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What changed in Hillenbrand, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Hillenbrand, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+436 added−536 removedSource: 10-K (2023-11-15) vs 10-K (2022-11-16)

Top changes in Hillenbrand, Inc.'s 2023 10-K

436 paragraphs added · 536 removed · 338 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+42 added−68 removed47 unchanged
Biggest changeWe believe Batesville has attractive fundamentals including: • Historically predictable strong cash flow and attractive margins; • Historically high return on invested capital; and • Substantial brand value and recognition, combined with quality service, a nationwide distribution network, and a strong customer base. 5 Table of Contents How We Operate We strive to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the HOM.
Biggest changeHow We Operate Guided by our Purpose, Shape What Matters for Tomorrow, we strive to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through the execution of our profitable growth strategy.
Hot runner and controller systems are sold under the Mold-Masters ® brand and designed for each product a customer manufactures on an injection molding machine. Hot runner systems are product-specific and replaced frequently due to design changes and innovation in customers’ end products, with a typical aftermarket cycle of one to five years.
Hot runner and controller systems are sold under the Mold-Masters ® brand and designed for each product a customer manufactures on an injection molding machine. Hot runner systems are end product-specific and replaced frequently due to design changes and innovation in customers’ end products, with a typical aftermarket cycle of one to five years.
Backlog represents the amount of net revenue that we expect to realize on contracts awarded to Molding Technology Solutions. Though backlog can be an indicator of future revenue, it does not include projects and aftermarket parts orders that are booked and shipped within the same quarter.
Backlog represents the amount of net revenue that we expect to realize on contracts awarded to Molding Technology Solutions. Though backlog can be an indicator of future net revenue, it does not include projects and aftermarket parts orders that are booked and shipped within the same quarter.
Molding Technology Solutions: Strategy Molding Technology Solutions seeks to execute its strategy through the following initiatives: • Strengthen leadership positions in global markets ◦ Leverage core technologies and applications expertise to expand presence in current end markets. ◦ Leverage Hillenbrand’s strong positions across the plastics value chain to cross-sell product lines. 13 Table of Contents ◦ Expand product offering in key end markets, including emerging markets and new segments for sustainability such as recycling and biodegradable plastics. • Drive innovation and new product development ◦ Provide innovative product and service solutions to solve customers’ challenges, leveraging shared research and development and technology across the enterprise. ◦ Develop new products that are focused on solidifying Molding Technology Solutions’ current market positions and expanding the market through the introduction of technology that displaces other materials, primarily metal and glass. ◦ Provide value-added end-to-end solutions from individual components to integrated systems. ◦ Enable the customer to fulfill sustainability requirements (e.g., reduction of virgin resin). • Leverage HOM to drive margin expansion and profitable growth ◦ Apply HOM principles and tools, including voice of customer and segmentation with a goal to drive profitable growth. ◦ Leverage Hillenbrand’s global footprint and enhance support to customers through the entire lifecycle of their equipment usage to expand sales of aftermarket parts and services. ◦ Drive global supply strategy to achieve supply chain and operating efficiencies to improve cost and quality. ◦ Enhance productivity through process standardization.
Molding Technology Solutions: Strategy Molding Technology Solutions seeks to execute its strategy through the following initiatives: • Strengthen leadership positions in global markets ◦ Leverage core technologies and applications expertise to expand presence in current end markets. ◦ Leverage Hillenbrand’s strong positions across the plastics value chain to cross-sell product lines. ◦ Expand product offering in key end markets, including emerging markets and new segments for sustainability such as recycling and biodegradable plastics. • Drive innovation and new product development ◦ Provide innovative product and service solutions to solve customers’ challenges, leveraging shared research and development and technology across the enterprise. ◦ Develop new products that are focused on solidifying Molding Technology Solutions’ current market positions and expanding the market through the introduction of technology that displaces other materials, primarily metal and glass. ◦ Provide value-added end-to-end solutions from individual components to integrated systems. ◦ Enable the customer to fulfill sustainability requirements (e.g., reduction of virgin resin). • Leverage HOM to drive margin expansion and profitable growth ◦ Apply HOM principles and tools, including voice of customer and segmentation with a goal to drive profitable growth. ◦ Leverage Hillenbrand’s global footprint and enhance support to customers through the entire lifecycle of their equipment usage to expand sales of aftermarket parts and services. ◦ Drive global supply strategy to achieve supply chain and operating efficiencies to improve cost and quality. 13 Table of Contents ◦ Enhance productivity through process standardization.
HILLENBRAND REGULATORY MATTERS Advanced Process Solutions, Molding Technology Solutions, and Batesville reportable operating segments are subject to a variety of federal, state, local, and foreign laws and regulations relating to environmental, health, and safety concerns, including the handling, storage, discharge, and disposal of hazardous materials used in or derived from our manufacturing processes.
HILLENBRAND REGULATORY MATTERS The Advanced Process Solutions and Molding Technology Solutions reportable operating segments are subject to a variety of federal, state, local, and foreign laws and regulations relating to environmental, health, and safety concerns, including relating to the handling, storage, discharge, and disposal of hazardous materials used in or derived from our manufacturing processes.
Advanced Process Solutions: Strategy Advanced Process Solutions seeks profitable growth through the following strategic initiatives: • Strengthen leadership positions and build targeted platforms ◦ Grow platforms to critical mass to achieve benefits of leadership and scale in attractive end markets organically and through acquisitions. ◦ Capitalize on emerging trends in end markets such as food, recycling, and biopolymers. ◦ Leverage global footprint to provide leading aftermarket support to customers. • Drive innovation and new product development ◦ Provide innovative product and service solutions to solve customers’ challenges. ◦ Extend applications expertise to win in adjacent markets with high growth potential. ◦ Develop new products driven by voice of customer input and changing needs. ◦ Provide value-added end-to-end solutions from individual components to integrated systems. • Leverage HOM to drive margin expansion and profitable growth ◦ Apply HOM principles and tools, including voice of customer and segmentation, for profitable growth. ◦ Drive best-in-class lead times to grow share in aftermarket business. ◦ Implement strategic supplier relationships to improve cost and quality. ◦ Enhance productivity through process standardization.
Advanced Process Solutions: Strategy Advanced Process Solutions seeks profitable growth through the following strategic initiatives: • Strengthen leadership positions and build targeted platforms 10 Table of Contents ◦ Grow platforms to critical mass to achieve benefits of leadership and scale in attractive end markets organically and through acquisitions. ◦ Capitalize on emerging trends in end markets such as food, recycling, and biopolymers. ◦ Leverage global footprint to provide leading aftermarket support to customers. • Drive innovation and new product development ◦ Provide innovative product and service solutions to solve customers’ challenges. ◦ Extend applications expertise to win in adjacent markets with high growth potential. ◦ Develop new products driven by voice of customer input and changing needs. ◦ Provide value-added end-to-end solutions from individual components to integrated systems. • Leverage HOM to drive margin expansion and profitable growth ◦ Apply HOM principles and tools, including voice of customer and segmentation, for profitable growth. ◦ Drive best-in-class lead times to grow share in aftermarket business. ◦ Implement strategic supplier relationships to improve cost and quality. ◦ Enhance productivity through process standardization.
This approach has yielded a deep understanding among our employee base of our products and our customers, while encouraging new employees to bring new ideas in support of our continuous improvement mindset.
This approach has yielded a deep understanding among our employee base of our products and our customers, while encouraging new employees to bring innovative ideas in support of our continuous improvement mindset.
We believe that long-term growth for this segment is driven by megatrends such as a rapidly growing middle class in China and India and a growing global population, resulting in rising demand for products sold in many of the end markets that Advanced Process Solutions serves, including durable plastic goods and food.
We believe that long-term growth for this segment is driven by megatrends such as a rapidly growing middle class in China and India and a growing global population, resulting in rising demand for products sold in many of the end markets that Advanced Process Solutions serves, including plastic goods, food, and recycling.
Kulmaczewski also served as Senior Director and Vice President of Operations and Site Leader, from May 2014 through September 2016. Mr. Kulmaczewski’s experience before Leica Biosystems included technical and manufacturing roles with generally increasing levels of responsibility at various other public and private manufacturing companies. Christopher H.
Kulmaczewski also served as Senior Director and Vice President of Operations and Site Leader, from May 2014 through September 2016. Mr. Kulmaczewski’s experience before Leica Biosystems included technical and manufacturing roles with generally increasing levels of responsibility at various other public and private manufacturing companies.
Total Rewards Hillenbrand offers benefits focused on supporting employees and their families as they navigate work and life. Hillenbrand’s compensation programs are designed to ensure employees are effectively compensated in terms of base salary, incentive compensation, and other benefits that support the health and wellness of our employees.
Total Rewards Hillenbrand offers rewards programs focused on supporting employees and their families as they navigate work and life. Hillenbrand’s programs are designed to ensure employees are effectively compensated in terms of base salary, incentive compensation, and other benefits that support the health and wellness of themselves and their families.
These trends include increased use of lightweight plastics in the automotive industry to improve fuel efficiency; more effective packaging in emerging markets to improve food shelf life, freshness, and safety; innovation in a variety of applications in the medical space designed to improve safety, drug and therapy delivery, and durability; increased use of engineered plastics in construction that are more durable, lightweight and require little maintenance; increased use of biopolymers to help preserve the environment; and more sustainable food sources such as plant-based proteins.
These trends include increased use of lightweight plastics in the automotive industry to improve fuel efficiency; more effective packaging in emerging markets to improve food shelf life, freshness, and safety; increased consumption of processed foods in emerging markets; innovation in a variety of applications in the medical space designed to improve safety, drug and therapy delivery, and durability; increased use of engineered plastics in construction that are more durable, lightweight and require little maintenance; increased use of biopolymers to help preserve the environment; and more sustainable food sources such as plant-based proteins.
Recurring sales are supported by a large installed base of hot runner systems worldwide. • Mold components ◦ Molding Technology Solutions designs, manufactures, and sells high-quality mold bases and plates available in various configurations to meet the needs of customers for a variety of applications under the DME ® brand.
Recurring sales are supported by a large installed base of hot runner systems worldwide. • Mold components 11 Table of Contents ◦ Molding Technology Solutions designs, manufactures, and sells high-quality mold bases and plates available in various configurations to meet the needs of customers for a variety of applications under the DME ® brand.
Molding Technology Solutions: Competition Molding Technology Solutions holds leading positions in key industries because of design and quality of products, extensive application and process engineering expertise, product support services, brand name recognition, and commitment to serving the broad needs of customers. Molding Technology Solutions brands face strong competition in the markets where they compete.
Molding Technology Solutions: Competition Molding Technology Solutions holds leading positions in key industries because of design and quality of products, extensive application and process engineering expertise, product support services, brand name recognition, and commitment to serving the broad needs of customers. 12 Table of Contents Molding Technology Solutions brands face strong competition in the markets where they compete.
Approximately 3,800 employees were located within the United States (“U.S.”) and 7,200 employees were located outside of the U.S., primarily throughout Europe and Asia. Approximately 66% of our workforce within the U.S. is composed of manufacturing direct labor, and the remaining population includes all other selling, general, and administrative professional employees.
Approximately 3,200 employees were located within the United States (“U.S.”) and 7,200 employees were located outside of the U.S., primarily throughout Europe and Asia. Approximately 62% of our workforce within the U.S. is composed of manufacturing direct labor, and the remaining population includes all other selling, general, and administrative professional employees.
Products are offered under brand names that are recognized among the leaders in their respective categories. • Compounding, Extrusion, and Material Handling Equipment and Equipment System Design ◦ Twin screw compounding and extrusion machines range from small laboratory compounding machines to high performance, high throughput extrusion systems.
Products are offered under brand names that are recognized as leaders in their respective categories. • Compounding, extrusion, and material handling equipment and equipment system design ◦ Twin screw compounding and extrusion machines range from small laboratory compounding machines to high performance, high throughput extrusion systems.
Prior to that he served in various roles of increasing responsibility over approximately 15 years at Johnson Controls, including as Chief Financial Officer of Yangfeng Automotive Interiors in Shanghai, China. Prior to Johnson Controls, Mr. VanHimbergen spent nearly a decade at Pricewaterhouse Coopers LLP working with large multinational manufacturing companies. Mr.
Prior to that he served in various roles of increasing responsibility over approximately 15 years at Johnson Controls, including as Chief Financial Officer of Yangfeng Automotive Interiors in Shanghai, China, where he lived for five years. Prior to Johnson Controls, Mr. VanHimbergen spent nearly a decade at Pricewaterhouse Coopers LLP working with large multinational manufacturing companies. Mr.
In instances where third-party suppliers are depended upon for outsourced products or components, there is risk of customer dissatisfaction with the quality or performance of the products sold due to supplier failure. Difficulties experienced by third-party suppliers can interrupt our ability to obtain the outsourced product and ultimately to supply products to customers.
In instances where third-party suppliers are depended upon for outsourced products or components, there is risk of customer dissatisfaction with the quality or performance of the products sold due to supplier failure. Difficulties experienced by third-party suppliers can interrupt Advanced Process Solutions’ ability to obtain the outsourced product and ultimately to supply products to customers.
As a result, margin percentages tend to be lower on these large system sales when compared to the rest of the reportable operating segment. With the acquisition of Herbold in 2022, the Company now offers complete, innovative recycling solutions leveraging both Coperion and Herbold complementary technologies.
As a result, margin percentages tend to be lower on these large system sales when compared to the rest of the reportable operating segment. With the acquisition of Herbold in fiscal 2022, the Company now offers complete, innovative recycling solutions leveraging both Coperion and Herbold complementary 8 Table of Contents technologies.
All of these extrusion products are sold under the Coperion ® and Herbold ® brands. ◦ Material handling equipment includes pneumatic and hydraulic conveying equipment for difficult-to-move materials; high-precision feeders that can operate at both very high and very low fill rates; blenders for pellets and powders; and rotary valves, diverter valves, and slide-gate valves used for feeding, dosing, discharge, and distribution during pneumatic conveying.
These extrusion products are sold under the Coperion ® brand. ◦ Material handling equipment includes pneumatic and hydraulic conveying equipment for difficult-to-move materials; high-precision feeders that can operate at both very high and very low fill rates; blenders for pellets and powders; and rotary valves, diverter valves, and slide-gate valves used for feeding, dosing, discharge, and distribution during pneumatic conveying.
A majority of the equipment uses a unique technology based on a specific gyratory-reciprocating motion that provides an optimal material distribution on the screens, gentle handling of particles, and accurate separations. • Aftermarket parts and service ◦ Aftermarket parts and service are a major component of most of Advanced Process Solutions’ product lines.
A majority of the products use a unique technology based on a specific gyratory-reciprocating motion that provides an optimal material distribution on the screens, gentle handling of particles, and accurate separations. • Aftermarket parts and service ◦ Aftermarket parts and service are a major component of most of Advanced Process Solutions’ product lines.
Advanced Process Solutions regularly takes steps designed to mitigate the impact of volatility in raw and component material prices, including executing Lean initiatives and various pricing and sourcing actions.
Advanced Process Solutions regularly takes steps designed to mitigate the impact of volatility in raw and component material prices, including executing Lean initiatives through the application of HOM and various pricing and sourcing actions.
Products are offered under brand names that are recognized as being among the leaders in their respective industries. 11 Table of Contents • Injection molding and extrusion equipment ◦ Molding Technology Solutions designs, manufactures and sells plastic processing equipment and systems, which include injection molding, extrusion and auxiliary systems.
