Financing Agreements |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing Agreements | Financing Agreements The following table summarizes Hillenbrand’s current and long-term debt as of:
(1)Includes unamortized debt issuance costs of $2.8 and $2.9 at December 31, 2022 and September 30, 2022, respectively.
(2)Includes unamortized debt issuance costs of $2.3 and $2.5 at December 31, 2022 and September 30, 2022, respectively.
(3)Includes unamortized debt issuance costs of $3.7 and $3.8 at December 31, 2022 and September 30, 2022, respectively.
(4)Includes unamortized debt issuance costs of $0.1 and $0.1 at December 31, 2022 and September 30, 2022, respectively.
With respect to the Facility, as of December 31, 2022 and September 30, 2022, the Company had outstanding balances of $484.6 and $6.7, respectively. As of December 31, 2022, the Company had $21.0 in outstanding letters of credit issued and $494.4 of borrowing capacity under the Facility, all of which was immediately available based on the Company’s most restrictive covenant at December 31, 2022, assuming utilization of the available election to increase the maximum permitted leverage ratio to 4.00 to 1.00. During the three months ended December 31, 2022, the Company executed a $200.0 draw on the term loan provided for by the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”). The term loan will mature upon the maturity date of the Facility, June 8, 2027. The weighted-average interest rate on borrowings under the Facility was 2.23% for the three months ended December 31, 2022. There were no borrowings under the Facility during the three months ended December 31, 2021. The weighted-average interest rate on the term loan was 5.43% for the three months ended December 31, 2022. There were no borrowings on the term loan during the three months ended December 31, 2021. The weighted average facility fee on the Facility was 0.15% and 0.15% for the three months ended December 31, 2022 and 2021, respectively.
Other credit arrangements
In the normal course of business, certain operating companies within the Advanced Process Solutions and Molding Technology Solutions reportable operating segments provide 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, 2022 and September 30, 2022, the Company had credit arrangements totaling $440.8 and $373.6, respectively, under which $262.4 and $247.4, respectively, were used for guarantees. These arrangements include the Company’s Syndicated L/G Facility Agreement (“L/G Facility Agreement”) and other ancillary credit facilities.
Covenants related to current financing agreements
The Credit Agreement, L/G Facility Agreement and Private Shelf Agreement, dated as of December 6, 2012 (as amended, the “Shelf Agreement”) among the Company, Prudential Investment Management, Inc. and each Prudential Affiliate (as defined therein) that became a purchaser thereunder, contain the following financial covenants: a maximum leverage ratio (as defined in the agreements) of 3.50 to 1.00 and a minimum ratio of earnings before interest, income tax, depreciation, and amortization (“EBITDA”) (as defined in the agreements) to interest expense of 3.00 to 1.00. The Company may elect to increase the maximum permitted leverage ratio to 4.00 to 1.00, following certain acquisitions, for four full fiscal quarters (plus the fiscal quarter in which the acquisition takes place). As permitted in the Credit Agreement, L/G Facility Agreement, and Shelf Agreement, following the acquisition of Linxis on October 6, 2022, the Company plans to elect to increase the maximum permitted leverage ratio to 4.00 to 1.00 for the quarter ended December 31, 2022, and for the four succeeding quarters. The obligations under the Credit Agreement, L/G Facility Agreement and the Shelf Agreement are unsecured.
All obligations of the Company arising under the Credit Agreement, the L/G Facility Agreement, the $100.0 4.6% Series A unsecured notes (“Series A Notes”), the $400.0 of senior unsecured notes due June 2025 (the “2020 Notes”), the $375.0 of senior unsecured notes due September 2026 (the “2019 Notes”), and the $350.0 of senior unsecured notes due March 2031 (the “2021 Notes”), are fully and unconditionally, jointly and severally, guaranteed by certain of the Company’s domestic subsidiaries.
As of December 31, 2022, 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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