Greetings, and welcome to the Hillenbrand announces LINXIS Group transaction conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Sam Mynsberge, Senior Director of Investor Relations. Thank you. You may begin. Thank you, operator, and good morning, everyone. Thank you for joining us today to discuss two important announcements we made earlier this morning. I'm joined by our President and CEO, Kim Ryan, and our Senior Vice President and CFO, Bob VanHimbergen. I'd like to direct your attention to the supplemental slides posted on our IR website that will be referenced on today's call. Turning to slide three, a reminder that our comments may contain certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance and our actual results could differ materially. I encourage you to review slide three of the presentation for a deeper discussion of forward-looking statements and the risk factors that could impact our actual results. Finally, as a reminder, we are in quiet period and we'll be reporting our fiscal Q3 results in a few weeks, so today's call will be solely focused on the announcements we made this morning. With that, I'll now turn the call over to Kim. Kim? Thank you, Sam, and good morning, everyone. We appreciate you joining us to discuss two important announcements that we made this morning. We'll focus most of our time today on today's call to discuss our intent to acquire LINXIS Group for approximately EUR 572 million. LINXIS Group is a leading global provider of process equipment and automation solutions for the food industry, serving customers in over 100 countries. Before we go further into the strategic rationale and financial characteristics of the transaction, I want to comment on the other strategic announcement that we made this morning regarding Batesville. As we announced, our board has initiated a process to explore a range of strategic alternatives for Batesville and has engaged a financial advisor to support us in this process. Batesville continues to be a leader in the death care industry in North America, and I could not be more proud of this team and their tireless efforts in delivering exceptional quality, innovation, and service to our customers. Through this process, we are focusing on determining the best path to benefit our associates, customers, and shareholders. We have no specific timetable for this review, but we'll update you again at the conclusion of the evaluation process. This is an important moment for Hillenbrand, and I am confident that we are well-positioned to drive long-term growth and deliver meaningful value to our shareholders. Bob and I will now provide some detail on the planned acquisition of LINXIS Group. We believe this transaction provides a unique and compelling opportunity for Hillenbrand. As you know, a key pillar of our strategy has been to strengthen and build our industrial segments, with particular focus on enhancing our capabilities in key strategic end markets such as food and recycling, where we see long-term growth opportunities. This follows our announcement on June 30 regarding our plans to acquire Herbold Meckesheim, a leader in plastic recycling solutions. Today's news further exemplifies the continued execution of our profitable growth strategy. LINXIS Group's leading brands will provide a significantly greater scale in the food industry. When combined with the complementary technologies that already exist within our Coperion brand, we can meaningfully improve the breadth of our offering for highly engineered food processing solutions and increase value creation opportunities for our customers. We also believe we can drive further value through cross-selling opportunities, expansion of their aftermarket business, deployment of the Hillenbrand Operating Model, and the utilization of our scalable foundation of global services such as global supply management, engineering, finance, and IT. As we have demonstrated in our integrations of Coperion and Milacron, we have a proven track record of acquiring global businesses and successfully integrating them into drive long-term value for our shareholders. Now, I'll turn it over to Bob to cover the transaction details. Thanks, Kim, and good morning, everyone. Turning to slide six. We believe LINXIS Group brings clear financial benefits to Hillenbrand. It will join the Advanced Process Solutions segment upon closing, creating a more diversified revenue stream within the segment. For calendar year 2022, the business is expected to generate revenue of approximately EUR 300 million with EBITDA margins in the mid-teens before synergies and be accretive to our adjusted earnings per share within the first full year. Given the complementary products and solutions to our Coperion brand, and by leveraging our scalable foundation, we expect to drive both revenue and cost synergies as we deploy the Hillenbrand Operating Model. With post-run rate synergies of over $10 million, we project that this transaction will reflect an attractive high single-digit enterprise value multiple. We plan to fund the transaction with a combination of cash on hand and capacity available under our existing credit facilities. After closing, we expect pro forma net leverage to be approximately 2.8x. We are confident in our ability to delever, and we have a proven track record of doing so following acquisitions. We expect the transaction will close before the end of calendar year 2022, subject to Works Council consultations and regulatory approvals. I'll now turn the call