Hillenbrand Reports Third Quarter 2016 Earnings and Continued Profitability Improvements
OREANDA-NEWS. August 04, 2016.
Revenue of
Implementation of the Hillenbrand Operating Model continues to expand profitability, as adjusted EBITDA increased 1% to
Despite lower volume, adjusted EBITDA margin of 18.1% in the quarter was 90 basis points higher than the prior year, driven by pricing, operational efficiency improvements, favorable product and business mix, and the addition of ABEL and Red Valve in the quarter's results.
"We've experienced persistent headwinds this year in many of our end markets for both the
Joe Raver, President and CEO of
Earlier this year, additional restructuring actions were announced to reduce costs and better position the business to compete effectively and respond to weak demand. Many of those actions have been completed as planned. The business remains on track to achieve the targeted savings of approximately
Guidance
Order volume fell short of expectations in the third quarter, particularly in the area of large systems projects, resulting in lower than anticipated backlog heading into the fourth quarter. While project pipeline activity level remains solid, increased uncertainty driven by general economic conditions is leading to extended customer decision timelines that have affected order timing more than expected. As a result,
- Adjusted EPS in the range of
\\$1.98 to \\$2.05 , compared to\\$2.05 to \\$2.15 previously - Organic constant currency revenue growth in the range of negative 7% to negative 5%, compared to down 2% to flat previously
- Total constant currency revenue growth in the range of negative 3% to negative 1%, compared to 2% to 4% previously
Conference Call Information
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Conference call ID number: 42034114
Webcast link: http://ir.hillenbrand.com (archived through Saturday, September 3, 2016)
Replay - Conference Call
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Conference Call ID Number: 42034114
In addition to the financial measures prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), this earnings release also contains non-GAAP operating performance measures. These non-GAAP measures are referred to as "adjusted" and exclude expenses associated with backlog amortization, inventory step-up, business acquisition and integration, restructuring, trade name impairment, and litigation. The related income tax for all of these items is also excluded. This non-GAAP information is provided as a supplement, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
An important non-GAAP measure
Another important non-GAAP operational measure used is backlog. Backlog is not a term recognized under GAAP; however, it is a common measurement used in industries with extended lead times for order fulfillment (long-term contracts), like those in which our
See below for a reconciliation from GAAP operating performance measures to the most directly comparable non-GAAP (adjusted) performance measures. There is no GAAP financial measure comparable to backlog; therefore, a quantitative reconciliation of backlog is not provided.
Hillenbrand, Inc. | |||||||||||||||
Consolidated Statements of Income (Unaudited) | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
Three Months Ended June 30, |
Nine Months Ended June 30, | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Net revenue |
\\$ |
371.0 |
\\$ |
398.7 |
\\$ |
1,109.7 |
\\$ |
1,204.8 |
|||||||
Cost of goods sold |
227.5 |
259.8 |
695.3 |
778.9 |
|||||||||||
Gross profit |
143.5 |
138.9 |
414.4 |
425.9 |
|||||||||||
Operating expenses |
87.2 |
79.1 |
256.6 |
247.0 |
|||||||||||
Amortization expense |
7.2 |
6.5 |
25.6 |
21.5 |
|||||||||||
Interest expense |
6.6 |
5.7 |
18.9 |
17.8 |
|||||||||||
Other (expense) income, net |
(0.3) |
(1.3) |
(1.9) |
(6.3) |
|||||||||||
Income before income taxes |
42.2 |
46.3 |
111.4 |
133.3 |
|||||||||||
Income tax expense |
10.9 |
13.8 |
31.9 |
39.9 |
|||||||||||
Consolidated net income |
31.3 |
32.5 |
79.5 |
93.4 |
|||||||||||
Less: Net income attributable to noncontrolling interests |
0.6 |
0.4 |
2.7 |
1.1 |
|||||||||||
Net income(1) |
\\$ |
30.7 |
\\$ |
32.1 |
\\$ |
76.8 |
\\$ |
92.3 |
|||||||
Net income(1) — per share of common stock: |
|||||||||||||||
Basic earnings per share |
\\$ |
0.49 |
\\$ |
0.51 |
\\$ |
1.21 |
\\$ |
1.46 |
|||||||
Diluted earnings per share |
\\$ |
0.48 |
\\$ |
0.50 |
\\$ |
1.21 |
\\$ |
1.44 |
|||||||
Weighted average shares outstanding (basic) |
63.4 |
63.3 |
63.3 |
63.2 |
|||||||||||
Weighted average shares outstanding (diluted) |
63.9 |
63.9 |
63.8 |
63.8 |
|||||||||||
Cash dividends per share |
\\$ |
0.2025 |
\\$ |
0.2000 |
\\$ |
0.6075 |
\\$ |
0.6000 |
|||||||
