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 ~~June 30,~~December 31, 2023

☐ 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) 931-5000

(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

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 ~~69,915,289~~70,151,784 shares of common stock, no par value per share, outstanding as of ~~July 27, 2023.~~January 31, 2024.

Table of Contents

HILLENBRAND, INC.

INDEX TO FORM 10-Q


		Page
	PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~June 30,~~ December 31 , 2023 and 2022	2

	Consolidated Statements of Comprehensive Income (~~Loss)~~for the Three ~~and Nine~~ Months Ended ~~June 30,~~December 3 1 , 2023 and 2022	3

	Consolidated Balance Sheets at ~~June 30,~~December 31 , 2023 and September 30, ~~2022~~2023	4

	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~June 30,~~December 3 1 , 2023 and 2022	5

	Consolidated Statements of Shareholders’ Equity for the Three ~~and Nine~~ Months Ended ~~June 30,~~December 31 , 2023 and 2022	6

	Condensed Notes to Consolidated Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3729

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5339

Item 4.	Controls and Procedures	5439

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	5440

Item 1A.	Risk Factors	5440





I ~~tem~~Item 5.	O ~~ther Information~~Other Information	5540

Item 6.	Exhibits	5540

SIGNATURES

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Hillenbrand, Inc.

Consolidated Statements of Operations (Unaudited)

(in millions, except per share data)


		Three Months Ended June 30,				Nine Months Ended June 30,
				Three Months Ended December 31,
				Three Months Ended December 31,
				Three Months Ended December 31,
		2023		2022		2023		2022		2023	2022
Net revenue	Net revenue	$	716.6	$	579.8	$	2,063.2	$	1,711.4
Cost of goods sold	Cost of goods sold	469.7		388.8		1,382.5		1,149.9
Gross profit	Gross profit	246.9		191.0		680.7		561.5
Operating expenses	Operating expenses	144.8		111.6		424.6		337.1
Amortization expense	Amortization expense	19.7		13.4		58.6		40.8
Loss on divestiture		—		—		—		3.1

Interest expense		18.6		17.5		63.0		52.7
Other income, net		(4.0)		(2.5)		(10.6)		(9.3)

Pension settlement charge

Pension settlement charge

Pension settlement charge
Interest expense, net

Income from continuing operations before income taxes
Income from continuing operations before income taxes
Income from continuing operations before income taxes	Income from continuing operations before income taxes	67.8		51.0		145.1		137.1
Income tax expense	Income tax expense	23.8		19.9		50.2		54.4
Income from continuing operations	Income from continuing operations	44.0		31.1		94.9		82.7
Income from discontinued operations (net of income tax expense)		0.6		19.0		20.1		73.3
Gain on divestiture of discontinued operations (net of income tax expense)		0.4		—		441.3		—
Total income from discontinued operations		1.0		19.0		461.4		73.3
(Loss) income from discontinued operations (net of income tax expense)

Consolidated net income

Consolidated net income

Consolidated net income	Consolidated net income	45.0		50.1		556.3		156.0
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	1.7		1.3		4.8		3.9
Net income attributable to Hillenbrand	Net income attributable to Hillenbrand	$	43.3	$	48.8	$	551.5	$	152.1

Earnings per share	Earnings per share
Earnings per share
Earnings per share
Basic earnings per share	Basic earnings per share
Basic earnings per share
Basic earnings per share
Income from continuing operations attributable to Hillenbrand
Income from continuing operations attributable to Hillenbrand
Income from continuing operations attributable to Hillenbrand	Income from continuing operations attributable to Hillenbrand	$	0.60	$	0.42	$	1.29	$	1.09
Income from discontinued operations	Income from discontinued operations	0.02		0.26		6.62		1.01
Net income attributable to Hillenbrand	Net income attributable to Hillenbrand	$	0.62	$	0.68	$	7.91	$	2.10
Diluted earnings per share	Diluted earnings per share
Income from continuing operations attributable to Hillenbrand	Income from continuing operations attributable to Hillenbrand	$	0.60	$	0.42	$	1.29	$	1.08
Income from discontinued operations		0.02		0.26		6.59		1.00
Income from continuing operations attributable to Hillenbrand
Income from continuing operations attributable to Hillenbrand
(Loss) income from discontinued operations
Net income attributable to Hillenbrand	Net income attributable to Hillenbrand	$	0.62	$	0.68	$	7.88	$	2.08
Weighted average shares outstanding (basic)	Weighted average shares outstanding (basic)	70.0		71.4		69.7		72.4
Weighted average shares outstanding (diluted)	Weighted average shares outstanding (diluted)	70.3		72.0		70.0		73.0

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of Comprehensive Income ~~(Loss)~~ (Unaudited)

(in millions)


		Three Months Ended June 30,				Nine Months Ended June 30,
				Three Months Ended December 31,
				Three Months Ended December 31,
				Three Months Ended December 31,
		2023		2022		2023		2022		2023	2022
Consolidated net income	Consolidated net income	$	45.0	$	50.1	$	556.3	$	156.0
Changes in other comprehensive (loss) income, net of tax:
Changes in other comprehensive income, net of tax:
Currency translation adjustment (1)
Currency translation adjustment (1)
Currency translation adjustment (1)	Currency translation adjustment (1)	(23.8)		(56.6)		38.6		(61.6)
Pension and postretirement	Pension and postretirement	(0.3)		1.7		(1.8)		3.1
Change in net unrealized gain on derivative instruments	Change in net unrealized gain on derivative instruments	—		0.1		3.3		2.0

Total changes in other comprehensive (loss) income, net of tax		(24.1)		(54.8)		40.1		(56.5)
Consolidated comprehensive income (loss)		20.9		(4.7)		596.4		99.5
Total changes in other comprehensive income, net of tax
Total changes in other comprehensive income, net of tax
Total changes in other comprehensive income, net of tax
Consolidated comprehensive income
Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests	1.1		—		4.2		2.3
Comprehensive income (loss) attributable to Hillenbrand		$	19.8	$	(4.7)	$	592.2	$	97.2
Comprehensive income attributable to Hillenbrand

(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

Table of Contents

Hillenbrand, Inc.

Consolidated Balance Sheets

(in millions)


		June 30, 2023 (unaudited)		September 30, 2022
	December 31, 2023 (unaudited)						December 31, 2023 (unaudited)	September 30, 2023
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	290.5	$	232.2
Trade receivables, net	Trade receivables, net	318.3		252.9
Receivables from long-term manufacturing contracts, net	Receivables from long-term manufacturing contracts, net	280.4		213.3
Inventories, net	Inventories, net	568.4		485.6

Prepaid expenses and other current assets	Prepaid expenses and other current assets	125.7		102.8
Prepaid expenses and other current assets
Prepaid expenses and other current assets

Current assets held for sale		—		116.1

Total current assets

Total current assets

Total current assets	Total current assets	1,583.3		1,402.9
Property, plant, and equipment, net	Property, plant, and equipment, net	296.4		231.9
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	105.9		87.9
Intangible assets, net	Intangible assets, net	1,085.6		808.0
Goodwill	Goodwill	1,561.4		1,151.1
Other long-term assets	Other long-term assets	101.2		80.4
Long-term assets held for sale		—		105.3

Total Assets
Total Assets
Total Assets	Total Assets	$	4,733.8	$	3,867.5

LIABILITIES
LIABILITIES
LIABILITIES	LIABILITIES
Current Liabilities	Current Liabilities					Current Liabilities
Trade accounts payable	Trade accounts payable	$	402.3	$	371.0
Liabilities from long-term manufacturing contracts and advances	Liabilities from long-term manufacturing contracts and advances	362.6		290.3
Current portion of long-term debt	Current portion of long-term debt	10.0		—
Accrued compensation	Accrued compensation	85.5		97.0

Current liabilities held for sale		—		113.8

Other current liabilities

Other current liabilities

Other current liabilities	Other current liabilities	318.9		205.7
Total current liabilities	Total current liabilities	1,179.3		1,077.8
Long-term debt	Long-term debt	1,329.3		1,222.1
Accrued pension and postretirement healthcare	Accrued pension and postretirement healthcare	108.2		101.3
Operating lease liabilities	Operating lease liabilities	83.0		70.5
Deferred income taxes	Deferred income taxes	288.4		210.2
Other long-term liabilities	Other long-term liabilities	60.1		51.8
Long-term liabilities held for sale		—		25.8

Total Liabilities
Total Liabilities
Total Liabilities	Total Liabilities	$	3,048.3	$	2,759.5

Commitments and contingencies (Note 16)
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 15)

SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY
Common stock, no par value (75.8 and 75.8 shares issued, 69.9 and 68.9 shares outstanding)		—		—
SHAREHOLDERS’ EQUITY
SHAREHOLDERS’ EQUITY
Common stock, no par value (75.8 and 75.8 shares issued, 70.1 and 69.9 shares outstanding)
Additional paid-in capital	Additional paid-in capital	706.9		723.8
Retained earnings	Retained earnings	1,317.0		812.0
Treasury stock (5.9 and 6.9 shares, at cost)		(255.0)		(297.3)
Treasury stock (5.7 and 5.9 shares, at cost)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(114.9)		(155.6)
Hillenbrand Shareholders’ Equity	Hillenbrand Shareholders’ Equity	1,654.0		1,082.9
Noncontrolling interests	Noncontrolling interests	31.5		25.1
Total Shareholders’ Equity	Total Shareholders’ Equity	1,685.5		1,108.0

Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	4,733.8	$	3,867.5
Total Liabilities and Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in millions)


		Nine Months Ended June 30,
	Three Months Ended December 31,								Three Months Ended December 31,
		2023		2022			2023	2022
Operating activities from continuing operations	Operating activities from continuing operations					Operating activities from continuing operations
Consolidated net income	Consolidated net income	$	556.3	$	156.0
Total income from discontinued operations (net of income tax expense)		(461.4)		(73.3)
Adjustments to reconcile income from continuing operations to cash provided by operating activities:
Adjustments to reconcile income from continuing operations to used in operating activities:
Total loss (income) from discontinued operations (net of income tax expense)
Total loss (income) from discontinued operations (net of income tax expense)
Total loss (income) from discontinued operations (net of income tax expense)

Depreciation and amortization	Depreciation and amortization	93.1		74.4
Loss on divestiture		—		3.1
Depreciation and amortization
Depreciation and amortization

Deferred income taxes
Deferred income taxes
Deferred income taxes	Deferred income taxes	(19.1)		(11.6)
Amortization of deferred financing costs	Amortization of deferred financing costs	2.7		2.7
Share-based compensation	Share-based compensation	14.0		14.6

Trade accounts receivable, net and receivables from long-term manufacturing contracts
Trade accounts receivable, net and receivables from long-term manufacturing contracts
Trade accounts receivable, net and receivables from long-term manufacturing contracts	Trade accounts receivable, net and receivables from long-term manufacturing contracts	(44.2)		(87.5)
Inventories, net	Inventories, net	32.5		(95.8)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(6.1)		(32.0)
Trade accounts payable	Trade accounts payable	(12.6)		81.3
Liabilities from long-term manufacturing contracts and advances,	Liabilities from long-term manufacturing contracts and advances,
accrued compensation, and other current liabilities	accrued compensation, and other current liabilities	(26.9)		(39.3)
accrued compensation, and other current liabilities
accrued compensation, and other current liabilities
Income taxes payable	Income taxes payable	20.6		13.3
Accrued pension and postretirement	Accrued pension and postretirement	(4.8)		(6.7)
Other, net	Other, net	(10.5)		(9.1)
Net cash provided by (used in) operating activities from continuing operations		133.6		(9.9)
Net cash used in operating activities from continuing operations

Investing activities from continuing operations
Investing activities from continuing operations
Investing activities from continuing operations	Investing activities from continuing operations
Capital expenditures	Capital expenditures	(46.1)		(24.6)
Proceeds from sales of property, plant, and equipment	Proceeds from sales of property, plant, and equipment	0.8		1.7

Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(626.8)		(12.9)
Proceeds (payments) from divestitures, net of cash divested		696.7		(4.5)
Acquisition of businesses, net of cash acquired
Acquisition of businesses, net of cash acquired

Other, net	Other, net	0.4		—
Net cash provided by (used in) investing activities from continuing operations		25.0		(40.3)
Other, net
Other, net
Net cash used in investing activities from continuing operations

Financing activities from continuing operations
Financing activities from continuing operations
Financing activities from continuing operations	Financing activities from continuing operations
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	200.0		—
Repayments on long-term debt	Repayments on long-term debt	(105.0)		—
Proceeds from revolving credit facilities	Proceeds from revolving credit facilities	883.5		—
Repayments on revolving credit facilities	Repayments on revolving credit facilities	(914.1)		—
Payment of deferred financing costs	Payment of deferred financing costs	(3.3)		(3.5)
Payments of dividends on common stock	Payments of dividends on common stock	(45.9)		(47.0)
Repurchases of common stock		—		(167.0)

Proceeds from stock option exercises
Proceeds from stock option exercises
Proceeds from stock option exercises	Proceeds from stock option exercises	19.9		24.7
Payments for employee taxes on net settlement equity awards	Payments for employee taxes on net settlement equity awards	(12.5)		(6.9)
Other, net	Other, net	(1.2)		(1.6)
Net cash provided by (used in) financing activities from continuing operations		21.4		(201.3)
Cash provided by (used in) continuing operations		180.0		(251.5)
Cash (used in) provided by discontinued operations:
Net cash (used in) provided by financing activities from continuing operations
Cash used in continuing operations
Cash used in discontinued operations:
Operating cash flows
Operating cash flows
Operating cash flows	Operating cash flows	(109.4)		104.2
Investing cash flows	Investing cash flows	(7.6)		(7.9)
Total cash (used in) provided by discontinued operations		(117.0)		96.3
Total cash used in discontinued operations
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(9.3)		(10.2)
Net cash flows	Net cash flows	53.7		(165.4)

Cash, cash equivalents, restricted cash, and cash and cash equivalents held for sale:
Cash and cash equivalents:
Cash and cash equivalents:
Cash and cash equivalents:
At beginning of period	At beginning of period	237.6		450.9
At end of period	At end of period	$	291.3	$	285.5

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of Shareholders’ Equity (Unaudited)

(in millions)

Three Months Ended June 30, 2023
Shareholders of Hillenbrand, Inc.
Common Stock Additional
Paid-in
Capital Retained
Earnings Treasury Stock Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total
Shares Shares Amount
Balance at March 31, 2023 75.8 $ 704.7 $ 1,289.2 6.2 $ (266.9) $ (91.4) $ 31.2 $ 1,666.8
Total other comprehensive loss, net of tax — — — — — (23.5) (0.6) (24.1)
Net income — — 43.3 — — — 1.7 45.0
Issuance/retirement of stock for stock awards/options — (2.9) — (0.3) 11.9 — — 9.0
Share-based compensation — 4.9 — — — — — 4.9
Dividends ($0.22 per share) — 0.2 (15.5) — — — — (15.3)
Purchase of shares of noncontrolling interests — — — — — — (0.8) (0.8)
Balance at June 30, 2023 75.8 $ 706.9 $ 1,317.0 5.9 $ (255.0) $ (114.9) $ 31.5 $ 1,685.5
Nine Months Ended June 30, 2023
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 loss, net of tax — — — — — 40.7 (0.6) 40.1
Net income — — 551.5 — — — 4.8 556.3
Issuance/retirement of stock for stock awards/options — (34.9) — (1.0) 42.3 — — 7.4
Share-based compensation — 17.4 — — — — — 17.4
Dividends ($0.66 per share) — 0.6 (46.5) — — — (1.6) (47.5)
Acquisition of noncontrolling interests — — — — — — 4.6 4.6
Purchase of shares of noncontrolling interests — — — — — — (0.8) (0.8)
Balance at June 30, 2023 75.8 $ 706.9 $ 1,317.0 5.9 $ (255.0) $ (114.9) $ 31.5 $ 1,685.5

















	Three Months Ended December 31, 2023
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares					Shares	Amount
Balance at September 30, 2023	75.8	$	709.5	$	1,319.6	5.9	$	(251.7)	$	(147.1)	$	32.6	$	1,662.9
Total other comprehensive income, net of tax	—	—		—		—	—		56.2		—		56.2
Net income	—	—		17.2		—	—		—		2.0		19.2

Issuance/retirement of stock for stock awards/options	—	(13.7)		—		(0.2)	9.0		—		—		(4.7)
Share-based compensation	—	5.2		—		—	—		—		—		5.2
Dividends ($0.2225 per share)	—	0.2		(15.8)		—	—		—		(1.2)		(16.8)
Purchase of noncontrolling interests	—	—		—		—	—		—		(3.0)		(3.0)

Balance at December 31, 2023	75.8	$	701.2	$	1,321.0	5.7	$	(242.7)	$	(90.9)	$	30.4	$	1,719.0

~~Table of Contents~~

Three Months Ended June 30, 2022
Common Stock Additional
Paid-in
Capital Retained
Earnings Treasury Stock Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total
Shares Shares Amount
Balance at March 31, 2022 75.8 $ 717.3 $ 737.1 3.4 $ (152.2) $ (47.7) $ 23.3 $ 1,277.8
Total other comprehensive loss, net of tax — — — — — (53.5) (1.3) (54.8)
Net income — — 48.8 — — — 1.3 50.1
Repurchases of common stock — — — 2.7 (111.5) — — (111.5)
Issuance/retirement of stock for stock awards/options — (2.3) — — 1.9 — — (0.4)
Share-based compensation — 4.4 — — — — — 4.4
Dividends ($0.2175 per share) — 0.1 (15.4) — — — — (15.3)
Balance at June 30, 2022 75.8 $ 719.5 $ 770.5 6.1 $ (261.8) $ (101.2) $ 23.3 $ 1,150.3
Nine Months Ended June 30, 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, 2021 75.8 $ 725.4 $ 666.2 3.1 $ (135.7) $ (46.3) $ 22.6 $ 1,232.2
Total other comprehensive loss, net of tax — — — — — (54.9) (1.6) (56.5)
Net income — — 152.1 — — — 3.9 156.0
Repurchases of common stock — — — 3.9 (167.0) — — (167.0)
Issuance/retirement of stock for stock awards/options — (23.1) — (0.9) 40.9 — — 17.8
Share-based compensation — 16.4 — — — — — 16.4
Dividends ($0.6525 per share) — 0.8 (47.8) — — — (1.6) (48.6)
Balance at June 30, 2022 75.8 $ 719.5 $ 770.5 6.1 $ (261.8) $ (101.2) $ 23.3 $ 1,150.3


















	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

See Condensed Notes to Consolidated Financial Statements

Table of Contents

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 that provides highly-engineered ~~mission-critical~~ processing equipment and solutions to customers around the world. Our portfolio is composed of leading industrial brands that serve large, attractive end markets, including durable plastics, food, and recycling. ~~The Company strives~~Guided by our Purpose, Shape What Matters for TomorrowTM, we pursue excellence, collaboration, and innovation to ~~provide superior return for~~shape solutions that best serve our ~~shareholders, exceptional value for~~people, our customers, ~~great professional opportunities for~~and our ~~employees, and to be responsible~~communities. Customers choose Hillenbrand due to our ~~communities through deployment of the Hillenbrand Operating Model (“HOM”). The HOM is a consistent~~reputation for designing, manufacturing, and ~~repeatable framework designed to produce sustainable~~servicing highly-engineered, mission-critical equipment and ~~predictable results. The Company recently enhanced the HOM to support our transformation to a pure-play industrial company by incorporating Purpose, updating our management practices,~~solutions that meet their unique and restating our values. 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.complex processing requirements.

On ~~December 15, 2022,~~February 1, 2023, the Company ~~entered into a definitive agreement to sell~~completed the divestiture of its historical Batesville reportable operating segment (“Batesville”) to BL Memorial Partners, LLC, a Delaware limited liability company owned by funds affiliated with LongRange Capital, L.P., for $761.5, ~~subject to closing adjustments, and~~ including an $11.5 subordinated note. ~~On February 1, 2023, the Company completed the divestiture.~~

This divestiture represented a strategic shift in Hillenbrand’s business and qualified as a discontinued operation. Accordingly, the operating results and cash flows related to ~~the historical~~ Batesville ~~reportable operating segment~~ have been reflected as discontinued operations in the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for all periods ~~presented, while the assets and liabilities that were divested were classified within the Consolidated Balance Sheets as held for sale in the periods preceding the divestiture.~~presented. Unless otherwise noted, discussion within the condensed notes to the Consolidated Financial Statements relates to continuing operations only and excludes ~~the historical Batesville reportable operating segment.~~Batesville. See Note 4 for additional information on this divestiture.

~~Subsequent~~The Company is providing, and will continue to ~~the completion of the divestiture, the Company began providing~~provide, certain transition services to Batesville for applicable ~~fees.~~fees that are not material to the Company’s financial position. The transition services ~~are expected to~~ vary in duration depending upon the type of service provided.

As a result of the divestiture, Hillenbrand is now composed of two reportable operating segments: Advanced Process Solutions and Molding Technology Solutions. Advanced Process Solutions is a leading global ~~leader in~~provider of highly-engineered process and material handling equipment, systems, and ~~systems~~aftermarket parts and services for a ~~wide~~ variety of industries, including durable plastics, food, and ~~recycling industries.~~recycling. Molding Technology Solutions is a global leader in highly-engineered ~~processing~~ equipment, systems, and aftermarket parts and service for the plastic technology processing industry. Molding Technology Solutions has a comprehensive product portfolio that includes injection molding and extrusion equipment, hot runner systems, process control systems, mold bases and components, and maintenance, repair, and operating (“MRO”) supplies.

The Consolidated Financial Statements include the accounts of Hillenbrand and its subsidiaries. They also include ~~four~~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 refer 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,~~2023, as filed with the SEC on November ~~16, 2022.~~15, 2023. 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 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

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the over time method, establishment of reserves related to credit losses, warranties, inventories, income taxes, litigation, ~~self-insurance,~~ and ~~progress toward achievement of performance criteria under incentive compensation programs.~~self-insurance.

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. The results of such geopolitical instability and uncertainty have had, and could continue to have, an 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 June 30, 2023, are reflected in the Consolidated Financial Statements. As of and for the three and nine months ended June 30, 2023 and 2022, the effects of the Ukraine War did not have a material impact on the Consolidated Financial Statements.

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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.~~2023.

