Breaking Down Hillenbrand, Inc. (HI) Financial Health: Key Insights for Investors

You're looking at Hillenbrand, Inc. (HI) and trying to figure out what to do with a stock that's in the middle of a major transition, and honestly, the latest numbers give us a lot to unpack. The headline is that the company is being acquired by Lone Star Funds for an enterprise value of approximately $3.8 billion, or $32.00 per share, which sets a clear ceiling on your near-term upside, but you still need to understand the underlying business health. For the full fiscal year 2025, Hillenbrand reported net revenue of $2.67 billion, a 16% drop year-over-year, and adjusted EBITDA fell 24% to $388 million, mostly due to divestitures like the Milacron injection molding and extrusion business and lower volume in their core segments. Still, the adjusted earnings per share (EPS) of $2.49 for the year shows the portfolio simplification is working to focus on higher-margin areas, even as they navigate a challenging macro environment and manage a net debt of $1.36 billion. This isn't a story about organic growth right now; it's a story about a strategic exit and a clean-up, so let's break down what those numbers mean for the deal closing and what you should do with your position before the first quarter of 2026.

Revenue Analysis

You're looking at Hillenbrand, Inc. (HI) and seeing a headline revenue drop, which can be jarring. The direct takeaway is this: Hillenbrand's full fiscal year 2025 net revenue was $2.67 billion, a decrease of 16% year-over-year, but this decline is largely a function of a strategic portfolio shift, not just a market slowdown.

The company is fundamentally an industrial equipment provider, generating revenue through two core segments: Advanced Process Solutions (APS) and Molding Technology Solutions (MTS). The primary revenue streams are sales of highly-engineered processing equipment and the stable, high-margin aftermarket parts and services (MRO) that support their large installed base. Honestly, the aftermarket business is the real backbone here.

Here's the quick math on the 2025 segment performance, which is key to understanding the full picture:

• Advanced Process Solutions (APS) net revenue decreased 10% for the full year.
• Molding Technology Solutions (MTS) net revenue decreased 32%, or 3% on a pro forma basis.

The difference between the reported 32% MTS drop and the 3% pro forma drop is the most important nuance for investors. That 32% figure is heavily skewed by the divestiture of the Milacron injection molding and extrusion (MIME) business, which was a deliberate move to transform Hillenbrand into a pure-play global industrial company. What this estimate hides is that the remaining core MTS business held up much better.

The aftermarket business is a critical, stabilizing factor. For the Advanced Process Solutions segment, aftermarket parts and services represented approximately 35% of its total net revenue in fiscal 2025. For Molding Technology Solutions, that figure was approximately 37%. This recurring revenue stream provides a buffer against the cyclical nature of capital equipment sales, which saw a decline in volume due to prevailing global economic uncertainties and lower capital equipment sales volume.

To be fair, the overall consolidated net revenue decline of 16% from the prior year's $3.18 billion still reflects a challenging macroeconomic backdrop, but the pro forma decrease of 9% is a more accurate measure of the core industrial business's organic performance. The company's focus is now clearly on leveraging its global footprint-where APS generates approximately 45% of its net revenue from the Americas, 26% from Asia, and 29% from EMEA-to support profitable aftermarket expansion. This global diversification defintely helps mitigate regional risks. For a deeper dive into the company's valuation, check out our full report on Breaking Down Hillenbrand, Inc. (HI) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if Hillenbrand, Inc. (HI) is making money efficiently, and the short answer is yes, but the quality of that profit is changing. The company's full fiscal year 2025 results show a solid gross margin, but operating and net margins tell a story of strategic transformation costs and macroeconomic headwinds.

For the fiscal year ending September 30, 2025, Hillenbrand, Inc. reported net revenue of approximately $2.67 billion. This is a significant figure, but the real insight comes from how much of that revenue they keep at each stage of the income statement.

Gross, Operating, and Net Margins: The 2025 Snapshot

Hillenbrand, Inc.'s gross profit margin remains a powerful indicator of its core business health. This margin, which is revenue minus the cost of goods sold, improved by 50 basis points (bps) to 33.7% for the full fiscal year 2025. That's a defintely strong starting point, reflecting effective pricing and productivity improvements offsetting cost inflation.

However, the picture shifts as you move down the income statement. Here's the quick math on the key full-year ratios:

• Gross Profit Margin: 33.7%
• Operating Profit Margin (GAAP): Approximately 9.1% (Calculated from $243.0 million in Operating Income on $2.67 billion in Revenue).
• Net Profit Margin (GAAP): Approximately 1.61% (Calculated from $43.1 million in Net Income on $2.67 billion in Revenue).

