Q3 2024 Hillenbrand Inc Earnings Call

Speaker Change: Greetings. Welcome to the Hillenbrand Third Quarter Fiscal Year 24 Earnings Call. At this time, all participants are in listen-only mode. The question-and-answer session will follow the formal presentation.

Operator: School Year 24 Earnings Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation.

Operator: The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator: If anyone today is sure to acquire operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. I'll now turn the conference over to Sam Mynsberge, Vice President, Investor Relations. Mr. Mynsberge, you may now begin your presentation.

Sam Mynsberge: I'll now turn the conference over to Sam Mynsberge, Vice-President and Vest Relations. Mr. Meinvers, you may now begin your presentation.

Operator: This is an answer session. We'll follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. I'll now turn the conference over to Sam Mynsberge, Vice President, Investor Relations. Mr. Mynsberge, you may now begin your presentation.

Sam Mynsberge: Thank you, Operator, and good morning, everyone. Welcome to Hillenbrand's earnings call for the third quarter of fiscal year 2024. 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. They'll 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 law.

Sam Mynsberge: Thank you, operator.

Sam Mynsberge: Good morning, everyone. Welcome to Hillenbrand's earnings call for our third quarter of fiscal year 2024. I'm joined by our president and CEO, Kim Ryan, and our Senior Vice President and CEO, Bob VanHimbergen. I'd like to direct your attention to the supplemental slides posted on our IR website. They'll 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. Also, during the course of this call, we will be discussing our results on a continuing operations basis, which excludes any impact from the discontinued operations base bill, as well as certain non-GAAP operating performance measures, including organic comparisons for our segments, which exclude the impacts from acquisitions, investitures, and foreign currencies change rates.

Sam Mynsberge: Thank you operator and good morning everyone. Welcome to Hillenbrand's earnings call for our third quarter of fiscal year 2024. I'm joined by our president and CEO Kim Ryan and our senior vice president and CFO Bob VanHimbergen.

Kimberly Ryan: I'd like to direct your attention to the supplemental slides posted on our IR website. They'll be referenced during today's call.

Speaker Change: I'd like to direct your attention to the supplemental slides posted on our IR website. They'll be referenced on today's call.

Sam Mynsberge: These statements are not guarantees of future performance, and our actual results could differ materially. Also, during the course of this call, we will be discussing our results on a continuing operations basis, which excludes any impact from discontinued operations, as well as certain non-GAAP operating performance measures, including organic comparisons for our segments, which exclude the impacts of acquisitions, divestitures, and foreign currency exchange rates. I encourage you to review the appendix in slide three of the presentation, as well as our 10-Q, which can be found on our website, for a deeper discussion of non-GAAP information, forward-looking statements, and the risk factors that could impact our actual results.

Speaker Change: Turning to slide 3, 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.

Speaker Change: Also, during the course of this call, we will be discussing our results on a continuing operations basis, which excludes any impact from the discontinued operations of Batesville, as well as certain non-GAAP operating performance measures, including organic comparisons for our segments, which exclude the impacts from acquisitions, divestitures, and foreign currency exchange rates.

Sam Mynsberge: I encourage you to review the appendix in slide three of the presentation, as well as our 10-Q, which can be found on our website, for a deeper discussion of non-GAAP information, forward-looking statements, and the respectors that could impact our actual results.

Speaker Change: I encourage you to review the appendix and slide 3 of the presentation, as well as our 10-Q, which can be found on our website, for a deeper discussion of non-depth information, forward-looking statements, and the risk factors that could impact our actual results.

Sam Mynsberge: Finally, as of August 1st, Schenk Process sued and Performance Materials has been re-branded under our existing Copierian brand, but will be referred to as FPM throughout today's call.

Sam Mynsberge: Finally, as of August 1st, Schenck Process Suit and Performance Materials has been rebranded under our existing Coperian brand but will be referred to as FPM throughout today's call. With that, I'll turn the call over to Kim.

Kim: Finally, as of August 1st, Schenck Process Food and Performance Materials has been rebranded under our existing Copperian brand, but will be referred to as FPM throughout today's call. With that, I'll turn the call over to Kim.

Kimberly Ryan: With that, I'll turn the call over to Kim. Thanks, Sam, and hello, everyone. Thank you for joining us on this morning's call. We were pleased with the progress made in executing our strategy during this quarter in light of tougher-than-expected macro-environment, as our FPM integration continued to progress well and exceeded our expectations for synergy achievement. However, the quarter was also characterized by heightened demand pressures across our mid and long cycle product line, as ongoing uncertainty in the macro-economic environment resulted in significantly lower-than-expected orders and revenue within our advanced process solution segment. In our molding technology solution segment, demand remained relatively stable, but we've yet to see a rebound in overall order patterns as macro-industry trends and machine utilization deteriorated as we progress through the quarter.

Kimberly Ryan: Thanks Sam, and hello everyone. Thank you for joining us on this morning's call. We were pleased with the progress we made in executing our strategy during this quarter in light of tougher-than-expected macro environments, as our FPM integration continued to progress well and exceeded our expectations for synergy achievement. However, the quarter was also characterized by heightened demand pressures across our mid- and long-cycle product lines as ongoing uncertainty in the macroeconomic environment resulted in significantly lower-than-expected orders and revenue within our advanced process solutions segment.

Kim: Thanks Sam and hello everyone. Thank you for joining us on this morning's call.

Kimberly Ryan: We were pleased with the progress made in executing our strategy during this quarter in light of the tougher than expected macro environment, as our FPM integration continued to progress well and exceeded our expectations for synergy achievement. As a result, we're seeing customers conserve cash by postponing CapEx investments beyond their current budget cycle, and we've seen this behavior across most of our key end markets globally. Now, on food, health, and nutrition.

Kim: We were pleased with the progress made in executing our strategy during this quarter in light of tougher-than-expected macro environments, as our FPM integration continued to progress well and exceeded our expectations for synergy achievement.

Kim: However, the quarter was also characterized by heightened demand pressures across our mid- and long-cycle product lines, as ongoing uncertainty in the macroeconomic environment resulted in significantly lower-than-expected orders and revenue within our advanced process solutions segment.

Kimberly Ryan: In our Molding Technology Solutions segment, demand remains relatively stable, but we've yet to see a rebound in overall order patterns as macro industry trends and machine utilization deteriorated as we progressed through the quarter. We continue to see pressure on the recovery timeline for MTS, which necessitated the non-cash impairment charge taken in the quarter, as we announced in yesterday's press release.

Kim: In our Molding Technology Solutions segment, demand remained relatively stable, but we've yet to see a rebound in overall order patterns as macro industry trends and machine utilization deteriorated as we progressed through the quarter.

Kimberly Ryan: We continue to see pressure to the recovery timeline in MTS, which necessitated the non-cash impairment charge taken in the quarter, as we announced in yesterday's press release. From a performance standpoint, total revenue grew 10 percent over prior year, primarily driven by the acquisition of FPM, but decreased 8 percent organically. We continue to see higher aftermarket revenue across both segments. However, this was offset by the decline in capital equipment volume, stemming from the ongoing order pressures that we've been facing throughout the year. Adjusted EBITDA margins also improved sequentially in both segments, as we continue to heavily focused on executing our previously announced reflexion actions and accelerating additional cost initiatives.

Kim: We continue to see pressure to the recovery timeline in MTS, which necessitated the non-cash impairment charge taken in the quarter, as we announced in yesterday's press release.

Kimberly Ryan: From a performance standpoint, total revenue grew 10% over the prior year, primarily driven by the acquisition of FPM, but decreased 8% organically. We continue to see higher aftermarket revenue across both segments, however, this was offset by a decline in capital equipment volume stemming from the ongoing order pressures that we've been facing throughout the year. Adjusted EBITDA margins also improved sequentially in both segments as we continue to focus heavily on executing our previously announced restructuring actions and accelerating additional cost initiatives.

Kim: From a performance standpoint, total revenue grew 10% over prior year, primarily driven by the acquisition of FPM, but decreased 8% organically.

Kim: We continued to see higher aftermarket revenue across both segments, however, this was offset by a decline in capital equipment volume stemming from the ongoing order pressures that we've been facing throughout the year.

Kim: Adjusted EBITDA margins also improved sequentially in both segments as we continue to heavy focus on executing our previously announced restructuring actions and accelerating additional cost initiatives.

Kimberly Ryan: In order to speed these costs out initiatives along, we're utilizing temporary additional resources to help us execute our plans as quickly and effectively as possible, given the intensified volume challenges.

Kimberly Ryan: In order to speed these cost-out initiatives along, we're utilizing temporary additional resources to help us execute our plans as quickly and effectively as possible, given the intensified volume challenge. We've delivered adjusted earnings per share of $0.85, which was at the high end of our guide, due in part to the success of these cost initiatives, which helped mitigate the softer-than-expected volume. However, we continue to see pressure on our previous performance expectations, given the magnitude of the order shortfall in APS and the increasing uncertainty around the world, which has dampened our outlook. Bob will discuss this further in a moment. I'll now provide some additional color on what we're seeing across key end marks.