Recently ~~Adopted Accounting Standards~~adopted accounting standards

In ~~December 2019,~~September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2019-12,~~2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50); Disclosure of Supplier Finance Program Obligations. ASU 2022-04 requires entities that use supplier finance programs to disclose information about the nature and potential magnitude of the programs, activity during the period, and changes from period to period. ASU 2022-04 does not affect the recognition, measurement, or consolidated financial statement presentation of obligations covered by supplier finance programs. The Company adopted ASU 2022-04 effective October 1, 2023. The adoption of ASU 2022-04 did not have a material effect on our Consolidated Financial Statements and related disclosures. See Note 6 for further details.

Recently issued accounting standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires additional disclosures pertaining to significant expenses and other items of an entity’s reportable operating segments. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 (fiscal 2025). Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): ~~Simplifying the Accounting for~~Improvements to Income ~~Taxes~~Tax Disclosures~~. ASU 2019-12clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating~~, which expands disclosures in an entity’s income tax ~~rates~~rate reconciliation table and regarding cash taxes paid both in ~~an interim period,~~the U.S. and ~~recognition of deferred taxes~~foreign jurisdictions. ASU 2023-09 will be effective for ~~outside basis differences in an investment, among other updates.~~annual periods beginning after December 15, 2024 (fiscal 2026). The Company ~~adopted~~is currently evaluating the impact of 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~~2023-09 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 early 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.Consolidated Financial Statements.

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.~~experience.

Contract balances

The balance in receivables from long-term manufacturing contracts at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, was ~~$280.4~~$287.2 and ~~$213.3,~~$260.2, respectively. The change was driven by the impact of net revenue recognized prior to billings to ~~customers and the impact of acquisitions.~~customers. The balance in the liabilities from long-term manufacturing contracts and advances at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, was ~~$362.6~~$387.1 and ~~$290.3,~~$388.5, respectively, and consists primarily of cash payments received or due in advance of satisfying performance obligations. The net revenue recognized for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 and 2022, related to liabilities from long-term manufacturing contracts and advances as of September 30, 2023 and 2022, was $116.4 and ~~2021, was $199.7 and $189.8,~~$91.4, respectively. During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022, the adjustments related to performance obligations satisfied in previous periods were immaterial.

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Transaction price allocated to the remaining performance obligations

As of ~~June 30,~~December 31, 2023, 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 ~~$1,870.4.~~$2,147.4. Approximately ~~77%~~80% 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.

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Disaggregation of revenue

The following tables present net revenue by end market:
Three Months Ended June 30, 2023 Nine Months Ended June 30, 2023
Advanced Process Solutions Molding Technology Solutions Total Advanced Process Solutions Molding Technology Solutions Total
End market
  Plastics $ 270.1 $ — $ 270.1 $ 759.2 $ — $ 759.2
  Automotive — 56.6 56.6 — 158.3 158.3
  Chemicals 29.0 — 29.0 85.8 — 85.8
  Consumer goods — 33.5 33.5 — 100.9 100.9
Food and pharmaceuticals 117.8 — 117.8 320.2 — 320.2
  Custom molders — 24.5 24.5 — 81.8 81.8
Packaging — 32.4 32.4 — 98.4 98.4
Construction — 31.6 31.6 — 101.4 101.4
  Minerals 15.3 — 15.3 47.8 — 47.8
  Electronics — 23.4 23.4 — 59.0 59.0
  Medical — 17.2 17.2 — 48.9 48.9
  Other industrial 32.5 32.7 65.2 95.0 106.5 201.5
    Total $ 464.7 $ 251.9 $ 716.6 $ 1,308.0 $ 755.2 $ 2,063.2
Three Months Ended June 30, 2022 Nine Months Ended June 30, 2022
Advanced Process Solutions Molding Technology Solutions Total Advanced Process Solutions Molding Technology Solutions Total
End market
Plastics $ 224.2 $ — $ 224.2 $ 688.7 $ — $ 688.7
Automotive — 41.0 41.0 — 146.9 146.9
Chemicals 24.9 — 24.9 74.4 — 74.4
Consumer goods — 40.9 40.9 — 115.9 115.9
Food and pharmaceuticals 23.1 — 23.1 69.4 — 69.4
Custom molders — 38.4 38.4 — 111.4 111.4
Packaging — 28.4 28.4 — 94.8 94.8
Construction — 35.8 35.8 — 84.2 84.2
Minerals 12.7 — 12.7 35.7 — 35.7
Electronics — 20.8 20.8 — 55.1 55.1
Medical — 21.9 21.9 — 62.1 62.1
Other industrial 25.4 42.3 67.7 73.8 99.0 172.8
Total $ 310.3 $ 269.5 $ 579.8 $ 942.0 $ 769.4 $ 1,711.4

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	Three Months Ended December 31, 2023				Three Months Ended December 31, 2022
	Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
End market
Plastics and recycling	$	243.6	$	—	$	243.6	$	240.8	$	—	$	240.8
Automotive	—		40.7		40.7		—		49.2		49.2
Chemicals	45.4		—		45.4		24.7		—		24.7
Consumer goods	—		28.3		28.3		—		33.1		33.1
Food and pharmaceuticals	182.8		—		182.8		103.8		—		103.8
Custom molders	—		25.1		25.1		—		26.6		26.6
Packaging	—		29.6		29.6		—		28.6		28.6
Construction	17.7		25.0		42.7		—		31.1		31.1
Minerals	20.0		—		20.0		13.8		—		13.8
Electronics	—		12.9		12.9		—		15.9		15.9
Medical	—		16.0		16.0		—		16.5		16.5
Other industrial	58.8		27.4		86.2		29.7		41.9		71.6
Total	$	568.3	$	205.0	$	773.3	$	412.8	$	242.9	$	655.7

The following tables present net revenue by geography:


		Three Months Ended June 30, 2023				Nine Months Ended June 30, 2023
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023														Three Months Ended December 31, 2022
	Advanced Process Solutions													Advanced Process Solutions	Molding Technology Solutions		Total	Advanced Process Solutions	Molding Technology Solutions	Total
Geography (1)	Geography (1)
Americas
Americas
Americas	Americas	$	164.6	$	146.1	$	310.7	$	462.1	$	439.4	$	901.5
Asia	Asia	153.8		67.8		221.6		444.8		201.3		646.1
Europe, the Middle East, and Africa	Europe, the Middle East, and Africa	146.3		38.0		184.3		401.1		114.5		515.6
Total	Total	$	464.7	$	251.9	$	716.6	$	1,308.0	$	755.2	$	2,063.2

		Three Months Ended June 30, 2022				Nine Months Ended June 30, 2022
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Geography (1)
Americas		$	79.9	$	159.1	$	239.0	$	218.9	$	424.3	$	643.2
Asia		157.6		71.7		229.3		484.4		228.3		712.7
Europe, the Middle East, and Africa		72.8		38.7		111.5		238.7		116.8		355.5
Total		$	310.3	$	269.5	$	579.8	$	942.0	$	769.4	$	1,711.4

(1)The Company attributes net revenue to a geography based upon the location of the end customer.

The following tables present net revenue by products and services:


		Three Months Ended June 30, 2023				Nine Months Ended June 30, 2023
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023														Three Months Ended December 31, 2022
	Advanced Process Solutions													Advanced Process Solutions	Molding Technology Solutions		Total	Advanced Process Solutions	Molding Technology Solutions	Total
Products and services	Products and services
Equipment
Equipment
Equipment	Equipment	$	341.8	$	164.2	$	506.0	$	952.6	$	499.5	$	1,452.1
Parts and services	Parts and services	122.9		71.9		194.8		355.4		207.3		562.7
Other	Other	—		15.8		15.8		—		48.4		48.4
Total	Total	$	464.7	$	251.9	$	716.6	$	1,308.0	$	755.2	$	2,063.2

		Three Months Ended June 30, 2022				Nine Months Ended June 30, 2022
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Products and services
Equipment		$	217.2	$	187.7	$	404.9	$	671.6	$	528.6	$	1,200.2
Parts and services		93.1		65.6		158.7		270.4		191.1		461.5
Other		—		16.2		16.2		—		49.7		49.7
Total		$	310.3	$	269.5	$	579.8	$	942.0	$	769.4	$	1,711.4

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The following tables present net revenue by timing of transfer:


		Three Months Ended June 30, 2023				Nine Months Ended June 30, 2023
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023
		Three Months Ended December 31, 2023														Three Months Ended December 31, 2022
	Advanced Process Solutions													Advanced Process Solutions	Molding Technology Solutions		Total	Advanced Process Solutions	Molding Technology Solutions	Total
Timing of transfer	Timing of transfer
Point in time
Point in time
Point in time	Point in time	$	250.2	$	223.4	$	473.6	$	692.0	$	679.5	$	1,371.5
Over time	Over time	214.5		28.5		243.0		616.0		75.7		691.7
Total	Total	$	464.7	$	251.9	$	716.6	$	1,308.0	$	755.2	$	2,063.2

		Three Months Ended June 30, 2022				Nine Months Ended June 30, 2022
		Advanced Process Solutions		Molding Technology Solutions		Total		Advanced Process Solutions		Molding Technology Solutions		Total
Timing of transfer
Point in time		$	143.6	$	254.8	$	398.4	$	413.0	$	741.7	$	1,154.7
Over time		166.7		14.7		181.4		529.0		27.7		556.7
Total		$	310.3	$	269.5	$	579.8	$	942.0	$	769.4	$	1,711.4

4. Divestitures

Batesville

As previously described, on February 1, 2023, the Company completed the divestiture of ~~its historical~~ 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, ~~subject to closing adjustments, and~~ including an $11.5 subordinated note. At closing, after the applicable adjustments, the Company received $698.0 in pre-tax cash proceeds, including an adjustment for cash on hand acquired from the Company, and the previously mentioned subordinated note.

This divestiture represented a strategic shift in Hillenbrand’s business and qualified as a discontinued operation. Accordingly, the operating results and cash flows related to the historical Batesville reportable operating segment have been reflected as discontinued operations in the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for all periods presented, while the assets and liabilities that were divested were classified within the Consolidated Balance Sheets as held for sale in the periods preceding the divestiture. The Company recognized a $586.0 pre-tax gain on divestiture, recorded within gain on divestiture of discontinued operations (net of income tax expense) in the Consolidated Statement of Operations for the nine months ended June 30, 2023. The $0.4 gain on divestiture of discontinued operations (net of income tax expense) for the three months ended June 30, 2023 is the result of certain income tax adjustments as a result of ongoing evaluation of the income tax impact of the divestiture on Hillenbrand.

Certain indirect corporate costs included within operating expenses in the Consolidated Statements of Operations that were previously allocated to the historical 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, costs directly attributable to the historical Batesville reportable operating segment divestiture have been reflected in discontinued operations. As a result, income before income taxes of the historical Batesville reportable operating segment decreased $17.5 for the nine months ended June 30, 2023, respectively, and decreased $0.9 and $1.5 for the three and nine months ended June 30, 2022, respectively.

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Discontinued operations

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

Three Months Ended June 30, Nine Months Ended June 30,
2023 2022 2023 2022
Net revenue $ — $ 140.8 $ 213.7 $ 479.6
Cost of goods sold — 100.5 142.2 329.2
Gross profit — 40.3 71.5 150.4
Operating (income) expenses (0.4) 17.0 42.6 51.4
Other expense, net — 1.5 1.0 4.6
Income (loss) from discontinued operations before income taxes 0.4 21.8 27.9 94.4
Income tax (benefit) expense (0.2) 2.8 7.8 21.1
Income from discontinued operations (net of income tax (benefit) expense) 0.6 19.0 20.1 73.3
Gain on divestiture of discontinued operations(1)
0.4 — 441.3 —
Total income from discontinued operations $ 1.0 $ 19.0 $ 461.4 $ 73.3

~~(1)~~ ~~Income tax benefit of $0.4 during the three months ended June 30, 2023, and net of income tax expense of $144.7 during the nine months ended June 30, 2023.~~

~~Held for sale~~

The assets and liabilities of the historical Batesville reportable operating segment had been reflected as assets and liabilities held for sale in the periods preceding the divestiture. The following is a summary of the major categories of assets and liabilities held for sale at September 30, 2022:


~~Cash and cash equivalents~~	$	~~1.9~~
~~Trade receivables, net~~	~~59.5~~
~~Inventories, net~~	~~48.2~~




~~Other assets~~	~~6.5~~
~~Current assets held for sale~~	$	~~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~~	$	~~62.0~~
~~Accrued compensation~~	~~13.6~~
~~Operating lease liabilities~~	~~13.0~~
~~Other liabilities~~	~~25.2~~
~~Current liabilities held for sale~~	$	~~113.8~~

~~Operating lease liabilities~~	$	~~22.1~~
~~Other liabilities~~	~~3.7~~
~~Long-term liabilities held for sale~~	$	~~25.8~~

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~~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, which became an approximately 46% interest in connection with the January 2023 amendment to the ~~five-year note. 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 nine months ended June 30, 2022. The Company incurred $0.4 of transaction costs associated with the divestiture during the nine months ended June 30, 2022, 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.


	Three Months Ended December 31,
	2023		2022
Net revenue	$	—	$	156.0
Cost of goods sold	—		103.7
Gross profit	—		52.3
Operating expenses	0.3		20.9
(Loss) income from discontinued operations before income taxes	(0.3)		31.4
Income tax expense	—		10.4
(Loss) income from discontinued operations (net of income tax expense)	$	(0.3)	$	21.0

5. Acquisitions

~~Proposed~~ Acquisition of Schenck Process Food and Performance Materials Business

On ~~May 23,~~September 1, 2023, the Company ~~signed a definitive agreement to acquire the~~completed its acquisition of Schenck Process Food and Performance Materials (“FPM”) ~~business, a portfolio company~~for $748.7, net of ~~Blackstone, for an enterprise value of approximately $730.0.~~ certain customary post-closing adjustments, and including cash acquired. The Company used available borrowings under its multi-currency revolving credit facility (the “Facility”) to fund this acquisition.

Headquartered in Kansas City, Missouri, FPM specializes in the design, manufacturing, and service of feeding, filtration, baking, and material handling technologies and systems that are highly complementary to the equipment and solutions ~~currently~~ offered in our Advanced Process Solutions reportable operating segment. ~~This transaction is expected to close during~~The results of FPM since the ~~fourth fiscal quarter~~date of ~~2023. It is anticipated that FPM will be~~the acquisition are included in ~~our~~the Advanced Process Solutions reportable operating segment.

Preliminary purchase price allocation and other items

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805”), Business Combinations (“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 FPM has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:


	September 1, 2023 (as initially reported)		Measurement Period Adjustments		September 1, 2023 (as adjusted)
Assets acquired:
Cash and cash equivalents	$	17.3	$	—	$	17.3
Trade receivables	65.2		(1.6)		63.6
Receivables from long-term manufacturing contracts	22.4		—		22.4
Inventories	64.8		(0.5)		64.3
Prepaid expenses and other current assets	10.3		—		10.3
Property, plant, and equipment	27.3		14.9		42.2
Operating lease right-of-use assets	11.0		3.5		14.5
Intangible assets	338.0		0.4		338.4
Goodwill	476.5		(12.4)		464.1
Other non-current assets	2.7		(1.0)		1.7
Total assets acquired	1,035.5		3.3		1,038.8

Liabilities assumed:
Trade accounts payable	59.4		(2.4)		57.0
Liabilities from long-term manufacturing contracts	86.6		—		86.6
Accrued compensation	13.5		—		13.5
Other current liabilities	45.7		1.1		46.8
Operating lease liabilities	9.5		—		9.5
Deferred income taxes	69.0		4.6		73.6
Other non-current liabilities	3.1		—		3.1
Total liabilities assumed	286.8		3.3		290.1
Net assets acquired	$	748.7	$	—	$	748.7

Measurement period adjustments

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to property, plant, and equipment, operating lease right-of-use assets, intangible assets, goodwill, and deferred income taxes. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

Intangible assets identified

The preliminary purchase price allocation included $338.4 of acquired identifiable intangible assets. Intangible assets consist of FPM’s technology, Baker Perkins trade name, and customer relationships and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, degree of stability in the current FPM customer base, economic factors, and expected future cash flows of the Company following the acquisition of FPM. The technology and Baker Perkins trade name were valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used

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in the valuations included FPM’s future cash flow projections, which were based on estimates used to price the FPM acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (12%).

The preliminary amounts allocated to intangible assets are as follows:


	Gross Carrying Amount		Weighted-Average Useful Life
Customer relationships	$	285.0	15 years
Technology	48.0		12 years
Trade name	4.4		5 years
Other	1.0
Total intangible assets	$	338.4

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. None of the goodwill is expected to be deductible for income tax purposes.

The working capital assets and liabilities, as well as the property, plant, and equipment acquired, were valued using Level 2 inputs, which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

Impact on results of operations

The results of FPM’s operations have been included in Hillenbrand’s Consolidated Financial Statements since the September 1,

2023 acquisition date. The following table provides the results of operations for FPM included in Hillenbrand’s Consolidated

Statement of Operations:


	Three Months Ended December 31, 2023
Net revenue	$	146.0
Income from continuing operations before income taxes	14.1

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 $59.2, ~~net of certain customary post-closing adjustments and~~ including cash acquired, using available borrowings under ~~its multi-currency revolving credit facility (the “Facility”).~~the Facility. Headquartered in Sidney, Ohio, Peerless is a premier supplier of industrial food processing equipment.

The acquisition of Peerless ~~increases~~increased the Company's scale in the food end market, and by combining Peerless’ highly complementary equipment and solutions with existing Advanced Process Solutions reportable operating segment technologies now allows the Company to deliver more comprehensive solutions to its customers.

The results of Peerless since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

~~Preliminary purchase~~Purchase price allocation and other items

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The ~~purchase price allocation of the assets acquired and liabilities assumed is preliminary until the contractual post-closing adjustments are finalized,~~following table summarizes the final ~~independent valuation consultant report is issued, and the measurement period allowed for under ASC 805 has closed. The final determination~~fair values 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 Peerless has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:

~~Table of Contents~~


		December 1, 2022 (as initially reported)		Measurement Period Adjustments		December 1, 2022 (as adjusted)
	December 1, 2022 (as initially reported)							December 1, 2022 (as initially reported)	Measurement Period Adjustments	December 1, 2022 (as adjusted)
Assets acquired:	Assets acquired:
Current assets
Current assets
Current assets	Current assets	$	16.2	$	1.3	$	17.5
Property, plant, and equipment	Property, plant, and equipment	2.3		—		2.3
Intangible assets	Intangible assets	—		25.3		25.3
Goodwill	Goodwill	50.9		(27.3)		23.6
Total assets acquired	Total assets acquired	69.4		(0.7)		68.7

Liabilities assumed:	Liabilities assumed:
Liabilities assumed:
Liabilities assumed:
Current liabilities
Current liabilities
Current liabilities	Current liabilities	9.5		—		9.5

Total liabilities assumed	Total liabilities assumed	9.5		—		9.5
Total liabilities assumed
Total liabilities assumed
Net assets acquired	Net assets acquired	$	59.9	$	(0.7)	$	59.2

Measurement period adjustments

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions ~~are~~were subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table ~~above.~~above, however, no material adjustments were recorded in the three months ended December 31, 2023. Adjustments were primarily made to intangible assets and goodwill. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

During the quarter ended December 31, 2023, the purchase price allocation for the acquisition was finalized.

Intangible assets identified

The ~~preliminary~~ purchase price allocation included $25.3 of acquired identifiable intangible assets. Intangible assets consist of Peerless’ trade name and customer relationships, and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, stability in the current Peerless customer base, economic factors, and future expected cash flows of the Company following the acquisition of Peerless. The trade name was valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used in the valuations included Peerless cash flow projections, which were based on estimates used to price the Peerless acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (13%).

The ~~preliminary~~ amounts allocated to intangible assets are as follows:


	Gross Carrying Amount		Weighted-Average Useful Life
Customer relationships	$	22.0	13 years
Trade name	3.3		10 years
Total intangible assets	$	25.3

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.

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(decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

~~Impact on results of operations~~

The results of Peerless’ operations have been included in Hillenbrand’s Consolidated Financial Statements since the December 1, 2022, acquisition date. The following table provides the results of operations for Peerless included in Hillenbrand’s Consolidated Statement of Operations:

Three Months Ended June 30, 2023 Nine Months Ended June 30, 2023
Net revenue $ 6.5 $ 17.9
Income from continuing operations before income taxes 0.3 0.4

During the nine months ended June 30, 2023, the Company incurred $0.5 in acquisition expenses related to the Peerless acquisition, which are included in operating expenses in the Consolidated Statement of Operations.

~~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 included in the Advanced Process Solutions reportable operating segment.~~

~~Purchase price allocation and other items~~

The Company utilized the services of an independent valuation consultant, along with estimates and assumptions determined 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:

~~Table of Contents~~

October 6, 2022 (as initially reported) Measurement Period Adjustments October 6, 2022 (as adjusted)
Assets acquired:
Cash and cash equivalents $ 22.9 $ — $ 22.9
Trade receivables 31.5 — 31.5
Receivables from long-term manufacturing contracts 12.1 — 12.1
Inventories 80.1 — 80.1
Prepaid expenses and other current assets 11.7 — 11.7
Property, plant, and equipment 36.7 1.1 37.8
Operating lease right-of-use assets 15.0 — 15.0
Intangible assets 243.8 — 243.8
Goodwill 332.0 (0.9) 331.1
Other noncurrent assets 1.0 — 1.0
     Total assets acquired 786.8 0.2 787.0
Liabilities assumed:
Trade accounts payable 18.9 — 18.9
Liabilities from long-term manufacturing contracts 52.0 — 52.0
Accrued compensation 10.3 — 10.3
Other current liabilities 19.6 1.4 21.0
Accrued pension and postretirement healthcare 3.9 — 3.9
Operating lease liabilities 9.4 — 9.4
Deferred income taxes 77.0 (1.2) 75.8
Other noncurrent liabilities 0.3 — 0.3
     Total liabilities assumed 191.4 0.2 191.6
          Net assets acquired 595.4 — 595.4
Less: Fair value of Linxis noncontrolling interest (1)
(4.6) — (4.6)
Purchase price consideration $ 590.8 $ — $ 590.8

~~(1)~~ While the Company acquired all issued and outstanding securities of Linxis in the acquisition, there remain certain noncontrolling interests in two subsidiaries of Linxis that existed as of the acquisition date.