back over to Kim to give a deeper overview of the business. Thanks, Bob. As I mentioned earlier, LINXIS Group is a leading global provider of process equipment and automation solutions for the food industry with over 1,000 employees and 10 global manufacturing sites. They specialize in design, manufacture, and service of mixing ingredient automation and portioning technologies, and are a recognized leader in the majority of the end markets and applications they serve throughout North America and Europe. The business has an attractive organic growth profile, and we are confident in our proven track record of driving operational excellence through the deployment of the Hillenbrand Operating Model. Finally, we are confident in the opportunity to improve the aftermarket mix of business to drive further profitable growth. Turning to slide eight, the combined capabilities of LINXIS Group and Coperion will strengthen our position within the large and attractive food end market, which has been a key strategic focus of ours for some time. We see long-term growth opportunity in this space with our combined solutions being well suited for applications such as baked goods, plant-based proteins, and pet foods, to name a few, where we can pursue cross-selling opportunities by leveraging each company's leading technologies, strong customer base, and global footprint. Finally, as we mentioned, we expect this transaction to accelerate our scale and build our leadership position in the food industry while meaningfully diversifying the end market served within our Advanced Process Solutions segment. This transaction is an exciting opportunity for Hillenbrand. I'm confident that it will further position us to drive long-term growth. Alongside the Herbold acquisition we announced a few weeks ago, today's news reaffirms our commitment to executing our profitable growth strategy to deliver meaningful value for our shareholders. I wanna thank our teams for all of their hard work getting us to this point, and I look forward to sharing more information with you on our Q3 earnings call in a few weeks. With that, we will now open the line to your questions on today's announcement. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Dan Moore with CJS Securities. Please proceed with your questions. Hi. Good morning. This is Stefanos Crist calling in for Dan. Good morning. Can you just speak to how the acquisition came about? Was it an auction or a negotiated transaction? Yes. As you know, this end market has been a strategic focus of ours for a long time, and we've been focused on potential M&A targets in this space for quite some time. We have looked at all of the places along the value chain in the food area, and this was a company that we have been looking at for quite some time, and we believe it's gonna be a very good fit for us. It's a combination of us and the relationships and our active involvement in the M&A market that brought this opportunity to our hands, and I think we're very excited about moving forward for this highly strategic acquisition. Great. Thank you. If I can just get one more in. Can you just talk about a little more detail on the growth, in the end markets that LINXIS is serving? This is typically in terms of the outlook for growth in this business. Typically, this is a long-term kind of GDP+ type of business, mid to high-single digits in the markets that they serve. Aftermarket is also a focus in this market. They are about 20% today. We continue to look at opportunities to expand that in the future over the next few years, which is a clear part of our Hillenbrand Operating Model, and a part of our integration plans for the businesses that we acquire and integrate. We are targeting faster growth in the aftermarket than in capital. Obviously, as we continue to study the marketplace and understand more about it, we certainly believe that would be in line with peers in this space and that we are entirely capable of achieving those anticipated growth rates. Great. Thanks so much. Thank you. Thank you. Our next questions come from the line of Matt Summerville with D.A. Davidson. Please proceed with your questions. Thanks. Kim, first, can you maybe do a little bit of a deeper dive into how products manufactured by LINXIS are complementary in nature to those manufactured by Coperion please? As you know, from previous discussions that we've had, we look along the value chain for systems that can get provided into these various markets. Basically upstream and downstream from where Coperion's systems operate today, we know the various segments that we were looking at. The targeted applications like baked goods and, you know, meat analogs, protein processing, other foods. We operate in those same types of applications, and these products are in some cases right intermingled with systems that we would sell today, and in some cases just slightly upstream or downstream from where we operate. It is highly complementary from that perspective because it allows us to offer a more fulsome solution set to customers who are looking to implement these processing lines. Does that help? Got it. We will in the future, in investment materials, we'll show those process changes as we continue to work towards closing out this transaction. In similar fashion to the way we show that in the polymer side, we'll show that on the food side as well, so you can really see where we're playing now. Understood. Maybe a couple more from me. When you talk about the EUR 10 million synergy