UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 6, 2014
 
HILLENBRAND, INC.
(Exact Name of Registrant as Specified in Charter)

Indiana	 	1-33794	 	26-1342272	
(State of Incorporation)	 	(Commission	 	(IRS Employer	
 	 	File Number)	 	Identification No.)	

One Batesville Boulevard	 	 	
Batesville, Indiana	 	47006	
(Address of Principal Executive Offices)	 	(Zip Code)	
 
Registrant’s telephone number, including area code:   (812) 934-7500
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o                                     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o                                     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o                                     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o                                     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Item 2.02.  Results of Operations and Financial Condition
 
On August 6, 2014, Hillenbrand, Inc. (the “Company”) announced its earnings for the third quarter ended June 30, 2014.  This announcement is more fully described in the press release filed as Exhibit 99.1 to this Current Report on Form 8-K.  The Company will sponsor a conference call and simultaneous webcast at 8 a.m. EDT Thursday, August 7, 2014. The webcast will be accessible on the Company’s website at http://ir.hillenbrand.com .
 
The information in this Report, including any Exhibits, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)          Exhibits

Exhibit
No	 	Description	
 	 	 	
99.1	 	Press Release dated August 6, 2014, issued by the Company	
 
2 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	HILLENBRAND, INC.	
Date: August 6, 2014	 	 	
 	 	 	
 	BY:	/s/ Elizabeth E. Dreyer	
 	 	Elizabeth E. Dreyer	
 	 	Vice President, Controller, Chief Accounting Officer, and Interim Chief Financial Officer	
 
3 

 
EXHIBIT INDEX

Exhibit
No	 	Description	
 	 	 	
Exhibit 99.1	 	Press Release dated August 6, 2014, issued by the Company	
 
4 

Exhibit 99.1

 
Hillenbrand Reports Third-Quarter Revenue of $417 Million
 
·       Process Equipment Group revenue increased 5% to $274 million
·       Batesville revenue decreased 4% to $143 million
·       Diluted EPS increased to $0.51 (19% increase to $0.57 on adjusted basis)
 
BATESVILLE, Indiana, August 6, 2014 — /PRNewswire/ — Hillenbrand, Inc. (NYSE: HI) reported results today for the third quarter ended June 30, 2014. Revenue increased by $8 million (2%) to $417 million and was consistent with the prior year on a constant currency basis. Process Equipment Group revenue grew by 5% to $274 million (2% constant currency) with growth demonstrated throughout the business. In addition, order backlog at the end of the third quarter was $731 million, representing a $14 million increase over the second quarter and a $159 million increase over the prior year. Batesville revenue was $143 million, a 4% decrease (3% constant currency) driven by lower average selling prices and decreased volume due to a lower number of North American burials.
 
Hillenbrand reports results on a GAAP and adjusted basis. Adjusted measures are reconciled to the most directly comparable GAAP measures at the end of this release. Net income increased 147% to $33 million ($0.51 per diluted share), while adjusted net income increased 19% to $36 million ($0.57 per diluted share). Adjusted EBITDA increased 11% to $71 million and adjusted EBITDA margin improved by 140 basis points to 17%. The increase in adjusted EBITDA was driven by improved margins for the Process Equipment Group offset in part by lower volume and average selling prices in the Batesville segment. Operating cash flow for the nine months ended June 30, 2014 improved by $86 million to $137 million due to higher net income and significant improvement in working capital.
 
“We’re pleased with our third quarter performance and the steps we have taken to advance the execution of our strategy,” said Joe A. Raver, President and Chief Executive Officer. “Our third quarter results demonstrate the benefits of our margin expansion and cost management initiatives across the organization.”
 
Guidance for Fiscal 2014
 
Hillenbrand affirmed guidance with estimated full-year revenue expected to be approximately $1.7 billion. Revenue from the Process Equipment Group is expected to be approximately $1.1 billion, and Batesville is anticipated to deliver approximately $600 million in revenue. Given current foreign exchange rates, management expects approximately 1% of favorable translation impact to revenue compared to 2013. Adjusted diluted EPS for 2014 is projected to range from $2.00 to $2.10.

Conference Call Information	 	
Date/Time:	8:00 a.m. EDT, Thursday, August 7, 2014	
Dial-In for U.S. and Canada:	1-877-201-0168	
Dial-In for International:	+1-647-788-4901	
Conference call ID number:	52610479	
Webcast link:	http://ir.hillenbrand.com (archived through Sunday, September 7, 2014)	
 	 	
Replay - Conference Call	 	
Date/Time:	Available until midnight EDT, Thursday, August 21, 2014	
Dial-In for U.S. and Canada:	1-855-859-2056	
Dial-In for International:	+1-404-537-3406	
Conference call ID number:	52610479	
 
Hillenbrand’s interim financial statements on Form 10-Q are expected to be filed jointly with this release and will be available on the Company’s website (www.Hillenbrand.com).
 
