UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2022

OR

 ☐ Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number. 001-33794 

HILLENBRAND, INC.

(Exact name of registrant as specified in its charter)

Indiana		26-1342272
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Batesville Boulevard
Batesville,	Indiana	47006
(Address of principal executive offices)		(Zip Code)

(812) 934-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	HI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒ 

The registrant had 69,396,956 shares of common stock, no par value per share, outstanding as of February 3, 2023.

HILLENBRAND, INC.

INDEX TO FORM 10-Q

		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Operations for the Three Months Ended December 31, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2022 and 2021	3
	Consolidated Balance Sheets at December 31, 2022 and September 30, 2022	4
	Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2022 and 2021	5
	Consolidated Statements of Shareholders’ Equity for the Three Months Ended December 31, 2022 and 2021	6
	Condensed Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	45
SIGNATURES

1

PART I — FINANCIAL INFORMATION

Item 1.                FINANCIAL STATEMENTS

Hillenbrand, Inc.

Consolidated Statements of Operations (Unaudited)

(in millions, except per share data)

	Three Months Ended December 31,
	2022		2021
Net revenue	$	655.7	$	565.9
Cost of goods sold	444.8		384.1
Gross profit	210.9		181.8
Operating expenses	142.3		112.0
Amortization expense	19.1		13.7
Loss on divestiture	—		3.1
Interest expense	23.3		17.9
Other income, net	(2.9)		(0.4)
Income from continuing operations before income taxes	29.1		35.5
Income tax expense	2.3		13.3
Income from continuing operations	26.8		22.2
Income from discontinued operations (net of income tax expense)	21.0		27.9
Consolidated net income	47.8		50.1
Less: Net income attributable to noncontrolling interests	2.3		1.1
Net income attributable to Hillenbrand	$	45.5	$	49.0
Earnings Per Share
Basic earnings per share
Income from continuing operations attributable to Hillenbrand	$	0.36	$	0.29
Income from discontinued operations	0.30		0.38
Net income attributable to Hillenbrand	$	0.66	$	0.67
Diluted earnings per share
Income from continuing operations attributable to Hillenbrand	$	0.35	$	0.29
Income from discontinued operations	0.30		0.38
Net income attributable to Hillenbrand	$	0.65	$	0.67
Weighted average shares outstanding (basic)	69.4		72.7
Weighted average shares outstanding (diluted)	69.8		73.5

See Condensed Notes to Consolidated Financial Statements

2

Hillenbrand, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(in millions)

	Three Months Ended December 31,
	2022		2021
Consolidated net income	$	47.8	$	50.1
Changes in other comprehensive income, net of tax:
Currency translation adjustment (1)	43.0		2.4
Pension and postretirement	(0.2)		0.7
Change in net unrealized gain on derivative instruments	3.7		0.7
Total changes in other comprehensive income, net of tax	46.5		3.8
Consolidated comprehensive income	94.3		53.9
Less: Comprehensive income attributable to noncontrolling interests	2.1		1.0
Comprehensive income attributable to Hillenbrand	$	92.2	$	52.9

(1)Includes gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature.

See Condensed Notes to Consolidated Financial Statements

3

Hillenbrand, Inc.

Consolidated Balance Sheets

(in millions)