The stark difference between the gross margin and the GAAP net margin (33.7% vs. 1.61%) highlights the impact of selling, general, and administrative expenses (SG&A), interest, and non-cash charges like amortization and divestiture-related losses. For a clearer view of core operations, the adjusted net income of $176 million gives an Adjusted Net Profit Margin of about 6.58%, which is a more realistic measure of operational profitability.

Profitability Trends and Operational Efficiency

The trend in profitability shows a squeeze on the operating side. Hillenbrand, Inc.'s operating margin decreased by a notable 5.5 percentage points over the last five years. This suggests that while the cost of making the product (Cost of Goods Sold) is well-managed, the costs associated with running the entire business-like marketing, R&D, and administrative overhead-have been increasing faster than revenue growth, leading to less operating leverage.

In the fourth quarter of fiscal 2025 alone, the operating margin dropped to 12.3%, down 2.1 percentage points from the prior year's quarter. This decline is a clear signal of unfavorable operating leverage due to lower volumes and product mix, even with productivity gains and favorable pricing. This is a critical point for investors to monitor, especially as the company transitions under the pending acquisition by Lone Star Funds. You can read more about the company's focus on its core business here: Mission Statement, Vision, & Core Values of Hillenbrand, Inc. (HI).

Industry Comparison: A Relative Strength

Despite the recent margin compression, Hillenbrand, Inc. has historically been a strong performer in the industrial sector. The company's five-year average operating margin of 12.4% has consistently placed it among the more profitable businesses in the industrials sector. This favorable starting point, driven by the strong gross margin, provides a cushion against cyclical downturns.

To put the 2025 performance in context, here is a comparison of key profitability metrics:

What this estimate hides is the one-time impact of the Milacron injection molding and extrusion (MIME) business divestiture, which has complicated the GAAP numbers, making the adjusted figures your best bet for assessing underlying operational health. The key action item for you is to watch for stabilization in the operating margin post-acquisition, as the core gross margin is still very healthy.

Debt vs. Equity Structure

You're looking at Hillenbrand, Inc. (HI) and wondering how they finance their operations-it's a crucial question because a company's capital structure tells you a lot about its risk profile and future flexibility. As a seasoned analyst, I can tell you Hillenbrand's approach in fiscal year 2025 was a deliberate, active effort to simplify its portfolio and pay down debt, moving toward a more conservative footing.

The core of Hillenbrand's financing mix leans heavily on long-term debt, a common structure for industrial companies that need capital for large-scale acquisitions and equipment. As of the end of the fiscal year on September 30, 2025, the company reported a net debt position of $1.36 billion. This figure reflects the total debt minus their cash on hand, which was about $165 million.

Looking closer at the debt components from the third quarter of 2025, the total debt (including capital leases) was approximately $1.755 billion, with the vast majority being long-term obligations. Short-term debt was only about $13 million, which is a tiny fraction of the long-term debt of roughly $1.742 billion. This structure means the company has few immediate principal repayment pressures, which is defintely a good thing for near-term liquidity.

The Debt-to-Equity Picture

The Debt-to-Equity (D/E) ratio is the cleanest measure of financial leverage-it tells you how much debt the company is using to finance its assets relative to the value of shareholders' equity. For Hillenbrand, Inc., the D/E ratio as of June 2025 stood at 1.33. Here's the quick math: Total Debt ($1.755 billion) divided by Total Stockholders' Equity (approximately $1.317 billion) equals 1.33. A D/E of 1.33 is notably higher than the average for the Industrials sector, suggesting a more aggressive use of debt to fund growth compared to many peers. This higher leverage increases the potential for volatile earnings due to interest expense, but it also amplifies returns when the company performs well.

The company's strategy in 2025 was clearly focused on reducing this leverage. They used the net proceeds from the divestiture of their Milacron business (about $265 million) and the sale of a minority interest in TerraSource (about $115 million) to reduce total debt by over $300 million during the year. That's a clear, actionable commitment to de-leveraging.

Recent Debt Optimization and Refinancing

Hillenbrand, Inc. didn't just pay down debt; they actively optimized their capital structure in 2025 for better financial flexibility. In July 2025, they redeemed in full their $375 million, 4.500% notes that were due in September 2026. Simultaneously, they amended and extended their syndicated credit agreement, which is a smart move to lock in terms and extend maturities.