Products are offered under brand names that are recognized as being among the leaders in their respective industries. • Injection molding and extrusion equipment ◦ Molding Technology Solutions designs, manufactures and sells plastic processing equipment and systems, which include injection molding, extrusion and auxiliary systems.
Molding Technology Solutions continues to identify and qualify alternative sources to mitigate risk associated to single or sole source supply continuity, and has and may continue to purchase certain materials in safety stock where we have supply chain continuity concerns.
Molding Technology Solutions continues to identify and qualify alternative sources to mitigate risk associated to single or sole source supply continuity, and has and may continue to purchase certain materials in safety stock where there are supply chain continuity concerns.
We believe that our relatively long average employee tenure across the globe — 10 years as of the end of the fiscal year 2022 — reflects the high engagement and dedication of our employees. Our talent acquisition team uses internal and external resources to recruit highly skilled and talented employees, and we encourage employee referrals for open positions.
We believe that our average employee tenure across the globe — 10.1 years as of the end of fiscal 2023 — reflects the high engagement and dedication of our employees. Our talent acquisition team uses internal and external resources to recruit highly skilled and talented employees, and we encourage employee referrals for open positions.
J. Michael Whitted, 50 , was elected Senior Vice President, Strategy and Corporate Development effective June 2018. Prior to joining the Company, Mr. Whitted served as Vice President, Corporate Development for SPX Corporation and SPX Flow, Inc., diversified, global suppliers of infrastructure equipment to various industries from 2001 to 2015.
(aerospace) and General Dynamics Corporation (aerospace and defense). J. Michael Whitted, 51 , was elected Senior Vice President, Strategy and Corporate Development effective June 2018. Prior to joining the Company, Mr. Whitted served as Vice President, Corporate Development for SPX Corporation and SPX Flow, Inc., diversified global suppliers of infrastructure equipment to various industries, from 2001 to 2015.
We make available on this website, free of charge, access to press releases, conference calls, our annual and quarterly reports, and other documents filed with or furnished to the Securities and Exchange Commission (“SEC”) as soon as reasonably practicable after these reports are filed or furnished.
AVAILABILITY OF REPORTS AND OTHER INFORMATION Our website is www.hillenbrand.com. We make available on this website, free of charge, access to press releases, conference calls, our annual and quarterly reports, and other documents filed with or furnished to the Securities and Exchange Commission (“SEC”) as soon as reasonably practicable after these reports are filed or furnished.
There are no family relationships between any of our executive officers or between any of them and any members of the Board of Directors. The following is a list of our executive officers as of November 16, 2022. Kimberly K. Ryan, 55, has served as a director and as President and Chief Executive Officer of the Company since December 2021.
There are no family relationships between any of our executive officers or between any of them and any members of the Board of Directors. The following is a list of our executive officers as of November 15, 2023. Kimberly K. Ryan, 56, has served as a director and as President and Chief Executive Officer of the Company since December 2021.
Prior to that, he served as a Vice President for Bear Stearns from 1998 to 2001, where he led corporate finance and M&A advisory transactions. Mr. Whitted’s experience prior to Bear Stearns included corporate finance and M&A advisory roles at CIBC World Markets, Bankers Trust, and First Chicago NBD. Michael D.
Prior to that, he served as a Vice President for Bear Stearns (investment banking) from 1998 to 2001, where he led corporate finance and M&A advisory transactions. Mr. Whitted’s experience prior to Bear Stearns included corporate finance and M&A advisory roles at CIBC World Markets, Bankers Trust, and First Chicago NBD (investment banks). Megan A.
In fiscal 2021, we began integrating sustainability with the HOM. We believe sustainability to be a source of value creation that must be aligned with the core strategy of the Company. We expect to continue developing this part of our strategy as we grow in our sustainability practice.
We believe sustainability to be a source of value creation that must be aligned with the core strategy of the Company. We expect to continue developing this part of our strategy as we grow in our sustainability practice.
Molding Technology Solutions has long-standing relationships with its largest customers, having served many of them for over 30 years. No one Molding Technology Solutions customer accounted for more than 10% of Hillenbrand’s consolidated net revenue during 2022.
Molding Technology Solutions has long-standing relationships with its largest customers, having served many of them for over 30 years. No one Molding Technology Solutions customer accounted for more than 10% of Hillenbrand’s consolidated net revenue during the years ended September 30, 2023, 2022, or 2021.
This equipment is sold under the Rotex ® and BM&M ® brands to customers in a variety of industries including proppants, fertilizers, chemicals, agricultural goods, plastics, forest products, and food processing.
These products are sold under the Rotex ® and BM&M ® brands to customers in a variety of industries including proppants, fertilizers, chemicals, agricultural goods, plastics, forest products, and food processing.
Customers purchasing injection molding or extrusion machines generally pay a deposit and make progress payments prior to shipment. 12 Table of Contents Molding Technology Solutions’ sales are further diversified by end markets, and continued expansion into these end markets is an important element of its strategy.
Customers purchasing injection molding or extrusion machines generally pay a deposit and make progress payments prior to shipment. Molding Technology Solutions’ net revenue is further diversified by end markets, and continued expansion into these end markets is an important element of its strategy.
Prior to that, he served as Chief Information Officer for Artificial Lift, GE Oil & Gas at General Electric Company (“GE”), an energy technology company from 2013 to 2015, preceded by fifteen years in other information technology related roles of increasing responsibility at GE. Mr.
Prior to that, he served as Chief Information Officer for Artificial Lift, GE Oil & Gas at General Electric Company (“GE”), an energy technology company, from 2013 to 2015, preceded by fifteen years in other information technology related roles of increasing responsibility at GE. Mr. Soni’s experience prior to GE included software engineering roles at Rockwell Collins, Inc.
Advanced Process Solutions’ product lines are supported by aftermarket parts and services, which represented approximately 30% of Advanced Process Solutions’ total net revenue during 2022.
Advanced Process Solutions’ product lines are supported by aftermarket parts and services, which represented approximately 28% of Advanced Process Solutions’ total net revenue during fiscal 2023.
While global supply chains have recently suffered from various 10 Table of Contents headwinds, those supporting our products have generally remained intact, providing access to sufficient inventory of the key materials needed for manufacturing.
While global supply chains have recently suffered from various headwinds, those supporting Molding Technology Solutions products have generally remained intact, providing access to sufficient inventory of the key materials needed for manufacturing.
Molding Technology Solutions Molding Technology Solutions is a global leader in highly engineered and customized equipment and systems and service in plastic technology and processing. Molding Technology Solutions has a full-line 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.
Molding Technology Solutions is a global leader in highly-engineered 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.
We believe Molding Technology Solutions has attractive fundamentals including: • Strong product and technology positions with substantial brand value and recognition; • Strong market positions and engineering expertise; • An aftermarket parts and service business with historically stable revenue and attractive margins; • A customer base that is highly diversified and has a strong history of long-term relationships with blue-chip end user customers; and • Geographic diversification, including established operations in high growth regions such as China and India.
We believe Molding Technology Solutions has attractive fundamentals including: • Strong product and technology positions with substantial brand value and recognition; • Strong market positions and engineering expertise; 4 Table of Contents • A large installed base that supports an aftermarket parts and service business with historically stable revenue and attractive margins; • A customer base that is highly diversified in end markets and applications, with a strong history of long-term customer relationships; and • Geographic diversification, including established operations in high growth countries such as India and China.
Ryan has served on the Board of Directors of Kimball International, Inc., a public manufacturing company (“Kimball”), including as a member of the Audit Committee. She also served as Kimball’s Board Chair from November 2018 to October 2021.
Ryan served on the Board of Directors of Kimball International, Inc., a public manufacturing company (“Kimball”), including as a member of the Audit Committee. She also served as Kimball’s Board Chair from November 2018 to October 2021, during which time she also served on the Compensation Committee and Governance Committee. Robert M.
Geographically, approximately 56% of Molding Technology Solutions’ net revenue in 2022 came from the Americas, 29% from Asia, and 15% from EMEA (Europe, the Middle East, and Africa).
Geographically, approximately 58% of Molding Technology Solutions’ net revenue in fiscal 2023 came from the Americas, 27% from Asia, and 15% from EMEA (Europe, the Middle East, and Africa).
In addition, we adopted new standards for our global suppliers in support of critical environmental policies and other regulatory requirements. The Environmental Council is working to maintain environmental regulatory compliance while enhancing business performance, and Hillenbrand’s Global Supply Management department engages with our suppliers to support compliance with applicable standards and legal requirements.
In addition, we maintain standards for our global suppliers in support of critical environmental policies and other regulatory requirements, and Hillenbrand’s Global Supply Management department engages with our suppliers to support compliance with applicable standards and legal requirements.
VanHimbergen joined the Company as Executive Vice President, Finance for a transition period in March 2022 from Johnson Controls International plc (“Johnson Controls”), where he was most recently Vice President, Corporate Controller beginning December 2017.
VanHimbergen joined the Company as Executive Vice President, Finance for a transition period in March 2022 from Johnson Controls International plc (“Johnson Controls”), a manufacturer of HVAC systems, security solutions, fire protection, and smart building technologies, where he was most recently Vice President, Corporate Controller beginning December 2017.
The timing of order placement, size of order, extent of customization, and customer delivery dates can create fluctuations in backlog and revenue. Revenue attributable to backlog may also be affected by foreign exchange fluctuations for orders denominated in currencies other than U.S. dollars or by provisions for cancellation, termination, or suspension at the discretion of the customer.
Net revenue attributable to backlog may also be affected by foreign exchange fluctuations for orders denominated in currencies other than U.S. dollars or by provisions for cancellation, termination, or suspension at the discretion of the customer.
The proprietary equipment is highly engineered and designed to solve the needs of customers for customized solutions. Material handling equipment is sold to a variety of industries, including plastics, food and pharmaceuticals, chemicals, and minerals.
The proprietary equipment is highly engineered and designed to solve the needs of customers for customized solutions. Material handling equipment is sold to a variety of industries, including plastics, food and pharmaceuticals, chemicals, and minerals. With the acquisition of FPM in 2023, the Company offers expanded material handling capabilities in each of these industries.
Small and mid-sized compounders are used by customers in engineered plastics, masterbatch, PVC, recycling, biodegradable products, and other applications for the plastics, chemical, food, and pharmaceutical industries. Extrusion systems are sold to customers in multiple industries.
Small and mid-sized compounders are used by customers in engineered plastics, masterbatch, PVC, recycling, biodegradable products, and other applications for the plastics, chemical, food, and pharmaceutical industries. With the acquisition of FPM in 2023, the Company now offers broader application solutions to support these industries. Extrusion systems are sold to customers in multiple industries.
Geographically, approximately 24% of Advanced Process Solutions’ net revenue in 2022 came from the Americas, 51% from Asia, and 25% from EMEA (Europe, the Middle East, and Africa).
Geographically, approximately 37% of Advanced Process Solutions’ net revenue in fiscal 2023 came from the Americas, 32% from Asia, and 31% from EMEA (Europe, the Middle East, and Africa).
Advanced Process Solutions: Customers Advanced Process Solutions has customers in a wide range of industries, including plastics, food and pharmaceuticals, chemicals, fertilizers, minerals, and recycling. These customers range from large, Fortune 500 global companies to regional and local businesses. No one Advanced Process Solutions customer accounted for more than 10% of Hillenbrand’s consolidated net revenue during 2022.
Advanced Process Solutions: Customers Advanced Process Solutions has customers in a wide range of industries, including plastics, food and pharmaceuticals, chemicals, fertilizers, minerals, and recycling. These customers range from large, Fortune 500 global companies to regional and local businesses.
Advanced Process Solutions: Products and Services 8 Table of Contents Advanced Process Solutions’ product portfolio has grown through a series of acquisitions and includes products and services for compounding, extrusion, and material handling, as well as screening and separating.
Advanced Process Solutions: Products and Services Advanced Process Solutions’ product portfolio has grown through a series of acquisitions and includes products and services for compounding, extrusion, material handling, conveying, mixing, ingredient automation, portion process, and screening and separating equipment.
We also own a number of trademarks and service marks relating to products and services which are of importance. We believe the marks Coperion ® , Coperion K-Tron ®, K-Tron ® , Rotex ® , BM&M ® , and Herbold ® were material to our Advanced Process Solutions reportable operating segment for the year ended September 30, 2022.
We also own a number of trademarks and service marks relating to products and services which are of importance. We believe the marks Coperion, Coperion K-Tron, K-Tron, Rotex, BM&M, Herbold, VMI, Bakon, Shaffer, Peerless, Shick Esteve, Unifiller, and DIOSNA brands are material to our Advanced Process Solutions reportable operating segment.
Molding Technology Solutions Molding Technology Solutions is a global leader in highly engineered and customized equipment and systems and service in plastic technology and processing. The product lines within Molding Technology Solutions have strong brand recognition and an established global footprint, and we believe are well-positioned to benefit from continued robust industry growth in both developed and emerging markets.
The product lines within Molding Technology Solutions have strong brand recognition and an established global footprint, and we believe are well-positioned to benefit from continued robust industry growth in both developed and emerging markets. Molding Technology Solutions’ breadth of products, long history, and global reach have resulted in a large installed base of plastic processing equipment and hot runner systems.
Soni, 49, was elected Vice President, Chief Information Officer effective May 2017, and promoted to the Company’s Executive Management Team in May 2019. Mr. Soni joined the Company from Honda Aircraft Company, a jet airplane manufacturer, where he served as Chief Information Officer – IT & Engineering Systems Division from 2015 to 2017.
Soni, 50, was elected Senior Vice President, Chief Information Officer effective January 2023, prior to which he served as Vice President, Chief Information Officer beginning May 2017. Mr. Soni joined the Company from Honda Aircraft Company, a jet airplane manufacturer, where he served as Chief Information Officer – IT & Engineering Systems Division from 2015 to 2017.
Ulrich Bartel, 62, was elected President of Coperion and Senior Vice President of Hillenbrand in June 2021. Since June 2022, he has also served as President of Advance Process Solutions, in which role he also oversees the Company’s Rotex business. Prior to these roles, Mr.
Since June 2022, he has also served as President of Advance Process Solutions, in which role he also oversees the Company’s Rotex business. Prior to these roles, Mr. Bartel served as President of Coperion’s Polymer Division from March 2020 to June 2021 and as Coperion’s Vice President of Compounding Machines from October 2013 to February 2020. Mr.
We are committed to operating all our businesses in a manner that protects the environment and makes us good corporate citizens in the communities in which we operate. In 2021, we established an Environmental Council, which includes our top operational leaders to facilitate and drive environmental priorities including energy, emissions, and operational efficiency.
We are committed to operating all our businesses in a manner that protects the environment and makes us good corporate citizens in the communities in which we operate.
Once employees are hired, development plans are created and monitored for critical roles to ensure progress is made along established timelines. Development plans also intersect with our mission, helping us increase our commitment to serve the needs of the local communities in which we operate, while simultaneously providing leadership development opportunities for our employees.
Development plans also intersect with our mission, helping us increase our commitment to serve the needs of the local communities in which we operate, while simultaneously providing leadership development opportunities for our employees. Effectively managing employee performance and linking pay to performance management is a critical part of our approach.