	December 31, 2022 (unaudited)		September 30, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	193.9	$	232.2
Trade receivables, net	326.6		252.9
Receivables from long-term manufacturing contracts, net	270.3		213.3
Inventories, net	591.6		485.6
Prepaid expenses and other current assets	132.9		102.8
Current assets held for sale	238.0		116.1
Total current assets	1,753.3		1,402.9
Property, plant, and equipment, net	285.2		231.9
Operating lease right-of-use assets, net	106.0		87.9
Intangible assets, net	1,095.1		808.0
Goodwill	1,562.7		1,151.1
Other long-term assets	83.6		80.4
Long-term assets held for sale	—		105.3
Total Assets	$	4,885.9	$	3,867.5
LIABILITIES
Current Liabilities
Trade accounts payable	$	397.3	$	371.0
Liabilities from long-term manufacturing contracts and advances	392.3		290.3
Current portion of long-term debt	10.0		—
Accrued compensation	93.1		97.0
Current liabilities held for sale	130.6		113.8
Other current liabilities	240.6		205.7
Total current liabilities	1,263.9		1,077.8
Long-term debt	1,890.4		1,222.1
Accrued pension and postretirement healthcare	111.6		101.3
Operating lease liabilities	82.3		70.5
Deferred income taxes	291.1		210.2
Other long-term liabilities	53.8		51.8
Long-term liabilities held for sale	—		25.8
Total Liabilities	$	3,693.1	$	2,759.5
Commitments and contingencies (Note 16)
SHAREHOLDERS’ EQUITY
Common stock, no par value (75.8 and 75.8 shares issued, 69.3 and 68.9 shares outstanding)	—		—
Additional paid-in capital	706.5		723.8
Retained earnings	842.0		812.0
Treasury stock (6.5 and 6.9 shares, at cost)	(277.0)		(297.3)
Accumulated other comprehensive loss	(108.9)		(155.6)
Hillenbrand Shareholders’ Equity	1,162.6		1,082.9
Noncontrolling interests	30.2		25.1
Total Shareholders’ Equity	1,192.8		1,108.0
Total Liabilities and Shareholders’ Equity	$	4,885.9	$	3,867.5

See Condensed Notes to Consolidated Financial Statements

4

Hillenbrand, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in millions)

	Three Months Ended December 31,
	2022		2021
Operating activities from continuing operations
Consolidated net income	$	47.8	$	50.1
Income from discontinued operations (net of income tax expense)	(21.0)		(27.9)
Adjustments to reconcile income from continuing operations to cash (used in) provided by operating activities:
Depreciation and amortization	31.0		25.6
Loss on divestiture	—		3.1
Deferred income taxes	(5.3)		(12.3)
Amortization of deferred financing costs	0.9		0.9
Share-based compensation	5.1		5.9
Trade accounts receivable, net and receivables from long-term manufacturing contracts	(51.1)		(4.0)
Inventories, net	2.7		(29.8)
Prepaid expenses and other current assets	(13.9)		(2.6)
Trade accounts payable	(11.6)		25.3
Liabilities from long-term manufacturing contracts and advances,
accrued compensation, and other current liabilities	14.8		(17.8)
Income taxes payable	(1.6)		12.7
Accrued pension and postretirement	(1.9)		(2.0)
Other, net	(1.5)		(6.9)
Net cash (used in) provided by operating activities from continuing operations	(5.6)		20.3
Investing activities from continuing operations
Capital expenditures	(15.3)		(7.6)
Proceeds from sales of property, plant, and equipment	0.8		—
Acquisition of businesses, net of cash acquired	(627.5)		—
Divestiture working capital payment	—		(4.5)
Net cash used in investing activities from continuing operations	(642.0)		(12.1)
Financing activities from continuing operations
Proceeds from issuance of long-term debt	200.0		—
Proceeds from revolving credit facilities	756.3		—
Repayments on revolving credit facilities	(326.3)		—
Payment of deferred financing costs	(0.6)		—
Payments of dividends on common stock	(15.3)		(15.8)
Repurchases of common stock	—		(28.9)
Proceeds from stock option exercises	6.9		14.6
Payments for employee taxes on net settlement equity awards	(9.2)		(5.7)
Other, net	(1.5)		(1.6)
Net cash provided by (used in) financing activities from continuing operations	610.3		(37.4)
Cash used in continuing operations	(37.3)		(29.2)
Cash (used in) provided by discontinued operations:
Operating cash flows	(0.6)		24.2
Investing cash flows	(4.5)		(2.1)
Total cash (used in) provided by discontinued operations	(5.1)		22.1
Effect of exchange rates on cash and cash equivalents	0.6		4.4
Net cash flows	(41.8)		(2.7)
Cash, cash equivalents, restricted cash, and cash and cash equivalents held for sale:
At beginning of period	237.6		450.9
At end of period	$	195.8	$	448.2

See Condensed Notes to Consolidated Financial Statements

5

Hillenbrand, Inc.

