Hillenbrand, Inc. (HI): BCG Matrix [Dec-2025 Updated]

You're looking at Hillenbrand, Inc.'s strategic pivot to a pure-play industrial focus, and the BCG Matrix clearly shows where the actoin is right now. We've got high-growth Stars like the FHN platform, fueled by that $730 million Schenck Process FPM buy, sitting alongside reliable Cash Cows generating $388 million in Adjusted EBITDA for fiscal year 2025. Still, the whole picture is complicated by the $3.8 billion pending acquisition by Lone Star Funds, making even the Question Marks-like the remaining MTS segment-a fascinating study in near-term value. Dive in to see exactly how these pieces map out for Hillenbrand, Inc.'s future.

Background of Hillenbrand, Inc. (HI)

You're looking at Hillenbrand, Inc. (HI) right at a major inflection point, so let's lay out what the company is before we map its portfolio. Hillenbrand, Inc. is a global industrial company that makes highly-engineered, mission-critical processing equipment and solutions for customers worldwide. Its Purpose is to Shape What Matters For Tomorrow™, focusing on excellence and innovation in its field.

The company organizes its operations into two primary segments: Advanced Process Solutions (APS) and Molding Technology Solutions (MTS). These segments serve attractive end markets, chiefly durable plastics, food, and recycling, aligning with what the company sees as secular growth trends.

Hillenbrand, Inc. has been aggressively reshaping its portfolio to become what it calls a pure-play global industrial company, focusing on those core areas. This transformation involved significant divestitures in 2025. For instance, the company completed the sale of a majority stake in its Milacron injection molding and extrusion (MIME) business to an affiliate of Bain Capital on March 31, 2025.

Furthermore, in July 2025, Hillenbrand, Inc. finalized the divestiture of its minority stake in TerraSource Holdings to Astec Industries, netting approximately $115 million from that transaction, which it used to pay down debt. These moves definitely reflect a strategy to shed segments tangential to its new focus.

Looking at the full fiscal year 2025 results, which ended September 30, 2025, the reported net revenue was $2.67 billion, marking a 16% decrease year-over-year, largely due to the MIME divestiture and lower volumes. On a pro forma basis, which removes the divested business for comparison, net revenue was down 9%. Adjusted Earnings Per Share (EPS) for the year came in at $2.49, a 25% decline from the prior year.

Segment performance in fiscal 2025 showed APS net revenue decreasing by 10%, while MTS net revenue dropped 32%, though it was only down 3% on a pro forma basis. Despite the revenue decline, GAAP net income rose to $0.61 per share, up significantly from a loss of $(3.03) per share the year before, thanks in part to lower non-cash impairment charges and a gain on the TerraSource sale.

As of September 30, 2025, the company reported net debt of $1.36 billion, with a net debt to pro forma adjusted EBITDA ratio of 3.7x, and maintained liquidity of approximately $373 million. The company also returned about $63 million to shareholders via quarterly dividends during the year.

The biggest news, however, is the pending change in ownership. In October 2025, Hillenbrand, Inc. agreed to be acquired by an affiliate of Lone Star Funds in an all-cash deal valued at roughly $3.8 billion. Under the terms, shareholders are set to receive $32.00 per share, and the transaction is expected to close by the end of the first quarter of calendar year 2026.

Hillenbrand, Inc. (HI) - BCG Matrix: Stars

The Advanced Process Solutions (APS) segment, particularly the Food, Health, and Nutrition (FHN) platform, represents Hillenbrand, Inc.'s Star category, characterized by leadership in growing end markets requiring significant investment to maintain market share.

The FHN platform was significantly bolstered by the acquisition of the Schenck Process Food and Performance Materials (FPM) business, which Hillenbrand, Inc. completed for an enterprise value of approximately $730 million. This acquisition was explicitly aimed at strengthening leadership across attractive, growing end markets, including food. The acquired FPM business was expected to generate calendar year 2023 revenue of approximately $540 million and approximately $68 million of EBITDA. By the third quarter of fiscal year 2025, Hillenbrand, Inc. announced achieving $30 million in run-rate cost synergies associated with the Linxis and FPM acquisitions earlier than planned, signaling progress in integrating these growth assets.