We believe Advanced Process Solutions has attractive fundamentals including: • Proven products with substantial brand value and recognition; • Industry-leading applications and engineering expertise; • An aftermarket parts and service business with historically stable revenue and attractive margins; • A customer base that is highly diversified and has a strong history of long-term relationships with blue-chip end user customers; and • Geographic diversification.
We believe Advanced Process Solutions has attractive fundamentals including: • Strong product and technology positions with substantial brand value and recognition; • Industry-leading applications and engineering expertise; • Comprehensive solutions capabilities through a differentiated suite of complementary processing technologies; • A large installed base that supports an aftermarket parts and service business with historically stable revenue and attractive margins; • A customer base that is highly diversified, including a strong history of long-term relationships with blue-chip end user customers; and • A strong global footprint for sales, manufacturing, engineering, and service, including established operations in high growth countries such as India and China.
Finally, we provide you a brief background on our executive officers so that you can understand their experience and qualifications. GENERAL Hillenbrand ( www.Hillenbrand.com ) is a global industrial company operating in over 40 countries with multiple leading brands that serve a wide variety of industries around the world.
Finally, we provide you a brief background on our executive officers so that you can understand their experience and qualifications. GENERAL Hillenbrand ( www.Hillenbrand.com ) is a global industrial company that provides highly-engineered processing equipment and solutions to customers around the world.
Beyond that, we may not receive the pending or contemplated patents, trademarks, or service marks for which we have applied or filed.
However, we may not be sufficiently protected by our various patents, trademarks, and service marks, and they may be challenged, invalidated, cancelled, narrowed, or circumvented. Beyond that, we may not receive the pending or contemplated patents, trademarks, or service marks for which we have applied or filed.
Products are either assembled and tested at an Advanced Process Solutions facility and then shipped to a customer or are assembled at the customer’s desired location. 9 Table of Contents We expect that future net revenue associated with Advanced Process Solutions will be influenced by order backlog because of the lead time involved in fulfilling engineered-to-order equipment and solutions for customers.
We expect that future net revenue associated with Advanced Process Solutions will be influenced by order backlog because of the lead time involved in fulfilling engineered-to-order equipment and solutions for customers. Backlog represents the amount of net revenue that we expect to realize on contracts awarded to Advanced Process Solutions.
For large or customized orders, customers generally pay a deposit and make progress payments in accordance with the project progress. Often, long-term relationships are established with these customers. Advanced Process Solutions’ sales are diversified by end markets, and further penetration of these end markets is an important element of its strategy.
Often, long-term relationships are established with these customers. 9 Table of Contents Advanced Process Solutions’ net revenue is diversified by end markets, and further penetration of these end markets is an important element of its strategy.
These products are sold under the Coperion ® and Herbold ® brands. • Screening and Separating Equipment ◦ Screening and separating equipment sorts dry, granular products based on the size of the particles being processed.
Primary industries served include food, pharmaceutical, and cosmetics. • Screening and separating equipment ◦ Screening and separating equipment sorts dry, granular products based on the size of the particles being processed.
Molding Technology Solutions: Raw and Component Materials Steel, which Molding Technology Solutions sources both directly and indirectly through its component suppliers, is the primary material used in the manufacturing of its products.
Molding Technology Solutions: Raw and Component Materials Steel, which Molding Technology Solutions sources both directly and indirectly through its component suppliers, is the primary material used in the manufacturing of its products. Molding Technology Solutions does not enter into derivative financial instruments to hedge its commodity price risk but it does have some long-term supply contracts with key suppliers.
Approximately 3,200 employees globally work under collective bargaining agreements and works councils. Hillenbrand strives to maintain satisfactory relationships with all its employees, including the unions and works councils representing those employees.
As of September 30, 2023, approximately 3,300 employees globally work under collective bargaining agreements and works councils. Hillenbrand strives to maintain satisfactory relationships with all its employees, including the unions and works councils representing those employees. As a result, we have not experienced a significant work stoppage due to labor relations in more than 20 years.
However, Advanced Process Solutions has experienced significant delays of certain raw materials and components, but has largely been able to mitigate the impact on our consolidated results of operations.
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. However, Advanced Process Solutions has experienced significant delays of certain raw materials and components, but has largely been able to mitigate the impact on our consolidated results of operations.
Farrell began his career with the Company in 2011 as Corporate and Securities Counsel, and in 2014 was named Vice President, Associate General Counsel and Assistant Secretary. Prior to joining Hillenbrand, Mr. Farrell was in private practice for six years with global law firm Troutman Pepper. Mr.
He has served as General Counsel and Secretary since 2015 and also served as the Company’s Chief Compliance Officer from 2016 until March 2023. Mr. Farrell began his career with the Company in 2011 as Corporate and Securities Counsel, and in 2014 was named Vice President, Associate General Counsel and Assistant Secretary. Prior to joining Hillenbrand, Mr.
She brings to this role more than two decades of diverse experience in human resources across multiple industries. Prior to joining Hillenbrand, Ms. Arora was Vice President of Global HR Services for Honeywell International Inc. (“Honeywell”), a diversified technology and manufacturing company, from October 2019 through December 2021.
Arora was Vice President of Global HR Services for Honeywell International Inc. (“Honeywell”), a diversified technology and manufacturing company, from October 2019 through December 2021. Prior to that, she served as Vice President, Global Human Resources and Communications, Safety and Productivity Solutions at Honeywell from November 2016 to October 2019. Since September 2020, Ms.
In everything we do, we strive to provide great professional opportunities for our people and recognize the critical role our human capital plays in supporting our strategy. Cybersecurity Our approach to cybersecurity begins with our responsibility for strong governance and controls.
In everything we do, we strive to provide great professional opportunities for our people and recognize the critical role our human capital plays in supporting our strategy. As Hillenbrand acquires companies, it will take time to integrate them into our overall programs.
Living these values empowers us to better serve one another, our communities, and our customers while we continue to pursue exceptional performance and long-term shareholder value. Workplace Demographics Hillenbrand is committed to the growth of our employees by developing talent and building a growth-minded culture.
As we continue to grow as a company, living out our Purpose and Core Values empowers us to better serve one another, our communities, and our customers while we continue to pursue exceptional performance and long-term shareholder value.
Backlog represents the amount of net revenue that we expect to realize on contracts awarded to Advanced Process Solutions. Though backlog can be an indicator of future net revenue, it does not include projects and aftermarket orders that are booked and shipped within the same quarter.
Though backlog can be an indicator of future net revenue, it does not include projects and aftermarket orders that are booked and shipped within the same quarter. The timing of order placement, size of order, extent of customization, and customer delivery dates can create fluctuations in backlog and net revenue.
She previously served as President of Batesville beginning in April 2011, at which time she was also named a Senior Vice President of Hillenbrand. Ms. Ryan began her career with Batesville in 1989, holding positions of increasing responsibility within Batesville and the Company’s former parent in finance, strategy, operations, logistics, and information technology. Since 2014, Ms.
Ryan began her career with Batesville in 1989, holding positions of increasing responsibility within Batesville and the Company’s former parent in finance, strategy, operations, logistics, and information technology. 14 Table of Contents From 2014 to 2023, Ms.
Features of the plans vary, but may include automatic Company contributions, Company matching contributions on associate contributions, and automatic enrollment. These plans provide a wide range of investment choices along with tax-deferred investment growth. We no longer provide new pension benefits for U.S. employees, but continue pensions in other jurisdictions, where required by law.
In the U.S., the majority of employees are eligible to participate in one of several 401(k) savings plans. Features of the plans vary but may include automatic Company contributions, Company matching contributions on employee contributions, and automatic enrollment. The plans provide a wide range of investment choices along with tax-deferred investment growth.
Reportable Operating Segments Advanced Process Solutions Advanced Process Solutions is a leading global provider of compounding, extrusion, and material handling, screening and separating equipment and systems, and services for a wide variety of manufacturing and other industrial processes.
Reportable Operating Segments Advanced Process Solutions Advanced Process Solutions is a leading global provider of highly-engineered process and material handling equipment, systems, and aftermarket parts and services for a variety of industries, including durable plastics, food, and recycling.
Security begins at the top of our organization, where Company leadership consistently communicates the requirements for vigilance and compliance throughout the organization, and then leads by example.
Recently acquired companies are at varying stages of implementation as of September 30, 2023. 7 Table of Contents Cybersecurity Our approach to cybersecurity begins with our responsibility for strong governance and controls. Security begins at the top of our organization, where Company leadership consistently communicates the requirements for vigilance and compliance throughout the organization, and then leads by example.
In 2022, with both our people and our Core Values in mind, we expanded our focus to driving standardization of health and safety measures across our operations. Our Health & Safety Council (“Council”), which is composed of Environment, Health & Safety representatives from across the enterprise, leads our safety strategy and provides a forum for collaboration and data collection.
Health and Safety The health and safety of our employees is our highest priority. In fiscal 2023, with both our people and our Core Values in mind, we expanded our focus to driving standardization of health and safety measures across our operations.
Molding Technology Solutions maintains leadership positions across these product lines, as well as leading positions in process control systems, mold bases and components, and MRO supplies. The Molding Technology Solutions product lines are supported by aftermarket parts and services, which represented approximately 25% of Molding Technology Solutions’ total net revenue during 2022.
The Molding Technology Solutions product lines are supported by aftermarket parts and services, which represented approximately 28% of Molding Technology Solutions’ total net revenue during fiscal 2023.
Farrell is also Chair of the Board of Trustees of Cure SMA, an international not-for-profit organization committed to developing a treatment and cure for spinal muscular atrophy, the number one genetic cause of death for infants. Michael M. Jones, 47, has been President of Milacron Injection Molding & Extrusion and Senior Vice President of Hillenbrand since November 2019.
Farrell was in private practice for six years with global law firm Troutman Pepper. Mr. Farrell is also Chair of the Board of Trustees of Cure SMA, an international not-for-profit organization committed to developing a treatment and cure for spinal muscular atrophy, the number one genetic cause of death for infants. Leo J.
Jones also held positions at Hill-Rom between 2004 and 2011. He is a Certified Public Accountant (inactive). Leo J. Kulmaczewski, Jr., 57, has served as the Company’s Senior Vice President, Operations Center of Excellence and HOM since February 2021. Mr.
Kulmaczewski, Jr., 58, has served as the Company’s Senior Vice President, Operations Center of Excellence and HOM since February 2021. Mr.
In the past, certain of our products have been copied and sold by others and could continue to be. Hillenbrand vigorously seeks to enforce its intellectual property rights. However, we may not be sufficiently protected by our various patents, trademarks, and service marks, and they may be challenged, invalidated, cancelled, narrowed, or circumvented.
Our ability to compete effectively depends, to an extent, on our ability to maintain the proprietary nature of our intellectual property. In the past, certain of our products have been copied and sold by others and could continue to be. Hillenbrand vigorously seeks to enforce its intellectual property rights.
Bartel served as President of Coperion’s Polymer Division from March 2020 to June 2021 and Coperion’s Vice President of Compounding Machines from October 2013 to February 2020. Mr. Bartel began his career at 17 Table of Contents Coperion in 1990 as a process engineer, holding positions of increasing responsibility within Coperion in sales, service, process technology, engineering, manufacturing, and research.
Bartel began his career at Coperion in 1990 as a process engineer, holding positions of increasing responsibility within Coperion in sales, service, process technology, engineering, manufacturing, and research. Nicholas R. Farrell, 44, is the Company’s Senior Vice President, General Counsel, and Secretary.
Prior to that time, she served as the Company’s Director, Financial Reporting since August 2014 and prior to that in roles of increasing responsibility in the Company’s finance organization. Ms. Walke began her career with nearly a decade in public accounting at the firm of Ernst and Young LLP.
Walke, 44, was elected Vice President, Chief Accounting Officer in May 2022, after serving in an interim capacity beginning February 2022. Prior to that time, she served as the Company’s Director, Financial Reporting since August 2014 and prior to that in roles of increasing responsibility in the Company’s finance organization. Ms.
For further information, see Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. Acquisitions On June 30, 2022, the Company completed the acquisition of Gabler Engineering GmbH and affiliate (“Gabler”). On August 31, 2022, the Company completed the acquisition of Herbold Meckesheim GmbH (“Herbold”).
For further information, see Note 5 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. Divestitures On December 31, 2020, the Company completed the divestiture of Red Valve Company, Inc. (“Red Valve”). The results of operations and cash flows of the Company include Red Valve through December 31, 2020.
As TerraSource was divested in early fiscal 2022, Advanced Process Solutions no longer owns the TerraSource Global ® , Pennsylvania Crusher ® , Gundlach ® , and Jeffrey Rader ® marks, and as a result we do not believe they were material for the year ended September 30, 2022.
We believe the marks Milacron and Mold-Masters are material to our Molding Technology Solutions reportable operating segment. As our historical Batesville reportable operating segment was divested in early fiscal 2023, the Company no longer owns the trademark Batesville ® , and as a result we do not believe it was material for the year ended September 30, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGoodwill and other identifiable indefinite-lived intangible assets, which are subject to periodic impairment evaluations, represent a significant portion of our total assets. An impairment charge on these assets could have a material adverse impact on our financial condition and results of operations.
Biggest changeThere can be no assurance that divestitures, including the historical Batesville reportable operating segment divestiture, will be ultimately beneficial to us or have a positive effect on shareholder value. 16. Goodwill and other identifiable indefinite-lived intangible assets, which are subject to periodic impairment evaluations, represent a significant portion of our total assets.
Uncertainty in the United States global trade policy could negatively impact our business . The U.S. government has at times indicated a willingness to significantly change, and has in some cases significantly changed, trade policies and/or agreements.
Uncertainty in United States global trade policy could negatively impact our business . The U.S. government has at times indicated a willingness to significantly change, and has in some cases significantly changed, trade policies and/or agreements.
These impacts and conditions include, but may not be limited to, potential significant volatility or decreases in demand for our products, changes in customer behavior and preferences, disruptions in or closures of our manufacturing operations or those of our customers and suppliers, disruptions within our supply chain, limitations on our employees’ ability to work and travel, potential increased vulnerability to cybersecurity incidents, including breaches of information systems security that could be due to widespread 19 Table of Contents remote working arrangements or other conditions, potential financial difficulties of customers and suppliers, significant changes in economic or political conditions, including rapidly changing government orders and regulations and our efforts to comply with them, and related financial and commodity volatility, including volatility in raw material and other input costs (including but not limited to oil prices), any of which could last for extended periods.
These impacts and conditions include, but may not be limited to, potential significant volatility or decreases 17 Table of Contents in demand for our products, changes in customer behavior and preferences, disruptions in or closures of our manufacturing operations or those of our customers and suppliers, disruptions within our supply chain, limitations on our employees’ ability to work and travel, potential increased vulnerability to cybersecurity incidents, including breaches of information systems security that could be due to widespread remote working arrangements or other conditions, potential financial difficulties of customers and suppliers, significant changes in economic or political conditions, including rapidly changing government orders and regulations and our efforts to comply with them, and related financial and commodity volatility, including volatility in raw material and other input costs (including but not limited to oil prices), any of which could last for extended periods.
We operate in cyclical industries. As an industrial capital goods supplier, we serve industries that are cyclical and sensitive to changes in general economic conditions, such as packaging, automotive, construction, consumer goods, electronics, chemicals, and plastics industries. The performance of many of our businesses is directly related to the production levels of our customers.
