Financing Agreements |
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| 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 $2.5 and $2.9 at March 31, 2023 and September 30, 2022, respectively.
(2)Includes unamortized debt issuance costs of $2.2 and $2.5 at March 31, 2023 and September 30, 2022, respectively.
(3)Includes unamortized debt issuance costs of $3.6 and $3.8 at March 31, 2023 and September 30, 2022, respectively.
(4)Includes unamortized debt issuance costs of $0.1 at September 30, 2022.
With respect to the Facility, as of March 31, 2023 and September 30, 2022, the Company had outstanding balances of $0 and $6.7, respectively. As of March 31, 2023, the Company had $18.3 in outstanding letters of credit issued and $981.7 of borrowing capacity under the Facility, of which $793.0 was immediately available based on the Company’s most restrictive covenant. During the six months ended March 31, 2023, the Company executed a $200.0 draw on the term loan commitment 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 3.12% and 2.53% for the three and six months ended March 31, 2023, respectively. There were no borrowings under the Facility during the three and six months ended March 31, 2022. The weighted-average interest rate on the term loan was 5.99% and 5.84% for the three and six months ended March 31, 2023, respectively. There were no borrowings on the term loan during the three and six months ended March 31, 2022. The weighted average facility fee on the Facility was 0.20% and 0.16% for the three and six months ended March 31, 2023, respectively, and 0.15% for both the three and six months ended March 31, 2022.
$100.0 Series A Unsecured Notes
On December 15, 2014, the Company issued $100.0 in 4.60% Series A unsecured notes (“Series A Notes”) pursuant to the Private Shelf Agreement, dated as of December 6, 2012 (as amended, the “Shelf Agreement”), among the Company, Prudential Investment Management, Inc. (“Prudential”) and each Prudential Affiliate (as defined therein) that became a purchaser thereunder. During the three months ended March 31, 2023, the Company repaid in full the $100.0 in Series A Notes using a portion of the net proceeds from the Batesville divestiture and wrote off the remaining issuance costs associated with the Series A Notes.
Other credit arrangements
In the normal course of business, certain operating companies within our 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 March 31, 2023 and September 30, 2022, the Company had credit arrangements totaling $435.3 and $373.6, respectively, under which $311.0 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 Shelf Agreement 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 elected 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, L/G Facility Agreement, $400.0 of senior unsecured notes due June 2025 (the “2020 Notes”), $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 March 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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