Hillenbrand, Inc.

Hillenbrand, Inc. Annual Review – Plain English Investor Guide

Let’s break down Hillenbrand’s year like we’re chatting over coffee. No jargon, just what matters for your investment decisions.

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1. What Hillenbrand Does

Two main businesses under one roof:

• Funeral Products: Sells caskets and urns (Batesville brand).
• Industrial Machines: Makes equipment for factories (plastics, chemicals, recycling).

This Year’s Story: Industrial division grew, funeral division kept shrinking.

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2. Financial Performance

• Total Sales: $3.8 billion (up 10% from last year).
• Profit: $300 million (down 5% from last year).
• Key Insight: Their “real cash profit” (adjusted EBITDA) was $87.4 million – much stronger than the $52.1 million net income suggests.

Why profits dipped:

• Office/admin costs (HR, IT, legal) rose 7% due to inflation and bonuses.
• Spent cash buying companies (like Syntron) but saved money integrating them vs. last year.

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3. Wins & Challenges

What Worked:

• Industrial division boomed in recycling and electric vehicle markets.
• Saved $12M+ on merger costs by streamlining new acquisitions.
• Sold a non-core business to focus on growth areas.

What Struggled:

• Batesville sold fewer caskets as cremation rates hit 60%.
• Rising office/admin costs ate into profits (+$4.3M this year).

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4. Debt & Cash Checkup

• Debt: $1.5 billion.
• Cash: $400 million.
• Safety Net: Their adjusted EBITDA ($87.4M) covers interest payments 3x over.

The Takeaway: Debt is manageable, but rising admin costs need fixing.

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5. Risks to Watch

• Funeral Trends: More cremations = fewer casket sales.
• Inflation: If office costs keep rising 7% yearly, profits shrink further.
• Factory Slowdowns: Weak demand for industrial machines would hurt growth.

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6. Competitor Comparison

• Industrial Side: Leading in recycling tech and factory automation.
• Funeral Side: Batesville lags behind rivals adapting to cremation trends.

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7. Leadership & Strategy

• New CEO: Kim Ryan is cutting costs and pushing recycling tech.
• Sold a Division: Trimmed less profitable areas to focus on core growth.

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8. What’s Next?

• Industrial Growth: Recycling and automation markets look strong.
• Batesville’s Future: Pivoting to urns and digital tools for funeral homes.
• Biggest Task: Control rising office/admin costs to protect profits.

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9. External Factors

• Green Energy Boom: Could boost recycling equipment sales.
• Cremation Trend: Now 60% of funerals – Batesville must adapt faster.
• Inflation Pressure: Rising costs could squeeze margins further.

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Key Takeaways for Investors

1. Industrial Strength: The star performer, especially in recycling and EVs.
2. Funeral Weakness: Batesville’s decline isn’t reversing yet.
3. Cash Flow vs. Profit: The $87M+ adjusted EBITDA shows real earning power.
4. CEO’s Challenge: Can cost-cutting offset rising expenses?

Investment Verdict:

• Pros: Strong industrial growth, solid cash flow, leadership in green tech.
• Cons: Funeral decline, rising costs, debt load.
• Best For: Investors who believe in the industrial turnaround and can stomach short-term funeral sector risks.

Think of it like this: Hillenbrand’s a fixer-upper house. The foundation (industrial tech) is solid, but it needs paint (cost cuts) and a roof repair (Batesville pivot). If management delivers, it could shine.