As an industrial capital goods supplier, we serve industries that are cyclical and sensitive to changes in general economic conditions, such as packaging, automotive, construction, consumer goods, electronics, chemicals, and plastics industries. The performance of many of our businesses is directly related to the production levels of our customers.
We are exposed to a number of different tax uncertainties, which could have a material adverse effect on our results of operations. We are required to pay taxes in multiple jurisdictions. We determine the tax liability we are required to pay based on our interpretation of applicable tax laws and regulations in the jurisdictions in which we operate.
We are exposed to a number of different tax uncertainties, which could have a material adverse effect on our consolidated results of operations. We are required to pay taxes in multiple jurisdictions. We determine the tax liability we are required to pay based on our interpretation of applicable tax laws and regulations in the jurisdictions in which we operate.
If we are unable to comply with the financial and other covenants in our debt agreements, our business, financial condition, and liquidity could be materially adversely affected. Our Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement (each as defined below) contain financial and other restrictive covenants.
If we are unable to comply with the financial and other covenants in our debt agreements, our business, financial condition, and liquidity could be materially adversely affected. Our Credit Agreement and the L/G Facility Agreement (each as defined below) contain financial and other restrictive covenants.
We are subject to risks arising from currency exchange rate fluctuations, which may adversely affect our results of operations and financial condition. We are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenue.
We are subject to risks arising from currency exchange rate fluctuations, which may adversely affect our consolidated results of operations and financial condition. We are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenue.
If the proposed tax reform proposals are enacted, they could have a material impact on our tax provision and value of deferred tax assets and liabilities. We recognize deferred tax assets and liabilities based on the differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities.
If the tax reform proposals are enacted, they could have a material impact on our tax provision and value of deferred tax assets and liabilities. We recognize deferred tax assets and liabilities based on the differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities.
Increased prices for, poor quality of, or extended inability to source raw materials used in our products or associated services, and supply chain disruptions could adversely affect profitability. Our profitability is affected by the prices of the raw materials used in the manufacture of our products.
Increased prices for, poor quality of, or extended inability to source raw materials used in our products or associated services, or supply chain disruptions, could adversely affect profitability. Our profitability is affected by the prices of the raw materials used in the manufacture of our products.
The ultimate outcome of these claims, lawsuits, and governmental proceedings cannot be predicted with certainty but could have a material adverse effect on our financial condition, results of operations, and cash flows.
The ultimate outcome of these claims, lawsuits, and governmental proceedings cannot be predicted with certainty but could have a material adverse effect on our financial condition, consolidated results of operations, and cash flows.
If we are unable to successfully manage the risks associated with expanding our global business or to adequately manage operational fluctuations, it could adversely affect our business, financial condition, or results of operations. 9.
If we are unable to successfully manage the risks associated with expanding our global business or to adequately manage operational fluctuations, it could adversely affect our business, financial condition, or consolidated results of operations. 9.
Our international business is subject to risks that are often encountered in non-U.S. operations, including: • interruption in the transportation of materials to us and finished goods to our customers, including conditions where recovery from natural disasters may be delayed due to country-specific infrastructure and resources; • differences in terms of sale, including payment terms; • local product preferences and product requirements; • changes in a country’s or region’s political or economic condition, including with respect to safety and health issues; • trade protection measures and import or export licensing requirements; • unexpected changes in laws or regulatory requirements, including unfavorable changes with respect to tax, trade, sanctions compliance, or climate change related matters; • limitations on ownership and on repatriation of earnings and cash; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in enforcing contract and property rights under local law; • difficulties in implementing restructuring actions on a timely or comprehensive basis; and • differing protection of intellectual property.
Our international business is subject to risks that are often encountered in non-U.S. operations, including: • interruption in the transportation of materials to us and finished goods to our customers, including conditions where recovery from natural disasters may be delayed due to country-specific infrastructure and resources; • threat of wars or other conflicts; • differences in terms of sale, including payment terms; • local product preferences and product requirements; • changes in a country’s or region’s political or economic condition, including with respect to safety and health issues; • trade protection measures and import or export licensing requirements; • unexpected changes in laws or regulatory requirements, including unfavorable changes with respect to tax, trade, sanctions compliance, or climate change related matters; • limitations on ownership and on repatriation of earnings and cash; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in enforcing contract and property rights under local law; • difficulties in implementing restructuring actions on a timely or comprehensive basis; and • differing protection of intellectual property.
The integration of these companies may result in material challenges, including, without limitation: 21 Table of Contents • the diversion of management’s attention from ongoing business concerns and performance shortfalls as a result of the devotion of management’s attention to the integration; • managing a larger combined business; • maintaining employee morale and retaining key management and other employees; • retaining existing business and operational relationships, including customers, suppliers and other counterparties, and attracting new business and operational relationships; • the possibility of faulty assumptions underlying expectations regarding the integration process; • consolidating corporate and administrative infrastructures and eliminating duplicative operations; • coordinating geographically separate organizations; and • unanticipated issues in integrating information technology, communications and other systems.
The integration of these companies may result in material challenges, including, without limitation: • the diversion of management’s attention from ongoing business concerns, and performance shortfalls as a result of the devotion of management’s attention to the integration; • managing a larger combined business; • maintaining employee morale and retaining key management and other employees; • retaining existing business and operational relationships, including customers, suppliers and other counterparties, and attracting new business and operational relationships; • the possibility of faulty assumptions underlying expectations regarding the integration process; • consolidating corporate and administrative infrastructures and eliminating duplicative operations; • coordinating geographically separate organizations; and • unanticipated issues in integrating information technology, communications and other systems.
Inability to negotiate satisfactory new agreements or a labor disturbance at one or more of our facilities could have a material adverse effect on our operations. 29. Provisions in our Articles of Incorporation and By-laws and facets of Indiana law may prevent or delay an acquisition of the Company, which could decrease the trading price of our common stock.
Inability to negotiate satisfactory new agreements or a labor disturbance at one or more of our facilities could have a material adverse effect on our operations. 26. Provisions in our Articles of Incorporation and By-laws and facets of Indiana law may prevent or delay an acquisition of the Company, which could decrease the trading price of our common stock.
We may be subject to unfavorable changes, including retroactive changes, in the tax laws and regulations to which we are subject. We are subject to tax audits by governmental authorities in the United States and numerous non-U.S. jurisdictions, which are inherently uncertain. Negative or unexpected results from one or more such tax audits could adversely affect our results of operations.
We may be subject to unfavorable changes, including retroactive changes, in the tax laws and regulations to which we are subject. We are subject to tax audits by governmental authorities in the U.S. and numerous non-U.S. jurisdictions, which are inherently uncertain. Negative or unexpected results from one or more such tax audits could adversely affect our results of operations.
These risks could materially and adversely impact our business, results of operations and financial condition in the periods to come.
These risks could materially and adversely impact our business, results of operations and financial condition in the periods to come. 8.
If the Company suffers a loss or disclosure of protected information due to security breaches or other reasons, and if business continuity plans do not effectively address these issues on a timely basis, the Company may incur fines or penalties, or suffer interruption in its ability to manage operations, as well as reputational, competitive, or business harm, which could have a material adverse effect on our business, financial condition, and results of operations. 5.
If the Company suffers a loss or disclosure of protected information due to security breaches or other reasons, and if business continuity plans do not effectively address these issues on a timely basis, the Company may incur fines or penalties, or suffer interruption in its ability to manage operations, as well as reputational, competitive, or business harm, which could have a material adverse effect on our business, financial condition, and consolidated results of operations. 3.
Any such improper actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions; could lead to substantial civil and criminal, monetary, and non-monetary penalties, and related shareholder lawsuits; could cause us to incur significant legal fees; and could damage our reputation. 18.
Any such improper actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions; could lead to substantial civil and criminal, monetary, and non-monetary penalties, and related shareholder lawsuits; could cause us to incur significant legal fees; and could damage our reputation. 20.
For example: • We may be more vulnerable to general adverse economic and industry conditions, because we have lower borrowing capacity. 23 Table of Contents • We may be required to dedicate a larger portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including business development efforts and acquisitions, working capital requirements, and capital expenditures. • We could be exposed to the risk of increased interest rates, because our capital structure target normally includes a component of variable rate debt. • We may be more limited in our flexibility in planning for, or reacting to, changes in our businesses and the industries in which they operate, thereby placing us at a competitive disadvantage compared to competitors that have less indebtedness.
For example: • We may be more vulnerable to general adverse economic and industry conditions, because we have lower borrowing capacity. • We may be required to dedicate a larger portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including business development efforts and acquisitions, working capital requirements, and capital expenditures. • We could be exposed to the risk of increased interest rates, because our capital structure target normally includes a component of variable rate debt in addition to fixed rate debt. • We may be more limited in our flexibility in planning for, or reacting to, changes in our businesses and the industries in which they operate, thereby placing us at a competitive disadvantage compared to competitors that may have less indebtedness.
Principal competitive factors in the plastic processing industry, material handling equipment, and complete equipment systems include price, lead time, product features, technology, total cost of ownership, performance, reliability, quality, delivery, and customer service. Principal competitive factors in the mold components industry include technology, price, quality, performance, and delivery.
Principal competitive factors in the plastic processing industry, material handling equipment, and complete equipment systems include price, lead time, product features, technology, total cost of ownership, performance, reliability, quality, delivery, and customer service.
Certain proposals could include recommendations that could increase our tax obligations in those countries where we do business. Any changes in the taxation of our activities in such jurisdictions may result in a material increase in our effective tax rate. 23.
Certain proposals could include recommendations that could increase our tax obligations in those countries where we do business. Any changes in the taxation of our activities in such jurisdictions may result in a material increase in our effective tax rate. 21.
There can be no assurance that economic expansion or increased demand will be sustainable, and our financial condition, results of operations, and cash flows could be materially adversely affected. 12. A key component of our growth strategy is making significant acquisitions, some of which may be outside the industries in which we currently operate.
There can be no assurance that economic expansion or increased demand will be sustainable, and our financial condition, consolidated results of operations, and cash flows could be materially adversely affected. 14. A key component of our growth strategy is making significant acquisitions, some of which may be outside the industries in which we currently operate.
Extended inability to source a necessary raw material or service could cause us to cease manufacturing one or more products for a period of time, which could also lead to loss of customers, as well as reputational, competitive, or business harm, which could have a material adverse effect on our business, financial condition, and results of operations. 19.
Extended inability to source a necessary raw material or service could cause us to cease manufacturing one or more products for a period of time, which could also lead to loss of customers, as well as reputational, competitive, or business harm, which could have a material adverse effect on our business, financial condition, and consolidated results of operations. 7.
This net revenue is primarily generated in Europe, the Middle East, Asia, South America, and Canada. In addition, we have manufacturing operations, suppliers, and employees located outside the U.S.
This net revenue was primarily generated in Europe, the Middle East, Asia, South America, and Canada. In addition, we have manufacturing operations, suppliers, and employees located outside the U.S.
The successful implementation of our business strategy depends, in part, on our ability to attract and retain a skilled and talented workforce. Because of the complex nature of many of our products and services, we are generally dependent on a 22 Table of Contents thoroughly trained and highly skilled workforce, including, for example, our engineers.
The successful implementation of our business strategy depends, in part, on our ability to attract and retain a skilled and talented workforce. Because of the complex nature of many of our products and services, we are generally dependent on a thoroughly trained and highly skilled workforce, including, for example, our engineers.
These covenants could adversely affect us by limiting our financial and operating flexibility as well as our ability to plan for and react to market conditions, including as a result of global financial, socioeconomic, and political uncertainty and the effect on our business, and to meet our capital needs.
These covenants could adversely affect us by limiting our financial and operating flexibility as well as our ability to plan for and react to market conditions, including as a result of global financial, socioeconomic, and political uncertainty and 20 Table of Contents the effect on our business, and to meet our capital needs.
While we believe that our insurance plan provides appropriate levels of coverage for cyber risks and have taken steps to maintain and enhance the appropriate cybersecurity and address these risks by implementing enhanced security technologies, internal controls, and business continuity plans, these measures may not be adequate to cover or prevent all potential losses nor remedy related damage to our reputation.
While we believe that our insurance plan provides appropriate levels of coverage for cyber risks and have taken steps to address these risks by implementing enhanced security technologies, internal controls, and business continuity plans, these measures may not be adequate to cover or prevent all potential losses nor remedy related damage to our reputation.
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.
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, consolidated results of operations, and financial condition will not be materially and adversely affected.
We may not be able to achieve some or all of the benefits that we expect to achieve from these acquisitions, including the Linxis acquisition. If an acquisition were to perform unfavorably, it could have an adverse impact on our business and results of operations.
We may not be able to achieve some or all of the benefits that we expect to achieve from these acquisitions. If an acquisition were to perform unfavorably, it could have an adverse impact on our business and consolidated results of operations.
We may not achieve the intended benefits of our acquisitions. Under such circumstances, management could be required to spend significant amounts of time and resources in the transition of the acquired business, and we may not fully realize benefits anticipated from application of the HOM.
We may not achieve the intended benefits of our acquisitions. Under such circumstances, management could be required to spend significant amounts of time and resources in the transition of the acquired business, and we may not fully realize benefits anticipated from key initiatives, including the application of the HOM.
The effective tax rate of the Company may be negatively impacted by changes in the mix of earnings as well as future changes to tax laws in global jurisdictions in which we operate. We are subject to income taxes in the U.S. and various other global jurisdictions.
The effective tax rate of the Company may be negatively impacted by changes in the mix of earnings as well as future changes to tax laws in global jurisdictions in which we operate. 24 Table of Contents We are subject to income taxes in the U.S. and various other global jurisdictions.
Instability in the global economy and financial markets can adversely affect our business in several ways, including limiting our customers’ ability to obtain sufficient credit or to pay for our products within the terms of sale.
Instability in the global economy and financial markets can adversely affect our business in several ways, including limiting our customers’ ability to 16 Table of Contents obtain sufficient credit or to pay for our products within the terms of sale.
All acquisitions, including the Linxis acquisition, involve inherent uncertainties, which may include, among other things, our ability to: 24 Table of Contents • successfully identify the most suitable targets for acquisition; • negotiate reasonable terms; • properly perform due diligence and determine all the significant risks associated with a particular acquisition; • successfully achieve the desired performance of the acquired company; • avoid diversion of Company management’s attention from other important business activities; and • where applicable, implement restructuring activities without an adverse impact to business operations.
All acquisitions, including the FPM, Linxis, Herbold, and Peerless acquisitions, involve inherent uncertainties, which may include, among other things, our ability to: • successfully identify the most suitable targets for acquisition; • negotiate reasonable terms; • properly perform due diligence and determine all the significant risks associated with a particular acquisition; • successfully achieve the desired performance of the acquired company; • avoid diversion of Company management’s attention from other important business activities; and • where applicable, implement restructuring activities without an adverse impact to business operations.
Commerce Department’s Export Administration Regulations, trade sanctions promulgated by the Office of Foreign Asset 26 Table of Contents Control (“OFAC”), anti-money laundering, and data privacy. In particular, the U.S. Foreign Corrupt Practices Act, the U.K.
Commerce Department’s Export Administration Regulations, trade sanctions promulgated by the Office of Foreign Asset Control (“OFAC”), anti-money laundering, and data privacy. In particular, the U.S. Foreign Corrupt Practices Act, the U.K.