~~Measurement period adjustments~~

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to property, plant and equipment, other current liabilities, deferred income taxes, and goodwill. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

~~Intangible assets identified~~

The preliminary purchase price allocation included $243.8 of acquired identifiable intangible assets. Intangible assets consist of Linxis’s trade name portfolio and customer relationships and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, degree of stability in the current Linxis customer base, economic factors, and expected future cash flows of the Company following the acquisition of Linxis. The trade

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name portfolio was valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used in the valuations included Linxis cash flow projections, which were based on estimates used to price the Linxis acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (12%).

~~The preliminary amounts allocated to intangible assets are as follows:~~


	~~Gross Carrying Amount~~		~~Weighted-Average Useful Life~~
~~Customer relationships~~	$	~~211.1~~	~~13 years~~
~~Trade name~~	~~32.7~~		~~10 years~~
~~Total intangible assets~~	$	~~243.8~~

Impact on results of operations

The results of ~~Linxis~~Peerless’ operations have been included in Hillenbrand’s Consolidated Financial Statements since the ~~October 6,~~December 1, 2022 acquisition date. The following table provides the results of operations for ~~Linxis~~Peerless included in Hillenbrand’s Consolidated ~~Statement~~Statements of Operations:


		Three Months Ended June 30, 2023		Nine Months Ended June 30, 2023
	Three Months Ended December 31, 2023					Three Months Ended December 31, 2023	Three Months Ended December 31, 2022
Net revenue	Net revenue	$	86.0	$	238.5
Income from continuing operations before income taxes	Income from continuing operations before income taxes	5.9		3.3

During the ~~nine~~three months ended ~~June 30, 2023,~~December 31, 2022, the Company incurred ~~$1.3~~$1.2 in acquisition expenses related to the ~~Linxis~~Peerless acquisition, which are included in operating expenses in the Consolidated Statement of Operations.

Acquisition of ~~Herbold Meckesheim GmbH~~LINXIS Group SAS

On ~~August 31,~~October 6, 2022, the Company completed the acquisition of ~~Herbold Meckesheim GmbH~~LINXIS Group SAS (“~~Herbold”~~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 ~~$77.7~~total aggregate consideration of $590.8 (€~~77.5)~~596.2) in cash, ~~pursuant~~reflecting an approximate enterprise value of $566.8 (€572.0) plus cash acquired at closing. The Company used available borrowings under the Facility to a definitive acquisition agreement dated June 30, 2022. Based in Meckesheim, Germany, Herbold is a leader in recycling systems, specializing in key process steps such as washing, separating, drying, shredding, and pulverizing.fund this acquisition.

~~The acquisition of Herbold advances the Company’s long term growth strategy~~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 the ~~key end market~~design, manufacturing, and service of ~~recycling. Herbold offers highly complementary technologies to Hillenbrand’s Coperion branded products~~dosing, kneading, mixing, granulating, drying, and ~~enhances~~coating technologies. The purchase price allocation was finalized during the ~~Company’s offering of complete recycling solutions.~~

year ended September 30, 2023. The results of ~~Herbold~~Linxis since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

~~Table of Contents~~

~~Preliminary purchase price allocation and other items~~

The Company utilized the services of an independent valuation consultant, along with estimates and assumptions determined 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 Herbold has been allocated to individual assets acquired and liabilities assumed as of the acquisition date:

August 31, 2022 (as initially reported) Measurement Period Adjustments August 31, 2022 (as adjusted)
Assets acquired:
Current assets $ 38.2 $ 1.4 $ 39.6
Property, plant, and equipment 4.7 1.9 6.6
Intangible assets — 22.6 22.6
Goodwill 69.3 (12.3) 57.0
Other assets 5.3 — 5.3
     Total assets acquired 117.5 13.6 131.1
Liabilities assumed:
Current liabilities 33.9 6.6 40.5
Other long-term liabilities 5.9 7.0 12.9
     Total liabilities assumed 39.8 13.6 53.4
          Net assets acquired $ 77.7 $ — $ 77.7

~~Measurement period adjustments~~

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to intangible assets and goodwill. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

~~Intangible assets identified~~

The preliminary purchase price allocation included $22.6 of acquired identifiable intangible assets. Intangible assets consist of Herbold’s trade name, technology, and customer relationships, and will be amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Company. The determination of the useful lives is based upon various industry studies, historical acquisition experience, stability in the current Herbold customer base, economic factors, and future expected cash flows of the Company following the acquisition of Herbold. The trade name and technology were valued using the relief-from-royalty method of the income approach. Customer relationships were valued using the multi-period excess earnings method of the income approach. Significant assumptions used in the valuations included Herbold cash flow projections, which were based on estimates used to price the Herbold acquisition, discount rates that were benchmarked with reference to the implied rate of return to the Company’s pricing model, and the applicable weighted-average cost of capital (20%).

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~~The preliminary amounts allocated to intangible assets are as follows:~~


	~~Gross Carrying Amount~~		~~Weighted-Average Useful Life~~
~~Customer relationships~~	$	~~10.2~~	~~15 years~~
~~Trade name~~	~~8.0~~		~~10 years~~
~~Technology~~	~~4.4~~		~~7 years~~
~~Total intangible assets~~	$	~~22.6~~

The working capital assets and liabilities, as well as the property, plant and equipment acquired, were valued using Level 2 inputs, which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

~~Impact on results of operations~~

The results of Herbold’s operations have been included in Hillenbrand’s Consolidated Financial Statements since the August 31, 2022, acquisition date. The following table provides the results of operations for Herbold included in Hillenbrand’s Consolidated Statement of Operations:

Three Months Ended June 30, 2023 Nine Months Ended June 30, 2023
Net revenue $ 16.2 $ 48.4
Income (loss) from continuing operations before income taxes 0.6 (2.8)

~~During the nine months ended June 30, 2023, the acquisition expenses related to the Herbold acquisition were not material.~~

~~Acquisition of Gabler Engineering GmbH~~

On June 30, 2022, the Company completed the acquisition of Gabler Engineering GmbH (“Gabler”) for $12.9 (€12.6) in cash. Gabler, based in Malsch, Germany, specializes in the design, engineering, manufacturing, and implementation of plants and equipment for the confectionery and pharmaceutical industries. The final determination of the fair value of assets acquired and liabilities assumed was completed during the three months ended June 30, 2023. The majority of the purchase price allocation was assigned to the fair value of the acquired property, plant and equipment, working capital assets and liabilities, and residual goodwill (which was $6.2). There were no material changes in the purchase price allocation during the three and nine months ended June 30, 2023 and no further changes will be made. Goodwill is not deductible for tax purposes. The results of Gabler are included in the Advanced Process Solutions reportable operating segment and are not material to the Consolidated Financial Statements for the three and nine months ended June 30, 2023.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below for the historical period is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the ~~Gabler, Herbold, Linxis,~~Peerless and ~~Peerless~~FPM acquisitions had been completed on the date indicated, do not reflect synergies that might have been achieved, and are not indicative of future results of operations or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that Hillenbrand believes are reasonable under the circumstances.

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The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the acquisitions of ~~Gabler, Herbold, Linxis,~~Peerless and ~~Peerless~~FPM had occurred on October 1, ~~2021,~~2022, to give effect to certain events that Hillenbrand believes to be directly attributable to the acquisitions. These pro forma adjustments primarily include:

•an increase to depreciation and amortization expense that would have been recognized due to acquired tangible and intangible assets;

•an adjustment to ~~interest expense to reflect the additional borrowings of Hillenbrand and the repayment of Linxis’s historical debt in conjunction with the acquisition;~~

•~~an adjustment to~~ remove business acquisition and integration costs and inventory step-up costs during the three ~~and nine~~ months ended ~~June 30, 2023,~~December 31, 2022, as these costs are non-recurring in nature and would not have a continuing effect on Hillenbrand’s results of operations; and

•the related income tax effects of the adjustments noted above.

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The supplemental pro forma financial information for the ~~periods~~historical period presented is as follows:

Three Months Ended
June 30, Nine Months Ended
June 30,
2023 2022 2023 2022
Net revenue $ 716.6 $ 675.4 $ 2,069.0 $ 2,022.6
Income from continuing operations attributable to Hillenbrand 43.6 27.1 107.3 75.7
Income from continuing operations attributable to Hillenbrand — per share of common stock:
Basic earnings per share from continuing operations $ 0.62 $ 0.38 $ 1.54 $ 1.05
Diluted earnings per share from continuing operations $ 0.62 $ 0.38 $ 1.53 $ 1.04


	Three months ended December 31,
	2022
Net revenue	$	813.5
Income from continuing operations attributable to Hillenbrand	21.2

Income from continuing operations attributable to Hillenbrand — per share of common stock:
Basic earnings per share from continuing operations	$	0.31
Diluted earnings per share from continuing operations	$	0.30

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6.Supplemental Consolidated Balance Sheet Information


		June 30, 2023		September 30, 2022
	December 31, 2023					December 31, 2023	September 30, 2023
Allowance for credit losses	Allowance for credit losses	$	8.1	$	6.4

Warranty reserves	Warranty reserves	$	28.6	$	22.4
Warranty reserves
Warranty reserves

Accumulated depreciation on property, plant, and equipment	Accumulated depreciation on property, plant, and equipment	$	219.0	$	197.6
Accumulated depreciation on property, plant, and equipment
Accumulated depreciation on property, plant, and equipment

Inventories, net:
Inventories, net:
Inventories, net:	Inventories, net:
Raw materials and components	Raw materials and components	$	251.7	$	210.1
Work in process	Work in process	130.8		107.9
Finished goods	Finished goods	185.9		167.6
Total inventories, net	Total inventories, net	$	568.4	$	485.6

Other current liabilities:	Other current liabilities:
Other current liabilities:
Other current liabilities:
Income tax payable
Income tax payable
Income tax payable	Income tax payable	$	96.2	$	33.6
Other current liabilities	Other current liabilities	222.7		172.1
Total other current liabilities	Total other current liabilities	$	318.9	$	205.7

The following table provides a reconciliation of cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows:


		June 30, 2023		June 30, 2022
	December 31, 2023					December 31, 2023	December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	290.5	$	282.5
Cash and cash equivalents held for sale	Cash and cash equivalents held for sale	—		1.9
Short-term restricted cash included in other current assets	Short-term restricted cash included in other current assets	0.8		1.1

Total cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale shown in the Consolidated Statements of Cash Flows	Total cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale shown in the Consolidated Statements of Cash Flows	$	291.3	$	285.5
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale shown in the Consolidated Statements of Cash Flows
Total cash and cash equivalents, restricted cash, and cash and cash equivalents held for sale shown in the Consolidated Statements of Cash Flows

Supplier Finance Program

The Company has agreements with third-party financial institutions to facilitate supply chain finance (“SCF”) programs. The SCF programs allow qualifying suppliers to sell their receivables, on an invoice level at the selection of the supplier, from the Company to the financial institutions and negotiate their outstanding receivable arrangements and associated fees directly with the financial institutions. Hillenbrand is not party to the agreements between the supplier and the financial institutions. The supplier invoices that have been confirmed as valid under the SCF programs require payment in full by the financial institutions to the supplier by the original maturity date of the invoice, or discounted payment at an earlier date as agreed upon with the supplier. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier’s participation in the SCF programs.

All outstanding amounts related to suppliers participating in the SCF programs are recorded upon confirmation with the third-party financial institutions in trade accounts payable in the Consolidated Balance Sheets, and associated payments are included in cash used in operating activities in the Consolidated Statements of Cash Flows. The Company’s outstanding obligations included in trade accounts payable as of December 31, 2023 and September 30, 2023, were $29.4 and $29.1, respectively.

Trade Receivables Financing

During the three months ended December 31, 2023, the Company executed an amendment of its trade receivables financing arrangement (as amended, the “Amended Arrangement”) with a financial institution. In accordance with ASC 869, Transfers and Servicing, this Amended Arrangement is deemed a true sale, as the Company retains no rights or interest and has no

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obligations with respect to the trade receivables. The Company had proceeds from the sale of trade receivables under the Amended Arrangement of $61.3 for the three months ended December 31, 2023 ($0.0 for the three months ended December 31, 2022). As of December 31, 2023 and September 30, 2023, trade receivables in the amount of $30.4 and $0.0, respectively, were sold to the financial institution and are not reflected in the trade receivables in the Consolidated Balance Sheets.

7.Leases

For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022, the Company recognized ~~$5.6~~$8.5 and ~~$20.8, and $6.1 and $19.0~~$7.1 of operating lease expense, respectively, including short-term lease expense and variable lease costs, which were immaterial in each period. The Company’s finance leases were insignificant as of ~~June 30,~~December 31, 2023 and September 30, ~~2022.~~2023.

The following table presents supplemental Consolidated Balance Sheet information related to the Company’s operating leases:


		June 30, 2023			September 30, 2022
	December 31, 2023											December 31, 2023					September 30, 2023
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	$	105.9		$	87.9		Operating lease right-of-use assets, net	$	118.8				$	111.3

Other current liabilities
Other current liabilities
Other current liabilities	Other current liabilities	17.5			15.7			19.2					18.6
Operating lease liabilities	Operating lease liabilities	83.0			70.5			Operating lease liabilities	92.0					88.1
Total operating lease liabilities	Total operating lease liabilities	$	100.5		$	86.2		Total operating lease liabilities	$	111.2				$	106.7

Weighted-average remaining lease term (in years)	Weighted-average remaining lease term (in years)	5.7			7.9
Weighted-average remaining lease term (in years)
Weighted-average remaining lease term (in years)									6.9					7.1

Weighted-average discount rate	Weighted-average discount rate	3.6		%	2.7		%
Weighted-average discount rate
Weighted-average discount rate									3.9		%			3.8		%

~~Table of Contents~~

As of ~~June 30,~~December 31, 2023, the maturities of the Company’s operating lease liabilities were as follows:


2023 (excluding the nine months ended June 30, 2023)		$	5.8
2024		20.0
2024 (excluding the three months ended December 31, 2023)
2025	2025	16.8
2026	2026	14.1
2027	2027	12.1
2028
Thereafter	Thereafter	44.5
Total lease payments	Total lease payments	113.3
Less: imputed interest	Less: imputed interest	(12.8)
Total present value of lease payments	Total present value of lease payments	$	100.5

Supplemental Consolidated Statements of Cash Flow information related to the Company’s operating leases is as follows:


		Nine Months Ended June 30,
		2023		2022
	Three Months Ended December 31,						Three Months Ended December 31,
	2023					2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	17.9	$	15.7
Operating lease right-of-use assets, net obtained in exchange for new operating lease liabilities	Operating lease right-of-use assets, net obtained in exchange for new operating lease liabilities	10.4		18.3
Operating leases acquired in acquisitions	Operating leases acquired in acquisitions	15.3		—

8.Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at the lower of cost or fair value. Intangible assets are amortized on a straight-line basis over periods ranging from three to 21 years, representing the period over which the Company expects to receive future economic benefits from these assets. The Company assesses the carrying value of indefinite-lived trade names annually, or more often if events or changes in circumstances indicate there may be an impairment.

Table of Contents

The following table summarizes the carrying amounts and related accumulated amortization for intangible assets as of:


		June 30, 2023				September 30, 2022					December 31, 2023		September 30, 2023
		Cost		Accumulated Amortization		Cost		Accumulated Amortization			Cost	Accumulated Amortization		Cost	Accumulated Amortization
Finite-lived assets:	Finite-lived assets:									Finite-lived assets:
Customer relationships	Customer relationships	$	1,024.4	$	(276.5)	$	739.6	$	(221.1)
Trade names		48.1		(3.6)		—		—
Technology, including patents	Technology, including patents	142.1		(80.8)		132.9		(68.4)
Software	Software	39.7		(31.0)		34.4		(27.0)
Trade names



		1,254.3		(391.9)		906.9		(316.5)
Indefinite-lived assets:	Indefinite-lived assets:									Indefinite-lived assets:
Trade names	Trade names	223.2		—		217.6		—

Total	Total	$	1,477.5	$	(391.9)	$	1,124.5	$	(316.5)
Total
Total

Finite-lived intangible assets, net of $742.0 and $740.0 are included in the Advanced Process Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. Indefinite-lived intangible assets of $112.0 and $109.3 are included in the Advanced Process Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. The net change in intangible assets in the Advanced Process Solutions reportable operating segment during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, was driven primarily by ~~the acquisitions of Linxis, Herbold, and Peerless which included acquired intangible assets of $291.7, including impact of~~acquisition measurement period adjustments, ~~normal~~ amortization, and foreign currency adjustments. ~~See Note 5 for further detail on the acquisitions of Linxis, Herbold, and Peerless. Estimated amortization expense related to~~Finite-lived intangible assets, ~~for~~net of $412.6 and $412.9 are included in the ~~next five years is: $76.1~~Molding Technology Solutions reportable operating segment at December 31, 2023 and September 30, 2023, respectively. Indefinite-lived intangible assets of $112.1 are included in the Molding Technology Solutions reportable operating segment at both December 31, 2023 ~~$76.0~~and September 30, 2023. The net change in ~~2024, $73.2~~intangible assets in ~~2025, $72.4 in 2026,~~the Molding Technology Solutions reportable operating segment during the three months ended December 31, 2023, was driven primarily by amortization and ~~$72.4 in 2027.~~foreign currency adjustments.

~~Table of Contents~~

Goodwill

Goodwill is not amortized, but is subject to annual impairment tests. Goodwill has been assigned to reporting units within the reportable operating segments. The Company assesses the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment. Impairment testing is performed at a reporting unit level.

The following table summarizes the changes in the Company’s goodwill, by reportable operating segment, for the ~~nine~~three months ended ~~June 30,~~December 31, 2023:

Advanced Process Solutions Molding Technology Solutions Total
Balance as of September 30, 2022 $ 516.0 $ 635.1 $ 1,151.1
Acquisitions(1)
354.7 — 354.7
Acquisition measurement period adjustments (11.8) — (11.8)
Foreign currency adjustments 64.1 3.3 67.4
Balance as of June 30, 2023 $ 923.0 $ 638.4 $ 1,561.4

~~(1)See Note 5 for further information on the acquisitions of Linxis and Peerless.~~


	Advanced Process Solutions		Molding Technology Solutions		Total
Balance as of September 30, 2023	$	1,394.9	$	633.2	$	2,028.1

Acquisition measurement period adjustments	(12.1)		—		(12.1)


Foreign currency adjustments	35.9		9.6		45.5
Balance as of December 31, 2023	$	1,418.7	$	642.8	$	2,061.5

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022, the Company did not observe any triggering events or substantive changes in circumstances requiring the need for an interim impairment assessment.

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9.Financing Agreements

The following table summarizes Hillenbrand’s current and long-term debt as of:

June 30,
2023 September 30,
2022
$1,000.0 revolving credit facility (excluding outstanding letters of credit) $ 27.3 $ 6.7
$200.0 term loan 195.0 —
$400.0 senior unsecured notes (1)
397.8 397.1
$375.0 senior unsecured notes (2)
372.7 372.2
$350.0 senior unsecured notes (3)
346.5 346.2
$100.0 Series A Notes (4)
— 99.9
Total debt 1,339.3 1,222.1
Less: current portion 10.0 —
Total long-term debt $ 1,329.3 $ 1,222.1


	December 31, 2023		September 30, 2023
$1,000 revolving credit facility (excluding outstanding letters of credit)	$	530.6	$	505.1
$200 term loan	190.0		192.5
€185 term loan	203.0		195.0
$400 senior unsecured notes (1)	398.4		398.0
$375 senior unsecured notes (2)	373.0		372.9
$350 senior unsecured notes (3)	346.8		346.6


Total debt	2,041.8		2,010.1
Less: current portion	20.3		19.7
Total long-term debt	$	2,021.5	$	1,990.4

(1)Includes unamortized debt issuance costs of ~~$2.2~~$1.6 and ~~$2.9~~$2.0 at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, respectively.

(2)Includes unamortized debt issuance costs of ~~$2.0~~$1.7 and ~~$2.5~~$1.8 at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, respectively.

(3)Includes unamortized debt issuance costs of ~~$3.5~~$3.2 and ~~$3.8~~$3.4 at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, respectively.

~~(4)Includes unamortized debt issuance costs of $0.1 at September 30, 2022.~~

~~Primary Credit Facilities~~

~~$1,000.0 Revolving Credit Facility, $200.0 Term Loan, and €185.0 Term Loan Commitment~~

On June 21, 2023, the Company entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement (the “Credit Agreement Amendment”), which governs our multi-currency revolving credit facility (the “Facility”), by and among Hillenbrand and certain of its affiliates, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”). The Credit Agreement Amendment amends the Company’s Fourth Amended and Restated Credit Agreement, dated as of June 8, 2022 (the “Prior Credit Agreement,” and, as amended by the Credit Agreement Amendment, the “Amended Credit Agreement”). The amendments effected by the Credit Agreement Amendment include, among other changes, establishment of a euro-denominated, delayed-draw term loan facility available to the Company’s wholly owned subsidiary, Hillenbrand Switzerland GmbH, in an initial aggregate principal amount of up to €185.0 (the “New Term Loan”) and the inclusion of requirements that would be triggered by a Collateral Springing Event (described below).

~~Table of Contents~~

The New Term Loan commitment is subject to ticking fees if not drawn within 60 days of the date of the Credit Agreement Amendment, and the New Term Loan commitment will expire 180 days after the date of the Credit Agreement Amendment. The New Term Loan, if drawn, will be subject to quarterly amortization payments equal to 1.25% of the funded New Term Loan for the first eight calendar quarters following the funding date, and 1.875% of the funded New Term Loan thereafter until the maturity date. The New Term Loan would, once drawn, accrue interest at the Adjusted EURIBO Rate (as defined in the Amended Credit Agreement) plus a margin, ranging from 1.00% to 2.25%, based on the Company’s leverage ratio.~~The New Term Loan, if drawn, will mature on June 8, 2027, concurrently with the other obligations under the Credit Agreement Amendment.~~

As ~~compared to~~of December 31, 2023, the ~~Prior Credit Agreement,~~Company had $20.8 in outstanding letters of credit issued and $448.6 of borrowing capacity under the ~~Credit Agreement Amendment increases~~Facility, all of which was immediately available based on the ~~maximum permitted leverage ratio from~~Company’s most restrictive covenant. The weighted-average interest rate on borrowings under the Facility was 5.84% and ~~after the commencement of the Credit Agreement Amendment Adjusted Period from 4.00x at June 30, 2023 to 4.50x for the twelve month period ending June 30, 2024, stepping down to 4.00x~~2.23% for the three months ended ~~September 30, 2024 and~~ December 31, ~~2024, to 3.75x~~2023 and 2022, respectively. The weighted average facility fee on the Facility was 0.20% and 0.15% for the three months ended ~~March~~December 31, ~~2025,~~2023 and ~~to 3.50x~~2022, respectively. The weighted-average interest rate on the $200 term loan was 5.60% and 5.43% for the three months ended ~~June 30, 2025~~December 31, 2023 and ~~thereafter.~~2022, respectively. The ~~Credit Agreement Amendment also requires mandatory prepayments of~~weighted-average interest rate on the ~~New Term Loan with 100% of net proceeds from asset sales (subject to customary carveouts and reinvestment rights) and, as compared to~~€185 term loan was 5.60% for the ~~Prior Credit Agreement, contains additional limitations~~three months ended December 31, 2023. There were no borrowings on ~~liens and restricted payments~~the €185 term loan during the Adjustment Period (defined below). Except for the amendments applicable during the Adjustment Period (defined below), the Credit Agreement Amendment contains substantially the same affirmative and negative covenants and events of default as those in the Prior Credit Agreement. Newthree months ended December 31, 2022.

