Q2 2013 Earnings Call
May 03, 2013 8:00 am ET
Chris Gordon - Director of Investor Relations
Kenneth A. Camp - Chief Executive Officer, President, Director, Chairman of K-Tron International and Chief Executive Officer of K-Tron International
Cynthia L. Lucchese - Chief Financial Officer and Senior Vice President
Joe A. Raver - Senior Vice President and President of Process Equipment Group
Kimberly K. Ryan
Daniel Moore - CJS Securities, Inc.
Clint D. Fendley - Davenport & Company, LLC, Research Division
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Thank you, Ally, and good morning. Welcome to our earnings call for the second quarter of fiscal 2013, which ended March 31. After the market closed yesterday, we issued our earnings press release for the fiscal second quarter of 2013. This document is available on our website, and the information in it may be useful for today's call. With me on the 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 filed with the Securities and Exchange Commission such as our annual and quarterly reports on Form 10-K and 10-Q. We do not undertake any obligation to update or correct any forward-looking statements.
Now let me provide some information regarding our call. We scheduled 1 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, and Cindy will follow with financial results. 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 email 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?
Kenneth A. Camp
Thanks, Chris. Good morning, everyone, and thank you for joining us today. One thing that is evident from our results this quarter is the value of diversification in our portfolio. This year, Batesville is performing very well and Coperion added nicely to our revenue and bottom line, and that performance helped offset the decline in our other Process Equipment Group businesses driven by softness in a couple of specific markets, which we'll talk about. Overall, we had strong results with growth of more than 50% over last year. The Coperion acquisition was the largest driver of this growth, but I'm pleased to report another quarter of solid performance for Batesville, helped as well.
From a bottom line perspective, adjusted EBITDA increased 10%, and you may recall this metric is one of the most important metrics we use to assess bottom line performance since it corrects for the effects of acquisition accounting and provides a clearer and more consistent picture of the performance of our ongoing operations. Cindy will provide us more details regarding the financial results later in this morning's call.
I'll start my discussion with the performance of the Process Equipment Group. This is the first time, as I said, that Coperion is reflected in our results for the entire quarter, and they added nicely to both our revenue and bottom line, representing significant revenue growth. The remainder of the Process Equipment Group was down 18% when compared to 2012 due to a couple of factors, which we anticipated and have reflected in our previous calls.
First, after an overheated growth in the frac sand and potash markets last year, there was a softness in these markets this year as things are moving back into balance. We see this as more of a correction than a substantive shift in market behavior and expect significant long-term growth in both of those segments.
Second, there's a natural lumpiness to the capital equipment part of our business, a condition which has been exacerbated by a high degree of economic uncertainty, especially in Europe. This has resulted in a delay in the timing of delivery dates of ordered and, in many cases, completed products to some customers. We've not experienced any order cancellations and believe the timing issues are the result of customers being slower to bring some production lines onstream.
For the final topic related to the Process Equipment Group, I'll give you a brief summary of how Coperion is doing. Coperion's performance is meeting our expectations in nearly every way. We're pleased with their top and bottom line contribution in the quarter, and we're encouraged by their strong order level and healthy backlog. In fact, the only area where we've seen a bit of a change is their near-term working capital needs, and Cindy will address that more in her remarks.