opportunities, just, you know, round numbers at 3% of sales, when I think about all that Hillenbrand is extracting from Milacron and has extracted, that number associated with Milacron clearly materially higher is a percent of revenue. I guess I'm wondering maybe why the out of the gate synergy target maybe isn't, one, a little higher, and two, why is it gonna take five years to realize. I mean, I understand it's a European business, but still. Yeah. That 10 is an EBITDA number. I'd highlight that. I'd tell you, maybe just a couple things I'd highlight, right? One, our operating model will go into place immediately. Our valuation is really based on achieving the cost synergies. Our business case has really been on the assumption of achieving that. I'd tell you there's maybe some upside on the revenue synergies, because as Kim mentioned, you know, when you think about where LINXIS sits with our current Coperion business, I mean, our Coperion food and pharma product really fits well within the LINXIS platform and really no overlap there. I'd say, you know, the Coperion extrusion conversion step can really benefit from the LINXIS upstream profile. I'd say the Coperion markets, the position in the markets that we're in now, such as alternative protein, right, that brings new opportunities for LINXIS. I think about, you know, I think the 10 is probably got some upside if the revenues can be generated, which we think that's a possibility, but the 10's really just a cost side of things. The way we think about that is really, you know, the cost is in our control with the operating model, and so we just wanted to be, you know, grounded in our assumptions. That is typically how we pursue M&A valuations, is to make sure that we can achieve the required synergies to create an appropriate return in line with expectations based on cost synergies as the priority, as opposed to depending entirely on revenue synergies to justify M&A transactions. We think that makes us a much better steward of shareholder money by approaching it in that conservative fashion, similar to the way we approached the Coperion integration and our initial expectations of what we thought the Milacron transaction could potentially create for us as well. Yeah. The other thing to think about, I guess the last thing I'd highlight too, right, is Milacron, the size of that business that created synergies on the existing Hillenbrand business as well, right? That, think of that as almost like a global Hillenbrand synergy number, whereas now LINXIS is really a subset of a smaller profile subset of what's already been implemented within the Coperion brand in the APS segment. All of that makes sense. I appreciate it. If I can just squeeze one more in. Can you talk about? Sure. How cyclically insulated this business is, how it has performed historically during recessionary times, and whether this is kind of a long cycle backlog-oriented business like what you have with Coperion as well? Is there that similarity there too? Thank you. Yeah. It's certainly less cyclical than our existing business. In fact, historically, you know, cash flow is something I certainly focus on. Generally speaking, it's generally had free cash flow of over 90% of conversion, you know, through the last probably five or six years we've looked at. By the way, I think there's working capital opportunities there as we implement the operating model. If I think about backlog, their backlog turns roughly two and a half times a year. Hopefully that gives you some flavor of where we are. The other thing I'd, you know, want to maybe highlight, right, is just the food industry, we see that growing through recessions and LINXIS has a very strong brand recognition. In 70% of the markets or 70% of the revenues in their markets, they are the number one player with their offerings. We feel good about, you know, even in a recession, we expect this to perform well. Understood. Thank you guys. Thanks, Matt. Thank you. Our next question has come from the line of Chris Howe with Barrington Research. Please proceed with your questions. Good morning. Thanks for taking my questions, and congrats on this announcement. Thanks. Good morning, Chris. Good morning. I wanted to pivot back to some of Bob's comments about the synergies, more specifically the revenue synergies. If we think about their customer set versus your customer set, can you discuss any overlap there? Following up on that, how should we think about Hillenbrand and LINXIS on a geographic basis, and what type of opportunities there may be there from a footprint standpoint or from a customer targeting standpoint? A couple things. I'll take this and then Bob can pinch hit where I may have missed some opportunities to highlight some things. We believe. I mean, there is some limited overlap on the customer base. Obviously, we're selling different parts of systems that we believe can be brought together for a larger systems play. But there is an opportunity in certain end markets that exists in certain, you know, for instance, in the protein space or the pet food space or the snack space that might be more prevalent. We do see an opportunity for us to all benefit from an expanded customer base, expanded access to testing capabilities, on a geographic basis, expanded access to channel that is very dedicated to the food industry, and expanded operating model, approach to how to create and improve the aftermarket, that exists in these businesses up to the levels that most competitors in this