We have global operations, and the COVID-19 pandemic or other widespread pandemic, disease outbreak, or other health crisis, and the various government, industry and consumer actions related thereto could have negative impacts on our business and have created or could create or intensify adverse conditions described in our other risk factors.
We have global operations, and the COVID-19 pandemic or other widespread pandemic, disease outbreak, or other health crisis, and the various government, industry and consumer actions related thereto, including mandated or voluntary shutdowns, could have negative impacts on our business and have created or could create or intensify adverse conditions described in our other risk factors.
In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer 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.
In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the potential 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, interest rates we pay on our borrowings and our ability to borrow under the Facility or any other credit facility in the future, or pursuant to other available sources, could be adversely affected by matters including market volatility, economic downturns, or other instability or uncertainty.
Furthermore, interest rates we pay on our borrowings and our ability to borrow or draw under the Credit Agreement and L/G Facility Agreement or any other credit facility in the future, or pursuant to other available sources, could be adversely affected by matters including market volatility, economic downturns, or other instability or uncertainty.
Furthermore, any divestiture may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the loss of revenue associated with the divestiture, as well as significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition. 14.
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.
Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned 25 Table of Contents changes in use of the assets, divestitures, and market capitalization declines may impair these assets, and any of these factors may be increasingly present during a period of ongoing global supply chain disruption or macroeconomic uncertainty.
Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets, divestitures, and market capitalization declines may impair these assets, and any of these factors may be increasingly impactful during a period of ongoing global supply chain disruption or macroeconomic uncertainty.
The Company’s predominant exposures are the Euro, Canadian dollar, Swiss franc, Mexican peso, Chinese Renminbi, Japanese Yen, and Indian Rupee (along with others to a lesser degree).
The Company’s predominant exposures are to the Euro, Canadian dollar, Swiss franc, Mexican peso, Chinese Renminbi, Japanese Yen, Indian Rupee, and British pound sterling (along with others to a lesser degree).
Tax controls and changes in tax laws or regulations or the interpretation given to them may expose us to negative tax consequences, including interest payments and potential penalties, which could have a material adverse effect on our results of operations. 28 Table of Contents 24.
Tax controls and changes in tax laws or regulations or the interpretation given to them may expose us to negative tax consequences, including interest payments and potential penalties, which could have a material adverse effect on our results of operations. 22.
These competitors may be better able to withstand and respond to changes in conditions within our industry. Competition in any of these areas may reduce our sales and adversely affect our earnings or cash flow by resulting in decreased sales volumes, reduced prices, and increased costs of manufacturing, distributing and selling our products. 16.
These competitors may be better able to withstand and respond to changes in conditions within our industry. Competition in any of these areas may reduce our sales and adversely affect our earnings or cash flow by resulting in decreased sales volumes, reduced prices, and increased costs of manufacturing, distributing and selling our products. 13. We operate in cyclical industries.
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, our consolidated financial position, results of operations, and cash flows could be negatively impacted.
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.
We have incurred substantial expenses in connection with the completion of the acquisitions of Herbold and Linxis, and we expect to incur further expenses in order to integrate a large number of processes, policies, procedures, operations, technologies, and systems of Herbold and Linxis in connection with the acquisitions. 6.
We have incurred substantial expenses in connection with the completion of the acquisitions of FPM, Linxis, Herbold and Peerless, and we expect to incur further expenses in order to integrate a large number of processes, policies, procedures, operations, technologies, and systems in connection with these acquisitions. 12.
To the extent such disturbances or changes in the political or regulatory environment have a negative impact on the Company or the markets in which we operate, it may materially and adversely impact our business, results of operations and financial condition in the periods to come. 26.
To the extent such disturbances or changes in the political or regulatory environment have a negative impact on the Company or the markets in which we operate, it may materially and adversely impact our business, consolidated results of operations, and financial condition in the periods to come. 25 Table of Contents 24.
We may be vulnerable to credit rating downgrades, such as those we experienced during fiscal 2020, which could have an impact on our ability to secure future financing on terms commercially acceptable to us, to access the credit and capital markets, or to negotiate favorable covenants in any future amendments to our financial documents or new financings. 10.
We may be vulnerable to credit rating downgrades, which could have an impact on our ability to secure future financing on terms commercially acceptable to us, to access the credit and capital markets, or to negotiate favorable covenants in any future amendments to our financial documents or new financings. 10.
Moreover, if we are required to repay any of our debt before it becomes due, we may be unable to borrow additional amounts or otherwise obtain the cash necessary to repay that additional debt when due, which could materially adversely affect our business, financial condition, and liquidity.
Moreover, if we are required to repay any of our debt before it becomes due, we may be unable to borrow or draw additional amounts under the Credit Agreement and L/G Facility Agreement or otherwise obtain the cash necessary to repay that additional debt when due, which could materially adversely affect our business, financial condition, and liquidity.
A sustained labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by a pandemic or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, which could negatively affect our ability to efficiently operate our manufacturing and distribution facilities and overall business and have other material adverse effects on our business, financial condition, and results of operations. 8.
A sustained labor shortage, lack of skilled labor, or increased turnover or labor inflation could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, which could negatively affect our ability to efficiently operate our manufacturing and distribution facilities and overall business and have other material adverse effects on our business, financial condition, and consolidated results of operations. 5.
Therefore, our business is affected by fluctuations in the price of resin, which could have an adverse effect on our business and ability to generate operating cash flows. During periods of economic expansion, when capital spending normally increases, the Advanced Process Solutions and Molding Technology Solutions reportable operating segments generally benefit from greater demand for their products.
Therefore, our business is affected by fluctuations in the price of resin, which could have an adverse effect on our business and ability to generate operating cash flows. During periods of economic expansion, when capital spending normally increases, our businesses generally benefit from greater demand for our products.
Many of the industries in which we operate are highly competitive. Our products may not compete successfully with those of our competitors. The markets for plastic processing equipment and related products, material handling equipment, complete equipment systems, mold components, and burial caskets are highly competitive and include a number of North American, European, and Asian competitors.
Our products may not compete successfully with those of our competitors. The markets for plastic processing equipment and related products, material handling equipment, complete equipment systems, mold components, are highly competitive and include a number of North American, European, and Asian competitors.
For a more detailed discussion of claims, see Note 12 to our Consolidated Financial Statement included in Part II, Item 8, of this Form 10-K. 25. Uncertainty in the United States political and regulatory environment could negatively impact our business .
For a more detailed discussion of claims, see Note 13 to our Consolidated Financial Statement included in Part II, Item 8, of this Form 10-K. 23. Uncertainty in the U.S. political and regulatory environment could negatively impact our business .
While it is not possible to predict whether and when any such additional changes or disturbances could occur, any such events, including climate change regulation, or other events, whether at the local, state or federal level, could significantly impact our business and the industries in which we compete.
While it is not possible to predict whether and when any such additional changes or disturbances could occur, any such events, whether at the local, state or federal level, or outside the U.S., could significantly impact our business and the industries in which we compete.
Some of these factors are outside of the Company’s control, including certain impacts of the COVID-19 pandemic and Ukraine War discussed elsewhere in our risk factors, and any one of them could result in delays, increased costs, decreases in the amount of expected revenue or synergies, and diversion of management’s time and energy, which could materially affect our financial position, results of operations, and cash flows.
As discussed elsewhere in our risk factors, some of these factors are outside of the Company’s control, and any one of them could result in delays, increased costs, decreases in the amount of expected revenue or synergies, and diversion of management’s time and energy, which could materially affect our financial position, consolidated results of operations, and cash flows.
During periods of economic contraction, when capital spending normally decreases, Advanced Process Solutions and Molding Technology Solutions reportable operating segments generally are adversely affected by declining demand for new equipment orders, and may be subject to increases in uncollectible receivables from customers who become insolvent.
During periods of economic contraction, when capital spending normally decreases, they generally are adversely affected by declining demand for new equipment orders, and may be subject to increases in uncollectible receivables from customers who become insolvent.
International economic, political, legal, and business factors could negatively affect our operating results, cash flows, financial condition, and growth. We derived approximately 54%, 54%, and 52% of our net revenue from our operations outside the U.S. for the years ended September 30, 2022, 2021, and 2020, respectively.
International economic, political, legal, and business factors could negatively affect our operating results, cash flows, financial condition, and growth. 19 Table of Contents We derived approximately 62%, 67%, and 68% of our net revenue from our operations outside the U.S. for the years ended September 30, 2023, 2022, and 2021, respectively.
Despite our efforts to manage through the current circumstances, the degree to which COVID-19 and related actions ultimately impact our business, financial position, results of operations, and cash flows may depend on certain factors beyond our control, including the duration, spread, and severity of the pandemic or the effects of any variants thereof, the actions taken to contain COVID-19 and mitigate its public health effects, the impact on the U.S. and global economies and demand for our products, and how quickly and to what extent normal economic and operating conditions resume or become impacted by long-lasting changes.
Despite our efforts to manage through a widespread pandemic, disease outbreak, or other health crisis, the degree to which these events ultimately impact our business, financial position, results of operations, and cash flows may depend on certain factors beyond our control, including the duration, spread, and severity of the event, the actions taken to contain the event and mitigate its public health effects, the impact on the U.S. and global economies and demand for our products, and how quickly and to what extent normal economic and operating conditions resume or become impacted by long-lasting changes.
The majority of Molding Technology Solutions’ net revenue is realized from the manufacture, distribution, and service of highly engineered and customized systems within the plastic technology and processing market.
The majority of net revenue from our Molding Technology Solutions reportable operating segment is realized from the manufacture, distribution, and service of highly engineered and customized systems within the plastic technology and processing market.
We derive significant revenue from the plastics industry. Decrease in demand for base resin or engineering plastics or equipment used in the production of these products, or changes in technological advances, or changes in laws or regulations could have a material adverse effect on our business, financial condition, and results of operations.
Decrease in demand for base resin or engineering plastics or equipment used in the production of these products, changes in technological advances, or changes in laws or 23 Table of Contents regulations could have a material adverse effect on our business, financial condition, and consolidated results of operations.
Sales volume is dependent upon the need for equipment used to produce these products, which may be significantly influenced by the demand for plastics, the capital investment needs of companies in the plastics industry, changes in technological advances, or changes in laws or regulations such as, but not limited to, those related to single-use plastics and recycling.
Sales volume is dependent upon the need for equipment used to produce these products, which may be significantly influenced by the demand for plastics, the capital investment needs of companies in the plastics industry, changes in technological advances, or changes in laws or regulations such as, but not limited to, those related to single-use plastics, expanded-polystyrene and polystryrene foams, extended producer responsibility, content requirements for products, recycled content requirements, and reduction mandates.
Any charges relating to such impairments could adversely affect our results of operations in the periods recognized. 15. We operate in highly competitive industries, many of which are currently subject to intense price competition, and if we are unable to compete successfully, it could have a material adverse effect on our business, financial condition, and results of operations.
We operate in highly competitive industries, many of which are currently subject to intense price competition, and if we are unable to compete successfully, it could have a material adverse effect on our business, financial condition, and consolidated results of operations. Many of the industries in which we operate are highly competitive.
Principal competitive factors in the burial caskets industry include product, price, quality, delivery, and customer service. Our competitors may be positioned to offer more favorable pricing to customers, resulting in reduced volume and profitability. In certain cases, we have lost business to competitors who offered prices lower than ours.
Principal competitive factors in the mold components industry include technology, price, quality, performance, and delivery. 21 Table of Contents Our competitors may be positioned to offer more favorable pricing to customers, resulting in reduced volume and profitability. In certain cases, we have lost business to competitors who offered prices lower than ours.
This level of debt (and additional debt we may incur after that date) has important consequences to our businesses.
This amount of debt (and additional debt we may incur) has important consequences to our businesses.
Until this headroom grows over time, due to business growth or lower carrying value of the reporting unit, a relatively small decrease in reporting unit fair value can trigger impairment charges. When impairment charges are triggered, they tend to be material due to the size of the assets involved. Future acquisitions could present the same risks.
In any case, until this headroom grows over time, due to business growth or lower carrying value of the reporting unit, a small decline in reporting unit fair value may trigger impairment charges. When impairment charges are triggered, they tend to be material due to the size of the assets involved.
In many of the geographies where we operate, we face a potential shortage of qualified employees. A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels, and government regulations.
In many of the geographies where we operate, we face a potential shortage of qualified employees. A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels, and government regulations. Although we have not experienced any material labor shortages to date, the labor market has become increasingly competitive.
Any increases in prices resulting from a tightening supply of these or other commodities or services could adversely affect our profitability. We do not engage in hedging transactions for raw material purchases, but we do enter into some fixed-price supply contracts.
Any increases in prices of these or other commodities or services could adversely affect our profitability. We do not engage in hedging transactions for raw material purchases, but we do enter into some fixed-price supply contracts, in an attempt to delay or suppress the impacts of higher prices in the market.
As required by applicable accounting standards, we review goodwill and other identifiable intangible assets for impairment either annually or whenever changes in circumstances indicate that the carrying value may not be recoverable. The risk of impairment to goodwill and other indefinite-lived intangible assets is higher during the early years following an acquisition.
As required by applicable accounting standards, we review goodwill and other identifiable intangible assets for impairment either annually or whenever changes in circumstances indicate that the carrying value may not be recoverable.
The political environment in the United States has created significant uncertainty with respect to, and could result in additional changes in, or potential gridlock hindering legislation, regulation, international relations, and government policy, or possible civil unrest or other disturbances in connection therewith.
The political environment, especially in an election year in the U.S., may create uncertainty with respect to, and could result in additional changes in, or potential gridlock hindering legislation, regulation, international relations, and government policy, or could result in possible civil unrest or other disturbances in connection therewith.
If we acquire a company that operates in an industry that is different from the ones in which we currently operate, our lack of experience with that company’s industry could have a material adverse impact on our ability to manage that business and realize the benefits of that acquisition. 13.
As a result of these factors, our business, cash flows, and consolidated results of operations could be materially impacted. 22 Table of Contents If we acquire a company that operates in an industry that is different from the ones in which we currently operate, our lack of experience with that company’s industry could have a material adverse impact on our ability to manage that business and realize the benefits of that acquisition. 15.
We may incur a significant amount of debt, which could adversely affect the Company and limit our ability to respond to changes in our business or make future desirable acquisitions. As of September 30, 2022, our outstanding debt was $1,222.1.
We have a significant amount of debt, which could adversely affect the Company and limit our ability to respond to changes in our business or make future desirable acquisitions. As of September 30, 2023, our outstanding debt was $2,010.1, and this amount could increase if additional levels of liquidity are needed.
We may also decide to sell previously acquired businesses, or portions thereof, that no longer meet our strategic objectives, potentially resulting in a loss, accounting charge, or other negative impact. As a result of these factors, our business, cash flows, and results of operations could be materially impacted.
We may also decide to sell previously acquired businesses, or portions thereof, that no longer meet our strategic objectives, potentially resulting in a loss, accounting charge, or other negative impact.
We may be unable to successfully integrate with the businesses of Herbold, Linxis, or other acquired companies, or to realize the anticipated benefits of such acquisitions. On August 31, 2022, we completed the acquisition of Herbold, and on October 6, 2022, we completed the acquisition of Linxis.
We may be unable to successfully integrate with the businesses of FPM or Linxis, or other acquired companies, or to realize the anticipated benefits of such acquisitions.
