock awards/options— (13.7)— (0.2)9.0 — — (4.7)
Share-based compensation— 5.2 — — — — — 5.2 
Dividends ($0.2225 per share)— 0.2 (15.8)— — — (1.2)(16.8)
Purchase of noncontrolling interests— — — — — — (3.0)(3.0)
Balance at December 31, 202375.8 $701.2 $1,321.0 5.7 $(242.7)$(90.9)$30.4 $1,719.0 

Three Months Ended December 31, 2022
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
SharesSharesAmount
Balance at September 30, 202275.8 $723.8 $812.0 6.9 $(297.3)$(155.6)$25.1 $1,108.0 
Total other comprehensive income (loss), net of tax— — — — — 46.7 (0.2)46.5 
Net income— — 45.5 — — — 2.3 47.8 
Issuance/retirement of stock for stock awards/options— (22.6)— (0.4)20.3 — — (2.3)
Share-based compensation— 5.1 — — — — — 5.1 
Dividends ($0.22 per share)— 0.2 (15.5)— — — (1.6)(16.9)
Acquisition of noncontrolling interests— — — — — — 4.6 4.6 
Balance at December 31, 202275.8 $706.5 $842.0 6.5 $(277.0)$(108.9)$30.2 $1,192.8 


See Condensed Notes to Consolidated Financial Statements

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Hillenbrand, Inc.
Condensed Notes to Consolidated Financial Statements (Unaudited)
(in millions, except share and per share data)
 
1.Background and Basis of Presentation
 
Hillenbrand, Inc. (the “Company” or “Hillenbrand”) is a global industrial company that provides highly-engineered processing equipment and solutions to customers around the world. Our portfolio is composed of leading industrial brands that serve large, attractive end markets, including durable plastics, food, and recycling. Guided by our Purpose, Shape What Matters for TomorrowTM, we pursue excellence, collaboration, and innovation to shape solutions that best serve our people, our customers, and our communities. Customers choose Hillenbrand due to our reputation for designing, manufacturing, and servicing highly-engineered, mission-critical equipment and solutions that meet their unique and complex processing requirements.

On February 1, 2023, the Company completed the divestiture of its historical Batesville reportable operating segment (“Batesville”) to BL Memorial Partners, LLC, a Delaware limited liability company owned by funds affiliated with LongRange Capital, L.P., for $761.5, including an $11.5 subordinated note.

This divestiture represented a strategic shift in Hillenbrand’s business and qualified as a discontinued operation. Accordingly, the operating results and cash flows related to Batesville have been reflected as discontinued operations in the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for all periods presented. Unless otherwise noted, discussion within the condensed notes to the Consolidated Financial Statements relates to continuing operations only and excludes Batesville. See Note 4 for additional information on this divestiture.

The Company is providing, and will continue to provide, certain transition services to Batesville for applicable fees that are not material to the Company’s financial position. The transition services vary in duration depending upon the type of service provided.

As a result of the divestiture, Hillenbrand is now composed of two reportable operating segments: Advanced Process Solutions and Molding Technology Solutions. Advanced Process Solutions is a leading global provider of highly-engineered process and material handling equipment, systems, and aftermarket parts and services for a variety of industries, including durable plastics, food, and recycling. Molding Technology Solutions is a global leader in highly-engineered equipment, systems, and aftermarket parts and service for the plastic technology processing industry. Molding Technology Solutions has a comprehensive product portfolio that includes injection molding and extrusion equipment, hot runner systems, process control systems, mold bases and components, and maintenance, repair, and operating (“MRO”) supplies.
 
The Consolidated Financial Statements include the accounts of Hillenbrand and its subsidiaries.  They also include three subsidiaries where the Company’s ownership percentage is less than 100%.  The Company’s fiscal year ends on September 30.  Unless otherwise stated, references to years refer to fiscal years.
 
These unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements and therefore do not include all information required in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  The unaudited Consolidated Financial Statements have been prepared on the same basis as, and should be read in conjunction with, the audited Consolidated Financial Statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended September 30, 2023, as filed with the SEC on November 15, 2023. In the opinion of management, these unaudited Consolidated Financial Statements reflect all adjustments necessary to present a fair statement of the Company’s consolidated financial position and the consolidated results of operations and cash flows as of the dates and for the periods presented and are normal and recurring in nature. The interim period results are subject to variation and are not necessarily indicative of the consolidated results of operations to be expected for the full fiscal year.
 
The preparation of the Consolidated Financial Statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of net revenue and expenses during the period.  Actual results could differ from those estimates.  Examples of such estimates include, but are not limited to, revenue recognition under the over time method, establishment of reserves related to credit losses, warranties, inventories, income taxes, litigation, and self-insurance.


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2.Summary of Significant Accounting Policies
 
The significant accounting policies used in preparing the Consolidated Financial Statements are consistent with the accounting policies described in the Company’s Annual Report on Form 10-K as of and for the year ended September 30, 2023.

Recently adopted accounting standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50); Disclosure of Supplier Finance Program Obligations. ASU 2022-04 requires entities that use supplier finance programs to disclose information about the nature and potential magnitude of the programs, activity during the period, and changes from period to period. ASU 2022-04 does not affect the recognition, measurement, or consolidated financial statement presentation of obligations covered by supplier finance programs. The Company adopted ASU 2022-04 effective October 1, 2023. The adoption of ASU 2022-04 did not have a material effect on our Consolidated Financial Statements and related disclosures. See Note 6 for further details.

Recently issued accounting standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires additional disclosures pertaining to significant expenses and other items of an entity’s reportable operating segments. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 (fiscal 2025). Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on the Consolidated Financial Statements.
 
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). The Company is currently evaluating the impact of ASU 2023-09 on the Consolidated Financial Statements.

No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the Consolidated Financial Statements.

3.Revenue Recognition

Net revenue includes gross revenue less sales discounts and sales incentives, all of which require the Company to make estimates for the portion of these allowances that have yet to be credited or paid to customers. The Company estimates these allowances based upon historical experience.

Contract balances

The balance in receivables from long-term manufacturing contracts at December 31, 2023 and September 30, 2023, was $287.2 and $260.2, respectively. The change was driven by the impact of net revenue recognized prior to billings to customers. The balance in the liabilities from long-term manufacturing contracts and advances at December 31, 2023 and September 30, 2023, was $387.1 and $388.5, respectively, and consists primarily of cash payments received or due in advance of satisfying performance obligations. The net revenue recognized for the three months ended December 31, 2023 and 2022, related to liabilities from long-term manufacturing contracts and advances as of September 30, 2023 and 2022, was $116.4 and $91.4, respectively. During the three months ended December 31, 2023 and 2022, the adjustments related to performance obligations satisfied in previous periods were immaterial.

Transaction price allocated to the remaining performance obligations
                                            
As of December 31, 2023, the aggregate amount of transaction price of remaining performance obligations for the Company, which corresponds to backlog as defined in Part I, Item 2 of this Quarterly Report on Form 10-Q, was $2,147.4. Approximately 80% of these performance obligations are expected to be satisfied over the next twelve months, and the remaining performance obligations, primarily within one to three years.

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Disaggregation of revenue

The following tables present net revenue by end market:
Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Advanced Process SolutionsMolding Technology SolutionsTotalAdvanced Process SolutionsMolding Technology SolutionsTotal
End market
  Plastics and recycling$243.6 $ $243.6 $240.8 $ $240.8 
  Automotive 40.7 40.7  49.2 49.2 
  Chemicals45.4  45.4 24.7  24.7 
  Consumer goods 28.3 28.3  33.1 33.1 
  Food and pharmaceuticals182.8  182.8 103.8  103.8 
  Custom molders 25.1 25.1  26.6 26.6 
Packaging 29.6 29.6  28.6 28.6 
Construction17.7 25.0 42.7  31.1 31.1 
  Minerals20.0  20.0 13.8  13.8 
  Electronics 12.9 12.9  15.9 15.9 
  Medical 16.0 16.0  16.5 16.5 
  Other industrial58.8 27.4 86.2 29.7 41.9 71.6 
    Total$568.3 $205.0 $773.3 $412.8 $242.9 $655.7 

The following tables present net revenue by geography:
Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Advanced Process SolutionsMolding Technology SolutionsTotalAdvanced Process SolutionsMolding Technology SolutionsTotal
Geography (1)
Americas$264.2 $109.9 $374.1 $138.5 $136.2 $274.7 
Asia146.3 60.5 206.8 148.7 68.2 216.9 
Europe, the Middle East, and Africa157.8 34.6 192.4 125.6 38.5 164.1 
    Total$568.3 $205.0 $773.3 $412.8 $242.9 $655.7 
(1)The Company attributes net revenue to a geography based upon the location of the end customer.

