Batesville sales increase 7%
Hillenbrand Industries, a global diversified industrial company and parent of death care company, Batesville, reported their 3rd Quarter 2020 last week. The company, which operates with an October 1 fiscal year date announced that revenues for the entire company increased 36% to $608 million for the quarter, but Net Income of $24 million was about one-third less than last year at this same time. You can access Hillenbrand Industries 3Q 2020 earnings press release here.
Those numbers seem somewhat contradictory but are fairly simply explained with the acquisition of the company, Milacron, to the Hillenbrand family last year. That company revenue was simply not on the books last year and Hillenbrand is in the process of moving that company, and some smaller acquisitions, into a positive cash-flow member of the Hillenbrand family. At present, those acquisition driven expenses are costing the company profits.
Here’s what Hillenbrand CEO had to say about the 3rd Quarter, “Our vision at Hillenbrand is to build a world-class global diversified industrial company with a proven record of success, driven by the Hillenbrand Operating Model. We took a meaningful strategic step forward with the Milacron acquisition, which significantly changed our company profile and portfolio. We added two complementary businesses to our portfolio, with value-added product and technology positions across the plastics value chain,”
Raver continued by saying this, “We delivered solid operating results in a challenging market environment while maintaining a constant focus on keeping our employees safe, serving our customers, and executing on our strategy as we navigated through the COVID-19 pandemic. Batesville delivered strong top- and bottom-line results while quickly adapting to more stringent health and safety requirements and responding to the needs of local communities deeply affected by the pandemic.”
For those of us in the death care profession we are most interested in Hillenbrand’s unit, Batesville. Batesville is the leader, by market share, of casket sales in the United States and most of us realize with the advent of cremation services casket sales have been slipping on an annual basis of about 1-3% annually. However, Batesville’s 3rd Quarter, much like Matthews International’s casket division, showed an uptick in sales. For Batesville the result was $140 million in sales which is about 7% higher than last year for the same time.
The obvious answer to that increase is COVID-19 and here is what the Hillenbrand 3Q report said about Batesville’s sales increase, “The increase was primarily driven by higher volume, largely due to higher deaths from the COVID-19 pandemic, partially offset by an estimated increased rate at which families opted for cremation.”
CEO Raver said the following specifically about the Batesville division, “Batesville delivered strong top- and bottom-line results while quickly adapting to more stringent health and safety requirements and responding to the needs of local communities deeply affected by the pandemic.”
And, going forward, the following was mentioned of Batesville, “Batesville revenue is forecasted to decrease modestly as a result of lower expected mortality associated with COVID-19.”
As to priorities for Hillenbrand Industries going forward the following was noted, “Hillenbrand continues to prioritize paying down debt following the Milacron acquisition, reinvesting for growth, and supporting the dividend. “