• Redeemed $375 million in notes, reducing future interest obligations.
• Secured a new $700 million revolving credit facility for liquidity.
• Added a $175 million term loan and up to €240 million Euro-denominated delayed-draw term loan.

This refinancing and debt reduction activity shows a company balancing growth financing (new term loans) with risk management (paying down higher-rate notes and using divestiture proceeds). Their strategy is to use both debt and equity funding-debt for major strategic moves like acquisitions and divestiture proceeds for deleveraging-to create a more optimized capital structure for the long term. You can find a deeper dive into all the financials in Breaking Down Hillenbrand, Inc. (HI) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Hillenbrand, Inc. (HI) has the cash on hand to cover its near-term bills, especially with the pending acquisition by Lone Star Funds announced in October 2025. The short answer is yes, the company's liquidity position is adequate, but it relies heavily on its inventory and receivables.

The core of any liquidity assessment is the ability to cover current liabilities (bills due within a year) with current assets (cash or assets convertible to cash within a year). Based on the most recent available figures for the period ending June 30, 2025, Hillenbrand, Inc. (HI)'s liquidity ratios show a manageable, but not overly conservative, position.

• Current Ratio: The ratio is 1.25. This means Hillenbrand, Inc. (HI) has $1.25 in current assets for every dollar of current liabilities. This is generally considered acceptable for an industrial company, but it's not a huge cushion.
• Quick Ratio (Acid-Test): The ratio is 0.72. This is the more stringent test, removing inventory and prepaid expenses. A reading below 1.0 is common in manufacturing, but it confirms that without selling its inventory, the company cannot cover all its short-term debt immediately.

Here's the quick math on the near-term position (in millions USD, as of June 30, 2025):

Working Capital and Cash Flow Trends

Working capital-the difference between current assets and current liabilities-was a positive $256.2 million as of June 30, 2025. However, the trend in working capital has been a headwind for cash generation. For the full fiscal year 2025 (ending September 30, 2025), the company's cash flow from operations (CFO) was only $56 million. This was a significant decrease from the prior year, primarily due to 'unfavorable timing of working capital requirements related to capital equipment sales'. Essentially, they had to fund more inventory and receivables before getting paid by customers, which sucks cash out of the business.

On the cash flow statement, a few things stand out:

• Operating Cash Flow (CFO): $56 million for FY 2025. This is low for a company of this size, signaling pressure from the timing of capital equipment sales.
• Investing Cash Flow: Capital expenditures (CapEx) were approximately $38 million in FY 2025. This leaves a positive, albeit small, Free Cash Flow (FCF) of about $18 million ($56M CFO - $38M CapEx). That's not a lot of free cash.
• Financing Cash Flow: The company prioritized debt reduction, using proceeds from divestitures to pay down over $300 million of debt during the fiscal year. Still, they returned approximately $63 million to shareholders via dividends. Debt reduction is defintely a positive move for long-term solvency.

Potential Liquidity Concerns and Strengths

The primary strength is the cash position and access to capital. Hillenbrand, Inc. (HI) reported total liquidity of approximately $373 million as of September 30, 2025, which includes $165 million in cash on hand plus available credit under its revolving facility. This is a solid buffer. The net debt to pro forma adjusted EBITDA ratio was 3.7x at fiscal year-end, which is a manageable leverage level for an industrial firm, especially one undergoing a strategic acquisition.

The main concern isn't a crisis, but rather the quality of the current assets. The quick ratio of 0.72 shows a dependency on liquidating inventory, which can be slow in a capital equipment business. You need to keep an eye on inventory turnover in the coming quarters. Also, the low Free Cash Flow of $18 million means there isn't much organic cash left over after maintenance CapEx to fund growth or further debt paydown, outside of the divestiture proceeds. For a deeper look at the market's view of this, check out Exploring Hillenbrand, Inc. (HI) Investor Profile: Who's Buying and Why?

Valuation Analysis

You are likely wondering if Hillenbrand, Inc. (HI) is a buy, a hold, or a sell right now, especially after a volatile 2025. The direct takeaway is that the market sees Hillenbrand as fairly valued, leaning toward a Hold consensus, but with a clear path to being slightly undervalued based on forward-looking metrics. The stock is currently trading around $31.64 as of November 2025, just below the average analyst target.

Is Hillenbrand Overvalued or Undervalued?

