Hillenbrand revenue up, Batesville revenue down, CEO Raver calls Batesville “Lean and Flexible”

Multi-faceted conglomerate Hillenbrand Industries, parent of death care company Batesville, reported higher revenue year over year for their 1st Quarter which ended on December 31.  Hillenbrand, as a whole, reported revenue for the quarter of $410 million which is 3% higher than one year ago.  Hillenbrand’s Processed Equipment Group (PEG) reported revenue growth of 7%.

You can read a press release of the 1st Quarter results here.

Hillenbrand also announced another acquisition in the manufacturing arena by announcing the completed purchase of BM&M Screening Solutions , Ltd. for $26 million.  CEO Joe Raver said, “Acquisitions remain a key element of our profitable growth strategy”.

As for the Batesville business unit, comparable quarter sales fell about 4% to a total of $128 million for the quarter.  According to the company’s press release they fell as a “result of lower demand for burial caskets, primarily due to what is estimated to be an increased rate at which families opted for cremation.  Adjusted EBITDA margin of 20.9% was 10 basis points lower thatn the prior year mainly driven by cost inflation and lower volume, partially offset by pricing and productivity gains.”

In forward looking guidance, Hillenbrand estimates that the Process Equipment Group will continue to grow by 3-5% with the Bateville unit expected to continue revenue declines of 1-3%.

On January 30 Hillenbrand executed an earnings call with interested parties and you can find a transcipt of that call here.  Here are three statements in that call attributed to Hillenbrand CEO Joe Raver focused specifically on the Batesville unit:

  • “Our strategy for the Batesville business is to build on our leadership position and leverage elements of the Hillenbrand operating model to provide earnings, cash flow and talent to fuel Hillenbrand’s growth and continued transformation.”
  • “Batesville. . . focused on maintaing a lean and flexible organization to better serve our customers to continue to generate strong financial results for our shareholders”
  • “We expect that the long-term demand for burial caskets will continue to be challenged despite higher projected death from the aging generation of baby boomers, primarily due to the increase in cremation”.

Funeral Director Daily take:  My take on the press release and earnings call is that overall Hillenbrand is doing very well and they are in the process of becoming a bigger player in the processed equipment arena.  However,  it appears to me that the Batesville unit will continue to shrink in the transformation.  Batesville, according to the numbers presented in the press release, delivers only about 31% (and dropping) of the total Hillenbrand revenue base.

Don’t get me wrong, it will be around for some time as they are still doing about $500 million in business – however, that number is dropping about 4% or $20 million per year.  At that number and even at a lower EBITDA rate of 20.9% they are throwing off about $100 million of cash through Batesville.  To me, the comments indicate that they will then use that cash to continue to grow, via acquisition, the process equipment portion of the business as that is where they believe the future is.

I have no qualms with that method. . . it is probably very smart business and a proper way to award shareholders and maintain the going concern for years to come.  However, for those of us who were weaned on the Hillenbrand Industries that was comprised of Batesville Casket, Hil-Rom Hospital equipment, American Tourister Luggage, and Medco locks that were all, at some point in time,  under the Hillenbrand banner, it is somewhat hard to watch.

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