The following tables present net revenue by products and services:
Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Advanced Process SolutionsMolding Technology SolutionsTotalAdvanced Process SolutionsMolding Technology SolutionsTotal
Products and services
Equipment$382.0 $127.2 $509.2 $305.3 $162.1 $467.4 
Parts and services186.3 62.8 249.1 107.5 64.6 172.1 
Other 15.0 15.0  16.2 16.2 
    Total$568.3 $205.0 $773.3 $412.8 $242.9 $655.7 
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The following tables present net revenue by timing of transfer:
Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Advanced Process SolutionsMolding Technology SolutionsTotalAdvanced Process SolutionsMolding Technology SolutionsTotal
Timing of transfer
Point in time$278.2 $186.4 $464.6 $220.2 $230.0 $450.2 
Over time290.1 18.6 308.7 192.6 12.9 205.5 
    Total$568.3 $205.0 $773.3 $412.8 $242.9 $655.7 

4.    Divestitures

Batesville

As previously described, on February 1, 2023, the Company completed the divestiture of Batesville to BL Memorial Partners, LLC, a Delaware limited liability company owned by funds affiliated with LongRange Capital, L.P., for $761.5, including an $11.5 subordinated note. At closing, after the applicable adjustments, the Company received $698.0 in pre-tax cash proceeds, including an adjustment for cash on hand acquired from the Company, and the previously mentioned subordinated note.

Discontinued operations

Components of amounts reflected in the Consolidated Statements of Operations related to discontinued operations are presented in the table, as follows:
Three Months Ended December 31,
20232022
Net revenue$ $156.0 
Cost of goods sold 103.7 
Gross profit 52.3 
Operating expenses0.3 20.9 
(Loss) income from discontinued operations before income taxes(0.3)31.4 
Income tax expense 10.4 
(Loss) income from discontinued operations (net of income tax expense)$(0.3)$21.0 

5.    Acquisitions

Acquisition of Schenck Process Food and Performance Materials Business

On September 1, 2023, the Company completed its acquisition of Schenck Process Food and Performance Materials (“FPM”) for $748.7, net of certain customary post-closing adjustments, and including cash acquired. The Company used available borrowings under its multi-currency revolving credit facility (the “Facility”) to fund this acquisition.

Headquartered in Kansas City, Missouri, FPM specializes in the design, manufacturing, and service of feeding, filtration, baking, and material handling technologies and systems that are highly complementary to the equipment and solutions offered in our Advanced Process Solutions reportable operating segment. The results of FPM since the date of the acquisition are included in the Advanced Process Solutions reportable operating segment.

Preliminary purchase price allocation and other items

The Company utilized the services of an independent valuation consultant, along with estimates and assumptions determined by management, to estimate the fair value of the assets acquired and liabilities assumed. The preliminary allocation of the purchase price was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. The purchase price allocation of the assets acquired and liabilities assumed is preliminary until the contractual post-closing adjustments are finalized, and the measurement period allowed for under Accounting Standards Codification (“ASC
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805”), Business Combinations (“ASC 805”) has closed. The final determination of the fair value of assets acquired and liabilities assumed will be completed within the one-year measurement period as allowed by ASC 805. Changes during the measurement period could be material. Based on current fair value estimates, the preliminary purchase price for FPM has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:

September 1, 2023 (as initially reported)Measurement Period AdjustmentsSeptember 1, 2023
(as adjusted)
Assets acquired:
Cash and cash equivalents$17.3 $— $17.3 
Trade receivables65.2 (1.6)63.6 
Receivables from long-term manufacturing contracts22.4 — 22.4 
Inventories64.8 (0.5)64.3 
Prepaid expenses and other current assets10.3 — 10.3 
Property, plant, and equipment27.3 14.9 42.2 
Operating lease right-of-use assets11.0 3.5 14.5 
Intangible assets338.0 0.4 338.4 
Goodwill476.5 (12.4)464.1 
Other non-current assets2.7 (1.0)1.7 
     Total assets acquired1,035.5 3.3 1,038.8 
Liabilities assumed:
Trade accounts payable59.4 (2.4)57.0 
Liabilities from long-term manufacturing contracts86.6 — 86.6 
Accrued compensation13.5 — 13.5 
Other current liabilities45.7 1.1 46.8 
Operating lease liabilities9.5 — 9.5 
Deferred income taxes69.0 4.6 73.6 
Other non-current liabilities3.1 — 3.1 
     Total liabilities assumed286.8 3.3 290.1 
          Net assets acquired$748.7 $— $748.7 

Measurement period adjustments

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to property, plant, and equipment, operating lease right-of-use assets, intangible assets, goodwill, and deferred income taxes. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

Intangible assets identified

The preliminary purchase price allocation included $338.4 of acquired identifiable intangible assets. Intangible assets consist of FPM’s technology, Baker Perkins trade name, and customer relationships and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, degree of stability in the current FPM customer base, economic factors, and expected future cash flows of the Company following the acquisition of FPM. The technology and Baker Perkins trade name were valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used
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in the valuations included FPM’s future cash flow projections, which were based on estimates used to price the FPM acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (12%).

The preliminary amounts allocated to intangible assets are as follows:

Gross Carrying AmountWeighted-Average Useful Life
Customer relationships$285.0 15 years
Technology48.0 12 years
Trade name4.4 5 years
Other1.0 
Total intangible assets$338.4 

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. None of the goodwill is expected to be deductible for income tax purposes.

The working capital assets and liabilities, as well as the property, plant, and equipment acquired, were valued using Level 2 inputs, which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

Impact on results of operations

The results of FPM’s operations have been included in Hillenbrand’s Consolidated Financial Statements since the September 1,
2023 acquisition date. The following table provides the results of operations for FPM included in Hillenbrand’s Consolidated
Statement of Operations:

Three Months Ended December 31, 2023
Net revenue$146.0 
Income from continuing operations before income taxes14.1 

Acquisition of Peerless Food Equipment
On December 1, 2022, the Company completed the acquisition of the Peerless Food Equipment division (“Peerless”) of Illinois Tool Works Inc. for a purchase price of $59.2, including cash acquired, using available borrowings under the Facility. Headquartered in Sidney, Ohio, Peerless is a premier supplier of industrial food processing equipment.

The acquisition of Peerless increased the Company's scale in the food end market, and combining Peerless’ highly complementary equipment and solutions with existing Advanced Process Solutions reportable operating segment technologies now allows the Company to deliver more comprehensive solutions to its customers. The results of Peerless since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

Purchase price allocation and other items

The Company utilized the services of an independent valuation consultant, along with estimates and assumptions determined by management, to estimate the fair value of the assets acquired and liabilities assumed. The allocation of the purchase price was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data.

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The following table summarizes the final fair values of assets acquired and liabilities assumed as of the acquisition date:

December 1, 2022 (as initially reported)Measurement Period AdjustmentsDecember 1, 2022 (as adjusted)
Assets acquired:
Current assets$16.2 $0.9 $17.1 
Property, plant, and equipment2.3 — 2.3 
Intangible assets— 25.3 25.3 
Goodwill50.9 (27.0)23.9 
     Total assets acquired69.4 (0.8)68.6 
Liabilities assumed:
Current liabilities9.5 (0.1)9.4 
     Total liabilities assumed9.5 (0.1)9.4 
          Net assets acquired$59.9 $(0.7)$59.2 

Measurement period adjustments

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions were subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above, however, no material adjustments were recorded in the three months ended December 31, 2023. Adjustments were primarily made to intangible assets and goodwill. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

During the quarter ended December 31, 2023, the purchase price allocation for the acquisition was finalized.