The performance of the Company may suffer from business disruptions associated with information technology, cyber-attacks or unauthorized access, or catastrophic losses affecting infrastructure. The Company relies heavily on computer systems to manage and operate its businesses and record and process transactions. Computer systems are important to production planning, customer service, and order management, as well as other critical processes.
The Company relies heavily on computer systems to manage and operate its businesses and record and process transactions. Computer systems are important to production planning, customer service, and order management, as well as other critical processes.
We maintain intangible assets related to the acquisitions of Milacron, Coperion, K-Tron, Linxis, Rotex, Herbold, and Burnaby Machine and Mill Equipment Ltd. (“BM&M”), portions of which were identified as either goodwill or indefinite-lived assets. We periodically assess these assets to determine if they are impaired.
An impairment charge on these assets could have a material adverse impact on our financial condition and consolidated results of operations. We maintain intangible assets related to the acquisitions of Burnaby Machine and Mill Equipment Ltd. (“BM&M”), Coperion, FPM, Gabler, Herbold, K-Tron, Linxis, Milacron, Peerless, and Rotex, portions of which were identified as either goodwill or indefinite-lived assets.
Unfavorable developments in the plastics industry could impact our customers and, as a result, have a material adverse effect on our business, financial condition, and results of operations. 17. We rely upon our employees, agents, and business partners to comply with laws in many different countries and jurisdictions.
A demand shift away from protein products or processed foods could have a material adverse effect on our business, financial condition, consolidated results of operations, and cash flows. 19. We rely upon our employees, agents, and business partners to comply with laws in many different countries and jurisdictions.
Although we have not experienced any material labor shortages to date, we have recently observed an overall tightening and increasingly competitive labor market. The increasing competition for highly skilled and talented employees could result in higher compensation costs, difficulties in maintaining a capable workforce, and leadership succession planning challenges.
The increasing competition for highly skilled and talented employees could result in higher compensation costs, difficulties in maintaining a capable workforce, and leadership succession planning challenges.
We have recently completed several divestitures, and we continually assess the strategic fit of our existing businesses, including as part of the ongoing exploration of strategic alternatives for our Batesville business.
We have completed several divestitures, including the recent divestiture of our historical Batesville reportable operating segment, and we continually assess the strategic fit of our existing businesses.
Volatility of interest rates and negative equity returns could require greater contributions to the defined benefit plans in the future. 2. A pandemic, such as the COVID-19 pandemic, could have a material adverse effect on our business and results of operations, the nature and extent of which are highly uncertain and unpredictable.
A disease outbreak, such as the COVID-19 pandemic, or other health crisis, could have a material adverse effect on our business and consolidated results of operations, the nature and extent of which are highly uncertain and unpredictable.
As of September 30, 2022 and 2021, approximately 29% and 21%, respectively, of Hillenbrand’s employees work under collective bargaining agreements or works councils.
The Company could face labor disruptions that would interfere with operations. As of September 30, 2023 and 2022, approximately 31% and 30%, respectively, of Hillenbrand’s employees work under collective bargaining agreements or works councils.
Although we address currency risk management through regular operating and financing activities and through the use of derivative financial instruments, those actions may not prove to be fully effective. 28. The Company could face labor disruptions that would interfere with operations.
With respect to the effects on translated earnings, if the U.S. dollar strengthens relative to local currencies, as happens from time to time, the Company’s earnings could be negatively impacted. Although we address currency risk management through regular operating and financing activities and through the use of derivative financial instruments, those actions may not prove to be fully effective. 25.
We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs.
We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs. We believe that our supply management and production practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdvanced Process Solutions also leases or owns a number of warehouse distribution centers, service centers, and sales offices located in the U.S., Europe, Asia, Canada, and South America. At September 30, 2022, Molding Technology Solutions operated 12 significant manufacturing facilities located in the U.S. (in Ohio, Kansas, Georgia, and Michigan), Germany, China, India, and Canada.
Biggest change(in Ohio and Kansas), Germany, China, India, Canada, and the Czech Republic. Five of these facilities are owned and four are leased. Molding Technology Solutions also leases or owns a number of warehouse distribution centers, service centers, and sales offices located in the U.S., Mexico, Canada, Europe, Asia, and South America.
Six of these facilities are owned and six are leased. Molding Technology Solutions also leases or owns a number of warehouse distribution centers, service centers, and sales offices located in the U.S., Mexico, Canada, Europe, Asia, and South America. At September 30, 2022, Batesville operated four significant manufacturing facilities located in the U.S. (in Indiana, Tennessee, and Mississippi) and Mexico.
Seven of these facilities are owned and nine are leased. Advanced Process Solutions also leases or owns a number of warehouse distribution centers, service centers, and sales offices located in the U.S., Europe, Asia, Canada, and South America. At September 30, 2023, Molding Technology Solutions operated nine significant manufacturing facilities located in the U.S.
Item 2. PROPERTIES Our corporate headquarters is located in Batesville, Indiana, in a facility that we own. At September 30, 2022, Advanced Process Solutions operated 15 significant manufacturing facilities located in the U.S. (in Kansas, Ohio, and Virginia), Germany, Switzerland, China, India, Canada, and the United Kingdom. Six of these facilities are owned and nine are leased.
Item 2. PROPERTIES Our corporate headquarters is located in Batesville, Indiana, in a facility that we lease. At September 30, 2023, Advanced Process Solutions operated 16 significant manufacturing facilities located in the U.S. (in Kansas, Missouri, Ohio, and Virginia), 26 Table of Contents Germany, France, Switzerland, China, Canada, and the United Kingdom.
We believe our current facilities will provide adequate capacity to meet expected demand for the next several years.
Facilities often serve multiple purposes, such as administration, sales, manufacturing, testing, warehousing, and distribution. We believe our current facilities will provide adequate capacity to meet expected demand for the next several years.
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Three of these facilities are owned and one is leased. Batesville also leases or owns a number of warehouse distribution centers, service centers, and sales offices located in the U.S., Mexico, Canada, and Australia. 30 Table of Contents Facilities often serve multiple purposes, such as administration, sales, manufacturing, testing, warehousing, and distribution.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe carry various forms of commercial, property and casualty, product liability, and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us, and in most instances have deductibles and self-funded retentions up to $0.5 per occurrence or per claim, depending upon the type of coverage and policy period.
Biggest changeWe carry various forms of commercial, property and casualty, cybersecurity, product liability, and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us, and in most instances have deductibles and self-funded retentions up to $0.5 per occurrence or per claim, depending upon the type of coverage and policy period.
For more information on various legal proceedings, see Note 12 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. That information is incorporated into this Item 3 by reference. Item 4. MINE SAFETY DISCLOSURES Not applicable. PART II
For more information on various legal proceedings, see Note 13 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. That information is incorporated into this Item 3 by reference. Item 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe repurchase program has no expiration date but may be terminated by the Board of Directors at any time. As of September 30, 2022, we repurchased approximately 4,143,000 shares under the December 2, 2021 share repurchase program for approximately $175.0 in the aggregate.
Biggest changeShare Repurchases 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 authorized on December 7, 2018. The repurchase program has no expiration date but may be terminated by the Board of Directors at any time.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Hillenbrand common stock is traded on the New York Stock Exchange under the ticker symbol “HI.” As of November 10, 2022, we had approximately 1,580 shareholders of record.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Hillenbrand common stock is traded on the New York Stock Exchange under the ticker symbol “HI.” As of November 10, 2023, we had approximately 1,502 shareholders of record.
We currently expect to pay approximately $15.0 each quarter based on our outstanding common stock at September 30, 2022. Item 6. Reserved 32 Table of Contents
We currently expect to pay approximately $15.6 each quarter in fiscal 2024 based on our outstanding common stock at September 30, 2023. Item 6. Reserved 27 Table of Contents
Such shares were classified as treasury stock. 31 Table of Contents Dividend Policy We returned $62.0 to shareholders in 2022 in the form of quarterly dividends. We increased our quarterly dividend in 2022 to $0.2175 per common share from $0.2150 per common share paid in 2021.
No purchases of our common stock were made during the year ended September 30, 2023. Dividend Policy We returned $61.3 to shareholders in fiscal 2023 in the form of quarterly dividends. We increased our quarterly dividend in fiscal 2023 to $0.2200 per common share from $0.2175 per common share paid in fiscal 2022.
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Share Repurchases The following table summarizes repurchases of common stock during the three months ended September 30, 2022.
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Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount that May Yet be Purchased Under Plans or Programs July (July 1-31) 291,389 $ 40.79 291,389 $ 150.0 August (August 1-31) — — — $ 150.0 September (September 1-30) 622,254 40.18 622,254 $ 125.0 Total 913,643 $ 40.37 913,643 $ 125.0 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 authorized on December 7, 2018.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

135 edited+39 added−90 removed54 unchanged
Biggest changeThe adjusted effective income tax rate primarily excludes the tax effect of the following items: • The divestitures of TerraSource, ABEL and Red Valve ($0.6 expense in 2022 and $7.4 expense in 2021); • The impact of Milacron tax loss carryforwards on net domestic taxes on foreign earnings ($3.9 expense in 2022 and $0.6 expense in 2021); • The revaluation of deferred tax balances as a result of foreign currency fluctuations ($1.8 benefit in 2022 and $1.6 expense in 2021); and • Adjustments previously discussed within this section ($22.3 benefit in 2022 and $28.3 benefit in 2021). 44 Table of Contents Excluding these items, the increase in the current year adjusted effective tax rate was primarily due to an increase in tax expense associated with distributions from foreign subsidiaries and an increase in non-deductible executive compensation, partially offset by a reduction of the provisions for uncertain tax positions in the prior period.
Biggest changeThe adjusted effective income tax rate primarily excludes the tax effect of the following items: • The tax effect of the legal entity reorganization and transaction costs associated with recent acquisitions ($33.3 expense in 2023); • The divestiture of TerraSource ($0.6 expense in 2022); • The impact of tax loss carryforwards on net domestic taxes on foreign earnings ($12.7 expense in 2022); • The revaluation of deferred and current tax balances as a result of tax rate changes ($2.7 benefit in 2023 and $0.5 expense in 2022); • The revaluation of deferred tax balances as a result of foreign currency fluctuations ($0.3 expense in 2023 and $2.2 benefit in 2022); and • Adjustments previously discussed within this section, including business acquisition, divestiture, and integration costs, intangible amortization, and restructuring and restructuring-related charges ($34.1 benefit in 2023 and $19.7 benefit in 2022).
We begin the discussion at a consolidated level and then provide separate detail about Advanced Process Solutions, Molding Technology Solutions, and Batesville reportable operating segments, as well as Corporate. These financial results are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). We also provide certain non-GAAP operating performance measures.
We begin the discussion at a consolidated level and then provide separate detail about Advanced Process Solutions and Molding Technology Solutions reportable operating segments, as well as Corporate. These financial results are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). We also provide certain non-GAAP operating performance measures.
Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements. Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Anticipated losses on long-term manufacturing contracts are recognized immediately when such losses become evident.
Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements. Net revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Anticipated losses on long-term manufacturing contracts are recognized immediately when such losses become evident.
We maintain financial controls over the customer qualification, contract pricing, and estimation processes designed to reduce the risk of contract losses. Standalone service revenue is recognized either over time proportionately over the period of the underlying contract or as invoiced, depending on the terms of the arrangement. Standalone service revenue is not material to the Company.
We maintain financial controls over the customer qualification, contract pricing, and estimation processes designed to reduce the risk of contract losses. Standalone service net revenue is recognized either over time proportionately over the period of the underlying contract or as invoiced, depending on the terms of the arrangement. Standalone service revenue is not material to the Company.
Retirement and Postretirement Benefit Plans We sponsor retirement and postretirement benefit plans covering some of our employees. Expense recognized for the plans is based upon actuarial valuations. Inherent in those valuations are key assumptions including discount rates, expected returns on assets, and projected future salary rates.
Retirement Benefit Plans We sponsor retirement benefit plans covering some of our employees. Expense recognized for the plans is based upon actuarial valuations. Inherent in those valuations are key assumptions including discount rates, expected returns on assets, and projected future salary rates.
(5) See Notes 5, 6, and 7 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for lease, financing, and pension obligations, respectively. 52 Table of Contents 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.
(5) See Notes 6, 7, and 8 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for lease, financing, and pension obligations, respectively. 43 Table of Contents 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.
However, future changes in the judgments, assumptions and estimates that are used in the impairment testing for goodwill, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values.
However, future changes in the judgments, assumptions and estimates that are used in the impairment testing for goodwill, including discount rates or future cash flow projections, could result in significantly different estimates of the fair values.
The determination of intangible assets is subjective and generally requires complex valuation methodologies including the relief from royalty method and multi-period excess earnings method, for which we generally use a third-party valuation specialist.
The determination of identifiable intangible assets is subjective and generally requires complex valuation methodologies including the relief from royalty method and multi-period excess earnings method, for which we generally use a third-party valuation specialist.
The transaction price of a contract, or the amount the Company expects to receive upon satisfaction of the performance obligation, is determined by reference to the contract’s terms and includes adjustments, if applicable, for any variable consideration, such as sales discounts, customer rebates, and sales incentives, all of which require us to make estimates for the portion of these allowances that have yet to be credited or paid to our customers.
The transaction price of a contract, or the amount the Company expects to receive upon satisfaction of the performance obligation, is determined by reference to the contract’s terms and includes adjustments, if applicable, for any variable consideration, such as sales discounts and sales incentives, all of which require us to make estimates for the portion of these allowances that have yet to be credited or paid to our customers.
Although there are always changes in assumptions to reflect changing business and market conditions, our overall valuation methodology and the types of assumptions we use have remained consistent.
Although there are always changes in assumptions to reflect changing business and market conditions, our overall valuation methodology and the types of assumptions we use have remained consistent and conservative.
These services include treasury management, human resources, legal, business development, information 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, and integration, which we incur as a result of our strategy to grow through selective acquisitions.
These services include treasury management, human resources, legal, business development, information 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, divestiture, and integration, which we incur as a result of our strategy to grow through selective acquisitions.
For purposes of the goodwill impairment test, weighting is equally attributed to both the market and income approaches in arriving at the fair value of the reporting units. Under the market approach, we utilize the guideline company method, which involves calculating valuation multiples based on operating data from comparable publicly traded companies.
For purposes of the goodwill impairment test, weighting is equally attributed to both the market and income approaches in arriving at the fair value of the reporting units. Under the market approach, we utilize the guideline company method, which involves calculating valuation multiples based on financial data from comparable publicly traded companies.
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 enterprise value of approximately $566.8 (€572.0) plus cash acquired at closing, subject to post-closing adjustments.
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.
These arrangements include the L/G Facility Agreement (defined below) 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 L/G Facility Agreement by an additional €100, subject to approval of the lenders. We have significant operations outside the U.S.
These arrangements include the Amended L/G Agreement (defined below) 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 Agreement by an additional €100, subject to approval of the lenders. We have significant operations outside the U.S.
Multiples derived from these companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. These multiples are then applied to the operating data for our reporting units to arrive at an indication of value.
Multiples derived from these companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. These multiples are then applied to the financial data for our reporting units to arrive at an indication of value.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations) (unless otherwise stated, references to years relate to fiscal years) The following discussion compares our results for the year ended September 30, 2022, to the year ended September 30, 2021.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations) (unless otherwise stated, references to years relate to fiscal years) The following discussion compares our results for the year ended September 30, 2023, to the year ended September 30, 2022.