The APS segment, which houses the FHN platform, showed strong top-line movement in fiscal year 2024, with Q4 revenue increasing by 15% compared to the prior year, though its organic performance for that quarter was down 2%. For the full fiscal year 2024, Hillenbrand, Inc.'s total revenue reached $3.18 billion, an increase of 13%, largely attributed to acquisitions like FPM. However, the fiscal 2025 outlook, as of November 2024, projected total company revenue to be down mid-single digits at the midpoint, primarily driven by the APS segment. The third quarter of fiscal year 2025 saw pro forma APS net revenue decrease by 2% year over year.

Core Coperion compounding and extrusion capabilities are central to durable plastics and advanced materials, which are key end markets for Hillenbrand, Inc. The company leverages its technical expertise to deliver solutions for these sectors.

• Coperion features the ZSK Mc¹⁸ twin screw extruder for challenges like recycling plastics.
• The company's focus on sustainability aligns with the growing global middle class demand for lightweight, durable plastics.

Hillenbrand, Inc.'s technology focus is strongly positioned within the circular plastics economy, a market exhibiting high growth. The global market for Plastic Recycling was valued at $48.9 Billion in 2022 and is anticipated to reach $86.7 Billion by 2030. Hillenbrand, Inc. showcases its commitment to this area through integrated solutions and equipment designed to support the circular economy.

• Hillenbrand, Inc. offers a full suite of mission-critical recycling technologies.
• The company's recycling innovation center allows for testing of entire processes.
• Coperion's technologies enable the transformation of plastic waste into high-quality filaments for 3D printing.

Hillenbrand, Inc. (HI) - BCG Matrix: Cash Cows

You're looking at the core engine of Hillenbrand, Inc., the segment that should be funding the rest of the portfolio moves. These are the established businesses with deep roots, meaning they don't need heavy investment to keep the lights on, but they still command significant market presence.

The Advanced Process Solutions (APS) segment, particularly its aftermarket components, fits this profile. This recurring revenue stream is what you want in a Cash Cow because it provides stable, high-margin cash flow regardless of the lumpy cycles of new capital equipment sales. For fiscal year 2025, the segment delivered $104 million in Adjusted EBITDA on $557 million in Net Revenue, resulting in a strong 18.6% Adjusted EBITDA margin.

The overall company performance reflects the maturity of these units. Hillenbrand, Inc. generated $388 million in Adjusted EBITDA in fiscal year 2025, even while navigating revenue headwinds from lower volumes and tariffs. This total figure is the pool from which the Cash Cow segment contributes a significant, reliable portion.

The strategy here is to 'milk' the gains passively while investing just enough to maintain efficiency, not to chase growth. The numbers show the company is extracting cash, as evidenced by the $63 million returned to shareholders in the form of quarterly dividends over the full fiscal year 2025. Compare that to the capital expenditures for the year, which were only approximately $38 million. That difference is the cash available for other uses, like servicing debt or funding the Question Marks.

Here's a quick look at the cash generation versus investment for the entire enterprise in fiscal year 2025:

The APS segment's established equipment lines, which form the basis of this Cash Cow status, are market leaders, even if the overall market growth is low. This market leadership translates directly into the margins you see. The focus for these units is purely on operational excellence to maximize the cash conversion.

The key characteristics supporting the Cash Cow designation for the APS aftermarket business include:

• High market share in mature equipment lines.
• Adjusted EBITDA margin of 18.6% for the segment in FY 2025.
• Segment Adjusted EBITDA contribution of $104 million.
• Low relative investment needed for maintenance.
• The dividend payout of approximately $63 million in FY 2025 is greater than the total capital expenditures of approximately $38 million.

The total cash flow from operations for Hillenbrand, Inc. was $56 million for the year, which, while positive, was significantly lower than the prior year, showing the pressure from lower volumes across the board. Still, the APS segment's margin profile helps stabilize that overall cash generation. Finance: draft a sensitivity analysis on a 50 basis point drop in APS margin by next Tuesday.

Hillenbrand, Inc. (HI) - BCG Matrix: Dogs

The 'Dogs' quadrant in the Boston Consulting Group Matrix represents business units or assets characterized by low market growth and low relative market share. For Hillenbrand, Inc. (HI), the primary manifestation of this category in 2025 was the strategic divestiture of legacy and non-core operations to streamline the portfolio toward higher-growth, higher-return segments. These units, often cyclical or lower-margin, were shed to improve the overall financial profile and focus capital.