In addition to the financial measures prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), this earnings release also contains non-GAAP operating performance measures. These non-GAAP measures are referred to as “adjusted” and exclude expenses associated with backlog amortization, inventory step-up, business acquisitions and integration, restructuring, and litigation. The related income tax for all of these items is also excluded. This non-GAAP information is provided as a supplement, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

 
Hillenbrand uses this non-GAAP information internally to make operating decisions and believes it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results. The information can also be used to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by these types of items. Finally, Hillenbrand believes this information provides a higher degree of transparency.
 
An important non-GAAP measure Hillenbrand uses is adjusted earnings before interest, income tax, depreciation, and amortization (“adjusted EBITDA”). As previously discussed, a part of Hillenbrand’s strategy is to selectively acquire companies that we believe can benefit from our core competencies to spur faster and more profitable growth. Given that strategy, it is a natural consequence to incur related expenses, such as amortization from acquired intangible assets and additional interest expense from debt-funded acquisitions. Accordingly, we use adjusted EBITDA, among other measures, to monitor business performance.
 
Another important non-GAAP operational measure used is backlog. Backlog is not a term recognized under GAAP; however it is a common measurement used in the Process Equipment Group’s industry. Order backlog represents the amount of consolidated revenue that we expect to realize on contracts awarded related to the Process Equipment Group. Backlog includes expected revenue from large systems, equipment, and to a lesser extent, replacement parts, components, and service. The length of time that projects remain in backlog can span from days for replacement parts and service to approximately 18 months for larger system sales. Backlog includes expected revenue from the remaining portion of firm orders not yet completed, as well as revenue from change orders to the extent that it is reasonably expected to be realized. For purposes of calculating backlog, 100% of estimated revenue attributable to consolidated subsidiaries is included, an insignificant portion of which are not wholly-owned by Hillenbrand.
 
Future revenue for the Process Equipment Group is influenced by backlog because of the lead time involved in fulfilling engineered-to-order equipment for customers. Although backlog can be an indicator of future revenue, it does not include projects and parts orders that are booked and shipped within the same quarter. The timing of order placement, size, extent of customization, and customer delivery dates can create fluctuations in backlog and revenue. Revenue attributable to backlog is also affected by foreign exchange fluctuations for orders denominated in currencies other than United States dollars.
 
Net revenue is analyzed on a constant currency basis to better measure the comparability of results between periods. This information is provided because exchange rates can distort the underlying change in sales, either positively or negatively.
 
See below for a reconciliation from GAAP operating performance measures to the most directly comparable non-GAAP (adjusted) performance measures.  There is no GAAP financial measure comparable to backlog; therefore, a quantitative reconciliation of backlog is not provided.
 
Hillenbrand (www.Hillenbrand.com) is a global diversified industrial company that makes and sells premium business-to-business products and services for a wide variety of industries. We pursue profitable growth and meaningful dividends for our shareholders by leveraging our leading brands, robust cash generation capabilities, and strong core competencies.

 
Consolidated Statements of Income
(in millions, except per share data)

 	 	Three Months Ended	 	Nine Months Ended	 	
 	 	June 30,	 	June 30,	 	
 	 	2014	 	2013	 	2014	 	2013	 	
 	 	 	 	 	 	 	 	 	 	
Net revenue	 	$	416.8	 	$	408.8	 	$	1,198.5	 	$	1,112.5	 	
Cost of goods sold	 	267.5	 	276.0	 	775.4	 	735.2	 	
Gross profit	 	149.3	 	132.8	 	423.1	 	377.3	 	
Operating expenses	 	97.7	 	107.1	 	291.6	 	301.9	 	
Operating profit	 	51.6	 	25.7	 	131.5	 	75.4	 	
Interest expense	 	5.6	 	5.9	 	17.5	 	17.2	 	
Other income (expense), net	 	0.1	 	(0.3	)	9.7	 	0.3	 	
Income before income taxes	 	46.1	 	19.5	 	123.7	 	58.5	 	
Income tax expense	 	12.7	 	5.8	 	35.4	 	17.0	 	
Consolidated net income	 	33.4	 	13.7	 	88.3	 	41.5	 	
Less: Net income attributable to noncontrolling interests	 	0.6	 	0.4	 	2.2	 	1.2	 	
Net income(1)	 	$	32.8	 	$	13.3	 	$	86.1	 	$	40.3	 	
 	 	 	 	 	 	 	 	 	 	