Remaining unamortized deferred financing costs related to the ~~Credit Agreement Amendment~~Facility, $200 term loan and €185 term loan were ~~$2.6, which along with existing costs~~$5.6 in aggregate, as of ~~$3.4,~~December 31, 2023, and are being amortized to interest expense over the remaining term of ~~the Facility.~~

With respect to the Facility, as of June 30, 2023 and September 30, 2022, the Company had outstanding balances of $27.3 and $6.7, respectively. As of June 30, 2023, the Company had $14.8 in outstanding letters of credit issued and $1,160.2 of borrowing capacity under the Facility, of which $790.2 was immediately available based on the Company’s most restrictive covenant. During the nine months ended June 30, 2023, the Company executed a $200.0 draw on the term loan commitment provided for by the Prior Credit Agreement. The term loan will mature upon the maturity date of the Facility, June 8, 2027. The weighted-average interest rate on borrowings under the Facility was 4.45% and 2.55% for the three and nine months ended June 30, 2023, respectively. There were no borrowings under the Facility during the three and nine months ended June 30, 2022. The weighted-average interest rate on the term loan was 6.52% and 6.12% for the three and nine months ended June 30, 2023, respectively. There were no borrowings on the term loan during the three and nine months ended June 30, 2022. The weighted average facility fee on the Facility was 0.19% and 0.17% for the three and nine months ended June 30, 2023, respectively, and 0.15% for both the three and nine months ended June 30, 2022.

~~Letter of Guarantee (“L/G”) Facility~~

On June 22, 2023, the Company entered into an Amendment and Restatement Agreement (the “L/G Amendment”) between the Company, the subsidiary borrowers party thereto, the subsidiary guarantors party thereto, Commerzbank Aktiengesellschaft, as mandated lead arranger and bookrunner, Commerzbank Aktiengesellschaft (as successor to Commerzbank Finance & Covered Bond S.A.), as agent (in such capacity, the “L/G Agent”), and the other financial institutions party thereto as mandated lead arrangers, lenders and issuing banks.

The L/G Amendment amends and restates the Company’s Syndicated L/G Facility Agreement, dated June 21, 2022 (the “Prior L/G Agreement” and, as amended by the L/G Amendment, the “Amended L/G Facility Agreement”). The amendments effected by the L/G Amendment include, among other changes, an increase in the facility from €225.0 to €325.0 and the inclusion of requirements that would be triggered by a Collateral Springing Event (described below).

As compared to the Prior L/G Agreement, the Amended L/G Facility Agreement increases the maximum permitted leverage ratio from and after the commencement of the L/G Adjusted Period from 4.00x at June 30, 2023 to 4.50x for the twelve month period ended June 30, 2024, stepping down to 4.00x for the three months ended September 30, 2024 and December 31, 2024, to 3.75x for the three months ended March 31, 2025, and to 3.50x for the three months ended June 30, 2025 and thereafter. The Amended L/G Facility Agreement also, as compared to the Prior L/G Agreement, contains additional limitations on liens and restricted payments during the Adjustment Period (defined below). Except for the amendments applicable during the Adjustment Period (defined below), the Amended L/G Facility Agreement contains substantially the same affirmative and negative covenants and events of default as those in the Prior L/G Agreement. New deferred financing costs related to the Amended L/G Facility Agreement were $0.7, which along with existing costs of $1.0, are being amortized to interest expense over the remaining term of the Amended L/G Facility Agreement.

~~Table of Contents~~

Letters of credit, guarantees and surety bonds are routinely required by customers of the Company’s industrial businesses. Guarantees may be issued in euros or certain other agreed-upon currencies. Specified sublimits apply, based on the specific lender and currency. The guarantees carry an annual fee that varies based on the Company’s leverage ratio. The Amended L/G Facility Agreement also provides for a leverage-based commitment fee assessed on the undrawn portion of the facility. The Amended L/G Facility Agreement matures on the earlier of (i) June 21, 2028, and (ii) the date of the termination of the Amended Credit Agreement (as such agreement may be from time to time extended or refinanced). The Amended L/G Facility Agreement contains representations, warranties and covenants that are customary for agreements of this type and contains specified customary events of default. The obligations under the Amended L/G Facility Agreement are guaranteed by Hillenbrand and certain of its domestic subsidiaries named therein.

~~Collateral Springing Event~~

The Amended Credit Agreement and the Amended L/G Facility Agreement require the Company and certain domestic subsidiaries that are guarantors thereunder to take certain actions if a Collateral Springing Event (as defined in the agreements) occurs before the later of April 1, 2025 or the date that all principal, interest, and other amounts owing in respect of the New Term Loan have been paid in full (the “Adjustment Period”). After a Collateral Springing Event, the Company and the guarantors would be required to grant liens on substantially all of their assets (subject to customary exceptions for excluded assets, including an exception for Principal Property (as defined in the Company’s indentures in respect of its senior notes) and for capital stock of entities that own any such Principal Property) in favor of the Administrative Agent and L/G Agent, as applicable, for the benefit of the secured parties.

~~Other credit arrangements~~these agreements.

In the normal course of business, ~~certain operating companies within our reportable operating segments provide~~the Company provides, primarily to certain customers, bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, the Company maintains adequate capacity to provide the guarantees. As of ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, the Company had credit arrangements totaling ~~$577.9~~$605.5 and ~~$373.6,~~$587.9, respectively, under which ~~$328.9~~$356.4 and ~~$247.4,~~$326.9, respectively, were used for guarantees. These arrangements include the Company’s ~~Amended~~Syndicated L/G Facility Agreement (“L/G Facility”) and other ancillary credit facilities.

~~Covenants~~ Remaining unamortized deferred financing costs related to ~~current financing agreements~~

~~The Amended Credit Agreement and Amended~~the L/G Facility ~~Agreement contain the following financial covenants for the current quarter: a maximum leverage ratio (as described above~~were $1.5 as of December 31, 2023, and ~~defined in the agreements) of 4.00 to 1.00 and a minimum ratio of earnings before interest, income tax, depreciation, and amortization (“EBITDA”) (as defined in the agreements)~~are being amortized to interest expense ~~of 3.00 to 1.00. As permitted in~~over the Amended Credit Agreement and Amended L/G Facility Agreement, the Company may elect to increase the maximum permitted leverage ratio to 4.00 to 1.00, following certain acquisitions, for four full fiscal quarters (plus the fiscal quarter in which the acquisition takes place). Following the acquisition of Linxis on October 6, 2022, the Company elected to increase the maximum permitted leverage ratio to 4.00 to 1.00 for the quarter ended December 31, 2022, and for the four succeeding quarters. The Credit Agreement Amendment will supersede this election beginning with the three months ended September 30, 2023, resulting in a maximum permitted leverage ratio of 4.50 to 1.00, as described above. The Company has one remaining permitted election to increase the maximum permitted leverage ratio to 4.00 to 1.00, to begin no earlier than the later of six months after the Credit Agreement Adjustment period has ended on April 1, 2025, or the date on which the New Term Loan is fully paid. The obligations under the Amended Credit Agreement and Amended L/G Facility Agreement are unsecured, but are subject to potential Collateral Springing Events as described above.

~~All obligations~~term of the Company arising under the Amended Credit Agreement, Amended L/G Facility Agreement, $400.0 of senior unsecured notes due June 2025 (the “2020 Notes”), $375.0 of senior unsecured notes due September 2026 (the “2019 Notes”), and the $350.0 of senior unsecured notes due March 2031 (the “2021 Notes”), are fully and unconditionally, jointly and severally, guaranteed by certain of the Company’s domestic subsidiaries.agreement.

As of ~~June 30,~~December 31, 2023, Hillenbrand was in compliance with all covenants contained in the foregoing agreements and credit instruments and there were no events of default.

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~~Long Term Notes~~

~~$100.0 Series A Unsecured Notes~~

On December 15, 2014, the Company issued $100.0 in 4.60% Series A unsecured notes (“Series A Notes”) pursuant to the Private Shelf Agreement, dated as of December 6, 2012 (as amended, the “Shelf Agreement”), among the Company, Prudential Investment Management, Inc. (“Prudential”) and each Prudential Affiliate (as defined therein) that became a purchaser thereunder. During the nine months ended June 30, 2023, the Company repaid in full the $100.0 in Series A Notes using a portion of the net proceeds from the Batesville divestiture and wrote off the remaining issuance costs associated with the Series A Notes.

10.Retirement Benefits

Defined Benefit Plans

Components of net periodic pension cost (benefit) ~~cost~~ included in the Consolidated Statements of Operations were as follows:


		U.S. Pension Benefits				Non-U.S. Pension Benefits
		Three Months Ended June 30,				Three Months Ended June 30,
	U.S. Pension Benefits											U.S. Pension Benefits			Non-U.S. Pension Benefits
	Three Months Ended December 31,												Three Months Ended December 31,
		2023		2022		2023		2022		2023	2022			2023		2022
Service costs	Service costs	$	—	$	—	$	0.4	$	0.4
Interest costs	Interest costs	2.7		1.5		1.2		0.2
Expected return on plan assets	Expected return on plan assets	(3.4)		(2.7)		(0.3)		(0.2)

Amortization of net loss (gain)	Amortization of net loss (gain)	0.1		0.3		(0.3)		0.4
Amortization of net loss (gain)
Amortization of net loss (gain)
Settlement charge
Net periodic pension (benefit) cost	Net periodic pension (benefit) cost	$	(0.6)	$	(0.9)	$	1.0	$	0.8

		U.S. Pension Benefits				Non-U.S. Pension Benefits
		Nine Months Ended June 30,				Nine Months Ended June 30,
		2023		2022		2023		2022
Service costs		$	—	$	—	$	1.4	$	1.5
Interest costs		8.3		4.6		3.1		0.6
Expected return on plan assets		(10.2)		(8.1)		(0.8)		(0.7)

Amortization of net loss (gain)		0.3		1.1		(0.7)		1.0
Net periodic pension (benefit) cost		$	(1.6)	$	(2.4)	$	3.0	$	2.4

On July 18, 2023, we announced an offer to provide former employees who are participants in the Company’s U.S. defined benefit pension plan (the “Plan”) the opportunity to elect a lump sum distribution of their earned Plan benefits. The Plan’s fiduciaries made lump sum payments to electing eligible participants in December 2023, funded by the existing assets in the Plan. As a result, the Company recorded a non-cash settlement pre-tax charge of $8.3 during the three months ended December 31, 2023.

Defined Contribution Plans

Expenses related to the Company’s defined contribution plans were ~~$2.7~~$2.9 and ~~$8.1~~$2.9 for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023, ~~respectively,~~ and ~~$2.3 and $7.0 for the three and nine months ended June 30,~~ 2022, respectively.

11.Income Taxes

The effective tax rates for the three months ended ~~June 30,~~December 31, 2023 and 2022 were ~~35.1%~~33.9% and ~~39.0%~~7.9%, respectively. The ~~decrease~~increase in the effective tax rate was primarily driven by a non-recurring ~~unfavorable change in estimate related to foreign~~discrete tax ~~credits and the impact of tax loss carryforwards within the Molding Technology Solutions reportable operating segment on the net domestic taxes on foreign earnings~~benefit in the prior period ~~partially offset by the revaluation of deferred tax balances as a result of foreign currency fluctuations in the current period.~~

~~Table of Contents~~

~~The effective tax rates for the nine months ended June 30, 2023 and 2022 were 34.6% and 39.7%, respectively.~~ ~~The decrease in the effective tax rate was primarily driven by the favorable recognition of discrete tax benefits~~ resulting from the approval of ~~the~~a reduced incentive tax rate for certain operations located in China and ~~the increase in~~a reduced discrete tax benefit offor equity compensation ~~in the current period,~~ as ~~well as a non-recurring unfavorable change in estimate related~~compared to foreign tax credits, the impact of divestitures, and the impact of tax loss carryforwards within the Molding Technology Solutions reportable operating segment on the net domestic taxes on foreign earnings in the prior ~~period. These items were~~period, partially offset by ~~an increase in~~a reduction of the tax accrual for ~~taxes on unremitted foreign earnings as a result of the divestiture of Batesville and the revaluation of deferred tax balances as a result of foreign currency fluctuations in the current period.~~unrepatriated earnings.

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12.Earnings per share

The dilutive effects of performance-based stock awards were included in the computation of diluted earnings per share at the level the related performance criteria were met through the respective Consolidated Balance Sheet date. Potential dilutive effects, representing approximately ~~350,000~~440,000 and 400,000 shares at ~~June 30,~~December 31, 2023 and 2022, respectively, were excluded from the computation of diluted earnings per share as the related performance criteria were not yet met, although the Company expects to meet various levels of criteria in the future.


		Three Months Ended June 30,				Nine Months Ended June 30,
				Three Months Ended December 31,
				Three Months Ended December 31,
				Three Months Ended December 31,
		2023		2022		2023		2022		2023	2022
Income from continuing operations	Income from continuing operations	$	44.0	$	31.1	$	94.9	$	82.7
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	1.7		1.3		4.8		3.9
Income from continuing operations attributable to Hillenbrand	Income from continuing operations attributable to Hillenbrand	$	42.3	$	29.8	$	90.1	$	78.8

Weighted-average shares outstanding (basic - in millions)	Weighted-average shares outstanding (basic - in millions)	70.0		71.4		69.7		72.4
Weighted-average shares outstanding (basic - in millions)
Weighted-average shares outstanding (basic - in millions)
Effect of dilutive stock options and other unvested equity awards (in millions)	Effect of dilutive stock options and other unvested equity awards (in millions)	0.3		0.6		0.3		0.6
Weighted-average shares outstanding (diluted - in millions)	Weighted-average shares outstanding (diluted - in millions)	70.3		72.0		70.0		73.0

Basic earnings per share from continuing operations attributable to Hillenbrand	Basic earnings per share from continuing operations attributable to Hillenbrand	$	0.60	$	0.42	$	1.29	$	1.09
Basic earnings per share from continuing operations attributable to Hillenbrand
Basic earnings per share from continuing operations attributable to Hillenbrand
Diluted earnings per share from continuing operations attributable to Hillenbrand	Diluted earnings per share from continuing operations attributable to Hillenbrand	$	0.60	$	0.42	$	1.29	$	1.08

Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)	Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)	0.1		0.5		0.4		0.4
Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)
Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)

2821

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13. Accumulated Other Comprehensive Loss

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive loss:


		Pension and Postretirement		Currency Translation (1)		Net Unrealized (Loss) Gain on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests		Total			Pension and Postretirement		Currency Translation (1)		Net Unrealized (Loss) Gain on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests	Total
Balance at September 30, 2022		$	(32.8)	$	(113.7)	$	(9.1)	$	(155.6)
Balance at September 30, 2023														Balance at September 30, 2023	$	(34.5)	$	(107.1)	$	(5.5)	$	(147.1)
Other comprehensive income before reclassifications:	Other comprehensive income before reclassifications:													Other comprehensive income before reclassifications:
Before tax amount	Before tax amount	—		39.2		3.4		42.6		$	(0.6)	$	42.0
Tax expense		—		—		(1.0)		(1.0)		—		(1.0)
Tax benefit
After tax amount	After tax amount	—		39.2		2.4		41.6		(0.6)		41.0
Amounts reclassified from accumulated other comprehensive loss (2)	Amounts reclassified from accumulated other comprehensive loss (2)	(1.8)		—		0.9		(0.9)		—		(0.9)
Net current period other comprehensive (loss) income		(1.8)		39.2		3.3		40.7		$	(0.6)	$	40.1
Balance at June 30, 2023		$	(34.6)	$	(74.5)	$	(5.8)	$	(114.9)
Net current period other comprehensive income
Balance at December 31, 2023														Balance at December 31, 2023	$	(28.5)	$	(57.8)	$	(4.6)	$	(90.9)

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

(2)Amounts are net of tax.


		Pension and Postretirement		Currency Translation (1)		Net Unrealized (Loss) Gain on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests		Total			Pension and Postretirement		Currency Translation (1)		Net Unrealized (Loss) Gain on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests	Total
Balance at September 30, 2021		$	(49.2)	$	13.1	$	(10.2)	$	(46.3)
Balance at September 30, 2022														Balance at September 30, 2022	$	(32.8)	$	(113.7)	$	(9.1)	$	(155.6)
Other comprehensive income (loss) before reclassifications:	Other comprehensive income (loss) before reclassifications:													Other comprehensive income (loss) before reclassifications:
Before tax amount	Before tax amount	1.8		(60.0)		1.0		(57.2)		$	(1.6)	$	(58.8)
Tax expense	Tax expense	(0.2)		—		(0.1)		(0.3)		—		(0.3)
After tax amount	After tax amount	1.6		(60.0)		0.9		(57.5)		(1.6)		(59.1)
Amounts reclassified from accumulated other comprehensive loss (2)	Amounts reclassified from accumulated other comprehensive loss (2)	1.5		—		1.1		2.6		—		2.6
Net current period other comprehensive income (loss)		3.1		(60.0)		2.0		(54.9)		$	(1.6)	$	(56.5)
Net current period other comprehensive (loss) income

Balance at June 30, 2022		$	(46.1)	$	(46.9)	$	(8.2)	$	(101.2)
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022															$	(33.0)	$	(70.5)	$	(5.4)	$	(108.9)

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

(2)Amounts are net of tax.

2922

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Reclassifications out of accumulated other comprehensive loss include:


		Three Months Ended June 30, 2023									Three Months Ended December 31, 2023
		Amortization of Pension and Postretirement (1)				(Gain) Loss on					Amortization of Pension and Postretirement (1)		(Gain) Loss on
		Net Gain Recognized		Prior Service Costs Recognized		Derivative Instruments		Total			Net Loss Recognized	Prior Service Costs Recognized		Derivative Instruments	Total
Affected Line in the Consolidated Statement of Operations:	Affected Line in the Consolidated Statement of Operations:									Affected Line in the Consolidated Statement of Operations:
Net revenue	Net revenue	$	—	$	—	$	0.2	$	0.2
Cost of goods sold	Cost of goods sold	—		—		(0.2)		(0.2)

Other income, net		(0.2)		—		0.5		0.3
Operating expenses
Operating expenses
Operating expenses

Total before tax
Total before tax
Total before tax	Total before tax	$	(0.2)	$	—	$	0.5	$	0.3
Tax expense	Tax expense							(0.1)
Total reclassifications for the period, net of tax	Total reclassifications for the period, net of tax							$	0.2

		Nine Months Ended June 30, 2023
		Amortization of Pension and Postretirement (1)				(Gain) Loss on
		Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue		$	—	$	—	$	0.2	$	0.2
Cost of goods sold		—		—		(1.2)		(1.2)

Other income, net		(0.5)		—		1.5		1.0
Gain on divestiture of discontinued operations (net of income tax expense)		(1.4)		(0.1)		—		(1.5)
Total before tax		$	(1.9)	$	(0.1)	$	0.5	$	(1.5)
Tax benefit								0.6
Total reclassifications for the period, net of tax								$	(0.9)

(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension (benefit) cost (see Note 10).

~~Table of Contents~~


		Three Months Ended June 30, 2022									Three Months Ended December 31, 2022
		Amortization of Pension and Postretirement (1)				(Gain) Loss on					Amortization of Pension and Postretirement (1)		(Gain) Loss on
		Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total			Net Gain Recognized	Prior Service Costs Recognized		Derivative Instruments	Total
Affected Line in the Consolidated Statement of Operations:	Affected Line in the Consolidated Statement of Operations:									Affected Line in the Consolidated Statement of Operations:
Net revenue	Net revenue	$	—	$	—	$	0.1	$	0.1
Cost of goods sold	Cost of goods sold	—		—		(0.2)		(0.2)

Other income, net		0.4		—		0.4		0.8
Operating expenses
Operating expenses
Operating expenses
Total before tax	Total before tax	$	0.4	$	—	$	0.3	$	0.7
Tax expense	Tax expense							(0.3)
Total reclassifications for the period, net of tax	Total reclassifications for the period, net of tax							$	0.4

		Nine Months Ended June 30, 2022
		Amortization of Pension and Postretirement (1)				Loss (Gain) on
		Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue		$	—	$	—	$	0.1	$	0.1
Cost of goods sold		—		—		(0.5)		(0.5)

Other income, net		2.1		—		1.4		3.5
Total before tax		$	2.1	$	—	$	1.0	$	3.1
Tax expense								(0.5)
Total reclassifications for the period, net of tax								$	2.6

(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension (benefit) cost (see Note 10).

14.Share-Based Compensation


		Three Months Ended June 30,				Nine Months Ended June 30,
				Three Months Ended December 31,
				Three Months Ended December 31,
				Three Months Ended December 31,
		2023		2022		2023		2022		2023	2022
Share-based compensation costs	Share-based compensation costs	$	4.9	$	3.8	$	14.0	$	14.6
Less impact of income taxes	Less impact of income taxes	1.1		0.9		3.2		3.4
Share-based compensation costs, net of tax	Share-based compensation costs, net of tax	$	3.8	$	2.9	$	10.8	$	11.2

The Company has share-based compensation with long-term performance-based metrics that are contingent upon the Company’s relative total shareholder return and the creation of shareholder value, as well as time-based awards. Relative total shareholder return is determined by comparing the Company’s total shareholder return during a three-year period to the respective total shareholder returns of companies in a designated stock index. Creation of shareholder value is measured by the cumulative cash returns and final period net operating profit after tax compared to the established hurdle rate over a three-year period. For the performance-based awards contingent upon the creation of shareholder value, compensation expense is adjusted each quarter based upon actual results to date and any changes to forecasted information on each of the separate grants.