Intangible assets identified

The purchase price allocation included $25.3 of acquired identifiable intangible assets. Intangible assets consist of Peerless’ trade name and customer relationships, and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, stability in the current Peerless customer base, economic factors, and future expected cash flows of the Company following the acquisition of Peerless. The trade name was valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used in the valuations included Peerless cash flow projections, which were based on estimates used to price the Peerless acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (13%).

The amounts allocated to intangible assets are as follows:

Gross Carrying AmountWeighted-Average Useful Life
Customer relationships$22.0 13 years
Trade name3.3 10 years
Total intangible assets$25.3 

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. Goodwill is expected to be deductible for tax purposes.

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The working capital assets and liabilities, as well as the property, plant, and equipment acquired, were valued using Level 2 inputs, which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

Impact on results of operations

The results of Peerless’ operations have been included in Hillenbrand’s Consolidated Financial Statements since the December 1, 2022 acquisition date. The following table provides the results of operations for Peerless included in Hillenbrand’s Consolidated Statements of Operations:

Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Net revenue$7.1 $4.0 
Income from continuing operations before income taxes0.5 1.1 

During the three months ended December 31, 2022, the Company incurred $1.2 in acquisition expenses related to the Peerless acquisition, which are included in operating expenses in the Consolidated Statement of Operations.

Acquisition of LINXIS Group SAS

On October 6, 2022, the Company completed the acquisition of LINXIS Group SAS (“Linxis”) from IBERIS INTERNATIONAL S.À R.L, an affiliate of IK Partners, and additional sellers (collectively, the “Sellers”). As a result of the acquisition, the Company acquired from the Sellers all of the issued and outstanding securities of Linxis, and Linxis became a wholly owned subsidiary of the Company for total aggregate consideration of $590.8 (€596.2) in cash, reflecting an approximate enterprise value of $566.8 (€572.0) plus cash acquired at closing. The Company used available borrowings under the Facility to fund this acquisition.

Linxis has six market-leading brands – Bakon, Diosna, Shaffer, Shick Esteve, Unifiller, and VMI – that serve customers in over 100 countries. With a global manufacturing, sales and service footprint, Linxis specializes in the design, manufacturing, and service of dosing, kneading, mixing, granulating, drying, and coating technologies. The purchase price allocation was finalized during the year ended September 30, 2023. The results of Linxis since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below for the historical period is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Peerless and FPM acquisitions had been completed on the date indicated, do not reflect synergies that might have been achieved, and are not indicative of future results of operations or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that Hillenbrand believes are reasonable under the circumstances.

The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the acquisitions of Peerless and FPM had occurred on October 1, 2022, to give effect to certain events that Hillenbrand believes to be directly attributable to the acquisitions. These pro forma adjustments primarily include:

an increase to depreciation and amortization expense that would have been recognized due to acquired tangible and intangible assets;
an adjustment to remove business acquisition and integration costs and inventory step-up costs during the three months ended December 31, 2022, as these costs are non-recurring in nature and would not have a continuing effect on Hillenbrand’s results of operations; and
the related income tax effects of the adjustments noted above.

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The supplemental pro forma financial information for the historical period presented is as follows:
Three months ended December 31,
2022
Net revenue$813.5 
Income from continuing operations attributable to Hillenbrand21.2 
Income from continuing operations attributable to Hillenbrand — per share of common stock:
Basic earnings per share from continuing operations$0.31 
Diluted earnings per share from continuing operations$0.30 

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6.Supplemental Consolidated Balance Sheet Information

December 31,
2023
September 30,
2023
Allowance for credit losses$10.4 $10.1 
Warranty reserves$37.0 $35.8 
Accumulated depreciation on property, plant, and equipment$243.0 $226.7 
Inventories, net:  
Raw materials and components$295.4 $285.2 
Work in process129.9 135.0 
Finished goods182.2 172.4 
Total inventories, net$607.5 $592.6 
Other current liabilities:
Income tax payable$76.5 $72.8 
Other current liabilities239.7 258.9 
Total other current liabilities$316.2 $331.7 