Net income(1)  — per share of common stock:	 	 	 	 	 	 	 	 	 	
Basic earnings per share	 	$	0.52	 	$	0.21	 	$	1.36	 	$	0.64	 	
Diluted earnings per share	 	$	0.51	 	$	0.21	 	$	1.35	 	$	0.64	 	
Weighted average shares outstanding — basic	 	63.1	 	62.8	 	63.2	 	62.7	 	
Weighted average shares outstanding — diluted	 	63.7	 	63.2	 	63.8	 	63.0	 	
 	 	 	 	 	 	 	 	 	 	
Cash dividends per share	 	$	0.1975	 	$	0.1950	 	$	0.5925	 	$	0.5850	 	

(1) Net income attributable to Hillenbrand
 
Condensed Consolidated Statements of Cash Flow 
(in millions)

 	 	Nine Months Ended 
 June 30,	 	
 	 	2014	 	2013	 	
Net cash provided by operating activities	 	$	136.9	 	$	50.8	 	
Net cash used in investing activities	 	(10.5	)	(430.8	)	
Net cash (used in) provided by financing activities	 	(108.9	)	399.9	 	
Effect of exchange rate changes on cash and cash equivalents	 	1.5	 	1.0	 	
Net cash flows	 	19.0	 	20.9	 	
 	 	 	 	 	 	
Cash and cash equivalents:	 	 	 	 	 	
At beginning of period	 	42.7	 	20.2	 	
At end of period	 	$	61.7	 	$	41.1	 	

 
Reconciliation of Non-GAAP Measures 
(in millions, except per share data)

 	 	Three Months Ended June 30,	 	
 	 	2014	 	2013	 	
 	 	GAAP	 	Adjustments	 	Adjusted	 	GAAP	 	Adjustments	 	Adjusted	 	
Cost of goods sold	 	$	267.5	 	$	0.1	(a)	$	267.6	 	$	276.0	 	$	(8.6	)(c)	$	267.4	 	
Operating expenses	 	97.7	 	(4.7	)(b)	93.0	 	107.1	 	(15.6	)(d)	91.5	 	
Interest expense	 	5.6	 	—	 	5.6	 	5.9	 	(0.5	)(e)	5.4	 	
Other income (expense), net	 	0.1	 	—	 	0.1	 	(0.3	)	(0.2	)(f)	(0.5	)	
Income tax expense	 	12.7	 	1.3	(m)	14.0	 	5.8	 	7.4	(m)	13.2	 	
Net income(1)	 	32.8	 	3.3	 	36.1	 	13.3	 	17.1	 	30.4	 	
Diluted EPS	 	0.51	 	0.06	 	0.57	 	0.21	 	0.27	 	0.48	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	35.8	%	0.0	%	35.8	%	32.5	%	2.1	%	34.6	%	
Operating expenses as a % of revenue	 	23.4	%	(1.1	)%	22.3	%	26.2	%	(3.8	)%	22.4	%	

 	 	Nine Months Ended June 30,	 	
 	 	2014	 	2013	 	
 	 	GAAP	 	Adjustments	 	Adjusted	 	GAAP	 	Adjustments	 	Adjusted	 	
Cost of goods sold	 	$	775.4	 	$	0.2	(g)	$	775.6	 	$	735.2	 	$	(21.3	)(i)	$	713.9	 	
Operating expenses	 	291.6	 	(9.1	)(h)	282.5	 	301.9	 	(44.4	)(j)	257.5	 	
Interest expense	 	17.5	 	—	 	17.5	 	17.2	 	(1.1	)(k)	16.1	 	
Other income (expense), net	 	9.7	 	—	 	9.7	 	0.3	 	(1.1	)(l)	(0.8	)	
Income tax expense	 	35.4	 	2.6	(m)	38.0	 	17.0	 	19.2	(m)	36.2	 	
Net income(1)	 	86.1	 	6.3	 	92.4	 	40.3	 	46.5	 	86.8	 	
Diluted EPS	 	1.35	 	0.10	 	1.45	 	0.64	 	0.74	 	1.38	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratios:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	35.3	%	0.0	%	35.3	%	33.9	%	1.9	%	35.8	%	
Operating expenses as a % of revenue	 	24.3	%	(0.7	)%	23.6	%	27.1	%	(4.0	)%	23.1	%	