Kim: In order to speed these cost-out initiatives along, we're utilizing temporary additional resources to help us execute our plans as quickly and effectively as possible, given the intensified volume challenges.

Kim: We've delivered adjusted earnings per share of 85 cents, which was at the high end of our guidance.

Kim: due in part to the success of these cost initiatives, which helped mitigate the softer-than-expected volume.

Kimberly Ryan: Given the magnitude of the order, shortfall in APS, and the increasing uncertainty around the world, which has dampened our outlook, Bob will discuss this further in a moment.

Kim: However, we continue to see pressure to our previous performance expectations given the magnitude of the order shortfall in APS and the increasing uncertainty around the world which has dampened our outlook. Bob will discuss this further in a moment.

Kimberly Ryan: I'll now provide some additional color on what we're seeing across key and markets. As I mentioned, orders in APS were materially impacted by continuing delays in customer decision timing. While we've been experiencing customers' delays throughout the year, they became more pronounced during the quarter, as customers remain highly sensitive to several different factors: the elevated interest rate environment, ongoing inflation, geopolitical uncertainty, and other global macroeconomic concerns. As a result, we're seeing customers conserve cash by postponing capex investment decisions beyond their current budget cycle, and we've seen this behavior across most of our key markets globally.

Bob: I'll now provide some additional color on what we're seeing across key end markets.

Kimberly Ryan: As I mentioned, orders in APS were materially impacted by continuing delays in customer decision time. While we've been experiencing customer delays throughout the year, they became more pronounced during the quarter, as customers remain highly sensitive to several different factors. The Elevated Interest Rate Environment, Ongoing Inflation, Geopolitical Uncertainty, and Other Global Macroeconomic Concerns. As a result, we're seeing customers conserve cash by postponing CapEx investments beyond their current budget cycle, and we've seen this behavior across most of our key end markets globally. I'll start my comments with polymers and advanced materials in APS.

Bob: As I mentioned, orders in APS were materially impacted by continuing delays in customer decision timing.

Bob: While we've been experiencing customer delays throughout the year, they became more pronounced during the quarter, as customers remain highly sensitive to several different factors.

Bob: The Elevated Interest Rate Environment, Ongoing Inflation, Geopolitical Uncertainty, and Other Global Macroeconomic Concerns.

Bob: As a result, we're seeing customers conserve cash by postponing CapEx investments, decisions beyond their current budget cycle, and we've seen this behavior across most of our key end markets globally.

Kimberly Ryan: I'll start my comments with polymers and advanced materials in APS. As we discussed last quarter, we believe we won a majority of the projects awarded for large polyulopen systems so far this year. We expected to see decisions made for incremental investment projects in India and the Middle East in the back half of the year, which have not yet been awarded on our originally unsuspected timeline. While the timing of final project decisions have slowed significantly, the level of customer code activity remains high across these regions. In addition to growing project pipelines for polyulopen investments in other parts of Asia and Africa, we believe the strength of our global footprint and our best in class technologies and solutions keep us well positioned in these regions for when decision timing begins to normalize.

Speaker Change: I'll start my comments with polymers and advanced materials in APS.

Kimberly Ryan: As we discussed last quarter, we believe we have won a majority of the projects awarded for large polyolefin systems so far this year, and decisions are expected to be made for incremental investment projects in India and the Middle East in the back half of the year, which have not yet been awarded on our originally anticipated timeline. While the timing of final project decisions has slowed significantly, the level of customer quote activity remains high across these regions, in addition to growing project pipelines for polyolefin investments in other parts of Asia and Africa.

Speaker Change: As we discussed last quarter, we believe we won a majority of the projects awarded for large polyolefin systems so far this year.

Speaker Change: We expected to see decisions made for incremental investment projects in India and the Middle East in the back half of the year, which have not yet been awarded on our originally anticipated timeline.

Speaker Change: While the timing of final project decisions have slowed significantly, the level of customer quote activity remains high across these regions.

Speaker Change: in addition to growing project pipelines for polyolefin investments in other parts of Asia and Africa. We believe the strength of our global footprint and our best-in-class technologies and solutions keep us well positioned in these regions for when decision timing begins to normalize.

Kimberly Ryan: We believe the strength of our global footprint and our best-in-class technologies and solutions keep us well positioned in these regions for when decision timing begins to normalize. For mid-size equipment systems serving the areas of engineered plastics, recycling, and batteries, we continue to see customers pausing their CapEx projects, with a number of decisions we expected over the summer now delayed outside of the current fiscal year.

Kimberly Ryan: For mid-size equipment systems serving the areas of engineer plastics, recycling, and battery, we continue to see customers pausing their capex projects, with a number of decisions we expected over the summer down the late outside of the current fiscal year. However, the breadth of our product and systems offering for these markets, which was greatly enhanced through the acquisitions of FPM and Herbal, has provided significant opportunity to compete more effectively than we could before. Our teams remain very energized for our ability to access new customers, increased share of all it with existing customers, and partner with customers and developing innovating solutions for these highly technical processes.

Speaker Change: For mid-size equipment systems serving the areas of engineered plastics, recycling, and battery, we continue to see customers pausing their CapEx projects, with a number of decisions we expected over the summer now delayed outside of the current fiscal year.

Kimberly Ryan: However, the breadth of our product and systems offering for these markets, which was greatly enhanced through the acquisitions of FPM and Haribold, has provided significant opportunities to compete more effectively than we could before. Our teams remain very energized about our ability to access new customers, increase share of wallet with existing customers, and partner with customers in developing innovative solutions for these highly technical processes. Turning to food, health, and nutrition.

Speaker Change: However, the breadth of our product and systems offering for these markets, which was greatly enhanced through the acquisitions of FPM and Haribold,

Speaker Change: has provided significant opportunity to compete more effectively than we could before.

Speaker Change: Our teams remain very energized for our ability to access new customers, increase share of wallet with existing customers, and partner with customers in developing innovative solutions for these highly technical processes.

Kimberly Ryan: Turning to food health and nutrition, orders in the quarter improved by double digits sequentially, but did not achieve the levels we expected coming into the year. While these and markets have historically been less cyclical, right now we're seeing elevated capex sensitivity from customers. That said, the pipeline of projects across our key customer segments of baked goods, pet foods, snacks, and cereals remains robust as customers evaluate investments for both capacity expansion and optimizing their existing operations through automation and equipment upgrades. We've not seen customers cancel projects in the pipeline, but we have seen a similar trend of delayed investment decisions as customers balance new investments with inflationary pressures, higher interest rates, and softening consumer trends.

Kimberly Ryan: Orders in the quarter improved by double digits sequentially but did not achieve the levels we expected coming into the year. While these end markets have historically been less cyclical, right now, we are seeing elevated CapEx sensitivity from customers. That said, the pipeline of projects across our key customer segments of baked goods, pet foods, snacks, and cereals remains robust as customers evaluate investments for both capacity expansion and optimizing their existing operations through automation and equipment upgrades. We've not seen customers cancel projects in the pipeline, but we have seen a similar trend of delayed investment decisions as customers balance new investments with inflationary pressures, higher interest rates, and softening consumer trends.

Speaker Change: Turning to food, health, and nutrition. Orders in the quarter improved by double digits sequentially, but did not achieve the levels we expected coming into the year. While these end markets have historically been less cyclical, right now we're seeing elevated CAPEX sensitivity from customers.

Speaker Change: That said, the pipeline of projects across our key customer segments of baked goods, pet foods, snacks, and cereals remains robust as customers evaluate investments for both capacity expansion and optimizing their existing operations through automation and equipment upgrades.

Kimberly Ryan: We've not seen customers cancel projects in the pipeline, but we have seen a similar trend of delayed investment decisions as customers balance new investments with inflationary pressures, higher interest rates, and softening consumer trends and execute on controllable factors within our four walls, pursue targeted growth initiatives, and exercise discipline regarding discretionary costs. I'm confident that we're well-positioned to meet those demands through our leading brands and our differentiated and highly engineered processing solutions.

Speaker Change: We've not seen customers cancel projects in the pipeline, but we have seen a similar trend of delayed investment decisions as customers balance new investments with inflationary pressures, higher interest rates, and softening consumer trends.

Kimberly Ryan: Finally, for our aftermarket parts and services in APS, we continue to see solid growth in this highly profitable part of the business as our large and growing install base pays dividends in the legacy business. In addition, we're driving strong performance within our recent acquisitions through the execution of integration initiatives, including dedicated aftermarket resources, better visibility into install base opportunities, and improve pricing realization. As discussed previously, this is a key focus area of our integration, and I plead to this traction that we're making. However, the delay in larger polyolifen projects orders has put pressure on our ability to achieve even higher levels about the market growth.

Kimberly Ryan: Finally, for our aftermarket parts and services in APS, we continue to see solid growth in this highly profitable part of the business, as our large and growing installed base pays dividends in the legacy business. In addition, we're driving strong performance within our recent acquisitions through the execution of integration initiatives, including dedicated aftermarket resources, better visibility into install-based opportunities, and improved pricing realization. As discussed previously, this is a key focus area of our integration, and I'm pleased with the traction that we're making.