Consolidated Statements of Shareholders’ Equity (Unaudited)

(in millions)

	Three Months Ended December 31, 2022
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares					Shares	Amount
Balance at September 30, 2022	75.8	$	723.8	$	812.0	6.9	$	(297.3)	$	(155.6)	$	25.1	$	1,108.0
Total other comprehensive income (loss), net of tax	—	—		—		—	—		46.7		(0.2)		46.5
Net income	—	—		45.5		—	—		—		2.3		47.8
Issuance/retirement of stock for stock awards/options	—	(22.6)		—		(0.4)	20.3		—		—		(2.3)
Share-based compensation	—	5.1		—		—	—		—		—		5.1
Dividends ($0.22 per share)	—	0.2		(15.5)		—	—		—		(1.6)		(16.9)
Acquisition of noncontrolling interests	—	—		—		—	—		—		4.6		4.6
Balance at December 31, 2022	75.8	$	706.5	$	842.0	6.5	$	(277.0)	$	(108.9)	$	30.2	$	1,192.8

	Three Months Ended December 31, 2021
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares					Shares	Amount
Balance at September 30, 2021	75.8	$	725.4	$	666.2	3.1	$	(135.7)	$	(46.3)	$	22.6	$	1,232.2
Total other comprehensive income (loss), net of tax	—	—		—		—	—		3.9		(0.1)		3.8
Net income	—	—		49.0		—	—		—		1.1		50.1
Repurchases of common stock	—	—		—		0.6	(28.9)		—		—		(28.9)
Issuance/retirement of stock for stock awards/options	—	(16.8)		—		(0.5)	25.7		—		—		8.9
Share-based compensation	—	5.9		—		—	—		—		—		5.9
Dividends ($0.2175 per share)	—	0.3		(16.1)		—	—		—		(1.6)		(17.4)
Balance at December 31, 2021	75.8	$	714.8	$	699.1	3.2	$	(138.9)	$	(42.4)	$	22.0	$	1,254.6

See Condensed Notes to Consolidated Financial Statements

6

Hillenbrand, Inc.

Condensed Notes to Consolidated Financial Statements (Unaudited)

(in millions, except share and per share data)

1.Background and Basis of Presentation

Hillenbrand, Inc. (the “Company” or “Hillenbrand”) is a global industrial company with multiple leading brands that serve a wide variety of industries around the world. The Company strives to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the Hillenbrand Operating Model (“HOM”). The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results.  The Company recently enhanced the HOM to support our transformation to a pure-play industrial company. The HOM describes the Company’s purpose, mission, vision, values, and mindset as leaders; applies our management practices in Strategy, People, Operational Excellence, and Innovation & Technology; and prescribes four steps (Understand, Focus, Execute, and Grow) designed to make the Company’s businesses both bigger and better.  The Company’s goal is to continue developing Hillenbrand as a world-class global industrial company through the deployment of the HOM. “Hillenbrand,” the “Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand, Inc. and its subsidiaries unless context otherwise requires.

On December 15, 2022, the Company entered into a definitive agreement to sell its Batesville reportable operating segment to BL Memorial Partners, LLC, a Delaware limited liability company owned by funds affiliated with LongRange Capital, L.P., for $761.5, which includes an $11.5 subordinated note, subject to closing adjustments. Batesville is a recognized leader in the death care industry in North America. On February 1, 2023, the Company completed the divestiture. At closing, after applicable adjustments, the Company received $698.0 in pre-tax cash proceeds, including an adjustment for cash on hand acquired from the Company. The Company also received the previously mentioned $11.5 subordinated note. The Company expects to recognize a gain within the Consolidated Statement of Operations during the quarter ended March 31, 2023. Accordingly, the Batesville reportable operating segment assets and liabilities were classified as held for sale in the Consolidated Balance Sheets for all periods presented. Subsequent to the completion of the sale, the Company expects to provide certain transition services to Batesville for applicable fees. The transition services are expected to vary in duration depending upon the type of service provided.