When we break down the core valuation ratios, the picture is mixed, which is why analysts are sitting on the fence. The trailing twelve months (TTM) Price-to-Earnings (P/E) ratio is a negative -126.6, which looks terrible on paper, but this is a technical signal of the company having negative earnings in the last year, largely due to restructuring or one-off charges. Here's the quick math: you can't value a company on losses.

But, if you look ahead, the Forward P/E is a much more palatable 13.60. That's a reasonable multiple for the Industrials sector, suggesting a strong expected earnings rebound in 2026. Plus, the Price-to-Book (P/B) ratio sits at 1.69, which is not overly expensive, and the Enterprise Value-to-EBITDA (EV/EBITDA) is 9.66x (TTM). This EV/EBITDA multiple is right in line with or slightly below the industry average, which supports the current 'Hold' rating.

• Forward P/E of 13.60 suggests a projected earnings recovery.
• EV/EBITDA of 9.66x shows the total business value is not inflated.
• P/B ratio of 1.69 is solid for an asset-heavy industrial firm.

Stock Momentum and Analyst Outlook

The stock price trend over the last 12 months has been a classic rollercoaster. Hillenbrand, Inc. hit a 52-week low of $18.36 and a 52-week high of $35.59. The good news is that after a tough year, the stock is up a strong 21.28% in the last three months, showing momentum is building as investors react to better-than-expected earnings reports. The stock is defintely responding to the portfolio refocus.

The analyst community's consensus is a firm Hold, with an average 12-month price target of $32.00. This target is only a tiny bit higher than the current price, implying limited near-term upside, but it also signals that the downside risk is contained. Five research firms currently cover the stock, and all have a 'Hold' or 'Neutral' recommendation.

Dividend Sustainability Check

For income investors, Hillenbrand, Inc. offers an annual dividend of $0.90 per share, resulting in a yield of approximately 2.85%. This yield is actually quite attractive, sitting well above the US Industrials sector average of 1.7%. The company has also increased its dividend for 18 consecutive years, which is a sign of management's commitment to returning capital. That's a great track record.

Now, about the payout ratio: the TTM ratio is a negative -360.00% because of the reported net loss. What this estimate hides is the cash flow picture. The dividend is much more sustainable when measured against cash flow, with a cash flow-based payout ratio estimated at a much healthier 15.80%. This means the dividend is well-covered by the company's operating cash generation, despite the temporary dip in GAAP earnings. To be fair, understanding the company's strategic direction is key to trusting this forward view; you can review the Mission Statement, Vision, & Core Values of Hillenbrand, Inc. (HI) for more context.

Risk Factors

You're looking at Hillenbrand, Inc. (HI) and trying to map out the near-term risks, which is defintely the right move, especially with a major acquisition pending. The direct takeaway is that while management is actively shedding non-core assets and cutting costs-driving a GAAP net income of $43.1 million in fiscal year 2025-the company still faces significant leverage and market cyclicality, plus the immediate uncertainty of the Lone Star deal. You need to focus on the financial structure and external market pressures.

Hillenbrand operates in highly competitive industrial sectors, meaning intense price competition is a constant threat. But the biggest internal risk right now is financial leverage. As of September 30, 2025, the company's net debt stood at approximately $1.36 billion, which pushes the Net Debt to Pro Forma Adjusted EBITDA ratio to 3.7x. This is above their stated long-term target range, limiting their financial flexibility for new strategic moves or responding to a sudden downturn. It's a heavy debt load, plain and simple. For a deeper dive on the shareholder base during this period, you might find Exploring Hillenbrand, Inc. (HI) Investor Profile: Who's Buying and Why? useful.

Near-Term Financial and Strategic Risks

The pending all-cash acquisition by Lone Star Funds, valued at approximately $3.8 billion, introduces a unique set of risks. While the deal offers shareholders $32.00 per share, any delay or failure to close due to regulatory hurdles or litigation could severely impact the stock price and business operations. This uncertainty alone can disrupt employee retention, customer relationships, and supply chain stability.

Beyond the acquisition, the company's exposure to cyclical industries is clear in the fiscal 2025 results. Full-year net revenue dropped to $2.67 billion, a 16% decrease from the prior year, largely driven by lower capital equipment sales volume in the Advanced Process Solutions segment. This decline is a classic sign of economic sensitivity.

• Market Volatility: The stock's Beta of 1.72 signals it is significantly more volatile than the broader market.
• Supply Chain/Input Costs: Ongoing supply chain disruptions and raw material price fluctuations continue to pressure the gross profit margin, which, while improving, remains a focus area.
• International Exposure: With the Advanced Process Solutions segment generating 55% of its net revenue outside the Americas in fiscal 2025, Hillenbrand is exposed to significant currency exchange rate fluctuations and global political instability.