Speaker Change: Finally, for our aftermarket parts and services in APS, we continue to see solid growth in this highly profitable part of the business, as our large and growing install base pays dividends in the legacy business.

Speaker Change: In addition, we're driving strong performance within our recent acquisitions through the execution of integration initiatives, including dedicated aftermarket resources, better visibility into install-based opportunities, and improved pricing realization.

Speaker Change: As discussed previously, this is a key focus area of our integration.

Kimberly Ryan: However, the delay in larger polyolefin project orders has put pressure on our ability to achieve even higher levels of aftermarket growth, as many of those large projects would have included up-front spare parts packages. Now, turning to our Molding Technologies Solutions section. In the quarter, we saw improved demand for automotive and packaging applications, primarily in India and Asia, as hot runner demand saw its first quarter of year-over-year growth in China since early 2022.

Speaker Change: And I'm pleased with the traction that we're making. However, the delay in larger polyolefin project orders has put pressure on our ability to achieve even higher levels of aftermarket growth, as many of those large projects would have included upfront spare parts packages.

Kimberly Ryan: As many of those large projects would have included upfront spare parts packages.

Kimberly Ryan: Now, turning to our molding technology solution segment. In the quarter, we saw improved demand for automotive and packaging applications, primarily in India and Asia, as hotrunner demand saw its first quarter of year-over-year growth in China since early 2022. Overall, for the segment, orders were up slightly year over year, but essentially flat on a sequential basis as we'd yet to see signs of broader demand recovery. Key macro indicators showed positive signs in April, but then trended negatively through the remainder of the quarter, reflecting a challenging and uncertain environment for machine utilization and mold making activity in North America.

Speaker Change: Now turning to our molding technology solution segment. In the quarter, we saw improved demand for automotive and packaging applications, primarily in India and Asia, as hot runner demand saw its first quarter of year-over-year growth in China since early 2022.

Kimberly Ryan: Overall, for this segment, orders were up slightly year over year, but essentially flat on a sequential basis as we've yet to see signs of broader demand recovery. Key macro indicators showed positive signs in April, but then trended negatively through the remainder of the quarter, reflecting a challenging and uncertain environment for machine utilization and mold making activity in North America.

Speaker Change: Overall for the segment, orders were up slightly year-over-year, but essentially flat on a sequential basis as we've yet to see signs of broader demand recovery.

Speaker Change: Key macro indicators showed positive signs in April but then trended negatively through the remainder of the quarter, reflecting a challenging and uncertain environment for machine utilization and mold making activity in North America.

Kimberly Ryan: While indexing to new capital equipment remains subdued, we continue to focus on driving aftermarket parts and services revenue, achieving a record level in the quarter.

Kimberly Ryan: While investment in new capital equipment remains subdued, we continue to focus on driving aftermarket parts and services revenue, achieving a record level in the quarter. In summary, we've experienced greater than expected challenges across our end markets as macro factors have weighed heavily on our near to midterm growth opportunities and expectations. In light of this, we continue to focus on and execute on controllable factors within our four walls. Pursue targeted growth initiatives and exercise discipline regarding discretionary costs.

Speaker Change: While investment in new capital equipment remains subdued, we continue to focus on driving aftermarket parts and services revenue, achieving a record level in the quarter.

Kimberly Ryan: In summary, we've experienced greater than expected challenges across our end markets, as macro factors have weighed heavily on our near-to-mid-term growth opportunities and expectations. In light of this, we continue to focus and execute on controllable factors within our four walls, first two targeted growth initiatives, and exercise discipline regarding discretionary costs. In addition, we remain on track with previously announced restructuring actions, and we continue to evaluate further actions to ensure that we're optimizing our cost structure across the organization.

Speaker Change: In summary, we've experienced greater-than-expected challenges across our end markets as macro factors have weighed heavily on our near-to-mid-term growth opportunities and expectations.

Speaker Change: In light of this, we continue to focus...

Speaker Change: and execute on controllable factors within our four walls. Pursue targeted growth initiatives and exercise discipline regarding discretionary costs.

Kimberly Ryan: In addition, we remain on track with previously announced restructuring actions, and we continue to evaluate further actions to ensure that we're optimizing our cost structure across the organization. I remain confident in our strategy and the long-term catalyst for our business, as the growing global middle class and a drive for increased sustainability support long-term demands for durable plastics, processed foods, and more sustainably focused solutions, including recycling and batteries. I'm confident that we're well positioned to meet those demands through our leading brands and our differentiated and highly engineered processing solutions.

Speaker Change: In addition, we remain on track with previously announced restructuring actions, and we continue to evaluate further actions to ensure that we're optimizing our cost structure across the organization.

Kimberly Ryan: I remain confident in our strategy and the long-term catalyst for our business, as the growing global middle class and a driver increase sustainability supports long-term demands for durable plastics, processed food, and more sustainably focused solutions, including recycling and battery. I'm confident that we're well-positioned to meet those demands through our leading brands and are differentiated and highly engineered processing solutions.

Speaker Change: I remain confident in our strategy and the long-term catalyst for our business.

Speaker Change: As the growing global middle class and a drive for increased sustainability supports long-term demands for durable plastics, processed foods, and more sustainably focused solutions, including recycling and battery.

Speaker Change: I'm confident that we're well positioned to meet those demands through our leading brands and our differentiated and highly engineered processing solutions.

Robert VanHimbergen: Now, the forward training call over to Bob to discuss our financials in more detail. I want to highlight the progress of our integration, as well as touch on our most recent sustainability report. As we approach the one-year anniversary of our FPM acquisition, I'm tremendously pleased with the fit of the business within our portfolio, the people, the culture, the technologies and capabilities of the combined companies. We are stronger as we've come together as one team. Through the deployment of our Hillenbrand operating model and the utilization of temporary external resources, we've been able to accelerate operational efficiencies and cost synergies, resulting in even a margins over 300 basis points ahead of what we had originally planned by this time within the FPM business.

Kimberly Ryan: Now, before turning the call over to Bob to discuss our financials in more detail, I want to highlight the progress of our integration as well as touch on our most recent sustainability report. As we approach the one-year anniversary of our FPM acquisition, I'm tremendously pleased with the fit of the business within our portfolio, the people, the culture, the technologies, and the capabilities of the combined company. We are stronger as we come together as one.

Speaker Change: Now before turning call over to Bob to discuss our financials in more detail I want to highlight the progress of our integration as well as touch on our most recent sustainability report.

Speaker Change: As we approach the one-year anniversary of our FPM acquisition, I'm tremendously pleased with the fit of the business within our portfolio, the people, the culture, the technologies, and capabilities of the combined companies.

Speaker Change: we are stronger as we've come together as one team

Kimberly Ryan: Through the deployment of our Hillenbrand operating model and the utilization of temporary external resources, we've been able to accelerate operational efficiencies and cost synergies, resulting in EBITDA margins over 300 basis points ahead of what we had originally planned by this time in the FPM business year. While the team and I are disappointed that the broader demand environment has limited the speed at which we can capitalize on more commercial opportunities, I'm very proud of how we've executed our integration plans to create a winning organization for the future.

Speaker Change: Through the deployment of our Hillenbrand operating model and the utilization of temporary external resources, we've been able to accelerate operational efficiencies and cost synergies, resulting in EBITDA margins over 300 basis points ahead of what we had originally planned by this time within the FPM business.

Robert VanHimbergen: While the team and I are disappointed that the broader dynamic environment has limited the speed in which we can capitalize on more commercial opportunities, I'm very proud of how we've executed our integration plans to create a winning organization for the future. Most importantly, I'm highly confident in our team and our portfolio of leading process technologies for ingredient automation, mixing, extruding, portioning, as well as full systems integration that will allow us to deliver best-in-class solutions to customers in the years ahead. Finally, as you saw in May, we published our fifth sustainability report, which focused on product innovation, supply chain, and increased transparency around our key environmental metrics like waste, water, and scope 1, 2, and 3 emissions.

Speaker Change: While the team and I are disappointed that the broader demand environment has limited the speed in which we can capitalize on more commercial opportunities, I'm very proud of how we've executed our integration plans to create a winning organization for the future.

Kimberly Ryan: Most importantly, I'm highly confident in our team and our portfolio of leading process technologies for ingredient automation, mixing, extruding, portioning, as well as full systems integration that will allow us to deliver best-in-class solutions to customers in the years ahead. Finally, as you saw in May, we published our fifth sustainability report, which focused on product innovation, supply chain, and increased transparency around our key environmental metrics like waste, water, and scope 1, 2, and 3 emissions.

Speaker Change: Most importantly, I'm highly confident in our team and our portfolio of leading process technologies for ingredient automation, mixing, extruding, portioning, as well as full systems integration that will allow us to deliver best-in-class solutions to customers in the years ahead.

Speaker Change: Finally, as you saw in May, we published our fifth sustainability report which focused on product innovation, supply chain, and increased transparency around our key environmental metrics like waste, water, and scope 1, 2, and 3 emissions.