This divestiture represents a strategic shift in Hillenbrand’s business and qualified as a discontinued operation as of December 31, 2022. As a result, the Company classified the results of Batesville in discontinued operations in its Consolidated Statements of Operations for all periods presented. The cash flows related to discontinued operations have been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented. Unless otherwise noted, discussion within the notes to the Consolidated Financial Statements relates to continuing operations only and excludes the historical Batesville reportable operating segment. See Note 4 for additional information.

As a result of classifying the Batesville reportable operating segment as a discontinued operation, Hillenbrand is now composed of two reportable operating segments: Advanced Process Solutions and Molding Technology Solutions. Advanced Process Solutions is a global leader in highly-engineered process and material handling equipment and systems for a wide variety of industries, including durable plastics, food, and recycling industries. Molding Technology Solutions is a global leader in highly-engineered processing equipment, systems, and aftermarket parts and service for the plastic technology processing industry.

The unaudited Consolidated Financial Statements include the accounts of Hillenbrand and its subsidiaries.  They also include three subsidiaries where the Company’s ownership percentage is less than 100%.  The Company’s fiscal year ends on September 30.  Unless otherwise stated, references to years relate to fiscal years.

These unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements and therefore do not include all information required in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  The unaudited Consolidated Financial Statements have been prepared on the same basis as, and should be read in conjunction with, the audited Consolidated Financial Statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended September 30, 2022, as filed with the SEC on November 16, 2022. In the opinion of management, these unaudited Consolidated Financial Statements reflect all adjustments necessary to present a fair statement of the Company’s consolidated financial position and the consolidated results of operations and cash flows as of the dates and for the periods presented and are normal and recurring in nature. The interim period results are subject to variation and are not necessarily indicative of the consolidated results of operations to be expected for the full fiscal year.

The preparation of the Consolidated Financial Statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

7

date of the Consolidated Financial Statements and the reported amounts of net revenue and expenses during the period.  Actual results could differ from those estimates.  Examples of such estimates include, but are not limited to, revenue recognition under the over time method, establishment of reserves related to customer rebates, doubtful accounts, warranties, early-pay discounts, inventories, income taxes, litigation, self-insurance, and progress toward achievement of performance criteria under incentive compensation programs.

As a result of the Russian Federation’s invasion of Ukraine in February 2022 (the “Ukraine War”), various nations, including the U.S., have instituted economic sanctions and other responsive measures, which have resulted in an increased level of global economic and political uncertainty. Any such geopolitical instability and uncertainty could have a negative impact on our ability to sell to, ship products to, collect payments from, and support customers in certain regions. The effects of the Ukraine War and such associated measures on management’s estimates and consolidated results of operations through December 31, 2022 are reflected in the Consolidated Financial Statements. As of and for the three months ended December 31, 2022, the effects of the Ukraine War have not had a material impact on the Consolidated Financial Statements.

Events and changes in circumstances arising after December 31, 2022, including those resulting from Ukraine War, will be reflected in management’s estimates for future periods in subsequent periodic filings.

2.Summary of Significant Accounting Policies

The significant accounting policies used in preparing the Consolidated Financial Statements are consistent with the accounting policies described in the Company’s Annual Report on Form 10-K as of and for the year ended September 30, 2022, except as described below.

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The Company adopted ASU 2019-12 during the year ended September 30, 2022, and has applied it to all periods presented, as applicable.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires companies to apply Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This generally will result in an acquirer recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition as compared to the ASC 805, Business Combinations (“ASC 805”) requirement that an acquirer recognize and measure the assets it acquires and liabilities it assumes at fair value on the acquisition date. ASU 2021-08 is effective for the Company’s fiscal year beginning October 1, 2023, with early adoption permitted. The Company adopted ASU 2021-08 during the year ended September 30, 2022, and has applied it to all acquisitions executed in the current year, as applicable.

No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the Consolidated Financial Statements.

3.Revenue Recognition

Net revenue includes gross revenue less sales discounts and sales incentives, all of which require the Company to make estimates for the portion of these allowances that have yet to be credited or paid to customers. The Company estimates these allowances using the expected value method, which is based upon historical rates.