Table of Contents

During the ~~nine~~three months ended ~~June 30,~~December 31, 2023, the Company made the following grants:


			Number of Units
Time-based stock awards			~~266,765~~276,548
Performance-based stock awards (maximum that can be earned)			~~366,641~~472,835

~~Table of Contents~~

The Company’s time-based stock awards and performance-based stock awards granted during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, had weighted-average grant date fair values of ~~$51.31~~$38.39 and ~~$67.36,~~$41.45, respectively. Included in the performance-based stock awards granted during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 are ~~189,058~~275,458 units whose payout level is based upon the Company’s relative total shareholder return over the three-year measurement period, as described above. These units will be expensed on a straight-line basis over the measurement period and are not subsequently adjusted after the grant date.

15.~~Other Income, Net~~

Three Months Ended
June 30, Nine Months Ended
June 30,
2023 2022 2023 2022
Interest income $ (2.8) $ (1.3) $ (7.1) $ (4.0)
Foreign currency exchange loss, net 0.1 1.0 0.4 1.2
Other, net (1.3) (2.2) (3.9) (6.5)
Other income, net $ (4.0) $ (2.5) $ (10.6) $ (9.3)

~~16.~~Commitments and Contingencies

Like most companies, Hillenbrand is involved from time to time in claims, lawsuits, and government proceedings relating to its operations, including environmental, antitrust, patent infringement, business practices, commercial transactions, product and general liability, workers’ compensation, auto liability, employment-related, and other matters. The ultimate outcome of any claims, lawsuits, and proceedings cannot be predicted with certainty. An estimated loss from these contingencies is recognized when the Company believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated; however, it is difficult to measure the actual loss that might be incurred related to these matters. If a loss is not considered probable and/or cannot be reasonably estimated, the Company is required to make a disclosure if there is at least a reasonable possibility that a significant loss may have been incurred. Legal fees associated with claims and lawsuits are generally expensed as incurred.

Claims covered by insurance have in most instances deductibles and self-funded retentions up to $0.5 per occurrence or per claim, depending upon the type of coverage and policy period. For auto, workers’ compensation, and general liability claims in the U.S., outside insurance companies and third-party claims administrators generally assist in establishing individual claim reserves. An independent outside actuary often provides estimates of ultimate projected losses, including incurred but not reported claims, which are used to establish reserves for losses. For all other types of claims, reserves are established when payment is considered probable and are based upon advice from internal and external counsel and historical settlement information for such claims.

The liabilities recorded represent the best estimate of costs that the Company will incur in relation to such exposures, but it is possible that actual costs will differ from those estimates.

~~17.~~16.Fair Value Measurements

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability, developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels:


Level 1:			Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2:			Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.
Level 3:			Inputs are unobservable for the asset or liability.

~~Table of Contents~~

See the section below titled “Valuation techniques” for further discussion of how Hillenbrand determines fair value for certain assets and liabilities.

Carrying Value at June 30, 2023
Fair Value at June 30, 2023
Using Inputs Considered as:
Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 290.5 $ 290.5 $ — $ —
Restricted cash 0.8 0.8 — —
Investments in rabbi trust 3.4 3.4 — —
Derivative instruments 3.0 — 3.0 —
Liabilities:
The Facility 27.3 — 27.3 —
Term loan 195.0 — 195.0 —
2021 Notes 350.0 296.4 — —
2020 Notes 400.0 396.5 — —
2019 Notes 374.7 367.0 — —
Derivative instruments 2.0 — 2.0 —

Table of Contents


	Carrying Value at December 31, 2023		Fair Value at December 31, 2023 Using Inputs Considered as:
			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	198.4	$	198.4	$	—	$	—
Restricted cash	1.2		1.2		—		—

Investments in rabbi trust	4.0		4.0		—		—
Derivative instruments	2.0		—		2.0		—

Liabilities:
Facility	530.6		—		530.6		—
$200 term loan	190.0		—		190.0		—
€185 term loan	203.0		—		203.0		—
$350 senior unsecured notes	350.0		305.2		—		—
$400 senior unsecured notes	400.0		400.1		—		—
$375 senior unsecured notes	374.8		371.1		—		—

Derivative instruments	1.2		—		1.2		—


		Carrying Value at September 30, 2022		Fair Value at September 30, 2022 Using Inputs Considered as:							Carrying Value at September 30, 2023	Fair Value at September 30, 2023 Using Inputs Considered as:
				Level 1		Level 2		Level 3				Level 1	Level 2	Level 3
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	232.2	$	232.2	$	—	$	—
Restricted cash	Restricted cash	3.5		3.5		—		—
Cash and cash equivalents held for sale		1.9		1.9		—		—

Investments in rabbi trust
Investments in rabbi trust
Investments in rabbi trust	Investments in rabbi trust	2.4		2.4		—		—
Derivative instruments	Derivative instruments	2.6		—		2.6		—

Liabilities:	Liabilities:
The Facility		6.7		—		6.7		—
2021 Notes		350.0		268.7		—		—
2020 Notes		400.0		394.5		—		—
2019 Notes		374.7		349.6		—		—
Series A Notes		100.0		—		97.6		—
Liabilities:
Liabilities:
Facility
$200 term loan
€185 term loan
$350 senior unsecured notes
$400 senior unsecured notes
$375 senior unsecured notes

Derivative instruments	Derivative instruments	8.0		—		8.0		—
Derivative instruments
Derivative instruments

Valuation techniques

•Cash and cash equivalents, restricted cash, ~~cash and cash equivalents held for sale,~~ and investments in rabbi trust are classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The types of financial instruments the Company classifies within Level 1 include most bank deposits, money market securities, and publicly traded mutual funds. The Company does not adjust the quoted market price for such financial instruments.

•The Company estimates the fair value of foreign currency derivatives using industry accepted models. The significant Level 2 inputs used in the valuation of derivatives include spot rates, forward rates, and volatility. These inputs were obtained from pricing services, broker quotes, and other sources.

•The fair values of the Facility, $200 term loan, and ~~Series A Notes~~€185 term loan were estimated based on internally-developed models using current market interest rate data for similar issues, as there is no active market for the Facility, $200 term loan, ~~or Series A Notes,~~and €185 term loan, and therefore, are classified within Level 2 of the fair value hierarchy.

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•The fair values of the ~~2021 Notes, 2020 Notes,~~$350 senior unsecured notes, $400 senior unsecured notes and ~~2019 Notes~~$375 senior unsecured notes were based on quoted prices in active markets and are classified within Level 1 of the fair value hierarchy. The Company does not adjust the quoted market prices for such financial instruments.

Derivative instruments

The Company has hedging programs in place to manage its currency exposures. The objectives of the Company’s hedging programs are to mitigate exposures in gross margin and non-functional-currency-denominated assets and liabilities. Under these programs, the Company uses derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates. These include foreign currency exchange forward contracts, which generally have terms up to 24 months. The aggregate notional value of derivatives was ~~$208.9~~$181.0 and ~~$156.0~~$164.6 at ~~June 30,~~December 31, 2023 and September 30, ~~2022,~~2023, respectively. The derivatives are recorded at fair value ~~primarily~~ in other current assets and other current liabilities in the Consolidated Balance Sheets.

~~18.~~17.Segment and Geographical Information

As previously described, on February 1, 2023, the Company completed the divestiture of ~~its historical Batesville reportable operating segment.~~Batesville. The operating results and cash flows for ~~the historical~~ Batesville ~~reportable operating segment~~ have been classified as discontinued operations within the Consolidated Financial Statements for all periods presented.

Hillenbrand is now composed of two reportable operating segments: Advanced Process Solutions and Molding Technology Solutions. The Company’s reportable operating segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company records the direct costs of business operations to the reportable operating segments, including stock-based compensation, asset impairments, restructuring activities, and business acquisition costs. Corporate provides management and administrative services to each reportable operating segment. These services include treasury management, human resources, legal, business development, information technology, tax compliance, global supply management, sustainability, and other public company support functions such as internal audit, investor relations, and financial reporting. With limited exception for certain professional services and back-office and technology costs, the Company does not allocate these types of corporate expenses to the reportable operating segments.

3426

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The following tables present financial information for the Company’s reportable operating segments and significant geographical locations:




		Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
		2023		2022		2023		2022			2023	2022
Net revenue	Net revenue
Advanced Process Solutions	Advanced Process Solutions	$	464.7	$	310.3	$	1,308.0	$	942.0
Advanced Process Solutions
Advanced Process Solutions
Molding Technology Solutions	Molding Technology Solutions	251.9		269.5		755.2		769.4

Total	Total	$	716.6	$	579.8	$	2,063.2	$	1,711.4
Total
Total

Adjusted EBITDA (1)	Adjusted EBITDA (1)
Adjusted EBITDA (1)
Adjusted EBITDA (1)
Advanced Process Solutions
Advanced Process Solutions
Advanced Process Solutions	Advanced Process Solutions	$	93.6	$	60.6	$	238.1	$	180.6
Molding Technology Solutions	Molding Technology Solutions	50.8		54.5		141.4		156.7

Corporate	Corporate	(18.3)		(14.3)		(43.5)		(46.7)
Corporate
Corporate

Net revenue (2)	Net revenue (2)
Net revenue (2)
Net revenue (2)
United States
United States
United States	United States	$	258.0	$	202.6	$	763.9	$	545.5
China	China	123.4		140.9		355.3		428.9
India	India	57.1		46.7		164.8		148.7
Germany	Germany	53.2		33.9		150.5		105.4
All other countries	All other countries	224.9		155.7		628.7		482.9
Total	Total	$	716.6	$	579.8	$	2,063.2	$	1,711.4

(1)Adjusted earnings before interest, income tax, depreciation, and amortization (“adjusted EBITDA”) is a non-GAAP measure used by management to measure segment performance and make operating decisions.

(2)The Company attributes net revenue to a geography based upon the location of the end customer.


		June 30, 2023		September 30, 2022			December 31, 2023	September 30, 2023
Total assets	Total assets					Total assets
Advanced Process Solutions	Advanced Process Solutions	$	2,670.1	$	1,494.2
Molding Technology Solutions	Molding Technology Solutions	1,943.5		2,052.6

Corporate	Corporate	120.2		99.3
Held for sale assets		—		221.4
Corporate
Corporate

Total
Total
Total	Total	$	4,733.8	$	3,867.5

Tangible long-lived assets, net
Tangible long-lived assets, net
Tangible long-lived assets, net	Tangible long-lived assets, net
United States	United States	$	105.8	$	79.3
Germany	Germany	132.9		104.1
China	China	40.0		42.2
India	India	38.9		40.7
All other countries	All other countries	84.7		53.5
Total	Total	$	402.3	$	319.8

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The following schedule reconciles reportable operating segment adjusted EBITDA to consolidated net income:


		Three Months Ended June 30,					Nine Months Ended June 30,
		2023		2022			2023		2022
											Three Months Ended December 31,
						2023						2023	2022
Adjusted EBITDA:	Adjusted EBITDA:
Advanced Process Solutions
Advanced Process Solutions
Advanced Process Solutions	Advanced Process Solutions	$	93.6	$	60.6		$	238.1	$	180.6
Molding Technology Solutions	Molding Technology Solutions	50.8		54.5			141.4		156.7

Corporate	Corporate	(18.3)		(14.3)			(43.5)		(46.7)
Corporate
Corporate
Add:	Add:
Total income from discontinued operations		1.0		19.0			461.4		73.3
(Loss) income from discontinued operations (net of income tax expense)
(Loss) income from discontinued operations (net of income tax expense)
(Loss) income from discontinued operations (net of income tax expense)
Less:	Less:
Interest income		(2.8)		(1.3)			(7.1)		(4.0)
Interest expense		18.6		17.5			63.0		52.7

Interest expense, net

Interest expense, net

Interest expense, net
Income tax expense	Income tax expense	23.8		19.9			50.2		54.4
Depreciation and amortization	Depreciation and amortization	31.1		24.2			93.1		74.4

Business acquisition, disposition, and integration costs		10.6		9.1			28.5		20.6
Pension settlement charge
Pension settlement charge
Pension settlement charge
Business acquisition, divestiture, and integration costs
Inventory step-up charges	Inventory step-up charges	—		—			11.1		—
Restructuring and restructuring-related charges	Restructuring and restructuring-related charges	0.8		0.2			2.3		3.5

Loss on divestiture		—		—			—		3.1
Other		—		0.1			—		3.2

Consolidated net income	Consolidated net income	$	45.0	$	50.1		$	556.3	$	156.0

Consolidated net income

Consolidated net income

18.Restructuring

Subsequent to December 31, 2023, the Company announced a program to reduce costs and improve operational efficiency as a result of the weaker than expected order patterns and continued softness in market demand within the Molding Technology Solutions reportable operating segment. As a result, and based on the information available at the date of the Form 10-Q filing, the Company expects to incur severance and other related costs of approximately $20.0 over the next 9 months. The Company expects that substantially all of these costs will result in future cash expenditures, and we anticipate these cash expenditures to be substantially paid by the end of fiscal 2025.

Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(financial amounts in millions, except share and per share data, throughout Management’s Discussion and Analysis)

FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS

Throughout this Quarterly Report on Form 10-Q, we make a number of “forward-looking statements,” including statements regarding the proposed acquisition (the “Proposed Transaction”) by the Company of the Schenck Process Food and Performance Materials (“FPM”) business, such as statements about the timing and other anticipated benefits of the Proposed Transaction, that are within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and that are intended to be covered by the safe harbor provided under these sections. As the words imply, these are statements about future sales, earnings, cash flow, results of operations, uses of cash, financings, share repurchases, ability to meet deleveraging goals, and other measures of financial performance or potential future plans or events, strategies, objectives, beliefs, prospects, assumptions, expectations, and projected costs or savings or transactions of the Company that might or might not happen in the future, as contrasted with historical information. Forward-looking statements are based on assumptions that we believe are reasonable, but by their very nature 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.

Accordingly, in this Quarterly Report on Form 10-Q, we may say something like:

“We expect that future net revenue associated with our reportable operating segments will be influenced by order backlog.”

That is a forward-looking statement, as indicated by the word “expect” and by the clear meaning of the sentence.

Other words that could indicate we are making forward-looking statements include:

intend

believe

plan

expect

may

goal

would

project

position

become

pursue

estimate

will

forecast

continue

could

anticipate

remain

target

encourage

promise

improve

progress

potential

should

impact

This is not an exhaustive list, but is intended to give you an idea of how we try to 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 or events, and actual results or events 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: global market and economic conditions, including those related to the financial markets; the impact of contagious diseases, such as the outbreak of the novel strain of coronavirus (“COVID-19”) and the escalation thereof due to variant strains of the virus and the societal, governmental, and individual responses thereto, including supply chain disruptions, loss of contracts and/or customers, erosion of some customers’ credit quality, downgrades of the Company’s credit quality, closure or temporary interruption of the Company’s or its suppliers’ manufacturing facilities, travel, shipping and logistical disruptions, domestic and international general economic conditions, such as inflation, exchange rates and interest rates, loss of human capital or personnel, and general economic calamities; risks related to the Russian Federation’s invasion of Ukraine (referred to herein as the “Ukraine War”) and resulting geopolitical instability and uncertainty, which have had, and could continue to have, a negative impact on our ability to sell to, ship products to, collect payments from, and support customers in certain regions, in addition to the potential effect of supply chain disruptions that could adversely affect profitability; the risk of business disruptions associated with information technology, cyber-attacks, or catastrophic losses affecting infrastructure; the ~~risk that regulatory approvals required for~~impact of disease outbreaks, such as the Proposed Transaction delay the Proposed Transaction or cause the parties to abandon the Proposed Transaction, or that obtaining any such regulatory approvals results in the imposition of conditions, limitations, or restrictions that adversely affect the Company or FPM; the risk that other conditions to the completion of the Proposed Transaction are not satisfied on a timely basis or at all; uncertainties as to the timing of the Proposed Transaction and the risk that the Proposed Transaction may not be completed in a timely manner or at all; uncertainties as to the Company’s access to available financing for the Proposed Transaction on a timely basis and on reasonable terms; the possibility of unanticipated costs or liabilities associated with the

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Proposed Transaction; risks related to diversion of management attention of FPM from its ongoing business operations due to the Proposed Transaction or its announcement or pendency; risks associated with contracts containing consent and/COVID-19 pandemic, or other provisions that may be triggered by the Proposed Transaction; the impact of the announcement or pendency of the Proposed Transaction on the Company’s or FPM’s ability to retain and hire key personnel; the risk of litigation relating to the Proposed Transaction; the possibility that the integration of FPM with the Company’s current operations will be more costly or difficult than expected or may otherwise be unsuccessful; negative effects of the Proposed Transaction (including its announcement or pendency), the Linxis Group SAS (“Linxis”) acquisition, or other acquisitions on the Company’s business, financial condition, results of operations and financial performance (including the ability of the Company to maintain relationships with its customers, suppliers and others with whom it does business); the possibility that the anticipated benefits from the Proposed Transaction, the Linxis acquisition, and other acquisitions, including potential synergies and cost savings, cannot be realized by the Company in full or at all or may take longer to realize than expected, or the failure of the Company or any acquired company to achieve its plans and objectives generally; risks that the integrations of FPM, Linxis, or other acquired businesses disrupt current operations or pose potential difficulties in employee retention or otherwise adversely affect financial or operating results;health crises; increasing competition for highly skilled and talented workers, as well as labor shortages; uncertainty related to environmental regulation and industry standards, as well as physical risks of climate change; increased costs, poor quality, or unavailability of raw materials or certain outsourced services and supply chain disruptions; uncertainty in United States global trade policy; our level of international sales and operations; the impact of incurring significant amounts of indebtedness and any inability of the Company to respond to changes in its business or make future desirable acquisitions; the ability of the Company to comply with financial or other covenants in debt agreements; ~~cyclical demand for industrial capital goods; impairment charges~~negative effects of acquisitions, including the Schenck Process Food and Performance Materials (“FPM”) business and Linxis Group SAS (“Linxis”) acquisitions, on the Company’s business, financial condition, results of operations and financial performance (including the ability of the Company to ~~goodwill~~maintain relationships with its customers, suppliers, and others with whom it does business); the possibility that the anticipated benefits from acquisitions including the FPM and Linxis acquisitions cannot be realized by the Company in full or at all, or may take longer to realize than expected; risks that the integrations of FPM or Linxis or other ~~identifiable intangible assets;~~acquired businesses disrupt current operations or pose potential difficulties in employee retention or otherwise affect financial or operating results; competition in the industries in which we operate, including on price; cyclical demand for industrial capital goods; the ability to recognize the benefits of any acquisition or divestiture, including potential synergies and cost savings or the failure of the Company or any acquired company to achieve its plans and objectives generally; impairment charges to goodwill and other identifiable intangible assets; impacts of decreases in demand or changes in technological advances, laws, or regulation on the net revenues that we derive from the plastics industry; changes in food consumption

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patterns due to dietary trends, or economic conditions, or other reasons; our reliance upon employees, agents, and business partners to comply with laws in many countries and jurisdictions; increased costs, poor quality, or unavailability of raw materials or certain outsourced services and supply chain disruptions; the dependence of our business units on relationships with several large customers and providers; the impact to the Company’s effective tax rate of changes in the mix of earnings or in tax laws and certain other tax-related matters; exposure to tax uncertainties and audits; involvement in claims, lawsuits, and governmental proceedings related to operations; uncertainty in the ~~United States~~U.S. political and regulatory ~~environment or global trade policy;~~environment; adverse foreign currency fluctuations; labor disruptions; and the effect of certain provisions of the Company’s governing documents and Indiana law that could decrease the trading price of the Company’s common stock. Shareholders, potential investors, and other readers are urged to consider these risks and uncertainties in evaluating forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. For a more in-depth discussion of certain factors that could cause actual results to differ from those contained in forward-looking statements, see the discussion under the heading “Risk Factors” in Part I, Item 1A of Hillenbrand’s Form 10-K for the year ended September 30, ~~2022,~~2023, filed with the Securities and Exchange Commission (“SEC”) on November ~~16, 2022, and in Part II, Item 1A of this Quarterly Report on Form 10-Q,~~15, 2023, as well as other risks and uncertainties detailed in our other filings with the SEC from time to time. The forward-looking information in this Quarterly Report on Form 10-Q speaks only as of the date covered by this report, and we assume no obligation to update or revise any forward-looking information.

EXECUTIVE OVERVIEW

Hillenbrand (www.Hillenbrand.com) is a global industrial company that provides highly-engineered ~~mission-critical~~ processing equipment and solutions to customers around the world. Our portfolio is composed of leading industrial brands that serve large, attractive end markets, including durable plastics, food, and recycling. ~~The Company strives~~Guided by our Purpose, Shape What Matters for TomorrowTM, we pursue excellence, collaboration, and innovation to ~~provide superior return for~~shape solutions that best serve our ~~shareholders, exceptional value for~~people, our customers, ~~great professional opportunities for~~and our ~~employees, and to be responsible~~communities. Customers choose Hillenbrand due to our ~~communities through deployment of the Hillenbrand Operating Model (“HOM”). The HOM is a consistent~~reputation for designing, manufacturing, and ~~repeatable framework designed to produce sustainable~~servicing highly-engineered, mission-critical equipment and ~~predictable results. The Company recently enhanced the HOM to support our transformation to a pure-play industrial company by incorporating Purpose, updating our management practices,~~solutions that meet their unique and restating our values. 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.

complex processing requirements.

Our strategy is to leverage our historically strong financial foundation and the implementation of the HOM to deliver sustainable profit growth, revenue expansion, and substantial free cash flow and then reinvest available cash in new growth initiatives that are focused on building platforms with leadership positions in our core markets and near adjacencies, both organically and inorganically, in order to create shareholder value.

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022, the following operational decisions and economic developments had an impact on our current and future cash flows, results of operations, and consolidated financial position.

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~~Divestitures~~

~~Divestiture of Batesville~~

As previously described, on February 1, 2023, the Company completed the divestiture of its historical 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, subject to closing adjustments, and including an $11.5 subordinated note. At closing, after the applicable adjustments, the Company received $698.0 in pre-tax cash proceeds, including an adjustment for cash on hand acquired from the Company, and the previously mentioned subordinated note. The Company recognized a $586.0 pre-tax gain on divestiture, recorded within gain on divestiture of discontinued operations (net of income tax expense) in the Consolidated Statement of Operations for the nine months ended June 30, 2023. The $0.4 gain on divestiture of discontinued operations (net of income tax expense) for the three months ended June 30, 2023 is the result of certain income tax adjustments as a result of ongoing evaluation of the income tax impact of the divestiture on Hillenbrand.