The following table provides a reconciliation of cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows:
December 31, 2023December 31, 2022
Cash and cash equivalents$198.4 $193.9 
Cash and cash equivalents held for sale 0.9 
Short-term restricted cash included in other current assets1.2 1.0 
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale shown in the Consolidated Statements of Cash Flows$199.6 $195.8 
Supplier Finance Program
The Company has agreements with third-party financial institutions to facilitate supply chain finance (“SCF”) programs. The SCF programs allow qualifying suppliers to sell their receivables, on an invoice level at the selection of the supplier, from the Company to the financial institutions and negotiate their outstanding receivable arrangements and associated fees directly with the financial institutions. Hillenbrand is not party to the agreements between the supplier and the financial institutions. The supplier invoices that have been confirmed as valid under the SCF programs require payment in full by the financial institutions to the supplier by the original maturity date of the invoice, or discounted payment at an earlier date as agreed upon with the supplier. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier’s participation in the SCF programs.
 
All outstanding amounts related to suppliers participating in the SCF programs are recorded upon confirmation with the third-party financial institutions in trade accounts payable in the Consolidated Balance Sheets, and associated payments are included in cash used in operating activities in the Consolidated Statements of Cash Flows. The Company’s outstanding obligations included in trade accounts payable as of December 31, 2023 and September 30, 2023,  were $29.4 and $29.1, respectively.

Trade Receivables Financing

During the three months ended December 31, 2023, the Company executed an amendment of its trade receivables financing arrangement (as amended, the “Amended Arrangement”) with a financial institution. In accordance with ASC 869, Transfers and Servicing, this Amended Arrangement is deemed a true sale, as the Company retains no rights or interest and has no
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obligations with respect to the trade receivables. The Company had proceeds from the sale of trade receivables under the Amended Arrangement of $61.3 for the three months ended December 31, 2023 ($0.0 for the three months ended December 31, 2022). As of December 31, 2023 and September 30, 2023, trade receivables in the amount of $30.4 and $0.0, respectively, were sold to the financial institution and are not reflected in the trade receivables in the Consolidated Balance Sheets.

7.Leases

For the three months ended December 31, 2023 and 2022, the Company recognized $8.5 and $7.1 of operating lease expense, respectively, including short-term lease expense and variable lease costs, which were immaterial in each period. The Company’s finance leases were insignificant as of December 31, 2023 and September 30, 2023.

The following table presents supplemental Consolidated Balance Sheet information related to the Company’s operating leases:
December 31, 2023September 30, 2023
Operating lease right-of-use assets, net$118.8$111.3
Other current liabilities19.218.6
Operating lease liabilities92.088.1
Total operating lease liabilities$111.2$106.7
Weighted-average remaining lease term (in years)6.97.1
Weighted-average discount rate3.9 %3.8 %

As of December 31, 2023, the maturities of the Company’s operating lease liabilities were as follows:
2024 (excluding the three months ended December 31, 2023)
$18.5 
202521.7 
202618.0 
202715.1 
202813.6 
Thereafter38.7 
Total lease payments125.6 
Less: imputed interest(14.4)
Total present value of lease payments$111.2 

Supplemental Consolidated Statements of Cash Flow information related to the Company’s operating leases is as follows:
Three Months Ended December 31,
20232022
Cash paid for amounts included in the measurement of operating lease liabilities$6.8 $5.6 
Operating lease right-of-use assets, net obtained in exchange for new operating lease liabilities4.9 1.8 
Operating leases acquired in acquisitions3.5 15.0 

8.Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at the lower of cost or fair value. Intangible assets are amortized on a straight-line basis over periods ranging from three to 21 years, representing the period over which the Company expects to receive future economic benefits from these assets. The Company assesses the carrying value of indefinite-lived trade names annually, or more often if events or changes in circumstances indicate there may be an impairment.