Contract balances

The balance in receivables from long-term manufacturing contracts at December 31, 2022 and September 30, 2022, was $270.3 and $213.3, respectively. The change was driven by the impact of net revenue recognized prior to billings. The balance in the liabilities from long-term manufacturing contracts and advances at December 31, 2022 and September 30, 2022, was $392.3 and $290.3, respectively, and consists primarily of cash payments received or due in advance of satisfying performance obligations. The net revenue recognized for the three months ended December 31, 2022 and 2021, related to liabilities from long-term manufacturing contracts and advances as of September 30, 2022 and 2021, was $91.4 and $98.7, respectively.

8

During the three months ended December 31, 2022 and 2021, the adjustments related to performance obligations satisfied in previous periods were immaterial.

Transaction price allocated to the remaining performance obligations

As of December 31, 2022, the aggregate amount of transaction price of remaining performance obligations for the Company, which corresponds to backlog as defined in Part I, Item 2 of this Quarterly Report on Form 10-Q, was $1,959.3. Approximately 79% of these performance obligations are expected to be satisfied over the next twelve months, and the remaining performance obligations, primarily within one to three years.

Disaggregation of revenue

The following tables present net revenue by end market:

	Three Months Ended December 31, 2022						Three Months Ended December 31, 2021
	Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
End market
Plastics	$	240.8	$	—	$	240.8	$	235.0	$	—	$	235.0
Automotive	—		49.2		49.2		—		49.6		49.6
Chemicals	24.7		—		24.7		24.2		—		24.2
Consumer goods	—		33.1		33.1		—		39.7		39.7
Food and pharmaceuticals	103.8		—		103.8		21.8		—		21.8
Custom molders	—		26.6		26.6		—		38.3		38.3
Packaging	—		28.6		28.6		—		35.2		35.2
Construction	—		31.1		31.1		—		24.6		24.6
Minerals	13.8		—		13.8		12.1		—		12.1
Electronics	—		15.9		15.9		—		14.3		14.3
Medical	—		16.5		16.5		—		20.0		20.0
Other industrial	29.7		41.9		71.6		24.0		27.1		51.1
Total	$	412.8	$	242.9	$	655.7	$	317.1	$	248.8	$	565.9

The following tables present net revenue by geography:

	Three Months Ended December 31, 2022						Three Months Ended December 31, 2021
	Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Geography
Americas	$	138.5	$	136.2	$	274.7	$	63.6	$	129.1	$	192.7
Asia	148.7		68.2		216.9		168.6		81.6		250.2
Europe, the Middle East, and Africa	125.6		38.5		164.1		84.9		38.1		123.0
Total	$	412.8	$	242.9	$	655.7	$	317.1	$	248.8	$	565.9

9

The following tables present net revenue by products and services:

	Three Months Ended December 31, 2022						Three Months Ended December 31, 2021
	Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Products and services
Equipment	$	305.3	$	162.1	$	467.4	$	231.5	$	171.8	$	403.3
Parts and services	107.5		64.6		172.1		85.6		60.3		145.9
Other	—		16.2		16.2		—		16.7		16.7
Total	$	412.8	$	242.9	$	655.7	$	317.1	$	248.8	$	565.9

The following tables present net revenue by timing of transfer:

	Three Months Ended December 31, 2022						Three Months Ended December 31, 2021
	Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Timing of transfer
Point in time	$	220.2	$	230.0	$	450.2	$	135.0	$	246.1	$	381.1
Over time	192.6		12.9		205.5		182.1		2.7		184.8
Total	$	412.8	$	242.9	$	655.7	$	317.1	$	248.8	$	565.9

4.Divestitures

Batesville

Held for sale

As previously described in Note 1, the assets and liabilities of the Batesville reportable operating segment have been reflected as assets and liabilities held for sale. The following is a summary of the major categories of assets and liabilities held for sale at:

10

	December 31, 2022		September 30, 2022
Cash and cash equivalents	$	0.9	$	1.9
Trade receivables, net	67.9		59.5
Inventories, net	49.6		48.2
Property, plant and equipment, net	51.3		—
Operating lease right-of-use assets, net	39.7		—
Intangible assets, net	2.7		—
Goodwill	8.3		—
Other assets	17.6		6.5
Current assets held for sale	$	238.0	$	116.1
Property, plant and equipment, net	$	—	49.1
Operating lease right-of-use assets, net	—		35.6
Intangible assets, net	—		2.7
Goodwill	—		8.3
Long-term assets	—		9.6
Long-term assets held for sale	$	—	$	105.3
Trade accounts payable	$	58.6	$	62.0
Accrued compensation	5.9		13.6
Operating lease liabilities	39.0		13.0
Other liabilities	27.1		25.2
Current liabilities held for sale	$	130.6	$	113.8
Operating lease liabilities	$	—	22.1
Other liabilities	—		3.7
Long-term liabilities held for sale	$	—	$	25.8

Discontinued operations

As previously described in Note 1, on December 15, 2022, the Company entered into a definitive agreement to sell its Batesville reportable operating segment, which was completed on February 1, 2023. The Company determined that this divestiture qualified as a discontinued operation, in accordance with GAAP, since it represents a strategic shift for the Company and had a major effect on the Company’s consolidated results of operations. Accordingly, the results of operations for the Batesville reportable operating segment have been classified as discontinued operations within the Consolidated Financial Statements for all periods presented.

Certain indirect corporate costs included within operating expenses in the Consolidated Statements of Operations that were previously allocated to the Batesville reportable operating segment do not qualify for classification within discontinued operations and are now reported as operating expenses in continuing operations within corporate expenses. In addition, divestiture-related costs previously not allocated to the Batesville reportable operating segment that were incurred as part of the divestiture have been reflected in discontinued operations. As a result, income before income taxes of Batesville has been decreased by $3.5 for the three months ended December 31, 2022, and has been decreased by $0.3 for the three months ended December 31, 2021, with the offsetting changes in corporate expenses of continuing operations.

Components of amounts reflected in the Consolidated Statements of Operations related to discontinued operations are presented in the table, as follows:

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	Three Months Ended December 31,
	2022		2021
Net revenue	$	156.0	$	162.5
Cost of goods sold	103.7		107.0
Gross profit	52.3		55.5
Operating expenses	19.6		16.1
Other expense, net	1.3		1.5
Income from discontinued operations before income taxes	31.4		37.9
Income tax expense	10.4		10.0
Income from discontinued operations (net of income tax expense)	$	21.0	$	27.9

Divestiture of TerraSource

On October 22, 2021, the Company completed the divestiture of its TerraSource Global business (“TerraSource”) pursuant to a Contribution Agreement (“Agreement”) between the Company and certain affiliated companies of industrial holding company Right Lane Industries (“RLI”). Under the terms of the Agreement, Hillenbrand contributed TerraSource and its subsidiaries to a newly formed entity, TerraSource Holdings, LLC (“Holdings”), with RLI obtaining majority ownership and full operational control of TerraSource. In exchange for contributing the TerraSource business, the Company (i) received consideration in the form of a $25.6 five-year note, which was extended, subordinated, amended and restated in January 2023 to reflect a principal amount of $27.0, subject to certain adjustments, and an April 2028 maturity date, and (ii) also retained a 49% equity interest in Holdings through one of the Company’s indirect wholly-owned subsidiaries. The fair value of the total consideration received by the Company at closing was $27.7.

As a result of the TerraSource divestiture, the Company recorded a pre-tax loss of $3.1, after post-closing adjustments, in the Consolidated Statement of Operations during the three months ended December 31, 2021. The Company incurred $0.4 of transaction costs associated with the divestiture during the three months ended December 31, 2021, which were recorded within operating expenses in the Consolidated Statement of Operations. TerraSource’s results of operations were included within the Advanced Process Solutions reportable operating segment until the completion of the divestiture on October 22, 2021. Subsequent to the divestiture, the Company’s equity interest in Holdings is accounted for under the equity method of accounting as prescribed by GAAP.