Kimberly Ryan: We're pleased with the continued progress we're making in this regard and, as a result, have received top quartile scores amongst the new industrial companies by third-party reporting agencies. With that, I'll now turn the call over to Bob.

Robert VanHimbergen: We're pleased with the continued progress we're making in this regard, and as a result, we've received top core tile scores amongst the industrial companies by third-party reporting agencies.

Speaker Change: We're pleased with the continued progress we're making in this regard, and as a result, have received top quartile scores amongst the new industrial companies by third-party reporting agencies.

Robert VanHimbergen: With that, I'll now turn the call over to Bob. Thanks, Kim, and good morning, everyone. Turning to our consolidated performance on Slide 5, we delivered revenue of $787 million, an increase of 10% compared to the prior year, primarily due to the acquisition of FPM. On an organic basis, revenue decreased 8% year over year, as pricing and higher aftermarket revenue were more than offset by lower capital equipment volume. Adjusted EBITDA of $131 million increased 4%, the decreased 14% organically, as pricing, the impact of cost actions, and favorable product mix were more than offset by the flow-through effect of lower volume and cost inflation.

Robert VanHimbergen: Thanks, Kim, and good morning, everyone. Turning to our consolidated performance on slide five. We delivered revenue of $787 million, an increase of 10% compared to the prior year, primarily due to the acquisition of FPM. However, on an organic basis, revenue decreased 8% year-over-year as pricing and higher aftermarket revenue were more than offset by lower capital equipment volume. Adjusted EBITDA of $131 million increased 4%, but decreased 14% organically, as pricing, the impact of cost actions, and favorable product mix were more than offset by the flow-through effect of lower volume and cost inflation.

Speaker Change: With that, I'll now turn the call over to Bob.

Bob: thanks kim and good morning everyone turning to our consolidated performance on slide five we delivered revenue of seven hundred and eighty seven million dollars an increase of ten percent compared to the prior year primarily due to the acquisition of fpm

Kimberly Ryan: On an organic basis, revenue decreased 8% year-over-year as pricing and higher aftermarket revenue were more than offset by lower capital equipment volume. We continue to take action to right-size the cost structure in this business, improve operational efficiency, and focus on new product development to ensure we're well-positioned to serve customers once market conditions improve. Our just effective tax rate in the quarter was 28.6%, which was in line with our expectations. We continue to drive operational improvements in our trade working capital, but we are likely to experience sustained pressure on our cash flow performance until order patterns normalize.

Bob: On an organic basis, revenue decreased 8% year-over-year as pricing and higher aftermarket revenue were more than offset by lower capital equipment volume.

Bob: Adjusted EBITDA of $131 million increased 4%, but decreased 14% organically, as pricing, the impact of cost actions, and favorable product mix were more than offset by the flow-through effect of lower volume and cost inflation.

Robert VanHimbergen: We delivered consolidated adjusted EBITDA margin of 16.7%, a decrease of 90 basis points over the prior year. We reported gap net loss of $249 million, or a loss of $3.53 per share, down from income of $0.60 per share in the prior year, primarily due to a $265 million non-cash of parameter charge in the quarter, related to the hot runner product line within the molding technology solution segment. As Kim referenced, this charge was necessitated by the prolonged decline in demand and uncertain recovery timing for that business. We continue to take action to right size the cost structure in this business, improve operational efficiency, and focus on new product development to ensure we're well positioned to serve customers once market conditions improve.

Robert VanHimbergen: We delivered consolidated adjusted even and margin of 16.7%, a decrease of 90 basis points over the prior year. We reported a GAAP net loss of $249 million, for a loss of $3.53 per share, down from income of $0.60 per share in the prior year, primarily due to a $265 million non-cash impairment charge in the quarter related to the hot runner product line within the molding technology solution cycle. As Kim referenced, this charge was necessitated by the prolonged decline in demand and uncertain recovery timing for that business.

Bob: We delivered consolidated adjusted even a margin of 16.7 percent, a decrease of 90 basis points over the prior year.

Bob: We reported GAAP net loss of $249 million, or a loss of $3.53 per share.

Speaker Change: down from income of $0.60 per share in the prior year, primarily due to a $265 million non-cash impairment charge in the quarter related to the hot runner product line within the molding technology solution segment.

Speaker Change: As Kim referenced, this charge was necessitated by the prolonged decline in demand and uncertain recovery timing for that business.

Robert VanHimbergen: We continue to take action to right-size the cost structure in this business, improve operational efficiency, and focus on new product development to ensure we're well-positioned to serve customers once market conditions improve. Adjusted earnings per share of $0.85 decreased by $0.10, or 11%, year-over-year, but was at the high end of our expectations coming into the quarter, aided by the benefit of accelerated cost actions, which helped to offset the shortfall in Our just effective tax rate in the quarter was 28.6%, which was in line with our expectations.

Speaker Change: We continue to take action to right-size the cost structure in this business, improve operational efficiency, and focus on new product development to ensure we're well-positioned to serve customers once market conditions improve.

Robert VanHimbergen: The adjusted earnings per share of $0.85 decreased 10 cents, or 11% year-over-year, but was at the high end of our expectations coming into the quarter, aided by the benefit of accelerated cost actions, which helped to offset the short-ballon volumes. Our adjusted effect of tax rate in the quarter was 28.6%, which was in line with our expectation. Our capital from operations was $46 million in the quarter, down approximately $43 million from the prior year, primarily due to continued pressure of lower order intake and timing of working capital on large projects. Capital expenditures were $60 million in the quarter, and we returned approximately $16 million to shareholders throughout quarterly dividend.

Speaker Change: Adjusted earnings per share of $0.85 decreased $0.10, or 11%, year-over-year, but was at the high end of our expectations coming into the quarter, aided by the benefit of accelerated cost actions, which helped to offset the shortfall in volumes.

Speaker Change: Our adjusted effective tax rate in the quarter was 28.6%, which was in line with our expectations.

Robert VanHimbergen: Our cash flow from operations was $46 million in the quarter, down approximately $43 million from the prior year, primarily due to continued pressure on lower order intake and timing of working capital on large projects. Capital expenditures were $16 million in the quarter, and we returned approximately $16 million to shareholders through our quarterly dividend. We continue to drive operational improvements in our trade working capital, but we are likely to experience sustained pressure on our cash flow performance until order patterns normalize. We now project free cash flow for the year to be approximately $100 million.

Speaker Change: Our cash flow from operations was $46 million in the quarter, down approximately $43 million from the prior year, primarily due to continued pressure of lower order intake and timing of working capital on large projects.

Speaker Change: Capital expenditures were 16 million dollars in the quarter and we returned approximately 16 million dollars to shareholders through our quarterly dividend.

Robert VanHimbergen: We continue to drive operational improvements in our trade working capital; however, we are staying pressure for our cash flow performance until order patterns normalize. We now project free cash flow in the year to be approximately $100 million. Now moving to second performance, starting on APS on slide sets, revenue of $569 million increased 23% compared to the prior year, primarily driven by FPM. Organic revenue decreased 6% year by year, as lower capital equipment volume more than offset price realization and aftermarket revenue growth. Adjusted EBITDA of $109 million increased 17% year over year and was down 8% organically, primarily driven by lower volume and cost inflation, which more than offset pricing.

Speaker Change: We continue to drive operational improvements in our trade working capital, however we are likely to experience sustained pressure to our cash flow performance until order patterns normalize. We now project free cash flow in the year to be approximately $100 million.

Robert VanHimbergen: Now moving to segment performance, starting with APS on slide 6. Revenue of $569 million increased 23% compared to the prior year, primarily driven by FPM. Organic revenue decreased 6% year-over-year as lower capital equipment volume more than offset price realization and aftermarket revenue growth. Adjusted EBITDA of $109 million increased 17% year-over-year and was down 8% organically, primarily driven by lower volume and cost inflation, which more than offset prices. We delivered a just and even margin of 19.2% in the quarter, which was down 90 basis points over the prior year and 30 basis points organically.

Kimberly Ryan: Now moving to segment performance, starting on slide 6. Backlog of $1.73 billion increased 8% compared to the prior year, driven by the addition of FPM, such as pursuing additional procurement, value engineering, and product standardization opportunities. Adjusted EBITDA of $35 million decreased 32%, and the adjusted EBITDA margin of 15.9% decreased 430 basis points compared to the prior year, largely driven by the impact of lower volumes on operating leverage and price-cost pressure.

Speaker Change: Now moving to segment performance, starting on APS on slide six.

Speaker Change: Revenue of $569 million increased 23% compared to the prior year, primarily driven by FPM.

Speaker Change: Organic revenue decreased 6% year-over-year as lower capital equipment volume more than offset price realization and aftermarket revenue growth.

Speaker Change: Adjusted EBITDA of $109 million increased 17% year-over-year and was down 8% organically.

Speaker Change: Primarily driven by lower volume and cost inflation, which more than offset pricing.