(1) Net income attributable to Hillenbrand | |||||||||||||||
See Condensed Notes to Consolidated Financial Statements |
Condensed Consolidated Statements of Cash Flow | |||||||
(in millions) | |||||||
Nine Months Ended June 30, | |||||||
2016 |
2015 | ||||||
Net cash provided by operating activities |
\\$ |
189.7 |
\\$ |
75.5 |
|||
Net cash used in investing activities |
(251.5) |
(20.2) |
|||||
Net cash provided by (used in) financing activities |
63.8 |
(66.2) |
|||||
Effect of exchange rate changes on cash and cash equivalents |
(2.7) |
(1.5) |
|||||
Net cash flows |
(0.7) |
(12.4) |
|||||
Cash and cash equivalents: |
|||||||
At beginning of period |
48.3 |
58.0 |
|||||
At end of period |
\\$ |
47.6 |
\\$ |
45.6 |
Reconciliation of Non-GAAP Measures | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
Three Months Ended June 30, |
Nine Months Ended June 30, | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Net Income(1) |
\\$ |
30.7 |
\\$ |
32.1 |
\\$ |
76.8 |
\\$ |
92.3 |
|||||||
Restructuring and restructuring related |
1.7 |
1.2 |
9.1 |
3.8 |
|||||||||||
Business acquisition and integration |
0.7 |
0.5 |
3.5 |
0.7 |
|||||||||||
Litigation |
— |
— |
— |
0.5 |
|||||||||||
Inventory step-up |
(0.1) |
— |
2.4 |
— |
|||||||||||
Backlog amortization |
(0.1) |
— |
4.5 |
— |
|||||||||||
Trade name impairment |
2.2 |
— |
2.2 |
— |
|||||||||||
Tax effect of adjustments |
(1.5) |
(0.8) |
(7.5) |
(1.8) |
|||||||||||
Adjusted Net Income(1) |
\\$ |
33.6 |
\\$ |
33.0 |
\\$ |
91.0 |
\\$ |
95.5 |
|||||||
Diluted EPS |
\\$ |
0.48 |
\\$ |
0.50 |
\\$ |
1.21 |
\\$ |
1.44 |
|||||||
Restructuring and restructuring related |
0.03 |
0.02 |
0.14 |
0.06 |
|||||||||||
Business acquisition and integration |
0.01 |
0.01 |
0.06 |
0.01 |
|||||||||||
Litigation |
— |
— |
— |
0.01 |
|||||||||||
Inventory step-up |
— |
— |
0.04 |
— |
|||||||||||
Backlog amortization |
— |
— |
0.07 |
— |
|||||||||||
Trade name impairment |
0.03 |
— |
0.03 |
— |
|||||||||||
Tax effect of adjustments |
(0.02) |
(0.01) |
(0.12) |
(0.02) |
|||||||||||
Adjusted Diluted EPS |
\\$ |
0.53 |
\\$ |
0.52 |
\\$ |
1.43 |
\\$ |
1.50 |
|||||||
1 Net income attributable to Hillenbrand |
Three Months Ended June 30, |
Nine Months Ended June 30, | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Adjusted EBITDA: |
|||||||||||||||
Process Equipment Group |
\\$ |
41.8 |
\\$ |
43.7 |
\\$ |
109.8 |
\\$ |
116.3 |
|||||||
Batesville |
34.6 |
32.2 |
109.5 |
108.9 |
|||||||||||
Corporate |
(9.3) |
(9.7) |
(26.6) |
(30.1) |
|||||||||||
Less: |
|||||||||||||||
Interest income |
(0.3) |
— |
(0.8) |
(0.7) |
|||||||||||
Interest expense |
6.6 |
5.7 |
18.9 |
17.8 |
|||||||||||
Income tax expense |
10.9 |
13.8 |
31.9 |
39.9 |
|||||||||||
Depreciation and amortization |
14.3 |
12.7 |
46.2 |
41.1 |
|||||||||||
Business acquisition and integration |
0.7 |
0.5 |
3.5 |
0.7 |
|||||||||||
Inventory step-up |
(0.1) |
— |
2.4 |
— |
|||||||||||
Restructuring and restructuring related |
1.5 |
1.0 |
8.9 |
2.4 |
|||||||||||
Trade name impairment |
2.2 |
— |
2.2 |
— |
|||||||||||
Litigation |
— |
— |
— |
0.5 |
|||||||||||
Consolidated net income |
\\$ |
31.3 |
\\$ |
32.5 |
\\$ |
79.5 |
\\$ |
93.4 |
Throughout this release, we make a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As the words imply, forward-looking statements are statements about the future, as contrasted with historical information. Our forward-looking statements are based on assumptions and current expectations of future events that we believe are reasonable, but by their very nature they are subject to a wide range of risks. If our assumptions prove inaccurate or unknown risks and uncertainties materialize, actual results could vary materially from
Words that could indicate that we are making forward-looking statements include the following:
intend |
believe |
plan |
expect |
may |
goal |
would |
become |
pursue |
estimate |
will |
forecast |
continue |
could |
targeted |
encourage |
promise |
improve |
progress |
potential |
should |
This is not an exhaustive list. Our intent is to provide examples of how readers might identify forward-looking statements. The absence of any of these words, however, does not mean that the statement is not forward-looking.
Here is the key point: Forward-looking statements are not guarantees of future performance, and our actual results could differ materially from those set forth in any forward-looking statements. Any number of factors, many of which are beyond our control, could cause our performance to differ significantly from what is described in the forward-looking statements. These factors include, but are not limited to: the outcome of any legal proceedings that may be instituted against
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