The most significant action aligning with the 'Dogs' strategy was the divestiture of the Milacron Injection Molding and Extrusion (MIME) business. This unit was explicitly identified as cyclical and lower-margin, fitting the profile of an asset to be minimized. The divestiture was completed in early 2025, specifically on March 31, 2025. This business, part of the Molding Technology Solutions (MTS) segment, contributed to a 58% year-over-year revenue decline within that segment. The sale generated approximately $265 million in net proceeds for Hillenbrand, Inc.. The impact of shedding this operation was immediate; reported net revenue for the third quarter of fiscal 2025 decreased by 24% compared to the prior year, or 10% on a pro forma basis, with adjusted net income falling by 40% (a decrease of $0.34 per share).

The portfolio cleanup continued with the exit from the TerraSource Holdings investment. Hillenbrand, Inc. completed the divestiture of its minority stake in TerraSource on July 1, 2025. The total purchase price for the transaction was approximately $245 million. Hillenbrand, Inc. received net proceeds of approximately $115 million from this sale. These proceeds, combined with the MIME sale funds, were immediately deployed to strengthen the balance sheet. The company used these funds to reduce debt by over $300 million during fiscal 2025. This debt reduction favorably impacted the net leverage ratio by approximately 0.2x, bringing the implied net leverage to 3.7x following the TerraSource closing.

These divestitures represent the shedding of legacy, non-core assets to fund the pivot toward a pure-play industrial focus, prioritizing segments like Food, Health, and Nutrition (FHN). The units sold were those that either operated in low-growth markets or carried lower margins, making them prime candidates for divestiture under the 'Dogs' strategy.

Here is a summary of the key divestiture transactions completed in 2025:

The financial impact of these moves on the overall portfolio structure is clear when looking at the balance sheet actions taken:

• Debt reduction from combined proceeds: over $300 million in fiscal 2025.
• Net leverage ratio improvement from TerraSource sale: approximately 0.2x favorable impact.
• Implied net leverage post-TerraSource sale: 3.7x.
• MIME divestiture impact on Q3 2025 reported revenue: 24% decrease year-over-year.
• MIME divestiture impact on Q3 2025 adjusted EPS: 40% decrease.

Hillenbrand, Inc. (HI) - BCG Matrix: Question Marks

You're looking at the pieces of Hillenbrand, Inc. (HI) that are currently in high-growth markets but haven't yet secured a dominant market share. These are the units consuming cash with the potential to become Stars, but they need focused capital deployment to get there.

The remaining Molding Technology Solutions (MTS) segment, after the divestiture of the Milacron injection molding and extrusion (MIME) business, shows a degree of resilience. For the full fiscal year 2025, MTS net revenue decreased only 3% on a pro forma basis, which suggests stability in its core, but not the high growth characteristic of a Star.

Within the Advanced Process Solutions (APS) segment, the focus on emerging, high-growth recycling technologies represents the classic Question Mark. While the entire APS segment saw its full-year FY 2025 net revenue decrease by 10%, specific, newer product lines targeting the circular plastics economy are the areas demanding heavy investment to quickly capture market share. To be fair, Q4 2025 pro forma net revenue for the core business did increase 3%, which could be an early signal from these growth-oriented areas, but the overall segment performance still requires significant cash infusion to accelerate adoption.

These segments require significant investment to convert market potential into dominant share. The strategy here is clear: either invest heavily to gain share quickly, or risk these units becoming Dogs as the market matures or investment stalls. The company's recent strategic moves, including the divestiture of MIME in early fiscal year 2025, were designed to streamline the portfolio to better support these higher-potential areas.

Here's a quick look at the financial context surrounding these portfolio dynamics as of the latest reported figures:

The entire Hillenbrand, Inc. entity is arguably a Question Mark given the pending definitive agreement to be acquired by an affiliate of Lone Star Funds. This all-cash transaction values the company at approximately $3.8 billion, with shareholders set to receive $32.00 per share. This pending change in ownership status, expected to close by the end of Q1 2026, inherently places all business units-Stars, Cash Cows, and Question Marks-into a state of strategic uncertainty until the transition is complete. The investment thesis for these Question Marks now rests on the post-acquisition strategy Lone Star Funds intends to deploy.

You should track these specific areas:

• MTS pro forma revenue growth rate.
• New recycling technology order intake within APS.
• Progress on achieving synergy targets from prior acquisitions.
• The final closing conditions for the Lone Star Funds transaction.

Finance: draft the pro forma cash flow impact analysis for the remaining MTS segment by Friday.