Robert VanHimbergen: We delivered adjusted EBITDA margin in the quarter of 19.2%, which was down 90 basis points over the prior year, or 30 basis points organically. We expected seventh margin delusion given FPM's 13% margins at the time of acquisition. But as a result, the stronger margin performance through accelerated cost scenario achievement, operational efficiency gains, and aftermarket growth and pricing, we've been able to mitigate the due to the fact more quickly than originally anticipated, even with top line challenges related to capital equipment volumes. Backlog of $1.73 billion increased 8% compared to the prior year, driven by the addition of FPM.

Speaker Change: We delivered a just and even margin in the quarter of 19.2%, which was down 90 basis points over the prior year, or 30 basis points organically.

Robert VanHimbergen: We expected separate margin dilution given FPM's 13% margins at the time of acquisition, but as a result of the stronger margin performance through accelerated cost-centered achievement, operational efficiency gains, and aftermarket growth in pricing, we've been able to mitigate the dilutive effect more quickly than originally anticipated, even with top-line challenges related to capital equipment volume. Backlog of $1.73 billion increased 8% compared to the prior year, driven by the addition of FPM. However, on an organic basis, backlog decreased 8% and was also down 8% sequentially due to the execution of existing backlog and increased order softness across mid and long cycle parts of the cycle.

Speaker Change: We expected separate margin dilution given FPM's 13% margins at the time of acquisition.

Speaker Change: But as a result of stronger margin performance through accelerated cost centering achievement, operational efficiency gains, and aftermarket growth in pricing, we've been able to mitigate the dilutive effect more quickly than originally anticipated, even with top-line challenges related to capital equipment volumes.

Speaker Change: backlog of 1.73 billion dollars increased 8% compared to the prior year driven by the addition of FPM

Robert VanHimbergen: On an organic basis, backlog decreased 8%, and was also down 8% sequentially due to the execution of existing backlog and increased order softness across mid and long cycle parts of the segment. We continue to focus on accelerating cost actions in the segment, such as pursuing additional procurement, value engineering, and product standardization opportunities, driving productivity within our plants, and right sizing our cost structure in response to the challenging demand environment. As we head toward fiscal 2025, we recognize the pressure lower backlog may put on our ability to drive top line performance, which makes the acceleration of these cost actions even more critical in order to protect profitability.

Speaker Change: On an organic basis, backlog decreased 8% and was also down 8% sequentially due to the execution of existing backlog and increased order softness across mid- and long-cycle parts of the segment.

Robert VanHimbergen: We continue to focus on accelerating cost actions in the segment, such as pursuing additional procurement, value engineering, and product standardization opportunities, driving productivity within our plants, and right-sizing our cost structure in response to the challenging demand environment. As we head toward fiscal 2025, we recognize the pressure a lower backlog may put on our ability to drive top-line performance, which makes the acceleration of these cost actions even more critical in order to protect profitability. Now turning to MTS on slide 7.

Speaker Change: We continue to focus on accelerating cost actions in the segment, such as pursuing additional procurement, value engineering, and product standardization opportunities.

Speaker Change: driving productivity within our plants and right sizing our cost structure in response the challenging demand environment

Speaker Change: as we had toward fiscal two thousand and twenty-five we recognize the pressure more backlog may put on our ability to drive top line performance which makes the acceleration of these cost actions eeven more critical and order to protect profitability

Robert VanHimbergen: Now, turning to MTS on slide 7, revenue of $217 million decreased 14% year over year, primarily due to lower volume from Jackson moving equipment, partially offset by aftermarket growth. Adjusted EBITDA of $35 million decreased 32%, and adjusted EBITDA margin of 15.9% decreased 440 basis points compared to the prior year. Largely driven by the impact of lower volumes on operating leverage and price cost pressure. However, on a sequential basis, margins were up 100 basis points, as we began to realize the benefit of our structuring action. Backlog of $238 million decreased 11% compared to the prior year, but increased 4% on a sequential basis.

Robert VanHimbergen: Revenue of $217 million decreased 14% year-over-year, primarily due to lower volume from Jackson Molding equipment, partially offset by aftermarket growth. Adjusted EBITDA of $35 million decreased 32%, and adjusted EBITDA margin of 15.9% decreased 430 basis points compared to the prior year, largely driven by the impact of lower volumes on operating leverage and price-cost pressure. However, on a sequential basis, margins were up 100 basis points as we began to realize the benefit of our structuring action. Backlog of $238 million decreased 11% compared to the prior year, but increased 4% on a sequential basis.

Speaker Change: Now turning to MTS on slide 7.

Speaker Change: Revenue of $217 million decreased 14% year-over-year, primarily due to lower volume for injection molding equipment, partially offset by aftermarket growth.

Speaker Change: Adjusted EBITDA of $35 million decreased 32% and adjusted EBITDA margin of 15.9% decreased 430 basis points compared to the prior year. Largely driven by the impact of lower volumes on operating leverage and price cost pressure.

Kimberly Ryan: However, on a sequential basis, margins were up 100 basis points as we began to realize the benefit of our structuring action. As the timing for a more normalized demand environment remains unclear, we will continue to take necessary steps to position the business for long-term success. With that, I'll turn the call back over to Kim.

Speaker Change: However, on a sequential basis, margins were up 100 basis points as we began to realize the benefit of our structuring actions.

Speaker Change: Backlog of $238 million decreased 11% compared to the prior year, but increased 4% on a sequential basis.

Robert VanHimbergen: As Kim mentioned, we saw pockets of improvement outside of North America as orders remained relatively stable on a sequential basis and improved 3% year-over-year. Continued execution of our cost actions remains a top priority for this segment until demand recovers. I'll turn it to slide eight.

Robert VanHimbergen: As can mentioned, we saw pockets of improvement outside of North America as orders remained relatively stable on a sequential basis and improved 3% year over year. Continued execution of our cost actions remained the top priority for the segment until the man recovers. Now turning to slide 8, net debt at the end of the third quarter was $1.87 billion, and net debt to adjusted EBITDA ratio was 3.5 times. Debt reduction remains our number one priority for capital allocation, but as discussed last quarter, our timeline for returning to within our guardrails of 1-7-2-7 remains prolonged. A mile wrap up with an update to our outlook for the remainder of 2024. The demand environment remains weaker than expected as global macroeconomic uncertainty has increased, and customer order timing has elongated and cheerily within our APS segment.

Speaker Change: As Kim mentioned, we saw pockets of improvement outside of North America as orders remained relatively stable on a sequential basis and improved 3% year-over-year.

Kim: Continued execution of our cost actions remains a top priority for the segment until the man recovers.

Robert VanHimbergen: Net debt at the end of the third quarter was $1.87 billion, and the net debt to adjusted EBITDA ratio was 3.5 times. Debt reduction remains our number one priority for capital allocation, but as discussed last quarter, our timeline for returning to within our guardrails of 1-7 to 2-7 remains prolonged. I'll now wrap up with an update to our outlook for the remainder of 2024. The demand environment remains weaker than expected, as global macroeconomic uncertainty has increased, and customer order timing has elongated materially within our APS segment.

Kim: Now turning to slide 8, net debt at the end of the third quarter was $1.87 billion and net debt to adjust the EBITDA ratio was 3.5 times.

Speaker Change: Debt reduction remains our number one priority for capital allocation, but as discussed last quarter, our timeline for returning to within our guardrails of 1-7 to 2-7 remains prolonged.

Speaker Change: I'll now wrap up with an update to our outlook for the remainder of 2024.

Speaker Change: The demand environment remains weaker than expected as global macroeconomic uncertainty has increased and customer order timing has elongated materially within our APS segment.

Robert VanHimbergen: Given these challenges, we are updating our outlook for the final quarter of the year. Our full year guidance now assumes total annual revenue of approximately $3.13 to $3.16 billion, down from our previous range of $3.2 to $3.3 billion. The adjusted EBITDA is now expected to be in the range of $502 million to $512 million, down from $512 million to $536 million. Margins in each segment remain generally in line with previous expectations, despite the lower revenue assumptions. The adjusted EPS is now expected to be $3.20 to $3.30, previously $3.30 to $3.50, driven by the impact of lower volumes, partially offset by accelerated cost actions being taken across the enterprise, and strongly unexpected synergy realization with an FPM and links us.

Robert VanHimbergen: Given these challenges, we are updating our outlook for the final quarter of the year. Our full-year guidance now assumes total annual revenue of approximately $3.13 to $3.16 billion, down from our previous range of $3.2 to $3.3 billion. The adjusted EBITDA is now expected to be in the range of $502 million to $512 million, down from $512 million to $536 million. However, margins in each segment remain generally in line with previous expectations, despite the lower revenue assumption.

Speaker Change: Given these challenges, we are updating our outlook for the final quarter of the year.

Operator: School Year 24 Earnings Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation.

Speaker Change: Our full year guidance now assumes total annual revenue of approximately $3.13 to $3.16 billion, down from our previous range of $3.2 to $3.3 billion.

Operator: If anyone today sure to acquire operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: Adjusted EBITDA is now expected to be in the range of $502 million to $512 million, down from $512 million to $536 million.

