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Hillenbrand, Inc (HI)
F1Q13 Earnings Conference Call
February 5, 2013 08:00 AM ET
Kenneth Camp - President and Chief Executive Officer
Cynthia Lucchese - Chief Financial Officer
Chris Gordon - Director of Investor Relations
Daniel Moore – CJS Securities
Steve O’Neil – Hilliard Lyons
Previous Statements by HI
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At this time, it is my pleasure to turn the conference over to Chris Gordon, Director of Investor Relations. Mr. Gordon, please go ahead.
Thank you, Stephanie and good morning. Welcome to our earnings call for the first quarter of fiscal 2013, which ended on December 31, 2012. 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've 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 from 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, when we'll be joined by Batesville President, Kim Dennis; and Process Equipment Group President, Joe Raver. 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 email@example.com.
Now it's my pleasure to turn the call over to Ken Camp, Hillenbrand's President and Chief Executive Officer. Ken?
Thanks, Chris. Good morning everyone and thank you for joining us today. This was an important quarter for us on several fronts. As you know we completed the transformation and acquisition of Coperion Capital GmbH, welcoming them to the Hillenbrand family on December 1 and in this early going, we’re pleased with Coperion’s performance. Especially, as we began down the path of immigrating certain high priority processes.
Our revenue increased significantly growing more than 30% year-over-year, results that were supported by both the process equipment groups and the Batesville platform. In fact Batesville’s quarterly growth was the largest it has been in several years. And I am also pleased with our bottom line as we posted strong adjusted EBITDA growth of 6%. Cindy will provide more details regarding the financial results in just a few minutes.
I’d like to start my discussion of the platform performance with the process equipment group which grew significantly due primarily to the Coperion acquisition. Revenue grew nearly 80% to more than 150 million and backlog quadrupled compared to the first quarter of 2012. Backlog gives us visibility in the future revenue, so symmetric that we monitor closely. And I’d like to spend a few minutes giving you some detail regarding our current position.
As a reminder, the process equipment group serves a variety of industries which provides us with a measure of market and geographic diversification. We’re pleased that backlog in some of our largest segments particularly petrochemicals and plastics remain solid. However, we’ve began to see signs of some slowing of capital expenditure in certain end markets that we serve.
In fiscal 2012, the demand for profits which were used in the hydraulic fracturing process of natural gas drilling experienced a dramatic almost explosive acceleration. This had the effect of falling equipment sales, plan for 2013 into fiscal 2012. As a result, there is very little related to (inaudible) equipment in our current backlog. However, we believe that demand will catch up with current supply and over the long run this will remain a very attractive market segment for us. We’ve also seen a slowdown in capital equipment orders primarily in coal and potash. With some projects getting pushed out to 2014, much of this appears to be driven by the general economic and business uncertainty in Europe.
On the positive side, we feel confident about the future of the petrochemicals and plastic industries and believe they are leading a renaissance with manufacturing in the U.S. As you may know, natural gas is used as the hydrocarbon feedstock for plastics. The vast supply and low pricing of natural gas in the U.S. is leading the plastic industry back here and pulling manufacturing and the support manufacturing with it. As every business likes and needs to be closed to its supplier. There is also an increasing demand for coal in geographies outside the U.S. as China, India and Russia experience increased demand for energy primarily derived from coal. If you’ve listened to our earnings calls before, you’ve heard us say that our 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 talented elements.