(1) Net income attributable to Hillenbrand

 	P = Process Equipment Group; B = Batesville; C = Corporate	
(a)	Restructuring costs ($0.1 reduction B)	
(b)	Business acquisition and integration costs ($0.5 P, $1.2 C), litigation costs ($1.4 B), restructuring costs ($1.5 P, $0.1 C)	
(c)	Inventory step up ($8.0 P), restructuring costs ($0.1 P, $0.5 B)	
(d)	Business acquisition and integration costs ($1.0 P, $1.5 C), backlog amortization ($12.8 P), restructuring costs ($0.2 P), other ($0.1 B)	
(e)	Business acquisition and integration costs ($0.5 C)	
(f)	Business acquisition and integration costs ($0.2 C)	
(g)	Restructuring costs ($0.1 P, $0.3 reduction B)	
(h)	Business acquisition and integration costs ($1.5 P, $3.2 C), litigation costs ($1.4 B), restructuring costs ($1.7 P, $1.3 C)	
(i)	Inventory step up ($18.7 P), restructuring costs ($0.3 P, $2.3 B)	
(j)	Business acquisition and integration costs ($1.3 P, $12.1 C), backlog amortization ($29.9 P), restructuring ($0.2 P, $0.5 B, $0.2 C), litigation costs ($0.1 B), other ($0.1 B)	
(k)	Business acquisition and integration costs ($1.1 C)	
(l)	Acquisition-related foreign currency transactions ($0.8 C), business acquisition and integration costs ($0.2 C), other ($0.1 B)	
(m)	Tax effect of adjustments	

 

 	 	Three Months Ended 
 June 30,	 	Nine Months Ended 
 June 30,	 	
 	 	2014	 	2013	 	2014	 	2013	 	
Adjusted EBITDA:	 	 	 	 	 	 	 	 	 	
Process Equipment Group	 	$	44.1	 	$	33.3	 	$	96.8	 	$	78.5	 	
Batesville	 	34.3	 	36.7	 	113.7	 	123.6	 	
Corporate	 	(7.6	)	(6.3	)	(17.3	)	(22.8	)	
Less	 	 	 	 	 	 	 	 	 	
Interest income	 	(0.3	)	—	 	(0.6	)	(0.3	)	
Interest expense	 	5.6	 	5.9	 	17.5	 	17.2	 	
Income tax expense	 	12.7	 	5.8	 	35.4	 	17.0	 	
Depreciation and amortization	 	14.7	 	27.4	 	43.7	 	70.3	 	
Business acquisition and integration	 	1.7	 	2.4	 	4.7	 	12.4	 	
Inventory step-up	 	—	 	8.0	 	—	 	18.7	 	
Restructuring	 	1.6	 	0.3	 	2.8	 	2.2	 	
Litigation	 	1.4	 	0.2	 	1.4	 	0.3	 	
Consolidated net income	 	$	33.4	 	$	13.7	 	$	88.3	 	$	41.5	 	
 
Throughout this release, we make a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As the words imply, forward-looking statements are statements about the future, as contrasted with historical information. Our forward-looking statements are based on assumptions and current expectations of future events that we believe are reasonable, but by their very nature they are subject to a wide range of risks. If our assumptions prove inaccurate or unknown risks and uncertainties materialize, actual results could vary materially from Hillenbrand’s expectations and projections.
 
Words that could indicate that we are making forward-looking statements include the following:

Intend	 	believe	 	plan	 	expect	 	may	 	goal	 	would	
Become	 	pursue	 	estimate	 	will	 	forecast	 	continue	 	could	
Targeted	 	encourage	 	promise	 	improve	 	progress	 	potential	 	should	
 
This is not an exhaustive list. Our intent is to provide examples of how readers might identify forward-looking statements. The absence of any of these words, however, does not mean that the statement is not forward-looking.
 
Here is the key point : Forward-looking statements are not guarantees of future performance, and our actual results could differ materially from those set forth in any forward-looking statements . Any number of factors, many of which are beyond our control, could cause our performance to differ significantly from what is described in the forward-looking statements. These factors include, but are not limited to: the outcome of any legal proceedings that may be instituted against Hillenbrand, or any companies we may acquire; risks that an acquisition disrupts current operations or poses potential difficulties in employee retention or otherwise affects financial or operating results; the ability to recognize the benefits of an acquisition, including potential synergies and cost savings or the failure of an acquired company to achieve its plans and objectives generally; global market and economic conditions, including those related to the credit markets; volatility of our investment portfolio; adverse foreign currency fluctuations; ongoing involvement in claims, lawsuits and governmental proceedings related to operations; labor disruptions; the dependence of our business units on relationships with several large providers; increased costs or unavailability of raw materials; continued fluctuations in mortality rates and increased cremations; competition from nontraditional sources in the death care industry; cyclical demand for industrial capital goods; and certain tax-related matters. For a more in-depth discussion of these and other factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading “Risk Factors” in Part II, Item 1A of Hillenbrand’s Form 10-Q for the quarter ended June 30, 2014, filed with the Securities and Exchange Commission on August 6, 2014. The company assumes no obligation to update or revise any forward-looking information.
 
CONTACT 
Chris Gordon, Director, Investor Relations
Phone: 812-931-5001
Email: chris.gordon@hillenbrand.com