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The following table summarizes the carrying amounts and related accumulated amortization for intangible assets as of:

 December 31, 2023September 30, 2023
 CostAccumulated
Amortization
CostAccumulated
Amortization
Finite-lived assets:    
Customer relationships$1,312.9 $(317.6)$1,290.2 $(291.4)
Technology, including patents196.2 (89.2)192.3 (83.1)
Software51.3 (33.4)41.7 (31.7)
Trade names47.9 (5.7)41.9 (4.2)
 1,608.3 (445.9)1,566.1 (410.4)
Indefinite-lived assets:    
Trade names224.1 — 221.4 — 
Total$1,832.4 $(445.9)$1,787.5 $(410.4)

Finite-lived intangible assets, net of $742.0 and $740.0 are included in the Advanced Process Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. Indefinite-lived intangible assets of $112.0 and $109.3 are included in the Advanced Process Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. The net change in intangible assets in the Advanced Process Solutions reportable operating segment during the three months ended December 31, 2023, was driven primarily by acquisition measurement period adjustments, amortization, and foreign currency adjustments. Finite-lived intangible assets, net of $412.6 and $412.9 are included in the Molding Technology Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. Indefinite-lived intangible assets of $112.1 are included in the Molding Technology Solutions reportable operating segment at both December 31, 2023 and September 30, 2023. The net change in intangible assets in the Molding Technology Solutions reportable operating segment during the three months ended December 31, 2023, was driven primarily by amortization and foreign currency adjustments.


Goodwill

Goodwill is not amortized, but is subject to annual impairment tests. Goodwill has been assigned to reporting units within the reportable operating segments.  The Company assesses the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment.  Impairment testing is performed at a reporting unit level.

The following table summarizes the changes in the Company’s goodwill, by reportable operating segment, for the three months ended December 31, 2023:
 Advanced Process SolutionsMolding Technology SolutionsTotal
Balance as of September 30, 2023$1,394.9 $633.2 $2,028.1 
Acquisition measurement period adjustments(12.1) (12.1)
Foreign currency adjustments35.9 9.6 45.5 
Balance as of December 31, 2023
$1,418.7 $642.8 $2,061.5 

During the three months ended December 31, 2023 and 2022, the Company did not observe any triggering events or substantive changes in circumstances requiring the need for an interim impairment assessment.

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9.Financing Agreements
The following table summarizes Hillenbrand’s current and long-term debt as of:
December 31,
2023
September 30,
2023
$1,000 revolving credit facility (excluding outstanding letters of credit)$530.6 $505.1 
$200 term loan190.0 192.5 
€185 term loan203.0 195.0 
$400 senior unsecured notes (1)
398.4 398.0 
$375 senior unsecured notes (2)
373.0 372.9 
$350 senior unsecured notes (3)
346.8 346.6 
Total debt2,041.8 2,010.1 
Less: current portion 20.3 19.7 
Total long-term debt$2,021.5 $1,990.4 
(1)Includes unamortized debt issuance costs of $1.6 and $2.0 at December 31, 2023 and September 30, 2023, respectively.
(2)Includes unamortized debt issuance costs of $1.7 and $1.8 at December 31, 2023 and September 30, 2023, respectively.
(3)Includes unamortized debt issuance costs of $3.2 and $3.4 at December 31, 2023 and September 30, 2023, respectively.

As of December 31, 2023, the Company had $20.8 in outstanding letters of credit issued and $448.6 of borrowing capacity under the Facility, all of which was immediately available based on the Company’s most restrictive covenant. The weighted-average interest rate on borrowings under the Facility was 5.84% and 2.23% for the three months ended December 31, 2023 and 2022, respectively. The weighted average facility fee on the Facility was 0.20% and 0.15% for the three months ended December 31, 2023 and 2022, respectively. The weighted-average interest rate on the $200 term loan was 5.60% and 5.43% for the three months ended December 31, 2023 and 2022, respectively. The weighted-average interest rate on the €185 term loan was 5.60% for the three months ended December 31, 2023. There were no borrowings on the €185 term loan during the three months ended December 31, 2022.

Remaining unamortized deferred financing costs related to the Facility, $200 term loan and €185 term loan were $5.6 in aggregate, as of December 31, 2023, and are being amortized to interest expense over the remaining term of these agreements.