space experience. Those are a few of the things that I would that I would specifically point to, around the revenue synergy opportunities. Okay, that's helpful. I was pausing there in case there were additional comments. Just diving further into that, I know we still have the rest of the calendar year to officially close the acquisition. As we look at the complementary pieces with Coperion, do you anticipate the sales teams will go to market independently, or will there be some extensive cross-training to attack the market together, as more of a system sale? No, we will. With the broader depth that you have? We will, at this point, certainly in the M&A process, not get ahead of ourselves on that. We will do a lot of planning and a lot of discussions about how we will move forward, but we will not be getting ahead of the close of that transaction for competitive reasons, et cetera. It's Okay. Okay. Okay. That would not be permitted. Okay. One last one, if I'll squeeze it in. Just going back to the aftermarket, you mentioned 20% of the LINXIS business. How should we think about this? Is there an opportunity further out as we look at aftermarket as a percentage? Yeah. of the entire APS segment to become more competitive in the aftermarket space and grow revenue in that sub-market of the segment? Yes. What we see in that industry is typically around 30%, about a third type of thing. Think in those terms. That's what we'll be working towards, and trying to understand where we have that, where are we missing that opportunity today as we get more deeply into the business. We have a pretty specific way we approach geographic analysis, customer penetration levels, literally rep by rep, customer by customer, application by application. That's a part of the operating model in terms of how we assess where the opportunity sits. We will be pursuing that. In terms of the kind of what's possible, many of the benchmarks in that space report somewhere between, you know, up to maybe a third of revenue. That's what we will be working towards over time. Then obviously the important part of that is making sure that we have, you know, appropriate margins in that section of the business to continue to be able to to create that annuity and a long-term servicing of our customers. The relationship that exists when you have an effective aftermarket program of being there and understanding the future needs of your customers, whether it's for parts, whether it's for retrofits or modernizations of their lines or other initiatives to help them transform their business as it's required over time. That's probably the most important part of aftermarket is the enduring relationship that results from being a partner for them every day as they continue to operate that system over the life of it. Does that help, Chris? Perfect. That's perfect. Thanks for taking my questions. Appreciate it. Sure. Anytime. Thank you. Thank you. Our next questions come from the line of John Franzreb with Sidoti & Company. Please proceed with your questions. Good morning, Kim and Bob. Thanks for taking the questions. Morning. It looks like LINXIS was acquisitive in 2021 with three acquisitions. Can you talk a little bit what they were targeting and maybe a little bit about the progress of those acquisitions and then integrating them? Yeah. They were obviously targeting specifically a build-out of some of their capabilities in those three areas in which they operate. They were, whether that's geographic, so they are strong, you know, Chris asked a question, I'll just kind of point back to that. They are strong in Europe and North America, and this was an opportunity for them to continue to gain leading positions in complementary technologies that are very close to the technologies that were part of their portfolio before. They have been acquisitive. I think they are, if you were to say, where are they in the integration, I think they are on the most recent ones. They are still in process on the integration. There's work to finish together there as we move forward as an organization. We'll be trying to understand, you know, exactly what was left on their integration playbook and then layer on our own integration playbook as we work through some of our strategic planning over the next months and, you know, continue to do that planning work so that we can kick this off and be running when the transaction ultimately closes. Fair to say that there was still work to do there and we'll plan to complete that work as well as some of the opportunities we saw on our own. Got it. If you kind of strip out those businesses, what does the company look like today versus, pre-pandemic kind of levels, either on a revenue basis or capacity utilization? Can you give us a sense of what they are versus what they were? Yeah. If you go back, call it five or so years, you know, their top line growth was, call it in the 3.5%-4% excluding M&A, really growing really in line with the market. We see stronger growth going forward than that. On some end markets, even closer to like maybe the mid to high-single digits on some of their end markets. We feel good about what they've done and what we can do going forward. Now, when you add on the M&A, obviously they're kinda high-single-digit, low-double-digit growth. They've, you know, they've done a good job of buying companies the last few years and improving margin through their own standardization programs and rationalizing their product portfolio to really improve margins. We've talked