5.Acquisitions

Acquisition of Peerless Food Equipment

On December 1, 2022, the Company completed the acquisition of the Peerless Food Equipment division (“Peerless”) of Illinois Tool Works Inc. for a purchase price of $59.9, subject to customary post-closing adjustments and including cash acquired, using available borrowings under its existing $1,000.0 multi-currency credit facility (the “Facility”). Headquartered in Sidney, Ohio, Peerless is a premier supplier of industrial food processing equipment.

The acquisition of Peerless increases the Company's scale in the food end market, and by combining Peerless’s highly complementary equipment and solutions with existing Coperion, Linxis, and Gabler technologies, allows the Company to deliver more comprehensive solutions to its customers.

Preliminary purchase price allocation and other items

The determination of the preliminary purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Peerless at this time, given the timing of the close of the transaction. It is anticipated that the majority of the purchase price allocation will ultimately be assigned to the fair value of the acquired property, plant and equipment, working capital assets and liabilities, identifiable intangible assets, and goodwill. The preliminary purchase price allocation will change in future periods as the fair value estimates of assets and liabilities and the valuation of the related tax assets and liabilities are completed. Changes during the measurement period could be material. The final determination of the fair value of assets acquired and liabilities assumed will be completed within the one-year measurement period as allowed by ASC 805. The Company expects to continue to obtain information for the purpose of determining the fair value of the assets acquired and liabilities assumed at the acquisition date throughout the remainder of the measurement period. Based on current fair value estimates and the timing

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of the close of the transaction, the preliminary purchase price for Peerless has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:

	December 1, 2022
Assets acquired:
Current assets	$	16.2
Property, plant, and equipment	2.3
Goodwill	50.9
Total assets acquired	69.4
Liabilities assumed:
Current liabilities	9.5
Total liabilities assumed	9.5
Net assets acquired	$	59.9

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. Goodwill is expected to be deductible for tax purposes.

During the three months ended December 31, 2022, the Company incurred $1.2 in acquisition expenses related to the Peerless acquisition, which are included in operating expenses in the Consolidated Statement of Operations. The results of Peerless are reported in the Advanced Process Solutions reportable operating segment and are not material to the Consolidated Financial Statements for the three months ended December 31, 2022.

Acquisition of LINXIS Group SAS

On October 6, 2022, the Company completed the acquisition of LINXIS Group SAS (“Linxis”) from IBERIS INTERNATIONAL S.À R.L, an affiliate of IK Partners, and additional sellers (collectively, the “Sellers”). As a result of the acquisition, the Company acquired from the Sellers all of the issued and outstanding securities of Linxis, and Linxis became a wholly owned subsidiary of the Company for total aggregate consideration of $590.8 (€596.2) in cash, reflecting an approximate enterprise value of $566.8 (€572.0) plus cash acquired at closing, subject to post-closing adjustments. The Company used available borrowings under the Facility to fund this acquisition.

Linxis has six market-leading brands – Bakon, Diosna, Shaffer, Shick Esteve, Unifiller, and VMI – that serve customers in over 100 countries. With a global manufacturing, sales and service footprint, Linxis specializes in design, manufacturing, and service of dosing, kneading, mixing, granulating, drying and coating technologies.

The results of Linxis are reported within the Advanced Process Systems reportable operating segment.

Purchase price allocation and other items

The Company utilized the services of an independent valuation consultant, along with estimates and assumptions provided by management, to estimate the fair value of the assets acquired and liabilities assumed. The preliminary allocation of the purchase price was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. The purchase price allocation of the assets acquired and liabilities assumed is preliminary until the contractual post-closing adjustments are finalized, the final independent valuation consultant report is issued, and the measurement period allowed for under ASC 805 has closed. The final determination of the fair value of assets acquired and liabilities assumed will be completed within the one-year measurement period as allowed by ASC 805. Changes during the measurement period could be material. Based on current fair value estimates, the preliminary purchase price for Linxis has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:

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	October 6, 2022
Assets acquired:
Cash and cash equivalents	$	22.9
Trade receivables	31.5
Receivables from long-term manufacturing contracts	12.1
Inventories	80.1