This divestiture represented a strategic shift in Hillenbrand’s business and qualified as a discontinued operation. Unless otherwise noted, amounts presented in Management’s Discussion and Analysis are for continuing operations only.

Subsequent to the completion of the sale, the Company began providing certain transition services to Batesville for applicable fees. The transition services are expected to vary in duration depending upon the type of service provided.

~~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, which became an approximately 46% interest in connection with the January 2023 amendment to the five-year note. The fair value of the total consideration received by the Company at closing was $27.7.

~~Acquisitions~~

~~Proposed Acquisition of Schenck Process Food and Performance Materials Business~~

On May 23, 2023, the Company signed a definitive agreement to acquire the Schenck Process Food and Performance Materials (“FPM”) business, a portfolio company of Blackstone, for an enterprise value of approximately $730.0. Headquartered in Kansas City, Missouri, FPM specializes in the design, manufacturing, and service of feeding, filtration, baking, and material handling technologies and systems that are highly complementary to the equipment and solutions currently offered in our Advanced Process Solutions reportable operating segment. This transaction is expected to close during the fourth fiscal quarter of 2023. It is anticipated that FPM will be included in our Advanced Process Solutions reportable operating segment.

~~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 $59.2, net of certain customary post-closing adjustments and including cash acquired, using available borrowings under its multi-currency revolving credit facility (the “Facility”). Headquartered in Sidney, Ohio, Peerless is a premier supplier of industrial food processing equipment. The results of Peerless are included in the Advanced Process Solutions reportable operating segment.

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~~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.

~~Acquisition of Herbold Meckesheim GmbH~~

On August 31, 2022, the Company completed the acquisition of Herbold Meckesheim GmbH (“Herbold”) for $77.7 (€77.5) in cash, pursuant to a definitive acquisition agreement dated June 30, 2022. Based in Meckesheim, Germany, Herbold is a leader in recycling systems, specializing in key process steps such as washing, separating, drying, shredding, and pulverizing. The results of Herbold are included in the Advanced Process Solutions reportable operating segment.

~~Acquisition of Gabler Engineering GmbH~~

~~Change in Reportable Operating Segments~~

As a result of the Batesville divestiture, 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. Molding Technology Solutions is a global leader in highly-engineered processing equipment, systems, and aftermarket parts and service for the plastic technology processing industry.

~~Ukraine War~~

As a result of the Ukraine War, various nations, including the United States, have instituted economic sanctions and other responsive measures, which have resulted in an increased level of global economic and political uncertainty. The results of such geopolitical instability and uncertainty have had, and could continue to have, an impact on our ability to sell to, ship products to, collect payments from, and support customers in certain regions.

We have suspended all new business in Russia and Belarus but may be contractually obligated to complete certain existing contracts, insofar as economic sanctions do not prevent us from doing so. The impacts of sanctions and other measures being imposed have not had a material impact to the consolidated results of operations. Russia, Belarus, and Ukraine do not constitute a material portion of our business; however, a significant escalation or expansion of the Ukraine War’s current scope and associated global economic disruption could have a negative effect on our cash flows and consolidated results of operations.

Additionally, supply chain disruptions and logistical challenges due to the Ukraine War and any indirect effects thereof are expected to further complicate existing supply chain constraints, which could adversely affect profitability. To date, we have experienced some inability to source certain raw materials and components, but we have largely been able to mitigate the impact on our consolidated results of operations.

Given the evolving nature of the Ukraine War, and the related sanctions, potential governmental actions, and economic impact, the scope and magnitude of any such potential effects remain uncertain. While we may experience negative impacts on our business, financial condition, and consolidated results of operations, we are unable to estimate the ultimate extent or nature of these impacts at this time.

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Supply Chain and Inflation

While global supply chains have recently suffered from various headwinds, those supporting our products have generally remained intact, providing access to sufficient inventory of the key materials needed for manufacturing. We have experienced significant delays in certain raw materials and components, but we have largely been able to mitigate the impact of these delays on our consolidated results of operations. We continue to identify and qualify alternative sources to mitigate risk associated with single or sole sources of supply, and we may choose to purchase certain materials in safety stock where we have supply chain continuity concerns. We have experienced and ~~it remains possible that~~ we may continue to experience ~~interruptions~~disruptions to our supply chains, ~~and such an interruption~~which could materially affect our ability to timely manufacture and distribute our products and could also have a significant impact on the Company’s consolidated net revenue, results of operations, and cash flows during fiscal ~~2023~~2024 and beyond.

We also experienced material and supply chain inflation during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023, as further discussed in our Operations Review. The material and supply chain inflation experienced during the three months ended December 31, 2023 was less significant than the impact during the three months ended December 31, 2022. Pricing actions and supply chain productivity initiatives have mitigated and are expected to continue to mitigate some of these inflationary pressures, but we may not be successful in fully offsetting these incremental costs, which could have a significant impact on the Company’s consolidated results of operations and cash flows during fiscal ~~2023~~2024 and beyond.

For additional information regarding supply chain, inflation, and other risks, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, ~~2022,~~2023, filed with the SEC on November ~~16, 2022.~~15, 2023.

Divestitures

Divestiture of Batesville

As previously described, on February 1, 2023, the Company completed the divestiture of Batesville to BL Memorial Partners, LLC, a Delaware limited liability company owned by funds affiliated with LongRange Capital, L.P., for $761.5, including an $11.5 subordinated note.

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The Company is providing, and will continue to provide, certain transition services to Batesville for applicable fees that are not material to the Company’s financial position. The transition services vary in duration depending upon the type of service provided.

Acquisitions

Acquisition of Schenck Process Food and Performance Materials Business

On September 1, 2023, the Company completed the acquisition of the Schenck Process Food and Performance Materials (“FPM”) business, a portfolio company of Blackstone, for total aggregate consideration of $748.7, net of certain customary post-closing adjustments, and including cash acquired, using available borrowings under its multi-currency revolving credit facility (the “Facility”). Headquartered in Kansas City, Missouri, FPM specializes in the design, manufacturing, and service of feeding, filtration, baking, and material handling technologies and systems that are highly complementary to the equipment and solutions offered in our Advanced Process Solutions reportable operating segment. The results of FPM since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

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 $59.2, net of certain customary post-closing adjustments and including cash acquired, using available borrowings under the Facility. Headquartered in Sidney, Ohio, Peerless is a premier supplier of industrial food processing equipment. The results of Peerless since the date of acquisition are included in the Advanced Process Solutions reportable operating segment.

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.

OPERATING PERFORMANCE MEASURES

The following discussion compares our results for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023, to the same ~~periods~~period in 2022. The Company’s fiscal year ends on September 30. Unless otherwise stated, references to years refer to fiscal years. We begin the discussion at a consolidated level and then provide separate detail about Advanced Process Solutions, Molding Technology Solutions, and Corporate. These results of operations are prepared in accordance with GAAP.

We also provide certain non-GAAP operating performance measures. These non-GAAP measures are referred to as “adjusted” measures and primarily exclude expenses associated with business acquisition, ~~disposition,~~divestiture, and integration costs, restructuring and restructuring-related charges, pension settlement charges, and inventory step-up ~~charges, gains and losses on divestitures, and other individually immaterial one-time costs.~~charges. The related income tax impact for all of these items is also excluded. The measures also exclude certain tax items related to acquisitions and divestitures, the revaluation of deferred tax balances resulting from fluctuations in currency exchange rates and non-routine changes in tax rates for certain foreign jurisdictions, and the impact that the Molding Technology Solutions reportable operating segment’s loss carryforward attributes have on tax provisions related to the imposition of tax on Global Intangible Low-Taxed Income ~~(GILTI)~~(“GILTI”) earned by certain foreign subsidiaries, the Foreign Derived Intangible Income Deduction ~~(FDII)~~(“FDII”), and the Base Erosion and Anti-Abuse Tax ~~(BEAT)~~(“BEAT”).

Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

We use this non-GAAP information internally to measure operating segment performance and make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of our 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 items such as the above excluded items. We believe this information provides a higher degree of transparency.

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An important non-GAAP measure that we use is adjusted earnings before interest, income tax, depreciation, and amortization (“adjusted EBITDA”). A part of Hillenbrand’s strategy is to selectively acquire companies that we believe can benefit from the ~~HOM~~Hillenbrand Operating Model (“HOM”) 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 our business performance. Adjusted EBITDA is not a recognized term under GAAP and therefore does not purport to be an alternative to net income. Further, the Company’s measure of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Another important operational measure used is backlog. Backlog is not a term recognized under GAAP; however, it is a common measurement used in industries with extended lead times for order fulfillment (long-term contracts), like those in

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which our reportable operating segments compete. Backlog represents the amount of net revenue that we expect to realize on contracts awarded to our reportable operating segments. For purposes of calculating backlog, 100% of estimated net revenue attributable to consolidated subsidiaries is included. Backlog includes expected net revenue from large systems and equipment, as well as aftermarket parts, components, and service. The length of time that projects remain in backlog can span from days for aftermarket parts or service to approximately 18 to 24 months for larger system sales within the Advanced Process Solutions reportable operating segment. The majority of the backlog within the Molding Technology Solutions reportable operating segment is expected to be fulfilled within the next twelve months. Backlog includes expected net revenue from the remaining portion of firm orders not yet completed, as well as net revenue from change orders to the extent that they are reasonably expected to be realized. We include in backlog the full contract award, including awards subject to further customer approvals, which we expect to result in net revenue in future periods. In accordance with industry practice, our contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.

We expect that future net revenue associated with our reportable operating segments will be influenced by order backlog because of the lead time involved in fulfilling engineered-to-order equipment for customers. Although backlog can be an indicator of future net 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 net revenue. Net revenue attributable to backlog may also be affected by foreign exchange fluctuations for orders denominated in currencies other than U.S. dollars.

We calculate the foreign currency impact on net revenue, gross profit, operating expenses, backlog, consolidated net income, and adjusted EBITDA in order to better measure the comparability of results between periods. We calculate the foreign currency impact by translating current year results at prior year foreign exchange rates. This information is provided because exchange rates can distort the underlying change in these metrics, either positively or negatively. The cost structure for Corporate is generally not significantly impacted by the fluctuation in foreign exchange rates, and we do not disclose the foreign currency impact in the Operations Review section below where the impact is not significant.

See page 4936 for a reconciliation of adjusted EBITDA to consolidated net income, the most directly comparable GAAP measure. We use other non-GAAP measures in certain other instances and include information reconciling such non-GAAP measures to the respective most directly comparable GAAP measures. Given that backlog is an operational measure and that the Company’s methodology for calculating backlog does not meet the definition of a non-GAAP measure, as that term is defined by the SEC, a quantitative reconciliation is not required or provided.

CRITICAL ACCOUNTING ESTIMATES

For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023, there were no significant changes to our critical accounting estimates as outlined in our Annual Report on Form 10-K for the year ended September 30, ~~2022,~~2023, filed with the SEC on November ~~16, 2022.~~15, 2023.

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OPERATIONS REVIEW — CONSOLIDATED




		Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended December 31,
		2023			2022			2023			2022				2023	2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue				Amount	% of Net Revenue	Amount	% of Net Revenue
Net revenue	Net revenue	$	716.6	100.0	$	579.8	100.0	$	2,063.2	100.0	$	1,711.4	100.0
Gross profit	Gross profit	246.9		34.5	191.0		32.9	680.7		33.0	561.5		32.8
Operating expenses	Operating expenses	144.8		20.2	111.6		19.2	424.6		20.6	337.1		19.7
Amortization expense	Amortization expense	19.7			13.4			58.6			40.8
Loss on divestiture		—			—			—			3.1
Pension settlement charge
Pension settlement charge
Pension settlement charge

Interest expense		18.6			17.5			63.0			52.7
Other income, net		(4.0)			(2.5)			(10.6)			(9.3)

Interest expense, net

Interest expense, net

Interest expense, net

Income tax expense	Income tax expense	23.8			19.9			50.2			54.4

Income tax expense

Income tax expense

Three Months Ended ~~June 30,~~December 31, 2023 Compared to Three Months Ended ~~June 30,~~December 31, 2022

Net revenue increased ~~$136.8 (24%~~$117.6 (18%).

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•Advanced Process Solutions net revenue increased ~~$154.4 (50%~~$155.5 (38%), primarily driven by the impact of acquisitions ($~~110.5)~~149.5), ~~favorable pricing,~~ higher aftermarket parts and service net revenue, and ~~an increase~~favorable pricing, partially offset by a decrease in ~~large plastics systems~~capital equipment sales. Foreign currency impact improved net revenue by 3%.

•Molding Technology Solutions net revenue decreased $37.9 (16%), primarily driven by a decrease in injection molding and hot runner equipment sales. Foreign currency impact improved net revenue by 1%.

•Molding Technology Solutions net revenue decreased $17.6 (7%), primarily driven by a decrease in injection molding and hot runner equipment sales, partially offset by higher aftermarket parts and service net revenue and favorable pricing. Foreign currency impact decreased net revenue by 1%.

Gross profit increased ~~$55.9 (29%~~$43.4 (21%) and gross profit margin improved ~~160~~80 basis points to ~~34.5%~~32.5%. On an adjusted basis, which excluded business acquisition, ~~disposition,~~divestiture, and ~~integrations~~integration costs, ~~and~~ restructuring and restructuring-related charges and inventory step-up charges, adjusted gross profit increased ~~$57.1 (30%~~$36.6 (17%), and adjusted gross profit margin ~~improved 160~~decreased 20 basis points to ~~34.6%~~32.7%.

•Advanced Process Solutions gross profit increased ~~$61.7 (56%~~$55.5 (41%), primarily driven by the impact of acquisitions, favorable pricing, ~~higher volume,~~productivity improvements, and ~~productivity improvements,~~favorable product mix, partially offset by cost ~~inflation.~~inflation and lower volume. Foreign currency impact improved gross profit by 3%. Gross profit margin improved 80 basis points to 33.6%, primarily driven by favorable pricing, productivity improvements, and favorable product mix, offset by cost inflation and a decrease in inventory step-up charges.

Advanced Process Solutions gross profit included inventory step-up charges related to acquisitions ($1.5 in 2024 and $8.0 in 2023) and business acquisition, divestiture, and integration costs of $0.3 in 2023. Excluding these non-recurring items, adjusted gross profit increased $48.7 (34%) and adjusted gross profit margin decreased 100 basis points to 33.8%.

•Molding Technology Solutions gross profit decreased $12.1 (17%) primarily driven by a decrease in volume and cost inflation, partially offset by favorable product mix. Foreign currency impact improved gross profit by 1%. Gross profit margin ~~improved 150~~decreased 40 basis points to ~~36.9%, primarily driven by favorable pricing, productivity improvements and the impact of acquisitions, partially offset by cost inflation.~~

Advanced Process Solutions gross profit included business acquisition, disposition, and integration costs ($0.2 in 2023). Excluding these charges, adjusted gross profit increased $61.9 (56%) and adjusted gross profit margin improved 160 basis points to 37.0%.

•Molding Technology Solutions gross profit decreased $5.8 (7%) primarily driven by a decrease in volume, cost inflation, and unfavorable product mix, partially offset by favorable pricing and productivity improvements. Foreign currency impact decreased gross profit by 1%. Gross profit margin decreased 20 basis points to 29.9%29.4%, primarily driven by cost inflation, partially offset by favorable ~~pricing and productivity improvements.~~product mix.

Molding Technology Solutions gross profit included business acquisition, disposition, and integration costs ($0.6 in 2023) and restructuring and restructuring related charges ($0.4 in 2023). Excluding these charges, adjusted gross profit decreased $4.8 (6%) and adjusted gross profit margin improved 20 basis points to 30.3%.

Operating expenses increased ~~$33.2 (30%~~$20.0 (15%), primarily driven by acquisitions ~~an increase in strategic investments,~~ and cost inflation, partially offset by lower variable ~~compensation.~~compensation and a decrease in business acquisition, divestiture, and integration costs. Foreign currency impact ~~increased~~decreased operating expenses by 1%4%. Our operating expense-to-net-revenue ratio ~~increased~~improved by ~~100~~60 basis points to ~~20.2%~~20.4%. Operating expenses included the following items:


		Three Months Ended June 30,				Three Months Ended December 31,
		2023		2022		2023	2022
Business acquisition, disposition, and integration costs		$	9.7	$	9.0
Business acquisition, divestiture, and integration costs
Restructuring and restructuring-related charges	Restructuring and restructuring-related charges	0.5		0.2

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On an adjusted basis, which excludes business acquisition, ~~disposition,~~divestiture, and integration costs and restructuring and restructuring-related charges, operating expenses increased ~~$32.1 (31%~~$25.2 (20%). Adjusted operating expenses as a percentage of net revenue increased ~~110~~30 basis points to ~~18.8%~~19.6%.

Amortization expense increased ~~$6.3 (47%~~$6.4 (34%) primarily driven by the impact of ~~acquisitions.~~acquisitions in the prior fiscal year.

~~Interest expense~~Pension settlement charge increased ~~$1.1 (6%), primarily~~$8.3 due to ~~increased borrowing for acquisitions.~~lump-sum payments made from the Company’s U.S. pension plan to former employees who elected to receive such payments. See Note 910 of Part I, Item 1 of this Quarterly Report on Form 10-Q for ~~a discussion of borrowing activity.~~further information on this pension settlement charge.

~~Other income,~~Interest expense, net increased ~~$1.5 (60%~~$8.3 (39%), primarily due to ~~an increase~~increased borrowing for acquisitions in ~~interest income.~~the prior fiscal year.

The effective tax rate was ~~35.1%~~33.9% in ~~2023~~2024 compared to ~~39.0%~~7.9% in ~~2022.~~2023. The ~~decrease~~increase in the effective tax rate was primarily driven by a non-recurring ~~unfavorable change~~discrete tax benefit in ~~estimate related~~the prior period resulting from the approval of a reduced incentive tax rate for certain operations located in China and a reduced discrete tax benefit for equity compensation as compared to the prior period, partially offset by a reduction of the tax accrual for unrepatriated earnings.

The adjusted effective tax rate was 28.6% in 2024 compared to 25.0% in 2023. The adjusted effective income tax rate excluded the tax effect of the following items:

•The revaluation of deferred tax balances as a result of foreign ~~tax credits~~currency fluctuations ($0.3 expense in 2024 and ~~the~~$0.2 expense in 2023);

•The impact of tax ~~loss~~lass carryforwards within the Molding Technology Solutions reportable operating segment on the net domestic taxes on foreign earnings ($0.3 benefit in ~~the prior period, partially offset by the revaluation of deferred tax balances as a result of foreign currency fluctuations in the current period.~~

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~~The adjusted effective tax rate was 30.6% in 2023 compared to 29.9% in 2022. The adjusted effective income tax rate primarily excluded the tax effect of the following items:~~

•~~The impact of tax loss carryforwards within the Molding Technology Solutions reportable operating segment on the net domestic taxes on foreign earnings ($0.1 expense in 2023 and $3.7 expense in 2022)~~2023);

•The revaluation of deferred tax balances as a result of foreign ~~currency fluctuations~~tax rate change ($~~0.5 expense in 2023 and $0.9~~3.4 benefit in ~~2022)~~2023); and

•Adjustments previously discussed within this section, such as business acquisition, ~~disposition,~~divestiture, and integration costs ($~~7.1~~10.6 benefit in ~~2023~~2024 and ~~$5.2~~$11.2 benefit in ~~2022)~~2023).

~~Nine Months Ended June 30, 2023 Compared to Nine Months Ended June 30, 2022~~

~~Net revenue~~ ~~increased $351.8 (21%), which included an unfavorable foreign currency impact (3%).~~

•Advanced Process Solutions net revenue increased $366.0 (39%), primarily driven by the impact of acquisitions ($308.1), favorable pricing, and higher aftermarket parts and service net revenue, partially offset by a decrease in large plastics system sales. Foreign currency impact decreased net revenue by 3%.

•Molding Technology Solutions net revenue decreased $14.2 (2%), primarily driven by a decrease in hot runner equipment sales, partially offset by favorable pricing and higher aftermarket parts and service net revenue. Foreign currency impact decreased net revenue by 3%.

~~Gross profit~~ increased $119.2 (21%), which included unfavorable foreign currency impact (3%). Gross profit margin improved 20 basis points to 33.0%. On an adjusted basis, which excluded inventory step-up charges related to acquisitions, business acquisition, disposition, and integration costs, and restructuring and restructuring-related charges~~, adjusted gross profit increased $128.6 (23%), and adjusted gross profit margin improved 60 basis points to 33.6%.~~

•Advanced Process Solutions gross profit increased $134.1 (42%), primarily driven by the impact of acquisitions, favorable pricing, higher volume, and productivity improvements, partially offset by cost inflation and an increase in inventory step up charges related to acquisitions. Foreign currency impact decreased gross profit by 3%. Gross profit margin improved 70 basis points to 35.0% primarily driven by favorable pricing, and productivity improvements, partially offset by cost inflation.

Advanced Process Solutions gross profit included inventory step-up charges related to acquisitions ($11.1 in 2023), business acquisition, disposition, and integration costs ($0.5 in 2023 and $0.2 in 2022), and restructuring and restructuring-related charges ($2.2 in 2022). ~~Excluding these charges, adjusted gross profit increased $142.7 (44%) and adjusted gross profit margin improved 120 basis points to 35.8%.~~

•Molding Technology Solutions gross profit decreased $14.9 (6%), primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements. Foreign currency impact decreased gross profit by 3%. Gross profit margin decreased 140 basis points to 29.6%, primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements.

Molding Technology Solutions gross profit included business acquisition, disposition, and integration costs ($0.7 in 2023) and restructuring and restructuring-related charges ($0.4 in 2023 and $0.1 in 2022). Excluding these charges, adjusted gross profit decreased $14.1 (6%) and adjusted gross profit margin decreased 130 basis points to 29.7%.

~~Operating expenses~~ increased $87.5 (26%), primarily driven by acquisitions, an increase in strategic investments, cost inflation, and an increase in business acquisition, disposition, and integration costs, partially offset by lower variable compensation. Foreign currency impact decreased operating expenses by 2%. Our operating expense-to-revenue ratio increased by 90 basis points to 20.6%. Operating expenses included the following items:

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Nine Months Ended June 30,
2023 2022
Business acquisition, disposition, and integration costs $ 27.3 $ 20.5
Restructuring and restructuring-related charges 2.1 1.6
Other one-time costs — 2.5

~~On an adjusted basis,~~ which excludes business acquisition, disposition, and integration costs, restructuring and restructuring-related charges, and other one-time costs including reserves against certain receivables, operating expenses increased $82.7 (27%). Adjusted operating expenses as a percentage of net revenue increased 90 basis points to 19.2%.

