Stock prices escalate due to surpassed earnings and revenue, despite challenges posed by tariffs and volume constraints, as indicated by Hillenbrand.
Hillenbrand Reports Third-Quarter Results, Maintains Earnings Forecast
In a recent financial update, Hillenbrand (NYSE: HI) reported its third-quarter results, showcasing a mixed performance amidst various challenges.
The industrial company's net revenue for the quarter was $599 million, surpassing the forecast of $572.5 million. However, this figure represents a 24% year-over-year decline, primarily due to the divestiture of the MIME business and lower capital equipment volume in the Advanced Process Solutions segment. On a pro forma basis, the revenue fell 10% year over year.
The decline in Hillenbrand's Advanced Process Solutions revenue was also notable, falling 11% year over year to $507 million. Meanwhile, the Molding Technology Solutions revenue declined 58% year over year to $92 million, largely due to the MIME sale.
Despite these setbacks, Hillenbrand returned to net profitability after a prior loss, supported by cost synergies and debt reduction efforts. The company used proceeds from recent divestitures to pay down over $300 million in debt this fiscal year.
Chief Executive Kim Ryan stated that cost synergies from the Linxis and FPM acquisitions were achieved earlier than planned, amounting to $30 million.
Hillenbrand maintained the midpoint of its adjusted earnings forecast at $2.20 to $2.35 a share for the full year. The updated full-year outlook for Hillenbrand in fiscal 2025 projects net revenue between $2.595 billion and $2.63 billion, with adjusted EPS ranging from $2.20 to $2.35. The midpoint revenue guidance is approximately $2.61 billion, which is slightly raised from previous expectations and about 1.1% above analysts’ estimates.
Results for the quarter were down compared to the previous year due to the divestiture of the MIME business, lower capital equipment volume, and inflationary pressures. Despite this, the company expects about $60 million in operating cash flow for fiscal 2025.
Notably, the earnings for the quarter were $0.51 a share, exceeding the consensus estimate of $0.50. However, it's worth noting that there is some discrepancy in fully reported earnings forecasts, with one source mentioning a full-year earnings estimate nearer to $0.91 per share, but this appears outdated or less aligned with the company’s recent guidance of adjusted EPS $2.20 to $2.35.
In other news, Hillenbrand's CFO Robert VanHimbergen is departing from the company. The exact reasons for his departure have not been disclosed.
In conclusion, Hillenbrand's third-quarter results demonstrated a challenging environment, but the company remains confident in its full-year outlook, indicating modest revenue growth relative to lowered prior estimates and a stable adjusted earnings forecast.
Technology played a significant role in Hillenbrand's cost synergies, as the company achieved $30 million in savings earlier than planned through the implementation of efficient systems and processes from recent acquisitions. Moreover, investing in technology could potentially alleviate the inflationary pressures experienced by the company in the finance sector, contributing to a more competitive business landscape.
