Hillenbrand announces first-quarter fiscal 2010 results

Hillenbrand, Inc. ( HI)

• Net revenue decreased 3% year-over-year, due primarily to a lower number of casketed deaths in the period.
• Earnings per share and net income increased more than 11% during the same period.
• Gross profit margin percentage improved 270 basis points over the prior year.
• Cash flow from operations increased 56.2% to $36.4 million.

Hillenbrand reported net revenue of $161.5 million for the first quarter of 2010, which ended December 31, 2009, a $5 million (3 percent) decline from the same period in fiscal 2009. The company posted net income of $29.5 million, a $3 million (11.3 percent) increase from the first quarter of last year. Earnings per diluted share for the first quarter of 2010 increased by $0.05 (11.6 percent) over the prior year period, from $0.43 to $0.48.

Included in current first-quarter pre-tax operating expenses were approximately $2.8 million in business acquisition costs and $200,000 in legal costs related to antitrust litigation. This was offset by a favorable non-recurring sales tax adjustment of $4.1 million, resulting in adjusted net income of $28.7 million, a $1.7 million (6.3 percent) increase in adjusted net income over the first quarter of 2009. Adjusted earnings per diluted share for the first quarter are $0.46, compared with adjusted EPS of $0.44 in the prior year, an increase of $0.02 (4.5 percent).

Decreases in the cost of commodities, most notably steel, continued to drive improvement in the company's gross profit margin from 41.9 percent in the first quarter of 2009 to 44.6 percent (270 basis points) during the same period in 2010. Investment income of $3.7 million was essentially flat compared with the $3.6 million posted in 2009.

Cash flow from operations remained strong at $36.4 million in the first quarter, compared with $23.3 million during the same period in 2009, an increase of $13.1 million (56.2 percent). The difference was driven primarily by lower spending and the timing of accounts payable disbursements.

"Comparing the first fiscal quarter of 2010 with 2009 is a challenge because '09 was the last quarter before the economic meltdown affected our business," said Kenneth A. Camp, Hillenbrand's president and chief executive officer. "In the second quarter of 2009, consumers became very conscious of their spending, and we saw a decline in mix and an increase in the growth of cremations. Both trends improved as the year went on, and we see signs that they may be returning to their normal patterns.

"A positive effect of the economic challenges resulted in some commodity prices also returning to more normal levels, compared to the very high commodity prices we experienced in 2008 and early in 2009," Camp said. "Even in the face of these challenges, Batesville Casket has been able to post solid results in the first quarter, and we expect to see better year-over-year revenue comparisons for the remainder of 2010."

Outlook for Fiscal Year 2010

The company is reaffirming the following guidance for fiscal year 2010. This guidance does not include the effects of the pending acquisition of K-Tron International or any of Hillenbrand's related business acquisition and transition costs.