In the normal course of business, the Company provides, primarily to certain customers, bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, the Company maintains adequate capacity to provide the guarantees. As of December 31, 2023 and September 30, 2023, the Company had credit arrangements totaling $605.5 and $587.9, respectively, under which $356.4 and $326.9, respectively, were used for guarantees. These arrangements include the Company’s Syndicated L/G Facility Agreement (“L/G Facility”) and other ancillary credit facilities. Remaining unamortized deferred financing costs related to the L/G Facility were $1.5 as of December 31, 2023, and are being amortized to interest expense over the remaining term of the agreement.

As of December 31, 2023, Hillenbrand was in compliance with all covenants contained in the foregoing agreements and credit instruments and there were no events of default.


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10.Retirement Benefits
 
Defined Benefit Plans

Components of net periodic pension cost (benefit) included in the Consolidated Statements of Operations were as follows:
 
U.S. Pension BenefitsNon-U.S. Pension Benefits
Three Months Ended December 31,Three Months Ended December 31,
 2023202220232022
Service costs$ $ $0.5 $0.5 
Interest costs2.0 2.8 1.1 0.9 
Expected return on plan assets(2.7)(3.4)(0.4)(0.3)
Amortization of net loss (gain)0.1 0.1 (0.2)(0.2)
Settlement charge8.3    
Net periodic pension (benefit) cost$7.7 $(0.5)$1.0 $0.9 

On July 18, 2023, we announced an offer to provide former employees who are participants in the Company’s U.S. defined benefit pension plan (the “Plan”) the opportunity to elect a lump sum distribution of their earned Plan benefits. The Plan’s fiduciaries made lump sum payments to electing eligible participants in December 2023, funded by the existing assets in the Plan. As a result, the Company recorded a non-cash settlement pre-tax charge of $8.3 during the three months ended December 31, 2023.

Defined Contribution Plans

Expenses related to the Company’s defined contribution plans were $2.9 and $2.9 for the three months ended December 31, 2023, and 2022, respectively.

11.Income Taxes
 
The effective tax rates for the three months ended December 31, 2023 and 2022 were 33.9% and 7.9%, respectively. The increase in the effective tax rate was primarily driven by a non-recurring discrete tax benefit in the prior period resulting from the approval of a reduced incentive tax rate for certain operations located in China and a reduced discrete tax benefit for equity compensation as compared to the prior period, partially offset by a reduction of the tax accrual for unrepatriated earnings.


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12.Earnings per share

The dilutive effects of performance-based stock awards were included in the computation of diluted earnings per share at the level the related performance criteria were met through the respective Consolidated Balance Sheet date.  Potential dilutive effects, representing approximately 440,000 and 400,000 shares at December 31, 2023 and 2022, respectively, were excluded from the computation of diluted earnings per share as the related performance criteria were not yet met, although the Company expects to meet various levels of criteria in the future.
Three Months Ended
December 31,
 20232022
Income from continuing operations$19.5 $26.8 
Less: Net income attributable to noncontrolling interests2.0 2.3 
Income from continuing operations attributable to Hillenbrand$17.5 $24.5 
Weighted-average shares outstanding (basic - in millions)70.3 69.4 
Effect of dilutive stock options and other unvested equity awards (in millions)0.2 0.4 
Weighted-average shares outstanding (diluted - in millions)70.5 69.8 
Basic earnings per share from continuing operations attributable to Hillenbrand$0.25 $0.36 
Diluted earnings per share from continuing operations attributable to Hillenbrand$0.25 $0.35 
Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)0.6 0.5 
 

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13. Accumulated Other Comprehensive Loss

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive loss:
 Pension and
Postretirement
Currency
Translation (1)
Net
Unrealized
(Loss) Gain
on Derivative
Instruments
Total
Attributable
to
Hillenbrand,
Inc.
Noncontrolling
Interests
Total
Balance at September 30, 2023$(34.5)$(107.1)$(5.5)$(147.1)  
Other comprehensive income before reclassifications:      
Before tax amount(0.4)49.3 0.3 49.2 $ $49.2 
Tax benefit 0.2  (0.1)0.1  0.1 
After tax amount(0.2)49.3 0.2 49.3  49.3 
Amounts reclassified from accumulated other comprehensive loss (2)
6.2  0.7 6.9  6.9 
Net current period other comprehensive income