Sam Mynsberge: I'll now turn the conference over to Sam Mynsberge, Vice-President and Vest Relations. Mr. Meinvers, you may now begin your presentation. Thank you, operator. Good morning, everyone. Welcome to Hillenbrand's Earnings Call for our third quarter of fiscal year 2024. I'm joined by our president and CEO, Kim Ryan, and our senior vice president and CEO, Bob VanHimbergen. I'd like to direct your attention to the supplemental slides posted on our IR website. They'll be referenced on today's call.

Speaker Change: Margins in each segment remain generally in line with previous expectations, despite the lower revenue assumptions.

Robert VanHimbergen: Adjusted EPS is now expected to be $3.20 to $3.30, previously $3.30 to $3.50 driven by the impact of lower volume, partially offset by accelerated cost actions being taken across the enterprise and stronger than expected synergy realization with FPM and Lynx. Please review slide 9 for additional guidance. As the timing for a more normalized demand environment remains unclear, we will continue to take the necessary steps to position the business for long-term success.

Speaker Change: Adjusted EPS is now expected to be $3.20 to $3.30.

Speaker Change: Previously $3.30 to $3.50, driven by the impact of lower volumes, partially offset by accelerated cost actions being taken across the enterprise, and stronger than expected synergy realization within FPM and Linksys.

Sam Mynsberge: Turning to slide three, a reminder that our comments may contain certain forward-looking statements that are subject to the safe hardware provisions of the securities laws. These statements are not guarantees of future performance, and our actual results could differ materially. Also, during the course of this call, we will be discussing our results on a continuing operations basis, which excludes any impact from the discontinued operations base bill, as well as certain non-gap operating performance measures, including organic comparisons for our segments, which exclude the impacts from acquisitions, investitures, and foreign currencies change rates.

Robert VanHimbergen: Please review slide 9 for additional guidance assumptions. As the timing for and more normalized demand environment remains unclear, we will continue to take necessary steps to position the business for long-term success. We cannot dictate the macro environment to remain disciplined on controlling costs, executing on our target restructuring and integration plans, and accelerating cost-saving initiatives to ensure we remain well positioned when market demand recovers.

Speaker Change: Please review slide 9 for additional guidance assumptions.

Speaker Change: As the timing for a more normalized demand environment remains unclear, we will continue to take necessary steps to position the business for long-term success.

Robert VanHimbergen: We cannot dictate the macroenvironment to remain disciplined on controlling costs, executing on our targeted restructuring and integration plans, and accelerating cost-saving initiatives to ensure we remain well-positioned for when market demand recovers. With that, I'll turn the call back over to Kim.

Kim: We cannot dictate the macro environment to remain disciplined on controlling costs, executing on our targeted restructuring and integration plans, and accelerating cost-saving initiatives to ensure we remain well positioned when market demand recovers. With that, I'll turn the call back over to Kim.

Sam Mynsberge: I encourage you to review the appendix in slide three of the presentation, as well as our 10Q, which can be found on our website, for a deeper discussion of non-gap information, forward-looking statements, and the respectors that could impact our actual results. Finally, as of August 1st, Schenk process sued and performance materials has been re-branded under our existing copierian brand, but will be referred to as FPM throughout today's call.

Kimberly Ryan: With that, I'll turn the call back over to Kim. Thanks, Bob. Before taking questions, I'll end our presentation with a few final remarks. The current macroeconomic environment continues to pressure results, which we expect to persist through the end of the year and potentially beyond. Although we do not see clear signals of market recovery timing, we will continue to control what we can by diligently managing costs, driving productivity, and executing our integration and restructuring plans. I'm confident we're taking the appropriate actions to manage the business in the near term, and I have strong conviction about our portfolio, leading brands, and differentiated technologies, and believe we will remain well positioned for long-term growth and value creation.

Kimberly Ryan: Thanks, Bob. Before taking questions, I'll end our presentation with a few final remarks. The current macroeconomic environment continues to pressure results, which we expect to persist through the end of the year and potentially beyond. Although we do not see clear signals of market recovery timing, we will continue to control what we can by diligently managing costs, driving productivity, and executing our integration and restructuring. I'm confident we're taking the appropriate actions to manage the business in the near-term, and I have strong conviction about our portfolio of leading brands and differentiated technologies and believe we will remain well-positioned for long-term growth and value creation. With that, I'll open the line to questions. Thank you.

Kim: Thanks, Bob. Before taking questions, I'll end our presentation with a few final remarks.

Speaker Change: The current macroeconomic environment continues to pressure results, which we expect to persist through the end of the year and potentially beyond.

Kimberly Ryan: With that, I'll turn the call over to Kim. Thanks, Sam, and hello, everyone. Thank you for joining us on this morning's call. We were pleased with the progress made in executing our strategy during this quarter in light of tougher than expected macro-environment, as our FPM integration continued to progress well and exceeded our expectations for synergy achievement. However, the quarter was also characterized by heightened demand pressures across our mid and long cycle product line, as ongoing uncertainty in the macro-economic environment resulted in significantly lower than expected orders and revenue within our advanced process solution segment. In our molding technology solution segment, demand remained relatively stable, but we've yet to see a rebound in overall order patterns as macro-industry trends and machine utilization deteriorated as we progress through the quarter.

Speaker Change: Although we do not see clear signals of market recovery timing, we will continue to control what we can by diligently managing costs, driving productivity, and executing our integration and restructuring plans.

Speaker Change: I'm confident we're taking the appropriate actions to manage the business in the near term, and I have strong conviction about our portfolio of leading brands and differentiated technologies, and believe we will remain well positioned for long-term growth and value creation. With that, I'll open the line for questions.

Operator: With that, I'll open the line for questions. Thank you.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions, and once again, that's star number one. Thank you. Thank you. Our first question comes from the line of Daniel Moore with CJS Securities. Please answer your question.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. We will pull for questions, and we'll see that star one. Thank you.

Speaker Change: Thank you. At this time, we'll be conducting a question and answer session.

Speaker Change: If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Kimberly Ryan: We continue to see pressure to the recovery timeline in MTS, which necessitated the non-cash impairment charge taken in the quarter as we announced in yesterday's press release. From a performance standpoint, total revenue grew 10 percent over prior year, primarily driven by the acquisition of FPM, but decreased 8 percent organically. We continue to see higher aftermarket revenue across both segments. However, this was offset by the decline in capital equipment volume, stemming from the ongoing order pressures that we've been facing throughout the year.

Speaker Change: One moment please while we poll for questions and once again that's star 1. Thank you.

Daniel Moore: Our first question comes from the line of Daniel Moore with C.J.S. Securities. Please receive your questions. Thank you.

Speaker Change: Thank you. Our first question comes from the line of Daniel Moore with CJS Securities. Please receive your questions.

Operator: Thank you. Good morning, Kim. Good morning, Bob. I would appreciate it if you could ask me a few questions.

Daniel Moore: Thank you. Good morning, Kim. Good morning, Bob. I'd appreciate it if you could take a few questions. I'll start with APS.

Daniel Moore: Good morning, Kim. Good morning, Bob. Appreciate taking the questions. Good morning, Dan.

Daniel Moore: Thank you. Good morning, Kim. Good morning, Bob. I appreciate taking a few of your questions.

Kimberly Ryan: Let's start with APS. It sounds like it's across the board, but are there certain end markets or geographies that may be reacting to the macro more so than others? And I'm just wondering specifically, it sounds like food and recycling is holding up better than most, but not quite as robust as maybe the prior expectations. I want to make sure I heard that right. Thanks.

Daniel Moore: I'll start with APS. It sounds like it's across the board, but are there certain end markets or geographies that may be reacting to the macro more so than others? And I'm just wondering specifically, it sounds like food and recycling is holding up.

Kimberly Ryan: It sounds like it's across the board, but are there certain end markets or geographies that may be reacting to the macro more so than others? And I'm just wondering specifically, it sounds like food and recycling are holding up better than most, but not quite as robust as maybe prior expectations. I want to make sure I heard that right. Thanks.

Kimberly Ryan: Adjusted EBITDA margins also improved sequentially in both segments, as we continue to heavy-focused on executing our previously announced reflexion actions and accelerating additional cost initiatives. In order to speed these costs out initiatives along, we're utilizing temporary additional resources to help us execute our plans as quickly and effectively as possible, giving the intensified volume challenges.

Kim: Better than most but not quite as robust as maybe the prior expectations. I want to make sure I heard that right. Thanks

Kimberly Ryan: Yeah, I think from a market standpoint, I think some of the challenges are in those mid-size projects are very prevalently where we're seeing that. And in terms of geographies, I think that the expectations that we had from a polyolusence standpoint, we expected some of these large projects to come through in the Middle East and India, and while we still got a lot of activity going on in those projects, that's where we continue to see the delays. We received the large, as we mentioned in earlier calls, we received a large number of orders in China in the large projects earlier in the year, and we believe we received the majority of the market projects awarded.

Kimberly Ryan: Yeah, I think from a market standpoint, I think some of the challenges are in those mid-sized projects that are very prevalent where we're seeing that. And in terms of geographies, I think that the expectations that we had from a polyolefin standpoint were for some of these large projects to come through in the Middle East and India. And while we've still got a lot of activity going on in those projects, that's where we continue to see delays.

