Quarterly report pursuant to Section 13 or 15(d)

Divestitures

v3.22.4
Divestitures
 3 Months Ended
Dec. 31, 2022
Discontinued Operations and Disposal Groups [Abstract]  
Divestitures Divestitures
Batesville

Held for sale

As previously described in Note 1, the assets and liabilities of the Batesville reportable operating segment have been reflected as assets and liabilities held for sale. The following is a summary of the major categories of assets and liabilities held for sale at:
December 31, 2022 September 30, 2022
Cash and cash equivalents $ 0.9  $ 1.9 
Trade receivables, net 67.9  59.5 
Inventories, net 49.6  48.2 
Property, plant and equipment, net 51.3  — 
Operating lease right-of-use assets, net 39.7  — 
Intangible assets, net 2.7  — 
Goodwill 8.3  — 
Other assets 17.6  6.5 
Current assets held for sale $ 238.0  $ 116.1 
Property, plant and equipment, net $ —  49.1 
Operating lease right-of-use assets, net —  35.6 
Intangible assets, net —  2.7 
Goodwill —  8.3 
Long-term assets —  9.6 
Long-term assets held for sale $ —  $ 105.3 
Trade accounts payable $ 58.6  $ 62.0 
Accrued compensation 5.9  13.6 
Operating lease liabilities 39.0  13.0 
Other liabilities 27.1  25.2 
Current liabilities held for sale $ 130.6  $ 113.8 
Operating lease liabilities $ —  22.1 
Other liabilities —  3.7 
Long-term liabilities held for sale $ —  $ 25.8 

Discontinued operations

As previously described in Note 1, on December 15, 2022, the Company entered into a definitive agreement to sell its Batesville reportable operating segment, which was completed on February 1, 2023. The Company determined that this divestiture qualified as a discontinued operation, in accordance with GAAP, since it represents a strategic shift for the Company and had a major effect on the Company’s consolidated results of operations. Accordingly, the results of operations for the Batesville reportable operating segment have been classified as discontinued operations within the Consolidated Financial Statements for all periods presented.

Certain indirect corporate costs included within operating expenses in the Consolidated Statements of Operations that were previously allocated to the Batesville reportable operating segment do not qualify for classification within discontinued operations and are now reported as operating expenses in continuing operations within corporate expenses. In addition, divestiture-related costs previously not allocated to the Batesville reportable operating segment that were incurred as part of the divestiture have been reflected in discontinued operations. As a result, income before income taxes of Batesville has been decreased by $3.5 for the three months ended December 31, 2022, and has been decreased by $0.3 for the three months ended December 31, 2021, with the offsetting changes in corporate expenses of continuing 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,
2022 2021
Net revenue $ 156.0  $ 162.5 
Cost of goods sold 103.7 107.0
Gross profit 52.3 55.5
Operating expenses 19.6 16.1
Other expense, net 1.3 1.5
Income from discontinued operations before income taxes 31.4 37.9
Income tax expense 10.4 10.0
Income from discontinued operations (net of income tax expense) $ 21.0  $ 27.9 

Divestiture of TerraSource
On October 22, 2021, the Company completed the divestiture of its TerraSource Global business (“TerraSource”) pursuant to a Contribution Agreement (“Agreement”) between the Company and certain affiliated companies of industrial holding company Right Lane Industries (“RLI”). Under the terms of the Agreement, Hillenbrand contributed TerraSource and its subsidiaries to a newly formed entity, TerraSource Holdings, LLC (“Holdings”), with RLI obtaining majority ownership and full operational control of TerraSource. In exchange for contributing the TerraSource business, the Company (i) received consideration in the form of a $25.6 five-year note, which was extended, subordinated, amended and restated in January 2023 to reflect a principal amount of $27.0, subject to certain adjustments, and an April 2028 maturity date, and (ii) also retained a 49% equity interest in Holdings through one of the Company’s indirect wholly-owned subsidiaries. The fair value of the total consideration received by the Company at closing was $27.7.

As a result of the TerraSource divestiture, the Company recorded a pre-tax loss of $3.1, after post-closing adjustments, in the Consolidated Statement of Operations during the three months ended December 31, 2021. The Company incurred $0.4 of transaction costs associated with the divestiture during the three months ended December 31, 2021, which were recorded within operating expenses in the Consolidated Statement of Operations. TerraSource’s results of operations were included within the Advanced Process Solutions reportable operating segment until the completion of the divestiture on October 22, 2021. Subsequent to the divestiture, the Company’s equity interest in Holdings is accounted for under the equity method of accounting as prescribed by GAAP.