Net revenue generated from standard equipment and highly customized equipment or parts contracts without an enforceable right to payment for performance completed to date, as well as non-specialized parts sales and sales of death care products, is recognized at a point in time. We use the input method of “cost-to-cost” to recognize net revenue over time.
Net revenue generated from standard equipment and highly customized equipment or parts contracts without an enforceable right to payment for performance completed to date, as well as net revenue from non-specialized parts sales, is recognized at a point in time. We use the input method of “cost-to-cost” to recognize net revenue over time.
Contract costs are incurred over longer periods of time and, accordingly, the estimation of these costs requires judgment. We measure progress based on costs incurred to date relative to total estimated cost at completion. Incurred cost represents work performed, which corresponds with, and we believe thereby 34 Table of Contents best depicts, the transfer of control to the customer.
Contract costs are incurred over longer periods of time and, accordingly, the estimation of these costs requires judgment. We measure progress based on costs incurred to date relative to total estimated cost at completion. Incurred cost represents work performed, which corresponds with, and we believe thereby best depicts, the transfer of control to the customer.
During the year ended September 30, 2022, the following operational decisions and economic developments had an impact on our current and may impact our future cash flows, consolidated results of operations, and financial position.
During the year ended September 30, 2023, the following operational decisions and economic developments had an impact on our current and may impact our future cash flows, consolidated results of operations, and financial position.
Subsequent 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 (“Sellers”).
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”).
Contractual Obligations and Contingent Liabilities and Commitments The following table summarizes our future obligations not quantified and disclosed elsewhere in this Form 10-K as of September 30, 2022.
Contractual Obligations and Contingent Liabilities and Commitments The following table summarizes our future obligations not quantified and disclosed elsewhere in this Form 10-K as of September 30, 2023.
See Note 6 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details on these amendments.
See Note 7 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details on these amendments.
Contract costs include labor, material, and certain overhead expenses. Cost estimates are based on various assumptions to project the outcome of future events, including labor productivity and availability, the complexity of the work to be performed, the cost of materials, and the performance of suppliers and subcontractors.
Contract costs include labor, material, and certain overhead expenses. Cost 29 Table of Contents estimates are based on various assumptions to project the outcome of future events, including labor productivity and availability, the complexity of the work to be performed, the cost of materials, and the performance of suppliers and subcontractors.
Changes in retirement and postretirement benefit expense and the recognized obligations may occur in the future as a result of a number of factors, including changes to key assumptions such as the expected long-term rate of return on pension assets and the weighted-average discount rate.
Changes in retirement benefit cost and the recognized obligations may occur in the future as a result of a number of factors, including changes to key assumptions such as the expected long-term rate of return on pension assets and the weighted-average discount rate.
Such factors we consider in a qualitative analysis include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, Company-specific events, events affecting the reporting unit, and the overall financial performance of the reporting unit.
Such factors we consider in a qualitative 30 Table of Contents analysis include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, Company-specific events, events affecting the reporting unit, and the overall financial performance of the reporting unit.
As a result of these factors and the limited cushion (or headroom, as commonly referred) due to the acquisition of Milacron in fiscal 2020, goodwill for the reporting units within the Molding Technology Solutions reportable operating segment are more susceptible to impairment risk.
As a result of these factors and the limited cushion (or headroom, as commonly referred) due to the acquisition of Milacron in fiscal 2020 and the impact of macroeconomic conditions, goodwill for the reporting units within the Molding Technology Solutions reportable operating segment generally are more susceptible to impairment risk.
The discussion comparing our results for the year ended September 30, 2021, to the year ended September 30, 2020, is included within Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended September 30, 2021, filed with the SEC on November 17, 2021.
The discussion comparing our results for the year ended September 30, 2022, to the year ended September 30, 2021, is included within Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended September 30, 2022, filed with the SEC on November 16, 2022.
While we use the best available information to 36 Table of Contents prepare the cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
While we use the best available information to prepare the cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
However, we have experienced significant delays of certain raw materials and components, but we have largely been able to mitigate the impact on our consolidated results of operations.
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 have no off-balance sheet financing agreements or guarantees at September 30, 2022, that we believe are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
We have no off-balance sheet financing agreements or guarantees as of September 30, 2023 that we believe are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
See Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for further information on these acquisitions and divestitures. Financing Activities Cash used in financing activities was largely impacted by net borrowing activity and share repurchases.
See Notes 4 and 5 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for further information on these acquisitions and divestitures. Financing Activities Cash provided by financing activities was largely impacted by net borrowing activity and share repurchases.
Pricing actions and supply chain productivity initiatives have 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 and beyond.
Pricing actions and supply chain productivity initiatives have mitigated and are expected to continue to mitigate some of these 33 Table of Contents 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 2024 and beyond.
It remains possible that we may experience some sort of interruption to our supply chains, and such an interruption 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 and beyond.
We have experienced, and it remains possible that we may experience interruptions to our supply chains, and such an interruption 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 2024 and beyond.
The intangible assets are impacted by a number of judgmental assumptions including future revenue growth rates and margins on such revenue, customer attrition rates, technology obsolescence factors and the discount rates. See Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, for further information on recent business combinations.
The identifiable intangible assets are impacted by a number of judgmental assumptions including future revenue growth rates and EBITDA margins on such revenue, customer attrition rates, and the discount rates. See Note 5 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, for further information on recent business combinations.
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 September 30, 2022, we had a transition tax liability of $16.9 pursuant to the 2017 Tax Cuts and Jobs Act (the “Tax Act”).
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 September 30, 2023, we had a transition tax liability of $11.2 pursuant to the 2017 Tax Cuts and Jobs Act (the “Tax Act”).
Foreign currency impact decreased net revenue by 6%. We expect future net revenue for Advanced Process Solutions to continue to be influenced by order backlog because of the lead time involved in fulfilling engineered-to-order equipment and solutions for customers.
Foreign currency impact decreased net revenue by 1%. 37 Table of Contents We expect future net revenue for Advanced Process Solutions to continue to be influenced by order backlog because of the lead time involved in fulfilling engineered-to-order equipment and solutions for customers.
In the months after closing, as we obtain additional information about these assets and liabilities, including through tangible asset appraisals, and learn more about the newly acquired business, we are able to refine the estimates of fair value and more accurately allocate the purchase price.
We obtain this information during due diligence and through other sources. In the months after closing, as we obtain additional information about these assets and liabilities, including through tangible asset appraisals, and learn more about the newly acquired business, we are able to refine the estimates of fair value and more accurately allocate the purchase price.
Those assumptions and estimates include macroeconomic conditions, competitive activities, cost containment, achievement of synergy initiatives, market data and market multiples (6.0-10.0 times adjusted EBITDA), discount rates (11.5-13.0%), and terminal growth rates (2.0%), as well as future levels of revenue growth, operating margins, depreciation, amortization, and working capital requirements, which are based upon the Company’s strategic plan.
Those assumptions and estimates include macroeconomic conditions, competitive activities, cost containment, achievement of synergy initiatives, market data and market multiples (6.5-11.0 times adjusted EBITDA), discount rates (12.5-16.0%), and terminal growth rates (2.0%), as well as future levels of revenue growth, adjusted EBITDA, and working capital requirements, which are based upon the Company’s strategic plan.
The estimated fair value, as calculated at July 1, 2022, for the three reporting units within the Molding Technology Solutions reportable operating segment ranged from approximately 13% to 54% greater than their carrying value (9% to 45% at the previous impairment assessment date).
The estimated fair value, as calculated at July 1, 2023, for the three reporting units within the Molding Technology Solutions reportable operating segment ranged from approximately 10% to 28% greater than their carrying value (13% to 54% at the previous impairment assessment date).
We continue to identify and qualify alternative sources to mitigate risk associated to single or sole source supply continuity, and we have purchased and may continue to purchase certain materials in safety stock where we have supply chain continuity concerns.
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.
(2) Business acquisition, disposition, and integration costs during 2022 primarily included professional fees related to the Gabler, Herbold, and Linxis acquisitions and professional fees and employee-related costs attributable to the integration of Milacron and the divestiture of TerraSource.
Business acquisition, divestiture, and integration costs during 2022 primarily included professional fees related to the Gabler, Herbold, and Linxis acquisitions and professional fees and employee-related costs attributable to the integration of Milacron and the divestiture of TerraSource. (2) Restructuring and restructuring-related charges primarily included severance costs during 2023 and 2022.
Foreign currency impact decreased consolidated adjusted EBITDA by $21.8. 48 Table of Contents 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. We describe actual results in generating and using cash by comparing 2022 to 2021.
Foreign currency impact decreased consolidated adjusted EBITDA by $9.5. 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. We describe actual results in generating and using cash by comparing 2023 to 2022.
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 the ongoing Ukraine War and other uncertainties.
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. 40 Table of Contents We have taken proactive measures to maintain financial flexibility.
This form of trade finance is customary in the industry and, as a result, we maintain adequate capacity to provide the guarantees. As of September 30, 2022, we had guarantee arrangements totaling $373.6, under which $247.4 was utilized for this purpose.
This form of trade finance is customary in the industry and, as a result, we maintain adequate capacity to provide the guarantees. As of September 30, 2023, we had guarantee arrangements totaling $587.9, under which $326.9 was utilized for this purpose.
Our expected long-term rate of return on domestic and international pension plan assets was 4.7% and 3.7% at September 30, 2022 and 2021, respectively. The weighted-average discount rate wa s 4.6% and 2.1% for the domestic and international defined benefit pension plans and 5.2% and 2.4% for the postretirement healthcare plans at September 30, 2022 and 2021, respectively.
Our expected long-term rate of return on domestic and international pension plan assets was 4.8% and 4.7% at September 30, 2023 and 2022, respectively. The weighted-average discount rate wa s 4.9% and 4.6% for the domestic and international defined benefit pension plans at September 30 , 2023 and 2022 , respectively.
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 year ended September 30, 2022.
The fair value of the total consideration received by the Company 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 year ended September 30, 2022.
Asset Impairment Determinations Impairment of goodwill Goodwill is tested for impairment at least annually and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value may be below carrying value. 35 Table of Contents Impairment of goodwill is tested at the reporting unit level.
Asset Impairment Determinations Impairment of goodwill and intangible assets Goodwill and other intangible assets with indefinite lives, primarily tradenames, are tested for impairment at least annually and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value may be below carrying value. Impairment of goodwill is tested at the reporting unit level.
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 which the Advanced Process Solutions and Molding Technology Solutions reportable operating segments compete.
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 which our reportable operating segments compete.
The non-cash charges of $11.2 and $62.3, for the years ended September 30, 2021 and 2020, respectively, were recorded within the impairment charges caption on the Consolidated Statements of Operations. For further information, see discussion below within the Executive Overview section and Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K.
The non-cash charge of $11.2 for the year ended September 30, 2021, was recorded within the impairment charges caption on the Consolidated Statements of Operations. For further information, see Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K.
September 30, 2022 September 30, 2021 Combined Balance Sheets Information: Current assets (1) $ 2,590.3 $ 1,311.6 Non-current assets 2,656.1 5,692.1 Current liabilities 623.2 581.8 Non-current liabilities 1,289.6 1,303.9 Year Ended September 30, 2022 Year Ended September 30, 2021 Combined Statements of Operations Information: Net revenue (2) $ 1,042.0 $ 999.0 Gross profit 353.5 374.2 Net income attributable to Obligors 396.7 557.6 (1) Current assets include intercompany receivables from non-guarantors of $1,868.7 and $596.8 as of September 30, 2022 and September 30, 2021, respectively.
September 30, 2023 September 30, 2022 Combined Balance Sheets Information: Current assets (1) $ 2,710.8 $ 2,590.3 Non-current assets 3,533.3 2,656.1 Current liabilities 985.1 623.2 Non-current liabilities 1,583.5 1,289.6 Year Ended September 30, 2023 Year Ended September 30, 2022 Combined Statements of Operations Information: Net revenue (2) $ 441.5 $ 1,042.0 Gross profit 93.0 353.5 Net income attributable to Obligors 223.2 396.7 (1) Current assets include intercompany receivables from non-guarantors of $2,070.6 and $1,868.7 as of September 30, 2023 and September 30, 2022, respectively.
These arrangements involve elements of performance and credit risk that are not included in the Consolidated Balance Sheets. The possibility that Hillenbrand would have to make actual cash expenditures in connection with these obligations is largely dependent on the performance of the guaranteed party, or the occurrence of future events that Hillenbrand is unable to predict.
The possibility that Hillenbrand would have to make actual cash expenditures in connection with these obligations is largely dependent on the performance of the guaranteed party, or the occurrence of future events that Hillenbrand is unable to predict.
Linxis has six 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 that are complementary to the equipment and solutions offered under Hillenbrand's Coperion brand.
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 decrease in operating cash flow was primarily due to unfavorable timing of working capital requirements related to large plastics projects and an increase in inventory due to higher customer demand and supply chain disruptions.
The increase in operating cash flow was primarily due to favorable timing of working capital requirements related to large plastics projects and a decrease in inventory.
A 50 basis-point change in the expected long-term rate of return on domestic and international pension plan assets would change annual pension expense by $1.6. A 50 basis-point change in the weighted-average discount rate would change the annual domestic and international pension expense by $0.3 and the annual postretirement healthcare plan expense by less tha n $0.1.
A 50 basis-point change in the expected long-term rate of return on domestic and international pension plan assets would change annual net periodic pension cost by $1.5. A 50 basis-point change in the weighted-average discount rate would change the annual net periodic pension cost by $0.2.
We increased our quarterly dividend in 2022 to $0.2175 per common share from $0.2150 per common share paid in 2021. 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.
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.
The transition tax liability is expected to be paid over the next three years. On December 2, 2021, the Board of Directors authorized a new share repurchase program of up to $300.0, which replaced the previous $200.0 share repurchase program authorized on December 7, 2018.
The transition tax liability is expected to be paid over the next two years. On December 2, 2021, the 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.
Advanced Process Solutions’ gross profit included restructuring and restructuring-related charges ($2.1 in 2022 and $7.6 in 2021), business acquisition, disposition, and integration costs ($0.1 in 2022 and $1.9 in 2021), and other one-time costs ($0.8 in 2022 and $0.5 in 2021).
Advanced Process Solutions’ gross profit included inventory step-up costs related to acquisitions ($11.7 in 2023), business acquisition, divestiture, and integration costs ($0.5 in 2023 and $0.1 in 2022), restructuring and restructuring-related charges ($2.1 in 2022), and other one-time costs ($0.8 in 2022).
Advanced Process Solutions’ gross profit included restructuring and restructuring-related charges ($2.1 in 2022 and $7.6 in 2021), business acquisition, disposition, and integration costs ($0.1 in 2022 and $1.9 in 2021), and other one-time costs ($0.8 in 2022 and $0.5 in 2021).
Advanced Process Solutions’ gross profit included inventory step-up costs related to acquisitions ($11.7 in 2023), business acquisition, divestiture, and integration costs ($0.5 in 2023 and $0.1 in 2022), restructuring and restructuring-related charges ($2.1 in 2022), and other one-time costs ($0.8 in 2022).
When material, we expect to seek assistance of competent valuation 38 Table of Contents professionals when the underlying valuation is more complex or unique. We anticipate that in most cases, we will exercise significant judgment in estimating the fair value of intangible assets, contingent liabilities, and contingent consideration.