Speaker Change: Yeah, I think from a...

Speaker Change: From a market standpoint, I think some of the challenges are in those mid-sized projects are very prevalent where we're seeing that. And in terms of geographies, you know, I think that

Daniel Moore: The expectations that we had from a polyolefin standpoint, we expected some of these large projects to come through in Middle East and India. And while we still got a lot of activity going on in those projects, that's where we continue to see the delays. We received a large, as we mentioned in earlier calls, we received a large number of orders in China in the large projects earlier in the year. And we believe we received the majority of the market projects awarded.

Kimberly Ryan: We received a large, as we mentioned in earlier calls, we received a large number of orders in China for large projects earlier in the year. And we believe we received the majority of the market projects awarded.

Kimberly Ryan: Given the magnitude of the order, shortfall in APS and the increasing uncertainty around the world, which is dampened our outlook, Bob will discuss this further in a moment. I'll now provide some additional color on what we're seeing across key and markets. As I mentioned, orders in APS were materially impacted by continuing delays in customer decision timing. While we've been experiencing customers' delays throughout the year, they became more pronounced during the quarter, as customers remain highly sensitive to several different factors, the elevated interest rate environment, ongoing inflation, geopolitical uncertainty, and other global macroeconomic concerns. As a result, we're seeing customers conserved cash by postponing capex investments decisions beyond their current budget cycle, and we've seen this behavior across most of our key and markets globally.

Kimberly Ryan: But again, we're seeing the pressure and the move out on timing. The Movement on Timing is these large projects in those Asian geographies and Middle East geographies and the primary pressures in these mid-size type projects that are really pushing out and especially characterized by customers who are a bit more sensitive to a lot of the dynamics that are going on, you know, the interest rates, you know, consumer demand, you know, concerns around consumer demand, etc. Those types of projects are going to be more sensitive to that in the APS environment.

Kimberly Ryan: But again, where we're seeing the pressure and the move out on timing, the move out on timing is the large projects in those agent geographies, in Middle East geographies, and the primary pressures in these mid-size type projects that are really pushing out, and especially characterized by customers who are a bit more sensitive to a lot of the dynamics that are going on, the interest rates, consumer demand, concerns around consumer demand, reduction, et cetera. Those types of projects are going to be more sensitive to that in the APS environment. Really helpful.

Speaker Change: But again, where we're seeing the pressure and the move out on timing.

Speaker Change: The movement on timing is these large projects in those Asian geographies and Middle East geographies, and the primary pressures in these...

Speaker Change: mid-size type projects that are really pushing out, and especially characterized by customers who are a bit more sensitive to a lot of the dynamics that are going on, you know, the interest rates.

Speaker Change: you know, consumer demand, you know, concerns around consumer demand, reduction, etc. Those types of projects are going to be more sensitive to that in the APS environment.

Kimberly Ryan: Really helpful. And I know it's sort of an impossible question, but if you had to rank order them, how critical are interest rates? I mean, are people sort of sitting on the sidelines for, you know, the 2550 plus basis point to build a bit of relief? Or is it more the, you know, just general macro uncertainty from what you're hearing from customers?

Kimberly Ryan: I know it's an impossible question, but if you had to rank order, how critical are interest rates? Are people sitting waiting on the sidelines for the 25-50 plus basis point, build a bit of relief? Or is it more just general macro uncertainty from what you're hearing from customers? Well, gosh, I would say that there are just a number of factors right now. I don't think you can point to anyone and say that is the silver bullet, and if and when that changes, everything, you know, that'll be the item that kind of opens up the dam of order flow.

Kimberly Ryan: I'll start my comments with polymers and advanced materials in APS. As we discussed last quarter, we believe we won a majority of the projects awarded for large polyulopen systems so far this year. We expected to see decisions made for incremental investment projects in India and the Middle East in the back half of the year, which have not yet been awarded on our originally unsuspected timeline. While the timing of final project decisions have slowed significantly, the level of customer code activity remains high across these regions.

Speaker Change: really helpful and if I mean I know it's it's sort of an impossible question but if you had to rank order how critical or interest rates I mean are people sort of sitting waiting on the sidelines for you know the 25 50 plus basis point you know build a bit of relief or is it more that you know

Speaker Change: Just general macro uncertainty from what you're hearing.

Kimberly Ryan: Well, gosh, I would say that there are just a number of factors right now. I don't think you can point to any one and say that is the silver bullet, and if and when that changes everything, you know, that'll be the item that kind of opens up the dam of order flow.

Speaker Change: from customers.

Speaker Change: Well, gosh, I would say that there are just a number of factors right now. I don't think you can point to anyone and say that is the silver bullet.

Kimberly Ryan: In addition to growing project pipelines for polyulopen investments in other parts of Asia and Africa, we believe the strength of our global footprint and our best in class technologies and solutions keep us well positioned in these regions for when decision timing begins to normalize. For mid-size equipment systems serving the areas of engineer plastics, recycling, and battery, we continue to see customers pausing their capex projects with a number of decisions we expected over the summer down the late outside of the current fiscal year.

Speaker Change: And if and when that changes, everything, you know, that'll be the item that kind of opens up the dam of order flow. I think that there are, you know, right now you've got geopolitical concerns, you've got interest rate concerns, you've got inflation, ongoing inflation concerns and you add in, you know, just kind of what's going to happen, for instance, in the U.S. with elections.

Kimberly Ryan: I think that there are, you know, right now you've got geopolitical concerns, you've got interest rate concerns, you've got inflation, ongoing inflation concerns, and you add in, you know, just kind of what's going to happen, for instance, in the U.S. with the election, and what does that mean for policy and trade. You know, all of those concerns are mounting, and I think it's just causing people to take a step back and continue to watch and see how things work out over the next couple of quarters. That's really the slowdown that we saw this quarter at a significantly greater rate than we expected.

Kimberly Ryan: I think that there are, you know, right now you've got geopolitical concerns, you've got interest rate concerns, you've got inflation, ongoing inflation concerns, and you add in, you know, just kind of what's going to happen, for instance, in the US with election, and what does that mean to policy and trade? You know, all of those concerns, I think, are mounting, and I think it's just causing people to take a step back and continue to watch and see how things work out over the next couple of quarters. And that's really the slowdown that we saw this quarter at a significant and a greater rate than we expected.

Speaker Change: and what does that mean to policy and trade, you know, all of those concerns I think are mounting and I think it's just causing people to take a step back and continue to watch and see how things work out over the next...

Kimberly Ryan: However, the breadth of our product and systems offering for these markets, which was greatly enhanced through the acquisitions of FPM and Herbal has provided significant opportunity to compete more effectively than we could before. Our teams remain very energized for our ability to access new customers, increased share of all it with existing customers, and partner with customers and developing innovating solutions for these highly technical processes. Turning to food health and nutrition, orders in the quarter improved by double digits sequentially, but did not achieve the levels we expected coming into the year.

Speaker Change: And that's really the slowdown that we saw this quarter at a significantly greater rate than we expected.

Kimberly Ryan: and that has been the real change that caused us to step back and look at this from a more conservative point of view given that we are not, we are not seeing the change in trajectory that we have expected at this point of the year.

Kimberly Ryan: And that has been the real change that has caused us to step back and look at this from a more conservative point of view, given that we are not seeing the change in trajectory that we had expected at this point in the year.

Kimberly Ryan: And that has been the real change that has caused us to step back and look at this from a more conservative point of view, given that we are not seeing the change in trajectory that we had expected at this point in the year.

Speaker Change: And that has been the real change that caused us to step back and look at this from a more conservative point of view, given that we are not seeing the change in trajectory that we had expected at this point in the year.

Robert VanHimbergen: And then sticking with APS, you know, I know you don't want to get into fiscal 25, but with backlogs ticking lower and just given the uncertainty around capital equipment purchase decisions, you know, I would expect APS revenue perhaps to be modestly lower in fiscal 25 unless we start to put more into backlog in the next quarter or two. Is that a reasonable way to look at the world, or am I kind of, maybe, missing something?

Daniel Moore: Understood, really helpful.

Daniel Moore: I know you don't want to get into fiscal 25, but it was backlogs ticking lower and just given the uncertainty around capital equipment purchase decisions. I would expect the APS revenue perhaps to be modestly lower in 25 unless we start to put more into backlog in the next quarter or two. Is that a reasonable way to look at the world, or am I missing something?

Speaker Change: understood really helpful I am in sticking with APS you know I know you don't want to get into fiscal 25 but

Speaker Change: with backlogs ticking lower and just given the uncertainty around capital equipment purchase decisions. I would expect APS revenue perhaps to be modestly lower in 2025 unless we start to put more into backlog in the next quarter or two. Is that a reasonable way to look at the world or am I kind of maybe missing something?

Kimberly Ryan: While these and markets have historically been less cyclical, right now we're seeing elevated capex sensitivity from customers. That said, the pipeline of projects across our key customer segments of baked goods, pet foods, snacks, and cereals remains robust as customers evaluate investments for both capacity expansion and optimizing their existing operations through automation and equipment upgrades. We've not seen customers cancel projects in the pipeline, but we have seen a similar trend of delayed investment decisions as customers balance new investments with inflationary pressures higher interest rates and softening consumer trends.

