Hillenbrand Reports Quarterly Profit

November 28, 2011

News Release

Batesville, Ind.

Quarterly Summary

Hillenbrand reported worldwide revenue of $231.2 million for the fourth quarter of fiscal 2011, a 9% ($19.2 million) increase over the prior year. The company's fastest-growing business platform, Process Equipment Group, increased revenue 32% ($18.4 million) to $76.4 million, or 25% ($14.3 million) on a constant currency basis. Excluding the impact of the August 31 acquisition of Rotex, revenue grew 17%. The acquisition also contributed to a 26% increase in Process Equipment Group's order backlog compared to the third quarter. The Batesville business platform reported fourth-quarter revenue of $154.8 million, slightly above prior-year revenue of $154 million.

Increased commodity costs in the Batesville business, primarily fuel and steel, along with inventory step-up charges related to the Rotex acquisition, led to a consolidated gross profit margin of 39.2%, compared to 41.8% in the prior year. Without the step-up charges, adjusted gross profit margin was 40.4% in the fourth quarter of 2011.

Net income increased 17% over the prior year to $23.5 million, with EPS growing 19% to $0.38. In the same period, EBITDA increased 8% to $44.6 million. The year-over-year increases were higher on an adjusted basis, with net income up 19% to $29.2 million, EPS up 20% to $0.48 and EBITDA up 11% to $52.5 million. Cash flow from operations was $33 million higher than the prior year, largely due to the timing of tax payments.

Annual Summary

Annual revenue for 2011 increased 18% ($134.2 million) over the prior year to $883.4 million, 16% on a constant currency basis. Gross profit margin was 41.9% compared to 41.8% in the prior year. Without the impact of inventory step-up charges, adjusted gross profit margin was 42.2% in 2011 and 43.4% in the prior year. Net income of $106.1 million ($1.71 per share) grew 15% compared to the prior year, and adjusted net income of $113.8 million ($1.84 per share) was 2% higher. At $197.5 million, EBITDA increased 19% ($31.7 million) over the prior year, and 9% ($17.2 million) on an adjusted basis. Collection of the Forethought Note in 2011 was a primary driver in the $71.3 million year-over-year increase in cash flow from operations.

CEO Comments

"The company posted very solid fourth-quarter results, fueled by effective execution of our growth strategy, which focuses on making the right investments in our business platforms to drive profitability and shareholder value," said Kenneth A. Camp, Hillenbrand president and chief executive officer. "Batesville continues to generate strong and consistent cash flow, while Process Equipment Group has embarked on a global growth initiative that is opening up new geographies for its brands, including newly acquired Rotex. I'm pleased with the company's accomplishments during the past year and look forward to building on those successes in 2012."

Guidance for Fiscal Year 2012

Hillenbrand expects 2012 global revenue to increase between 13% and 17%, driven by double-digit organic top-line growth from Process Equipment Group and a full year of revenue from Rotex. Batesville is anticipated to deliver low single-digit top-line growth. Given current foreign exchange rates, management expects foreign currency to be favorable in the early part of the year, then largely offset in the latter part, resulting in a minimal total translation impact when compared to 2011.

Diluted EPS for fiscal 2012 is projected to range from $1.75 to $1.85 on a GAAP basis. This takes into account $5 million of intangible asset amortization for Rotex and $12 million less interest and investment income. The Forethought Note, collected in April 2011, yielded $6 million of interest income that will not repeat in 2012. In addition, Hillenbrand recognized $6 million of gains from limited partnership investments in 2011 that are not expected to recur. The company expects to make adjustments for such items as business acquisition costs, backlog step-up amortization and antitrust litigation expense, resulting in a 2012 diluted adjusted EPS range of $1.82 to $1.92.

"Absent significant jolts to the world economy, we expect our strong growth in 2012 to drive us over the billion-dollar revenue mark," said Camp. "As we continue our transformation into a global diversified industrial enterprise, it's encouraging to see our strategy affirmed by the results we're delivering to our shareholders."

Conference Call and Webcast

The company will host a conference call and simultaneous webcast Tuesday, November 29, 2011, at 8 a.m. ET to discuss the results for the fourth quarter and full fiscal year 2011, which ended September 30, 2011. The webcast will be available at http://ir.hillenbrandinc.com and will be archived on the company's website through November 29, 2012.

To access the conference call, listeners in the United States and Canada may dial 1-800-378-6592, and international callers may dial 1-719-325-2324. A replay of the call will be available until midnight ET, Tuesday, December 13, 2011, by dialing 1-888-203-1112 in the United States and Canada or 1-719-457-0820 internationally, and using the passcode 8822146.

Source: Hillenbrand Inc.