~~Amortization expense~~ ~~increased $17.8 (44%) primarily driven by the impact of acquisitions.~~

~~Loss on divestiture~~of $3.1 in the prior year was due to the loss realized on the divestiture of TerraSource that did not repeat in 2023. See Note 4 of Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

~~Interest expense~~ ~~increased $10.3 (20%), primarily due to increased borrowing for acquisitions. See Note 9 of Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of borrowing activity.~~

~~Other income, net~~ ~~increased $1.3 (14%),~~ ~~primarily due to an increase in interest income.~~

~~The effective tax rate~~ ~~was 34.6% in 2023 compared to 39.7% in 2022.~~ ~~The decrease in the effective tax rate was primarily driven by th~~e favorable recognition of discrete tax benefits resulting from the approval of the incentive tax rate for certain operations located in China and the increase in tax benefit of equity compensation in the current period, as well as a non-recurring unfavorable change in estimate related to foreign tax credits, the impact of divestitures, and the impact of tax loss carryforwards within the Molding Technology Solutions reportable operating segment on the net domestic taxes on foreign earnings in the prior period. These items were partially offset by an increase in the accrual for taxes on unremitted foreign earnings as a result of the divestiture of Batesville and the revaluation of deferred tax balances as a result of foreign currency fluctuations in the current period.

~~The adjusted effective tax rate was 30.0% in 2023 compared to 31.1% in 2022. The adjusted effective income tax rate primarily excluded the tax effect of the following items:~~

•~~The impact of Milacron tax loss carryforwards on net domestic taxes on foreign earnings ($5.2 expense in 2022);~~

•~~Change in the assertion with regard to foreign unremitted earnings as a result of the divestiture of Batesville ($4.8 expense in 2023);~~

•~~The revaluation of deferred and current tax balances as a result of an incentive tax rate awarded to certain China operations ($3.4 benefit in 2023 and $0.4 expense in 2022);~~

•~~The revaluation of deferred tax balances as a result of foreign currency fluctuations ($0.8 expense in 2023 and $0.4 benefit in 2022); and~~

•~~Adjustments previously discussed within this section ($25.7 benefit in 2023 and $15.8 benefit in 2022).~~

OPERATIONS REVIEW — Advanced Process Solutions




		Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended December 31,
		2023			2022			2023			2022				2023	2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue				Amount	% of Net Revenue	Amount	% of Net Revenue
Net revenue	Net revenue	$	464.7	100.0	$	310.3	100.0	$	1,308.0	100.0	$	942.0	100.0
Gross profit	Gross profit	171.7		36.9	110.0		35.4	457.2		35.0	323.1		34.3
Operating expenses	Operating expenses	84.8		18.2	50.2		16.2	249.1		19.0	154.4		16.4
Amortization expense	Amortization expense	10.8			4.4			32.0			13.4

Three Months Ended ~~June 30,~~December 31, 2023 Compared to Three Months Ended ~~June 30,~~December 31, 2022

Net revenue increased ~~$154.4 (50%~~$155.5 (38%) primarily driven by the impact of acquisitions ($~~110.5)~~149.5), ~~favorable pricing,~~ higher aftermarket parts and service net revenue, and ~~an increase~~favorable pricing, partially offset by a decrease in ~~large plastics systems~~capital equipment sales. Foreign currency impact improved net revenue by 1%3%.

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Order backlog increased ~~$375.4 (31%~~$290.6 (18%) from ~~$1,228.6 on June 30,~~$1,625.2 at December 31, 2022, to ~~$1,604.0 on June 30,~~$1,915.8 at December 31, 2023. The increase in order backlog was primarily driven by acquisitions, ~~and an increase in large plastics systems and aftermarket parts and service orders.~~partially offset by the execution of existing backlog. Foreign currency impact increased order backlog by 2%3%. On a sequential basis, order backlog ~~decreased $69.4 (4%~~increased $49.4 (3%) to ~~$1,604.0~~$1,915.8 at ~~June~~December 31, 2023, up from $1,866.4 at September 30, 2023, ~~down from $1,673.4 at March 31, 2023,~~ primarily ~~driven by a decrease in large plastics systems orders and the execution of existing backlog.~~due to favorable foreign currency impact (3%).

Gross profit increased ~~$61.7 (56%~~$55.5 (41%) primarily driven by the impact of acquisitions, favorable pricing, ~~higher volume,~~productivity improvements, and ~~productivity improvements,~~favorable product mix, partially offset by cost ~~inflation.~~inflation and lower volume. Foreign currency impact improved gross profit by 1%3%. Gross profit margin improved ~~150~~80 basis points to ~~36.9%~~33.6%, primarily driven by favorable pricing, productivity improvements, and ~~the impact of acquisitions, partially offset by cost inflation.~~

~~Operating expenses~~ increased $34.6 (69%) primarily driven by the impact of acquisitions, cost inflation, an increase in strategic investments, and an increase in business acquisition, disposition, and integration costs. Foreign currency impact increased operating expenses by 1%. Operating expenses as a percentage of net revenue increased 200 basis points to 18.2%.

Operating expenses included business acquisition, disposition, and integration costs ($1.7 in 2023) and restructuring and restructuring-related charges ($0.3 in 2023). Excluding these items, adjusted operating expenses increased $32.5 (65%) and adjusted operating expenses as a percentage of net revenue increased 160 basis points to 17.8%.

~~Amortization expense~~ ~~increased $6.4 (146%) primarily driven by the impact of acquisitions.~~

~~Nine Months Ended June 30, 2023 Compared to Nine Months Ended June 30, 2022~~

~~Net revenueincreased $366.0 (39%), primarily driven by the impact of acquisitions ($308.1),~~ favorable ~~pricing, and higher aftermarket parts and service net revenue, partially offset by a decrease in large plastics system sales. Foreign currency impact decreased net revenue by 3%.~~

~~Gross profit~~ ~~increased $134.1 (42%), primarily driven by the impact of acquisitions, favorable pricing, higher volume, and productivity improvements, partially~~product mix, offset by cost inflation and ~~an increase~~a decrease in inventory step up charges related to acquisitions. Foreign currency impact decreased gross profit by 3%. Gross profit margin improved 70 basis points to 35.0%, primarily driven by favorable pricing, and productivity improvements, partially offset by cost inflation.step-up charges.

Advanced Process Solutions gross profit included inventory step-up charges related to acquisitions ($~~11.1~~1.5 in 2024 and $8.0 in 2023), and business acquisition, ~~disposition,~~divestiture, and integration costs ~~($0.5~~of $0.3 in ~~2023 and $0.2 in 2022), and restructuring and restructuring-related charges ($2.2 in 2022).~~2023. Excluding these ~~charges,~~non-recurring items, adjusted gross profit increased ~~$142.7 (44%~~$48.7 (34%) and adjusted gross profit margin ~~improved 120~~decreased 100 basis points to ~~35.8%~~33.8%.

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Operating expenses increased ~~$94.7 (61%~~$27.3 (34%), primarily ~~due to~~driven by the impact of acquisitions, ~~an increase in strategic investments,~~ cost inflation, and an increase in business acquisition, ~~disposition,~~divestiture, and integration costs. Foreign currency impact ~~decreased~~increased operating expenses by 3%. Operating expenses as a percentage of net revenue ~~increased 260~~improved 50 basis points to ~~19.0%~~18.8%.

Operating expenses included business acquisition, ~~disposition,~~divestiture, and integration costs ($~~4.8~~3.5 in 2024 and $1.5 in 2023), and restructuring and restructuring-related charges ($~~1.2~~0.4 in ~~2023~~2024 and ~~$0.2~~$0.9 in ~~2022), and other one-time costs including reserves against certain receivables ($2.4 in 2022)~~2023). Excluding these items, adjusted operating expenses increased ~~$91.3 (60%~~$25.8 (33%) and adjusted operating expenses as a percentage of net revenue ~~increased 250~~improved 60 basis points to ~~18.6%~~18.2%.

Amortization expense increased ~~$18.6 (139%~~$6.4 (62%) primarily driven by the impact of ~~acquisitions.~~acquisitions in the prior fiscal year.

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OPERATIONS REVIEW — Molding Technology Solutions




		Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended December 31,
		2023			2022			2023			2022				2023	2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue				Amount	% of Net Revenue	Amount	% of Net Revenue
Net revenue	Net revenue	$	251.9	100.0	$	269.5	100.0	$	755.2	100.0	$	769.4	100.0
Gross profit	Gross profit	75.2		29.9	81.0		30.1	223.5		29.6	238.4		31.0
Operating expenses	Operating expenses	32.5		12.9	37.5		13.9	106.5		14.1	112.1		14.6
Amortization expense	Amortization expense	8.9			9.0			26.6			27.4

Three Months Ended ~~June 30,~~December 31, 2023 Compared to Three Months Ended ~~June 30,~~December 31, 2022

Net revenue decreased ~~$17.6 (7%~~$37.9 (16%), primarily driven by a decrease in injection molding and hot runner equipment ~~sales, partially offset by higher aftermarket parts and service net revenue and favorable pricing.~~sales. Foreign currency impact ~~decreased~~improved net revenue by 1%.

Order backlog decreased ~~$153.8 (37%~~$102.5 (31%) from ~~$420.2 on June 30,~~$334.1 at December 31, 2022, to $266.4 on June 30, 2023. The decrease in order backlog was primarily driven by a decrease in orders within our injection molding equipment product line and the execution of existing backlog. On a sequential basis, order backlog decreased $31.8 (11%) to $266.4$231.6 at ~~June 30, 2023, down from $298.2 at March~~December 31, 2023. The decrease in order backlog was primarily driven by the execution of existing backlog. On a sequential basis, order backlog decreased $1.6 (1%) to $231.6 at December 31, 2023, down from $233.2 at September 30, 2023.

Gross profit decreased ~~$5.8 (7%~~$12.1 (17%) primarily driven by a decrease in volume and cost inflation, ~~and unfavorable product mix,~~ partially offset by favorable ~~pricing and productivity improvements.~~product mix. Foreign currency impact ~~decreased~~improved gross profit by 1%. Gross profit margin decreased 2040 basis points to ~~29.9%~~29.4%, primarily driven by cost inflation, partially offset by favorable ~~pricing and productivity improvements.~~product mix.

Operating expenses decreased ~~$5.0 (13%~~$3.1 (8%), primarily driven by a decrease in variable compensation and cost ~~containment.~~containment actions. Operating expense as a percentage of net revenue ~~improved 100~~increased 130 basis points to ~~12.9%~~16.7%.

Operating expenses included business acquisition, ~~disposition,~~divestiture, and integration costs ($~~0.4~~1.4 in ~~2023 and $0.6 in 2022)~~2023). Excluding these charges, adjusted operating expenses decreased ~~$4.7 (13%~~$1.7 (5%) and adjusted operating expenses as a percentage of net revenue ~~improved 100~~increased 190 basis points to ~~12.7%~~16.6%.

~~Nine Months Ended June 30, 2023 Compared to Nine Months Ended June 30, 2022~~

~~Net revenue~~ decreased $14.2 (2%), primarily driven by a decrease in hot runner equipment sales, partially offset by favorable pricing and higher aftermarket parts and service net revenue. Foreign currency impact decreased net revenue by 3%.

~~Gross profit~~ decreased $14.9 (6%), primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements. Foreign currency impact decreased gross profit by 3%. Gross profit margin decreased 140 basis points to 29.6%, primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements.

~~Operating expenses~~ decreased $5.6 (5%), primarily driven by a decrease in variable compensation, partially offset by inflation. Foreign currency impact decreased operating expenses by 2%. Operating expense as a percentage of net revenue improved 50 basis points to 14.1%.

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Operating expenses included business acquisition, disposition, and integration costs ($1.8 in 2023 and $1.3 in 2022) and restructuring and restructuring related charges ($0.7 in 2023). Excluding these items, adjusted operating expenses decreased $6.3 (6%) and adjusted operating expenses as a percentage of net revenue improved 50 basis points to 13.8%.

REVIEW OF CORPORATE EXPENSES




		Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended December 31,
		2023			2022			2023			2022				2023	2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue				Amount	% of Net Revenue	Amount	% of Net Revenue
Core operating expenses	Core operating expenses	$	19.7	2.7	$	15.2	3.2	$	48.1	2.3	$	50.4	3.2
Business acquisition, disposition, and integration costs		7.6		1.1	8.7		1.2	20.7		1.0	19.2		1.2
Restructuring and restructuring-related charges		0.2		—	—		—	0.2		—	1.0		—
Business acquisition, divestiture, and integration costs

Operating expenses	Operating expenses	$	27.5	3.8	$	23.9	4.4	$	69.0	3.3	$	70.6	4.4
Operating expenses
Operating expenses

Corporate operating expenses include the cost of providing management and administrative services to each reportable operating segment. These services include treasury management, human resources, legal, business development, information

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technology, tax compliance, procurement, sustainability, and other public company support functions such as internal audit, investor relations, and financial reporting. Corporate operating expenses also include costs related to business acquisition, ~~disposition,~~divestiture, and integration, which we incur as a result of our strategy to grow through selective acquisitions. Core operating expenses primarily represent corporate operating expenses excluding costs related to business acquisition, ~~disposition,~~divestiture, and integration costs and restructuring and restructuring-related charges.

Business acquisition, ~~disposition,~~divestiture, and integration costs include legal, tax, accounting, and other advisory fees and due diligence costs associated with investigating opportunities (including acquisitions and divestitures) and integrating completed ~~acquisitions.~~acquisitions (including severance).

As a result of classifying the historical Batesville reportable operating segment as a discontinued operation, certain indirect corporate costs included within operating expenses in the Consolidated Statements of Operations that were previously allocated to the historical 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 for all periods presented preceding the sale. In addition, costs directly attributable to the historical Batesville reportable operating segment divestiture have been reflected in discontinued operations for the three and nine months ended June 30, 2023.

Three Months Ended ~~June 30,~~December 31, 2023 Compared to Three Months Ended ~~June 30,~~December 31, 2022

Operating expenses ~~increased $3.6 (15%~~decreased $4.2 (20%), primarily ~~due to an increase~~driven by a decrease in ~~strategic investments~~business acquisition, divestiture, and ~~inflation, partially offset by lower variable compensation. These expenses as a percentage of net revenue were 3.8%, an improvement of 60 basis points from the prior year.~~

Core operating expenses increased $4.5 (30%), primarily due to an increase in strategic investments and inflation, partially offset by lower variable compensation. These expenses as a percentage of net revenue were 2.7%, an improvement of 50 basis points from the prior year.

~~Nine Months Ended June 30, 2023 Compared to Nine Months Ended June 30, 2022~~

~~Operating expenses decreased $1.6 (2%), primarily due to lower variable compensation, and prior year one-time expenses associated with the realignment of the executive management team,~~integration costs, partially offset by an increase in strategic investments ~~cost inflation,~~ and ~~an increase in business acquisition, disposition, and integrations costs. These expenses as a percentage of net revenue were 3.3%, an improvement of 110 basis points from the prior year.~~

Core operating expenses decreased $2.3 (5%), primarily due to lower variable compensation, and prior year one-time expenses associated with the realignment of the executive management team, partially offset by an increase in strategic investments and cost inflation. These expenses as a percentage of net revenue were ~~2.3%~~2.2%, an improvement of 90 basis points from the prior year.

Core operating expenses increased $1.1 (8%), primarily due to an increase in strategic investments and inflation. These expenses as a percentage of net revenue were 1.9%, an improvement of 10 basis points from the prior year.

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NON-GAAP OPERATING PERFORMANCE MEASURES

The following is a reconciliation from consolidated net income, the most directly comparable GAAP operating performance measure, to our non-GAAP adjusted EBITDA from continuing operations.

Three Months Ended June 30, Nine Months Ended June 30,
2023 2022 2023 2022
Consolidated net income $ 45.0 $ 50.1 $ 556.3 $ 156.0
Interest income (2.8) (1.3) (7.1) (4.0)
Interest expense 18.6 17.5 63.0 52.7
Income tax expense 23.8 19.9 50.2 54.4
Depreciation and amortization 31.1 24.2 93.1 74.4
Consolidated EBITDA 115.7 110.4 755.5 333.5
Total income from discontinued operations (1.0) (19.0) (461.4) (73.3)
Business acquisition, disposition, and integration costs (1)
10.6 9.1 28.5 20.6
Inventory step-up charges — — 11.1 —
Restructuring and restructuring-related charges (2)
0.8 0.2 2.3 3.5
Loss on divestiture (3)
— — — 3.1
Other (4)
— 0.1 — 3.2
Adjusted EBITDA from continuing operations $ 126.1 $ 100.8 $ 336.0 $ 290.6


	Three Months Ended December 31,
		2023		2022
Consolidated net income		$	19.2	$	47.8

Interest expense, net		29.8		21.5
Income tax expense		10.0		2.3
Depreciation and amortization		38.8		31.0
Consolidated EBITDA		97.8		102.6

Loss (income) from discontinued operations (net of income tax expense)		0.3		(21.0)
Pension settlement charge (1)		8.3		—
Business acquisition, divestiture, and integration costs (2)		5.6		10.7
Inventory step-up charges		1.5		8.0
Restructuring and restructuring-related charges (3)		0.6		1.0


Adjusted EBITDA from continuing operations		$	114.1	$	101.3

(1)The pension settlement charge during the three months ended December 31, 2023 was due to lump-sum payments made from the Company’s U.S. pension plan to former employees who elected to receive such payments.

(2)Business acquisition, ~~disposition,~~divestiture, and integration costs during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023, primarily included ~~professional fees related to acquisitions and~~ costs associated with the integration of recent acquisitions. Business acquisition, ~~disposition,~~divestiture, and integration costs during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022, primarily included professional fees related to acquisitions and professional fees and employee-related costs attributable to the integration of ~~Milacron and the divestiture of TerraSource.~~Milacron.

~~(2)~~(3)Restructuring and restructuring-related charges primarily included severance costs during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and ~~2022.~~

~~(3)The amount during the nine months ended June 30, 2022, represents the loss on the divestiture of TerraSource. See Note 4 of Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.~~

~~(4)Includes other individually immaterial one-time costs, including reserves against certain receivables during the three and nine months ended June 30,~~ 2022.

Three Months Ended ~~June 30,~~December 31, 2023 Compared to Three Months Ended ~~June 30,~~December 31, 2022

Consolidated net income decreased ~~$5.1 (10%~~$28.6 (60%) for the three months ended ~~June 30,~~December 31, 2023, compared to the same period in ~~2022.~~fiscal 2023. The decrease was primarily driven by a decrease in total income from discontinued operations, lower volume, cost inflation, a pension settlement charge in 2024, an increase in ~~amortization,~~interest expense, income taxes and ~~an increase in strategic investments,~~amortization, partially offset by favorable pricing and productivity improvements ~~the impact of acquisitions,~~ and ~~lower variable compensation.~~favorable product mix. Foreign currency impact ~~decreased~~increased consolidated net income by ~~$0.9.~~$0.3.

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Consolidated adjusted EBITDA from continuing operations increased ~~$25.3 (25%~~$12.8 (13%) for the three months ended ~~June 30,~~December 31, 2023, compared to the same period in 2022. The increase was primarily driven by favorable pricing, the impact of acquisitions, productivity improvements, and lower variable compensation, partially offset by cost inflation and an increase in strategic investments. Foreign currency impact decreased adjusted EBITDA by $1.0.

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~~Nine Months Ended June 30, 2023 Compared to Nine Months Ended June 30, 2022~~

~~Consolidated net income increased $400.3 (257%) for the nine months ended June 30, 2023, compared to the same period in 2022.~~fiscal 2023. The increase was primarily driven by the ~~increase in total income from discontinued operations, as well as~~impact of acquisitions, favorable pricing and productivity improvements, ~~higher volume within the Advanced Process Solutions reportable operating segment,~~ and ~~lower variable compensation,~~favorable product mix, partially offset by lower volume and cost inflation, an increase in strategic investments, an increase in depreciation and amortization, an increase in inventory step-up charges related to acquisitions, an increase in interest expense, unfavorable product mix, and an increase in business acquisition, disposition, and integration costs.inflation. Foreign currency impact ~~decreased consolidated net income by $7.1.~~

~~Consolidated adjusted EBITDA from continuing operations~~ increased $45.4 (16%) for the nine months ended June 30, 2023, compared to the same period in 2022. The increase was primarily driven by favorable pricing, the impact of acquisitions, productivity improvements, higher volume within the Advanced Process Solutions reportable operating segment, and lower variable compensation, partially offset by cost inflation, an increase in strategic investments, and unfavorable product mix. Foreign currency impact decreased adjusted EBITDA by ~~$12.0.~~$2.1.

LIQUIDITY AND CAPITAL RESOURCES

In this section, we discuss our ability to access cash to meet business needs. We discuss how we see cash flow being affected for the next twelve months and how we intend to use it. We describe actual results in generating and using cash by comparing the first ~~nine~~three months of ~~2023~~2024 to the same period last year. Finally, we identify other significant matters that could affect liquidity on an ongoing basis.

Ability to Access Cash

Our debt financing has historically included revolving credit facilities, term loans, and long-term notes as part of our overall financing strategy. We regularly review and adjust the mix of fixed-rate and variable-rate debt within our capital structure in order to achieve a target range based on our financing strategy.

We have taken proactive measures to maintain financial flexibility within the landscape of various uncertainties. We believe the Company ended the quarter with and continues to have sufficient liquidity to operate in the current business environment.

As of ~~June 30,~~December 31, 2023, we had ~~$1,160.2~~$448.6 of borrowing capacity under the ~~Amended Credit Agreement,~~Facility, all of which ~~$790.2~~ was immediately available based on our most restrictive covenant. The available borrowing capacity reflects a reduction of ~~$14.8~~$20.8 for outstanding letters of credit issued under the ~~Amended Credit Agreement.~~Facility. The Company may request an increase of up to $600.0 in the total borrowing capacity under the ~~Amended Credit Agreement,~~Facility, subject to approval of the lenders.