When material, we utilize the assistance of competent valuation professionals when the underlying valuation is more complex or unique. In most cases, if material, we will exercise significant judgment in estimating the fair value of identifiable intangible assets, contingent liabilities, and property, plant, and equipment.
In exchange for contributing the TerraSource business, the Company received consideration in the form of a five-year note with initial principal amount of $25.6, subject to certain adjustments, and also retained a 49% equity interest in Holdings through one of the Company’s indirect wholly-owned subsidiaries. The fair value of the total consideration received by the Company was $27.7.
In exchange for contributing the TerraSource business, the Company received consideration in the form of a five-year note with initial principal amount of $25.6, subject to certain adjustments, and an April 2028 maturity date, and 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.
Under this approach, we applied discounting using individual spot rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. These spot rates align to each of the projected benefit obligations and service cost cash flows.
We use a full yield curve approach in the estimation of the service and interest cost components of our defined benefit retirement plans. Under this approach, we applied discounting using individual spot rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date.
Net revenue attributable to backlog is also affected by foreign exchange rate fluctuations for orders denominated in currencies other than U.S. dollars. Order backlog increased $48.5 (4%) from $1,349.4 at September 30, 2021, to $1,397.9 at September 30, 2022.
Net revenue attributable to backlog is also affected by foreign exchange rate fluctuations for orders denominated in currencies other than U.S. dollars. Order backlog increased $468.5 (34%) from $1,397.9 at September 30, 2022, to $1,866.4 at September 30, 2023. The increase in order backlog was primarily driven by acquisitions and a favorable foreign currency impact (5%).
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.
Conversely, working capital needs are higher when a larger portion of the cash is to be received in later stages of manufacturing.
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 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.
(3) Primarily includes estimated payments for transition tax liability, the estimated liquidation of liabilities related to both our self-insurance reserves and severance payments. (4) We have excluded from the table our $33.9 liability related to uncertain tax positions as the current portion is not significant and we are not able to reasonably estimate the timing of the long-term portion.
(4) We have excluded from the table our $38.9 liability related to uncertain tax positions as the current portion is not significant and we are not able to reasonably estimate the timing of the long-term portion.
Gross profit margin improved 60 basis points to 31.1% in 2022, primarily due to favorable pricing and productivity improvements including synergies, partially offset by cost inflation. Molding Technology Solutions’ gross profit included restructuring and restructuring-related charges ($0.1 in 2022 and $2.6 in 2021), and business acquisition, disposition, and integration costs ($0.3 in 2022 and $1.9 in 2021).
Gross profit margin decreased 150 basis points to 29.6% in 2023, primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements. Molding Technology Solutions’ gross profit included restructuring and restructuring-related charges ($2.3 in 2023 and $0.1 in 2022) and business acquisition, divestiture, and integration costs ($0.7 in 2023 and $0.3 in 2022).
Our adjusted effective income tax rate was 29.1% in 2022 compared to 28.7% in 2021.
Our adjusted effective income tax rate was 29.5% in 2023 compared to 31.5% in 2022.
Operating expenses included the following items: Year Ended September 30, 2022 2021 Business acquisition, disposition, and integration costs $ 31.2 $ 31.4 Restructuring and restructuring-related charges 1.5 4.1 Other one-time costs 2.6 — 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 decreased $4.3 (1%), which included favorable foreign currency impact (3%).
Operating expenses included the following items: Year Ended September 30, 2023 2022 Business acquisition, divestiture, and integration costs $ 45.0 $ 29.0 Restructuring and restructuring-related charges 2.8 0.9 Other one-time costs — 2.3 On an adjusted basis, which excludes business acquisition, divestiture, and integration costs, restructuring and restructuring-related charges, and other one-time costs including reserves against certain receivables , operating expenses increased $115.7 36 Table of Contents (28%), which included favorable foreign currency impact (3%).
See page 48 for reconciliation of adjusted EBITDA to consolidated net income, the most directly comparable GAAP measure. We use non-GAAP measures in certain other instances and include information reconciling such non-GAAP measures to the respective most directly comparable GAAP measures.
We use non-GAAP measures in certain other instances and include information reconciling such non-GAAP measures to the respective most directly comparable GAAP measures.
For further information on the impairment charge, see Note 4 to our Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K.
For further information on divestitures, see Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. Interest expense increased $13.4 (21%), primarily due to increased borrowing for acquisitions. For further information, see Note 7 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Backlog represents the amount of net revenue that we expect to realize on contracts awarded to the Advanced Process Solutions and Molding Technology Solutions reportable operating segments. For purposes of calculating backlog, 100% of estimated net revenue attributable to consolidated subsidiaries is included.
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.
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.
Operating expenses as a percentage of net revenue were 2.2%, an improvement of 70 basis points from the prior year. 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.
Excluding these charges, adjusted gross profit increased $3.2 (1%) and adjusted gross profit margin decreased 40 basis points to 34.8%. • Molding Technology Solutions’ gross profit increased $21.3 (7%), primarily due to favorable pricing, an increase in volume, and productivity improvements and synergies, partially offset by cost inflation. Foreign currency impact decreased gross profit by 3%.
Excluding these charges, adjusted gross profit increased $222.2 (50%) and adjusted gross profit margin improved 160 basis points to 36.4%. • Molding Technology Solutions’ gross profit decreased $28.7 (9%), primarily due to cost inflation, unfavorable product mix, and a decrease in volume, partially offset by favorable pricing and productivity improvements. Foreign currency impact decreased gross profit by 2%.
Excluding the charges adjusted operating expenses as a percentage of net revenue improved 50 basis points to 11.3% REVIEW OF CORPORATE EXPENSES Year Ended September 30, 2022 2021 Amount % of Net Revenue Amount % of Net Revenue Core operating expenses $ 65.3 2.2 $ 62.0 2.2 Business acquisition, disposition, and integration costs 28.0 1.0 26.1 0.9 Restructuring and restructuring-related charges 0.8 — — — Operating expenses $ 94.1 3.2 $ 88.1 3.1 Corporate operating expenses include the cost of providing management and administrative services to each reportable operating segment.
REVIEW OF CORPORATE EXPENSES Year Ended September 30, 2023 2022 Amount % of Net Revenue Amount % of Net Revenue Core operating expenses $ 61.1 2.2 $ 66.4 2.9 Business acquisition, divestiture, and integration costs 35.1 1.2 26.1 1.1 Restructuring and restructuring-related charges 0.2 — 0.8 — Other — — (0.3) — Operating expenses $ 96.4 3.4 $ 93.0 4.0 Corporate operating expenses include the cost of providing management and administrative services to each reportable operating segment.
Gross profit margin improved 60 basis points to 31.1% in 2022, primarily due to favorable pricing and productivity improvements including synergies, partially offset by cost inflation. 43 Table of Contents Molding Technology Solutions’ gross profit included restructuring and restructuring-related charges ($0.1 in 2022 and $2.6 in 2021), and business acquisition, disposition, and integration costs ($0.3 in 2022 and $1.9 in 2021).
Gross profit margin decreased 150 basis points to 29.6% in 2023, primarily driven by cost inflation and unfavorable product mix, partially offset by favorable pricing and productivity improvements. Molding Technology Solutions’ gross profit included restructuring and restructuring-related charges ($2.3 in 2023 and $0.1 in 2022) and business acquisition, divestiture, and integration costs ($0.7 in 2023 and $0.3 in 2022).
Payment Due by Period (in millions) Total Less Than 1 Year 1-3 Years 4-5 Years After 5 Years Interest on financing agreements (1) 260.1 60.6 110.2 44.5 44.8 Purchase obligations (2) 404.0 353.8 50.2 — — Other obligations (3) 25.7 9.6 13.9 1.0 1.2 Total contractual obligations (4)(5) $ 689.8 $ 424.0 $ 174.3 $ 45.5 $ 46.0 (1) Cash obligations for interest requirements relate to our fixed-rate debt obligations at the contractual rates as of September 30, 2022.
Payment Due by Period (in millions) Total Less Than 1 Year 1-3 Years 4-5 Years After 5 Years Interest on financing agreements (1) 375.1 106.2 177.6 59.6 31.7 Purchase obligations (2) 383.7 364.0 18.7 0.9 0.1 Other obligations (3) 49.9 35.0 8.7 2.0 4.2 Total contractual obligations (4)(5) $ 808.7 $ 505.2 $ 205.0 $ 62.5 $ 36.0 (1) Cash obligations for interest requirements relate to our fixed-rate debt obligations at the contractual rates as of September 30, 2023.
Cash Flows Year Ended September 30, (in millions) 2022 2021 Cash flows provided by (used in) Operating activities $ 191.1 $ 528.4 Investing activities (143.4) 126.0 Financing activities (244.2) (523.3) Effect of exchange rate changes on cash and cash equivalents (16.8) 8.0 Net cash flows $ (213.3) $ 139.1 Operating Activities Operating activities provided $191.1 of cash during 2022, and provided $528.4 of cash during 2021, a $337.3 (64%) decrease.
Cash Flows Year Ended September 30, (in millions) 2023 2022 2021 Cash flows provided by (used in): Operating activities from continuing operations $ 207.0 $ 63.3 $ 362.7 Investing activities from continuing operations (722.3) (131.7) 137.6 Financing activities from continuing operations 693.4 (244.2) (523.3) Net cash flows from discontinued operations (144.4) 116.1 154.1 Effect of exchange rate changes on cash and cash equivalents (21.1) (16.8) 8.0 Net cash flows $ 12.6 $ (213.3) $ 139.1 Operating Activities Operating activities provided $207.0 of cash during 2023, and provided $63.3 of cash during 2022, a $143.7 (227%) increase.
Working capital requirements for the Advanced Process Solutions and Molding Technology Solutions 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 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.
Foreign currency impact decreased gross profit by 6%. Gross profit margin improved 10 basis points to 34.5% in 2022, primarily due to favorable pricing and productivity improvements, partially offset by cost inflation.
Foreign currency impact decreased gross profit by 1%. Gross profit margin improved 120 basis points to 35.7% in 2023, primarily due to the impact of acquisitions and favorable pricing, partially offset by cost inflation.
We also experienced material and supply chain inflation, including but not limited to higher transportation costs, in fiscal 2022 as further discussed in our Operations Review.
We also experienced material and supply chain inflation during fiscal 2023, as further discussed in our Operations Review.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed8 unchanged
Biggest changeWe are subject to market risk from fluctuating market prices of certain purchased commodity raw materials including steel, wood, red metals, and fuel. While these materials are typically available from multiple suppliers, commodity raw materials are subject to market price fluctuations.
Biggest changeWe are subject to market risk from fluctuating market prices of certain purchased commodity raw materials including steel. While these materials are typically available from multiple suppliers, commodity raw materials are subject to market price fluctuations. We generally buy these commodities based upon market prices that are established with the supplier as part of the purchasing process.
We are subject to interest rate risk associated with such borrowings, which bear a variable rate of interest that is based upon, at the Company’s option, (A) if denominated in US Dollars, at the Term SOFR Rate or the Alternate Base Rate (each as defined in the Credit Agreement), (B) if denominated in Japanese Yen, Canadian Dollars or Euros, at rates based on the rates offered for deposits in the applicable interbank markets for such currencies and (C) if denominated in Pounds Sterling or Swiss Francs, at SONIA and SARON, respectively (each as defined in the Credit Agreement), plus, in each case, a margin based on the Company’s leverage ratio.
We are subject to interest rate risk associated with such borrowings, which bear a variable rate of interest that is based upon, at the Company’s option, (A) if denominated in US dollars, at the Term SOFR Rate or the Alternate Base Rate (each as defined in the Amended Credit Agreement), (B) if denominated in Japanese Yen, Canadian dollars or Euros, at rates based on the rates offered for deposits in the applicable interbank markets for such currencies and (C) if denominated in Pounds Sterling or Swiss Francs, at SONIA and SARON, respectively (each as defined in the Credit Agreement), plus, in each case, a margin based on the Company’s leverage ratio.
The interest we pay on such borrowings is dependent on interest rate conditions and the timing of our financing needs. If we assumed borrowings under our variable rate debt obligations remained unchanged for the next fiscal year, a one percentage point change in the related interest rates would decrease or increase our annual interest expense by approximately $0.1.
The interest we pay on such borrowings is dependent on interest rate conditions and the timing of our financing needs. If we assumed borrowings under our variable rate debt obligations remained unchanged for the next fiscal year, a one percentage point change in the related interest rates would decrease or increase our annual interest expense by approximately $8.9.
The fair value of these financial instruments would hypothetically change by approximately $9.2 and $6.2 as of September 30, 2022 and 2021, respectively, if there were a 10% movement in end-of-period market rates. The translation of the financial statements of our non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign exchange rates.
The fair value of these financial instruments would hypothetically change by $1.2 and $7.6 as of September 30, 2023 and 2022, respectively, if there were a 10% movement in end-of-period market rates. The translation of the financial statements of our non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign exchange rates.
The carrying value of all of the Company’s derivative instruments at fair value resulted in assets of $3.0 and $1.9 (included in prepaid expenses and other current assets) and liabilities of $8.0 and $2.5 (included in other current liabilities and other long-term liabilities) at September 30, 2022 and 2021, respectively.
The carrying value of all of the Company’s derivative instruments at fair value resulted in assets of $1.5 and $2.6 (included in prepaid expenses and other current assets) and liabilities of $1.7 and $8.0 (included in other current liabilities and other long-term liabilities) at September 30, 2023 and 2022, respectively.
Exposure to this variability is periodically managed through the use of natural hedges and also by entering into currency exchange agreements. The aggregate notional amount of all derivative instruments was $173.1 and $186.4 at September 30, 2022 and 2021, respectively.
Exposure to this variability is periodically managed through the use of natural hedges and also by entering into currency exchange agreements. The aggregate notional amount of all derivative instruments was $164.6 and $156 at September 30, 2023 and 2022, respectively.
To the extent that commodity prices increase and we do not have firm pricing from our suppliers, or if our suppliers are not able to honor such prices, we may experience a decline in our gross margins to the extent we are not able to increase selling prices of our products or obtain supply chain efficiencies, including as a result of current global supply chain disruptions, to offset increases in commodity costs. 53 Table of Contents At September 30, 2022, our variable rate debt obligations were $6.7, which included borrowings on the Facility.
To the extent that commodity prices increase and we do not have firm pricing from our suppliers, or if our 44 Table of Contents suppliers are not able to honor such prices, we may experience a decline in our gross margins to the extent we are not able to increase selling prices of our products or obtain supply chain efficiencies, including as a result of current global supply chain disruptions, to offset increases in commodity costs.
The result of the appreciation or depreciation of all applicable currencies against the U.S. dollar would be a change in shareholders’ equity of approximately $120.8 and $121.0 as of September 30, 2022 and 2021, respectively. 54 Table of Contents
The result of the appreciation or depreciation of all applicable currencies against the U.S. dollar would be a change in shareholders’ equity of $122.0 and $118.6 as of September 30, 2023 and 2022, respectively. 45 Table of Contents
We generally buy these commodities based upon market prices that are established with the supplier as part of the purchasing process. We generally attempt to obtain firm pricing from our larger suppliers for volumes consistent with planned production.
We generally attempt to obtain firm pricing from our larger suppliers for volumes consistent with planned production.
Added
At September 30, 2023, our variable rate debt obligations were $892.6, which included borrowings on the Facility.

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