Hillenbrand Inc (HI)

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Hillenbrand, Inc. (HI)

F4Q 2012 Earnings Conference Call

November 27, 2012 08:00 AM ET


Kenneth A. Camp - President and CEO

Cynthia L. Lucchese - SVP and CFO

Joe A. Raver - President, Process Equipment Group

Kimberly K. Dennis - President, Batesville Services

Chris Gordon - Director, Investor Relations


Daniel Moore - CJS Securities, Inc.

Clint Fendley - Davenport & Company, LLC, Research Division

Jamie Clement - Sidoti & Company, LLC.



Good day ladies and gentlemen and welcome to the Hillenbrand, Inc Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder today’s conference call is being recorded.

I’d now like to turn the conference over to your host, Mr. Chris Gordon, Director of Investor Relations. Please go ahead.

Chris Gordon

Thank you, Ally, and good morning. Welcome to our earnings call for the fourth quarter of fiscal 2012, which ended on September 30th. With me on today’s call are Hillenbrand President and Chief Executive Officer, Ken Camp; and Chief Financial Officer, Cindy Lucchese.

During the course of today’s conference call and the question-and-answer session that follows, we may make projections or other forward-looking statements that are subject to the Safe Harbor Provisions of the Securities Laws regarding future events or the financial performance of the Company. We caution you that these statements are only our view of the future and that actual results may differ materially. We also alert you to the risks described in the documents we file with the Securities and Exchange Commission, such as our annual and quarterly reports on Forms 10-K and 10-Q. We do not undertake any obligations to update or correct any forward-looking statements.

Now let me provide some information regarding our call. We have scheduled one hour, and we’ll start with prepared remarks from Ken and Cindy that should last approximately 20 minutes. Ken will start with an overview of the business for the past quarter, Cindy will follow with financial results and Ken will wrap up the prepared portion of the call with some closing comments.

After that, we’ll move directly to Q&A, where we’ll be joined by Process Equipment Group President, Joe Raver; and Batesville President, Kim Dennis. If you have follow-up questions after the call has ended, please feel free to call me at 812-931-5001 or e-mail me at chris.gordon@hillenbrand.com.

Now it’s my pleasure to turn the call over to Ken Camp, Hillenbrand’s President and Chief Executive Officer. Ken?

Kenneth A. Camp

Thank you, Chris. Good morning, everyone and thank you for joining us today. After the market closed yesterday, we released our earnings and filed the 10-K for the fourth quarter and full fiscal year of 2012. Both documents are currently available on our website.

We finished fiscal 2012 with a double-digit revenue growth compared to last year for both the quarter and full-year delivering $0.50 per share in adjusted earnings for the quarter and a $1.76 for the full-year. I’m pleased with how well the Hillenbrand team has implemented our acquisition strategy to diversify and provide attractive growth for our shareholders, generating revenue of more than $250 million for the quarter and nearly $1 billion for the full-year. This represents a 10% increase over Q4 and 11% for the full-year.

Consolidated adjusted gross profit margin was 40% in the quarter in line with Q4 of last year, and up from 39% last quarter. The adjusted operating profit margin was 19%, an increase of 400 basis points over the last quarter and 100 basis points over the prior-year.

I’d like to start my discussion of platform performance with the Process Equipment Group, which has generated very solid results for the quarter and the year. Fourth quarter revenue in the Process Equipment Group grew 33% to $102 million. While much of this was due to the addition of Rotex, the Process Equipment Group still grew organically by 10% and they’re now contributing 40% of total enterprise revenue and 38% of our total adjusted EBITDA.

Like last year we again shipped several large orders in the fourth quarter and as a result we drew our backlog down by 14% sequentially to $121 million. That’s a level that shift slightly ahead of the Q4 2011 levels and this amount is consistent with – in Q4 of last year.

Our backlog continues to give us visibility into the future revenue and as we discussed in our last call, it has begun to show some signs of uncertainty in the global markets. With the elections finally over and virtually the same cast of characters returning to Washington, there is still uncertainty about when and how the United States will deal with the fiscal cliff, that’s set to take effect only a month from now.

Adding this challenge to our mounting national debt and similar situations in Europe, generate high levels of economic uncertainty around the globe. These levels of uncertainty are reflected in the results of many of the companies that you seen report in recent months and we have no reason to believe we would be immune from the same factors.

If you’ve listened to our earnings calls before, you heard us say that a core element of Hillenbrand’s growth through acquisition strategy is to acquire successful companies with great brands that can benefit from our core competencies of strategy management, lean business, and intentional talent development.

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