In the normal course of business, operating companies within our reportable operating segments provide to certain customers bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, we maintain adequate capacity to provide the guarantees. As of ~~June 30,~~December 31, 2023, we had guarantee arrangements totaling ~~$577.9,~~$605.5, under which ~~$328.9~~$356.4 was used for guarantees. These arrangements include the Amended L/G Facility Agreement under which unsecured letters of credit, bank guarantees, or other surety bonds may be issued. The Company may request an increase to the total capacity under the Amended L/G Facility Agreement by an additional €100.0, subject to approval of the lenders.

We have significant operations outside the U.S. We continue to assert that the basis differences in the majority of our foreign subsidiaries continue to be permanently reinvested outside of the U.S. We have recorded tax liabilities associated with distribution taxes on expected distributions of available cash and current earnings. The Company has made, and intends to continue to make, substantial investments in our businesses in foreign jurisdictions to support the ongoing development and growth of our international operations. As of ~~June 30,~~December 31, 2023, we had a transition tax liability of $14.9 pursuant to the 2017 Tax Cuts and Jobs Act (the “Tax Act”). The cash at our foreign subsidiaries, including U.S. subsidiaries participating in non-U.S. cash pooling arrangements, totaled ~~$248.0~~$178.0 at ~~June 30,~~December 31, 2023. We continue to actively evaluate our global capital deployment and cash needs.

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12-month Outlook

~~Ukraine War~~

The Ukraine War that began in February 2022 continues as of the date of this Quarterly Report. We have suspended all new business in Russia and Belarus but may be contractually obligated to complete existing contracts, insofar as economic sanctions do not prevent us from doing so. Although Russia, Belarus, and Ukraine do not constitute a material portion of our customer and supplier portfolio, a significant escalation or expansion of economic disruption of the Ukraine War’s current scope could have a negative effect on our consolidated results of operations and cash flows. However, we do not believe the impact will be material to our consolidated results of operations and cash flows. For more information about the Ukraine War and its effect on the Company’s business and results of operations, see ~~Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2022, filed with the SEC on November 16, 2022~~.

~~Proposed Acquisition of Schenck Process Food and Performance Materials~~

On May 23, 2023, the Company signed a definitive agreement to acquire the Schenck Process Food and Performance Materials (“FPM”) business, a portfolio company of Blackstone, for an enterprise value of approximately $730.0. This transaction is expected to close during the fourth fiscal quarter of 2023 and we expect to utilize cash on hand, borrowings from the Facility, and the delayed-draw term loan facility available to the Company’s wholly owned subsidiary Hillenbrand Switzerland GmbH (the “New Term Loan”) to fund this acquisition.

~~Other activities~~

During the nine months ended June 30, 2023, the Company repaid in full the $100.0 in 4.6% Series A unsecured notes (“Series A Notes”) using a portion of the net proceeds received from the Batesville divestiture. The remaining net proceeds from the Batesville divestiture were used to repay outstanding borrowings on the Facility. We estimate taxes of approximately $138.0 are owed associated with the Batesville divestiture, with $104.0 paid in our third quarter and $34.0 expected to be paid in our fourth quarter of fiscal 2023.

The Company is required to pay a transition tax on unremitted earnings of its foreign subsidiaries, resulting in an estimated liability of $14.9 recorded as of ~~June 30,~~December 31, 2023. The transition tax liability is expected to be paid over the next ~~three~~two years.

On December 2, 2021, our Board of Directors authorized a new share repurchase program of up to $300.0, which replaced the previous $200.0 share repurchase program. The repurchase program has no expiration date but may be terminated by the Board of Directors at any time. We had approximately $125.0 remaining for share repurchases under the existing authorization at ~~June 30,~~December 31, 2023.

Our anticipated contribution to our defined benefit pension plans in fiscal ~~2023~~2024 is ~~$9.5,~~$10.9, of which ~~$6.3~~$2.2 was made during the ~~nine~~three months ended ~~June 30,~~December 31, 2023. We will continue to monitor plan funding levels, performance of the assets within the plans, and overall economic activity, and we may make additional discretionary funding decisions based on the net impact of the above factors.

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We currently expect to pay quarterly cash dividends of approximately ~~$15.4~~$15.6 based on our outstanding common stock at ~~June 30,~~December 31, 2023. We increased our quarterly dividend in ~~2023~~2024 to ~~$0.22~~$0.2225 per common share from ~~$0.2175~~$0.2200 per common share paid in ~~2022.~~2023.

We believe existing cash and cash equivalents, cash flows from operations, borrowings under existing arrangements, and the issuance of debt will be sufficient to fund our operating activities and cash commitments for investing and financing activities. Based on these factors, we believe our current liquidity position is sufficient and will continue to meet all of our financial commitments in the current business environment.

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Cash Flows


		Nine Months Ended June 30,					Three Months Ended December 31,
		2023		2022
Cash flows provided by (used in):
	2023							2023	2022
Cash flows (used in) provided by:						Cash flows (used in) provided by:
Operating activities from continuing operations	Operating activities from continuing operations	$	133.6	$	(9.9)
Investing activities from continuing operations	Investing activities from continuing operations	25.0		(40.3)
Financing activities from continuing operations	Financing activities from continuing operations	21.4		(201.3)
Net cash flows from discontinued operations	Net cash flows from discontinued operations	(117.0)		96.3
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(9.3)		(10.2)
Net cash flows	Net cash flows	$	53.7	$	(165.4)

Operating Activities

Operating activities from continuing operations ~~provided $133.6~~used $24.0 of cash during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, and used ~~$9.9~~$5.6 of cash during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~a $143.5~~an $18.4 increase. The increase in operating cash flow ~~from~~used in continuing operations was primarily due to ~~favorable~~unfavorable timing of working capital requirements.

Working capital requirements for our reportable operating segments fluctuate and may continue to fluctuate in the future due primarily to the type of product and geography of customer projects in process at any point in time. Working capital needs are lower when advance payments from customers are more heavily weighted toward the beginning of the project. Conversely, working capital needs are higher when a larger portion of the cash is to be received in later stages of manufacturing.

Investing Activities

The ~~$65.3~~$626.9 increase in net cash flows from investing activities from continuing operations during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, was primarily due to ~~the proceeds received on the divestiture of the historical Batesville reportable operating segment, partially offset by~~ the acquisitions of Linxis and Peerless during fiscal year ~~2023 and an increase in capital expenditures.~~2023.

Financing Activities

Cash ~~provided by~~used in financing activities from continuing operations was largely impacted by net borrowing ~~activity and share repurchases.~~activity. Our general practice is to use available cash to pay down debt unless it is needed for an acquisition. ~~Cash provided by~~The $627.4 decrease in net cash flows from financing activities from continuing operations during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, was ~~$21.4,~~ primarily due to the ~~$200.0 term loan that funded in November 2022, partially offset by repayment of the Series A Notes, payment of dividends on common stock, and the~~ net ~~repayment~~borrowings on the Facility of ~~$30.6. Cash used~~$430.0 and the $200.0 draw on the term loan during fiscal year 2023 which did not repeat in ~~financing activities for the nine months ended June 30, 2022 was $201.3, primarily due to repurchases of common stock and payment of dividends on common stock.~~fiscal year 2024.

We returned ~~$45.9~~$15.6 to shareholders during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 in the form of quarterly dividends. We increased our quarterly dividend in fiscal ~~2023~~2024 to ~~$0.22~~$0.2225 per common share from ~~$0.2175~~$0.2200 per common share paid during fiscal ~~2022.~~2023.

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Summarized Financial Information for Guarantors and the Issuer of Guaranteed Securities

Summarized financial information of Hillenbrand (the “Parent”) and our subsidiaries that are guarantors of our senior unsecured notes (the “Guarantor Subsidiaries”) is shown below on a combined basis as the “Obligor Group.” The Company’s senior unsecured notes are guaranteed by certain of our wholly-owned domestic subsidiaries and rank equally in right of payment with all of our existing and financial information of the Obligor Group. All intercompany balances and transactions between the Parent and Guarantor Subsidiaries have been eliminated and all information excludes subsidiaries that are not issuers or guarantors of our senior unsecured notes, including earnings from and investments in these entities.

Upon the divestiture of Batesville on February 1, 2023, each of the subsidiaries of Batesville that were Guarantor Subsidiaries ceased to be a guarantor of the senior unsecured notes.

June 30, 2023

September 30, 2022

December 31, 2023

September 30, 2023

Combined Balance Sheets Information:

Current assets (1)

4,088.3

2,590.3

Non-current assets

2,593.7

2,656.1

Current liabilities

1,644.6

623.2

Non-current liabilities

1,411.3

1,289.6

Nine Months Ended
June 30, 2023

Three Months Ended
December 31, 2023

Combined Statements of Operations Information:

Net revenue (2)

335.9

Gross profit

67.3

Consolidated net income from continuing operations attributable to Obligors

337.1

Total income from discontinued operations (net of income tax expense) attributable to Obligors (3)

449.7

Net income attributable to Obligors (3)

786.8

Total loss from discontinued operations (net of income tax expense) attributable to Obligors

Net income attributable to Obligors

(1) Current assets include intercompany receivables from non-guarantors of ~~$1,934.6~~$2,847.8 as of ~~June 30,~~December 31, 2023 and ~~$1,868.7~~$2,070.6 as of September 30, ~~2022.~~2023.

(2) Net revenue includes intercompany sales with non-guarantors of ~~$4.3~~$2.7 for the ~~nine~~three months ended ~~June 30,~~December 31, 2023.

~~(3)~~ Of the $449.7 of total income from discontinued operations (net of income tax expense), $441.3 related to gain on divestiture (net of income tax expense) of discontinued operations recognized by the Parent. The remaining $8.4 related to the operations of the former subsidiary guarantors of the senior unsecured notes included in discontinued operations, which, as of February 1, 2023, have been divested and are no longer guarantors.

Recently Adopted and Issued Accounting Standards

For a summary of recently issued and adopted accounting standards applicable to us, see Item 1, Note 2 of Part I of this Form 10-Q.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A full discussion of quantitative and qualitative disclosures about market risk may be found in Item 7A of our ~~2022~~2023 Form 10-K for the year ended September 30, ~~2022,~~2023, filed with the SEC on November ~~16, 2022.~~15, 2023. There have been no material changes in this information since the filing of our ~~2022~~2023 Form 10-K. The following discussion provides information on significant changes to our market risks, resulting from an increase to our variable-rate debt obligations due to recent acquisitions, which could have a significant impact on our operating results, financial condition, and liquidity.

~~Table of Contents~~

~~Interest rate risk~~

As of September 30, 2022 we had outstanding variable-rate debt obligations of $6.7. In connection with recent acquisitions, we incurred borrowings under our Facility, including the $200.0 term loan funded in November 2022 under the Credit Agreement. As a result, our outstanding variable-rate debt obligations were $222.3 as of June 30, 2023. We are subject to interest rate risk associated with such borrowings, which bear a variable rate of interest. The interest we pay on such borrowings is dependent on interest rate conditions and the timing of our financing needs. If we assumed the borrowings under our variable-rate debt obligations remained at $222.3 for 12 months, a one percentage point change in the related interest rates would decrease or increase annual interest expense by approximately $2.2.

Item 4. CONTROLS AND PROCEDURES

Our management, with the participation of our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer (the “Certifying Officers”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Certifying Officers concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective.

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In the ordinary course of business, we review our system of internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, automating manual processes, and updating existing systems.

On October 6, 2022 and December 1, 2022, we completed the acquisitions of Linxis and Peerless, respectively, which included their existing information systems and internal controls over financial reporting. In conducting our evaluation of the effectiveness of our internal control over financial reporting for our fiscal year ended September 30, 2023, we plan to exclude Linxis and Peerless from our evaluation as permitted under existing SEC Staff interpretive guidance for newly acquired businesses. We are currently in the process of evaluating and integrating Linxis and Peerless’ historical internal controls over financial reporting with ours. These integrations may lead to changes in future fiscal periods, but we do not expect these changes to materially affect our disclosure controls and procedures or internal control over financial reporting. We expect to complete these integrations in fiscal 2024. For the three and nine months ended June 30, 2023, Linxis and Peerless accounted for $92.5 and $256.4 of our total net revenue, and as of June 30, 2023, had total assets of $912.1 (inclusive of acquired goodwill and identifiable intangible assets of $662.6).

~~Other than as noted above, there were~~There have been no changes in internal control over financial reporting identified in the evaluation for the quarter ended ~~June 30,~~December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in Note 1615 to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. RISK FACTORS

For information regarding the risks we face, see the discussion under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, ~~2022,~~2023, filed with the SEC on November 16, 2022, and the additional risk factor below. The following descriptions of risk factors include any additions and material changes to, and supersede the corresponding descriptions of, the risk factors associated with our business as previously disclosed in our Annual Report on Form 10-K for the year ended September 30, 2022.15, 2023.

We have recently completed several divestitures, including of our Batesville business, and we continually assess the strategic fit of our existing businesses. We may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment, and we cannot be certain that our business, operating results, and financial condition will not be materially and adversely affected.

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A successful divestiture depends on various factors, including reaching an agreement with potential buyers on terms we deem attractive, as well as our ability to effectively transfer liabilities, contracts, facilities, and employees to any purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to retain, reduce fixed costs previously associated with the divested assets or business, and collect the proceeds from any divestitures. These efforts require varying levels of management resources, which may divert our attention from other business operations. If we do not realize the expected benefits of any divestiture transaction or experience unexpected costs or similar risks, our consolidated financial position, results of operations, and cash flows could be negatively impacted. In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of or changes to customer, employee, or supplier relationships, potential adverse impacts to volume-based pricing under existing and future purchasing arrangements, and a decrease in net revenue and earnings associated with the divested business. Furthermore, any divestiture may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the associated loss of revenue, and may also result in significant write-offs, including those related to goodwill and other intangible assets, any of which could have a material adverse effect on our results of operations and financial condition.

In addition, divestitures, in particular the recent divestiture of our Batesville business, potentially involve significant post-closing separation and transition activities, which could involve the expenditure of material financial resources and significant employee resources. During these activities, we have diverted capital and other resources that otherwise could have been used in our business operations, and we will continue to do so until the process is completed. We also have incurred expenses and could continue to incur substantial expenses associated with the divestiture of Batesville, and there can be no assurance that this transaction will be ultimately beneficial to us or have a positive effect on shareholder value.

Item 5. OTHER INFORMATION

On ~~June 15,~~December 13, 2023, ~~J. Michael Whitted,~~Nicholas R. Farrell, Senior Vice President, ~~Strategy & Corporate Development~~General Counsel and Secretary of the Company, adopted a trading arrangement for the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Mr. ~~Whitted’s~~Farrell’s Rule 10b5-1 Trading Plan, which has a term of one (1) year, provides for ~~161,940~~8,542 stock options to be exercised and ~~sold, 17,589 shares underlying restricted stock units to be sold after vesting and applicable tax withholding, and 15,000 shares of common stock to be~~ sold, subject in each case to certain quantities and limit prices.

Item 6. EXHIBITS

The exhibits filed with this report are listed below. In reviewing any agreements included as exhibits to this report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements may contain representations and warranties by the parties to the agreements, including us. Except where explicitly stated otherwise, these representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

•should not necessarily be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

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~~Exhibit 2.1~~		Share Purchase Agreement, dated as of May 23, 2023, between Milacron LLC, as Purchaser, and Schenck Process Holding GmbH, as Seller (Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed May 30, 2023).
Exhibit 3.1		Restated and Amended Articles of Incorporation of Hillenbrand, Inc., effective as of February 13, 2020 (Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed February 14, 2020)
Exhibit 3.2		Amended and Restated Code of By-Laws of Hillenbrand, Inc., effective as of ~~May 5, 2022~~November 14, 2023 (Incorporated by reference to Exhibit 3.2 to ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K filed ~~May 9, 2022)~~
~~Exhibit 10.1~~		Amendment No. 1 to Fourth Amended and Restated Credit Agreement, dated as of June 21, 2023, among Hillenbrand, Inc., as a borrower, the subsidiary borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference as Exhibit 10.1 to Current Report on Form 8-K filed June 23,November 15, 2023).
~~Exhibit 10.2~~		Amendment and Restatement Agreement, dated June 22, 2023, between Hillenbrand, Inc., as a borrower, the subsidiary borrowers party thereto, the subsidiary guarantors party thereto, Commerzbank Aktiengesellschaft, as mandated lead arranger and bookrunner, Commerzbank Aktiengesellschaft (as successor to Commerzbank Finance & Covered Bond S.A.), as agent, and the other financial institutions party thereto as mandated lead arrangers, lenders and issuing banks (Incorporated by reference as Exhibit 10.2 to Current Report on Form 8-K filed June 23, 2023).
Exhibit 10.3*		Amendment No. 2 to Fourth Amended and Restated Credit Agreement, dated as of July 14, 2023, among Hillenbrand, Inc., as a borrower, the subsidiary borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Exhibit 22	*	List of Guarantor Subsidiaries of Hillenbrand, Inc. ~~(Incorporated by reference to Exhibit 22 to Quarterly Report on Form 10-Q filed May 8, 2023)~~
Exhibit 31.1*31.1	*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2*31.2	*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1*32.1	*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2*32.2	*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30,~~December 31, 2023, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
Exhibit 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

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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 thereunto duly authorized.


	HILLENBRAND, INC.

Date: ~~August 2, 2023~~February 5, 2024	By:	/s/ Robert M. VanHimbergen
		Robert M. VanHimbergen
		Senior Vice President and Chief Financial Officer

Date: ~~August 2, 2023~~February 5, 2024		/s/ Megan A. Walke
		Megan A. Walke
		Vice President and Chief Accounting Officer

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	Three Months Ended June 30, 2023
	Shareholders of Hillenbrand, Inc.
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares					Shares	Amount
Balance at March 31, 2023	75.8	$	704.7	$	1,289.2	6.2	$	(266.9)	$	(91.4)	$	31.2	$	1,666.8
Total other comprehensive loss, net of tax	—	—		—		—	—		(23.5)		(0.6)		(24.1)
Net income	—	—		43.3		—	—		—		1.7		45.0

Issuance/retirement of stock for stock awards/options	—	(2.9)		—		(0.3)	11.9		—		—		9.0
Share-based compensation	—	4.9		—		—	—		—		—		4.9
Dividends ($0.22 per share)	—	0.2		(15.5)		—	—		—		—		(15.3)

Purchase of shares of noncontrolling interests	—	—		—		—	—		—		(0.8)		(0.8)
Balance at June 30, 2023	75.8	$	706.9	$	1,317.0	5.9	$	(255.0)	$	(114.9)	$	31.5	$	1,685.5

	Nine Months Ended June 30, 2023
	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 loss, net of tax	—	—		—		—	—		40.7		(0.6)		40.1
Net income	—	—		551.5		—	—		—		4.8		556.3

Issuance/retirement of stock for stock awards/options	—	(34.9)		—		(1.0)	42.3		—		—		7.4
Share-based compensation	—	17.4		—		—	—		—		—		17.4
Dividends ($0.66 per share)	—	0.6		(46.5)		—	—		—		(1.6)		(47.5)
Acquisition of noncontrolling interests	—	—		—		—	—		—		4.6		4.6
Purchase of shares of noncontrolling interests	—	—		—		—	—		—		(0.8)		(0.8)
Balance at June 30, 2023	75.8	$	706.9	$	1,317.0	5.9	$	(255.0)	$	(114.9)	$	31.5	$	1,685.5


	October 6, 2022 (as initially reported)		Measurement Period Adjustments		October 6, 2022 (as adjusted)
Assets acquired:
Cash and cash equivalents	$	22.9	$	—	$	22.9
Trade receivables	31.5		—		31.5
Receivables from long-term manufacturing contracts	12.1		—		12.1
Inventories	80.1		—		80.1
Prepaid expenses and other current assets	11.7		—		11.7
Property, plant, and equipment	36.7		1.1		37.8
Operating lease right-of-use assets	15.0		—		15.0
Intangible assets	243.8		—		243.8
Goodwill	332.0		(0.9)		331.1
Other noncurrent assets	1.0		—		1.0
Total assets acquired	786.8		0.2		787.0

Liabilities assumed:
Trade accounts payable	18.9		—		18.9
Liabilities from long-term manufacturing contracts	52.0		—		52.0
Accrued compensation	10.3		—		10.3
Other current liabilities	19.6		1.4		21.0
Accrued pension and postretirement healthcare	3.9		—		3.9
Operating lease liabilities	9.4		—		9.4
Deferred income taxes	77.0		(1.2)		75.8
Other noncurrent liabilities	0.3		—		0.3
Total liabilities assumed	191.4		0.2		191.6
Net assets acquired	595.4		—		595.4

Less: Fair value of Linxis noncontrolling interest (1)	(4.6)		—		(4.6)
Purchase price consideration	$	590.8	$	—	$	590.8


	August 31, 2022 (as initially reported)		Measurement Period Adjustments		August 31, 2022 (as adjusted)
Assets acquired:
Current assets	$	38.2	$	1.4	$	39.6
Property, plant, and equipment	4.7		1.9		6.6
Intangible assets	—		22.6		22.6
Goodwill	69.3		(12.3)		57.0
Other assets	5.3		—		5.3
Total assets acquired	117.5		13.6		131.1

Liabilities assumed:
Current liabilities	33.9		6.6		40.5
Other long-term liabilities	5.9		7.0		12.9
Total liabilities assumed	39.8		13.6		53.4
Net assets acquired	$	77.7	$	—	$	77.7


	June 30, 2023		September 30, 2022
$1,000.0 revolving credit facility (excluding outstanding letters of credit)	$	27.3	$	6.7
$200.0 term loan	195.0		—
$400.0 senior unsecured notes (1)	397.8		397.1
$375.0 senior unsecured notes (2)	372.7		372.2
$350.0 senior unsecured notes (3)	346.5		346.2
$100.0 Series A Notes (4)	—		99.9

Total debt	1,339.3		1,222.1
Less: current portion	10.0		—
Total long-term debt	$	1,329.3	$	1,222.1


	Carrying Value at June 30, 2023		Fair Value at June 30, 2023 Using Inputs Considered as:
			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	290.5	$	290.5	$	—	$	—
Restricted cash	0.8		0.8		—		—

Investments in rabbi trust	3.4		3.4		—		—
Derivative instruments	3.0		—		3.0		—

Liabilities:
The Facility	27.3		—		27.3		—
Term loan	195.0		—		195.0		—
2021 Notes	350.0		296.4		—		—
2020 Notes	400.0		396.5		—		—
2019 Notes	374.7		367.0		—		—

Derivative instruments	2.0		—		2.0		—