about the aftermarket. That's been a focus of theirs as well, as Kim's mentioned. They've seen growth there, and we continue to see opportunity there as we collectively apply the operating model that we have, which obviously we've been very successful on when you think about what we've done with Milacron. I would just. [audio distortion]. I would just add just one more thing to that, which is, you know, we've been impressed with their leadership team as we've gone through this diligence process and have had an opportunity to, you know, to really try and spend a lot of time getting exposed to them and their leadership and what they're trying to accomplish strategically in each of those businesses. Obviously we've been working on, you know, making sure that we create a compelling proposition for those folks to continue their leadership as we continue to integrate them into the Hillenbrand portfolio. We're very optimistic about the insights that they'll be able to provide into our business and what that can do to bring that talent into our organization to help us continue to grow in this space. Okay. Just one last question. It looks like they may have some facilities in Eastern Europe. Have they been impacted at all by what's going on in Ukraine, or are they insulated from that? Yeah. We have not seen an impact to their business. As you can imagine, we've continued to track their performance, not just from a projected standpoint, but from an actual standpoint, and we have not seen them to be impacted in their business away from the expectations that they've given us for the long term. Okay. Thanks a lot, Kim. Thanks for taking my questions. Sure. Thanks. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next questions come from the line of Matt Summerville with D.A. Davidson. Please proceed with your questions. Thanks. Just a couple of quick follow-ups. First, maybe Kim, if you can sort of delve into a little bit kinda answering the why now with respect to Batesville. Sure. We, you know, go through this process on a regular basis. Our management team, along with the Board of directors, we routinely undertake a comprehensive and formal portfolio review to consider options. We recently completed such an assessment, and we have decided that now is the time. Why now? I think that the market has continued to stabilize post-COVID. I think that Batesville has performed very well. They've shown, you know, a great resilience and frankly, great flexibility to address the demands of the marketplace over the last couple of years. They are in a good position from a financial performance standpoint. They have a very strong management team. They have, you know, leading products from a digital standpoint with the recent announcement of Batesville Online, which is a great product that they've brought out to the marketplace, which I think will continue to be, you know, an opportunity that could be taken forward. They have tremendously strong relationships with their customers. We think they're in a very strong position, both from a performance standpoint, but also from a strategic standpoint in terms of some of the opportunities they see, and in a position to talk with prospective companies about what they might be able to do under a potentially different structure. We feel that now based on their performance and really the progression that we have made on the industrial side of the business in terms of the steady and predictable performance of the industrial side of the business, the growth that we've seen, you know, the work that we've done there to continue to build out the industrial. We're now in a position, we believe, to be able to really be more focused on being an industrial company entirely, and that it might be the right time for Batesville to evaluate other opportunities to be more of a pure play on their side as well. That might be in the end the best solution to unlock value for everyone in that scenario. That said, you know, this is an evaluation process. We do not have a specific timeline of what to expect. We will come back as that process completes. We will come back and share more information. This is, again, an evaluation process, and much to learn and see over the course of the next, you know, weeks and months ahead. Maybe just one follow-up on that, Kim. You know, just as sort of a gut check, I mean, for that business, if there were to be a potential suitor, is it fair to conclude that that would-be suitor would likely be a financial buyer versus a strategic buyer? I couldn't speculate at this time. Just lastly, with respect to LINXIS, can you just review how that transaction is going to be funded between, you know, cash on hand and revolver usage to satisfy the EUR 572 million EV? Yeah. I mean, it's gonna be a mix of both cash on hand and our revolver and probably using debt both within existing capacity, by the way, but split between Europe and the U.S. It'll be in both euros and dollars. Can you just remind how the revolver is currently priced? Yeah. Obviously it's variable, but right now it's just slightly north of 3% is where our rate is. Got it. Thank you, guys. Thanks, Matt. Thank you. There are no further questions at this time. I would like to turn the call back over to Kim Ryan for any closing comments. All right. Thank you again, everyone, for joining us today. We look forward to speaking with you again in a few weeks when we report our fiscal Q3 results. Have a great day, and thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.