Mitigation and Deleveraging Efforts

To be fair, management isn't just sitting still. They have been aggressively executing a portfolio refinement strategy to focus on higher-margin businesses. This included the divestiture of the Milacron injection molding and extrusion (MIME) business, which was a major factor in the revenue decline but also a strategic move to simplify operations.

The company has also prioritized debt reduction, using proceeds from divestitures-like the sale of a minority interest in TerraSource-to pay down over $300 million of debt during fiscal 2025. Plus, they achieved $30 million in run-rate cost synergies earlier than planned from the Linxis and FPM acquisitions. That's a good sign of operational discipline.

Here's a quick snapshot of the financial position and key risks:

Your action item is to track the Lone Star acquisition's regulatory progress and the company's ability to maintain its cost discipline against a backdrop of declining capital equipment demand.

Growth Opportunities

You're looking for a clear path forward with Hillenbrand, Inc. (HI), and the direct takeaway is that the most immediate, concrete value proposition is the pending acquisition. On October 15, 2025, Hillenbrand announced a definitive agreement to be acquired by Lone Star Funds for an all-cash transaction valued at $32.00 per share, which is an enterprise value of approximately $3.8 billion. This move essentially crystallizes your near-term return as a shareholder, which is a significant, decisive action.

The company's strategic transformation into a pure-play global industrial company, focusing on its Advanced Process Solutions (APS) and Molding Technology Solutions (MTS) segments, is what attracted this external interest. The deal is expected to close by the end of the first quarter of 2026, so you need to factor this $32.00 price into your current valuation model.

Strategic Transformation and 2025 Financials

The company's growth prospects, even before the acquisition, were anchored in a deliberate strategy of portfolio simplification and debt reduction. Hillenbrand completed the divestiture of its Milacron injection molding and extrusion (MIME) business, which generated approximately $265 million in net proceeds. Plus, they used those and other proceeds to reduce total debt by over $300 million during the fiscal year. Here's the quick math on the full fiscal year 2025 results, which ended September 30, 2025, showing the business's underlying health:

• Full Year 2025 Net Revenue: $2.67 billion.
• Full Year 2025 Adjusted EPS: $2.49.
• Full Year 2025 Net Income: $43.1 million (a significant turnaround from a loss of $(211.0) million in 2024).

What this estimate hides is the complexity of the revenue decline-the $2.67 billion in net revenue was a 16% decrease year-over-year, largely due to the MIME divestiture, but the net income recovery shows effective cost management and strategic focus.

Key Growth Drivers and Competitive Edge

The real engine for future organic growth, regardless of ownership, is Hillenbrand's massive installed base and its aftermarket business, which provides a stable, high-margin revenue stream. This is a huge competitive advantage (a 'moat,' if you will) that makes the company attractive.

In fiscal 2025, the aftermarket parts and service business represented approximately 35% of the Advanced Process Solutions segment's total net revenue and about 37% of the Molding Technology Solutions segment's net revenue. That's defintely a strong buffer against cyclical dips in new equipment sales. Other key growth drivers include:

• Product Innovation: Leveraging the 2023 acquisition of FPM to expand product offerings in high-demand sectors like plastics, food, and pharmaceuticals.
• Cross-Selling Initiatives: Actively driving commercial synergies, with approximately $40 million in cross-selling revenue achieved year-to-date as of August 2025.
• Global Footprint: Utilizing an 'in-region, for-region' manufacturing and service model to navigate global economic uncertainties and tariffs.

Hillenbrand's brands, like Coperion and Mold-Masters, are synonymous with quality and reliability, giving them strong brand equity that secures and retains customers. The company's backlog stood at $1.57 billion at the end of the fiscal year, which provides a solid revenue floor for the near term.

For a deeper dive into the company's foundational philosophy, you can review their Mission Statement, Vision, & Core Values of Hillenbrand, Inc. (HI).

Near-Term Action

Given the pending acquisition, the company has withdrawn its financial guidance for fiscal year 2026. The immediate action for you is to assess the risk of the deal not closing versus the guaranteed $32.00 per share cash payout. If you believe the deal will close, the upside is capped at the offer price; if you see a high likelihood of the deal failing, you need to re-evaluate the standalone company's future based on an expected earnings per share (EPS) growth of about 15.02% for the next year, a figure analysts had projected before the acquisition news.