Robert VanHimbergen: Yeah, I'll take that one, Dan. So, obviously, you know, we'll provide guidance, you know, in November for fiscal 25. But, you know, as we think about next year, there are a couple of things to think about in both businesses. You know, so we're really not seeing signs of a meaningful market recovery for MTFs. But I'd highlight, you know, two things.

Robert VanHimbergen: Yeah, I'll take that one, Dan. So obviously, you know, we'll provide guidance, you know, in November for fiscal 25. But, you know, as we think about next year, there are a couple of things to think about in both businesses. You know, we're really not seeing signs of a meaningful market recovery for MTS. But I'd highlight, you know, two things.

Robert VanHimbergen: Yes, I'll take that one, Dan.

Robert VanHimbergen: So obviously, we'll provide guidance in November on fiscal 25, but as we think about next year, there's a couple of things to think about really in both businesses. So we're really not seeing signs of a meaningful market recovery for MTS. But I'd highlight two things. One, the hot-runner business certainly can be quick to recover. And then the other thing to keep in mind is that we do have run rate savings from our structuring charge. We took this year that's going to benefit 2025.

Speaker Change: Yeah, I'll take that one, Dan. So obviously, you know, we'll provide guidance, you know, in November on fiscal 25. But, you know, as we think about next year, you know, there's a couple things to think about really in both businesses.

Speaker Change: You know, so we're really not seeing signs of a meaningful market recovery for MTFs.

Robert VanHimbergen: One, the hot runner business certainly can be quick to recover. And then the other thing to keep in mind is that, you know, we do have run rate savings from our restructuring charge we took this year that's going to benefit 2025. So, on the accounting side, you know, we do recognize revenue on a percentage of completion basis, and so timing those orders would certainly impact 25%, certainly would, how those orders come in would impact, you know, when those revenues are certainly recorded, considering those orders are mid and long term in duration, so those 12 to 24 months in duration certainly impact, you know, when that revenue is booked on, on, on, on, on, on, on, on, on So, in the near term, you know, we're going to continue to focus on cost actions and operational efficiencies to really mitigate some of that top line pressure.

Robert VanHimbergen: One, the hot runner business certainly can be quick to recover. And then the other thing to keep in mind is that, you know, we do have run rate savings from our restructuring charge we took this year that's going to benefit 2025. Now, on the EPS side, with the order trends that we're seeing right now, we do expect backlog and EPS to be down sequentially, and that's certainly going to put pressure on revenue, depending on those order patterns.

Speaker Change: But I'd highlight, you know, two things. One, the hot runner business certainly can be quick to recover. And then the other thing to keep in mind is that, you know, we do have run rate savings from our restructuring charge we took this year that's going to benefit 2025.

Kimberly Ryan: Finally, for our aftermarket parts and services in APS, we continue to see solid growth in this highly profitable part of the business as our large and growing install base pays dividends in the legacy business. In addition, we're driving strong performance within our recent acquisitions through the execution of integration initiatives, including dedicated aftermarket resources, better visibility into install base opportunities and improve pricing realization. As discussed previously, this is a key focus area of our integration, and I plead to this traction that we're making. However, the delay in larger polyolifen projects orders has put pressure on our ability to achieve even higher levels about the market growth. As many of those large projects would have included upfront spare parts packages.

Robert VanHimbergen: Now on the APS side, with order trends that we're seeing right now, we do expect backlog in APS to be down sequentially. And that's certainly going to put pressure on revenue, depending on those order patterns. So, on the accounting side, you know, we do recognize revenue on a percentage of completion basis. And so time goes; orders would certainly impact 25. Certainly, how those orders come in would impact, you know, when those revenues certainly reported, conferring those orders are mid and long from iterations. So those 12 to 24 months in duration certainly impacts, you know, when that revenue is booked on those orders being coming in the door, I should say.

Speaker Change: Now on the APS side, with order trends that we're seeing right now, you know we do expect backlog and APS to be down sequentially and that's certainly going to put pressure on revenue depending on those order patterns.

Robert VanHimbergen: So, on the accounting side, you know, we do recognize revenue on a percentage of completion basis, and so timing those orders would certainly impact 25%, it certainly would, how those orders come in would impact, you know, when those revenues are recorded, considering those orders are mid and long term in duration, so those 12 to 24 months in duration certainly impact, you know, when that revenue is booked on, on, on, on, on, on, on, on, on So, in the near term, you know, we're going to continue to focus on cost actions and operational efficiencies to really mitigate some of that top line pressure.

Speaker Change: So, on the accounting side, you know, we do recognize revenue on a percentage of completion basis, and so timing those orders would certainly impact 25.

Speaker Change: It certainly would, how those orders come in would impact, you know, when those...

Speaker Change: When revenue is certainly recorded, considering those orders are mid and long term in duration, so those 12 to 24 months in duration certainly impacts when that revenue is booked on those orders coming in the door, I should say.

Kimberly Ryan: Now, turning to our molding technology solution segment. In the quarter, we saw improved demand for automotive and packaging applications, primarily in India and Asia, as hotrunner demand saw its first quarter of year over year growth in China since early 2022. Overall, for the segment, orders were up slightly year over year, but essentially flat on a sequential basis as we'd yet to see signs of broader demand recovery.

Robert VanHimbergen: So in your term, you know, we're going to continue to focus on cost actions and operational efficiencies to really mitigate some of that hotline pressure.

Speaker Change: So, near term, we're going to continue to focus on cost actions and operational efficiencies to really mitigate some of that top-line pressure.

Robert VanHimbergen: Really that's helpful Bob, and it's really impressive what you've done on the margin front in light of, you know, the incremental kind of macro and revenue weakness. We think we can hold the line in terms of APS with the restructuring initiatives, you know, the synergies from FPM, etc. Just wondering how you're kind of thinking about maybe, you know, decrements in the near-term until we start to see that order book increase specifically on the APS side. Thanks.

Daniel Moore: Really, that's helpful, Bob. And, you know, really impressive what you've done on the margin front in light of, you know, the incremental kind of macro and revenue weakness. We think we can hold the line in terms of APS with the restructuring initiatives, you know, the synergies from at PM, etc.

Speaker Change: Really, that's helpful, Bob, and, you know, really impressive what you've done on the margin front in light of, you know, the incremental kind of macro and revenue weakness.

Speaker Change: We think we can

Kimberly Ryan: Key macro indicators showed positive signs in April, but then trended negatively through the remainder of the quarter, reflecting a challenging and uncertain environment for machine utilization and mold making activity in North America. While indexing to new capital equipment remains subdued, we continue to focus on driving aftermarket parts and services revenue, achieving a record level in the quarter.

Bob: Hold the line in terms of APS with the

Speaker Change: restructuring initiatives, you know, the synergies from FPM, etc. Just wondering how you're kind of thinking about maybe, you know, decrementals in near term until we start to see that order book increase.

Robert VanHimbergen: Just when they're in how you're kind of thinking about maybe, you know, decremental in in your term until we start to see that order book increase. Specifically, yes, I'd thanks. Yeah, it's probably hard to say if we're going to hold the line. I mean, we do have obviously a couple, a couple of letters we can pull. Certainly, you know, on the APS side, we've historically used a contingent. I want to take the workforce, but an outsourcing model. So when volumes do decline, we've had the ability to insource those hours and reduce that outsource work. And so that's, you know, really why you see with the volume decline on margins and APS have been relatively stable.

Robert VanHimbergen: Yeah, it's probably hard to say if we're going to hold the line. I mean, we do have, obviously, a couple of levers we can pull.

Speaker Change: specifically on the MPS side. Thanks.

Kimberly Ryan: In summary, we've experienced greater than expected challenges across our end markets, as macro factors have weighed heavily on our near-to-mid term growth opportunities and expectations. In light of this, we continue to focus and execute on controllable factors within our four walls, first two targeted growth initiatives and exercise discipline regarding discretionary costs. In addition, we remain on track with previously announced restructuring actions, and we continue to evaluate further actions to ensure that we're optimizing our cost structure across the organization.

Speaker Change: It's probably hard to say if we're going to hold the line. I mean, we do have, obviously, a couple of levers we can pull. Certainly, on the APS side, we've historically used...

Robert VanHimbergen: Certainly, you know, on the APS side, we've historically used a contingent, I won't say contingent workforce, but an outsourcing model. So when volumes do decline, we've had the ability to insource those hours and reduce that outsourced work. And so that's, you know, really why you see with the volume decline, our margins in APS have been relatively stable. The other tailwind we have going into next year, you know, the FPM business, as Kim highlighted in her prepared remarks, we're seeing really strong performance in that business on operational efficiencies as they execute contracts, but also on the synergies where we're accelerating that. So those will be some of the tailwinds we have going into offset some top-line pressure. Yeah.

Speaker Change: A contingent, I won't say contingent workforce, but an outsourcing model, so when volumes

Speaker Change: due todecline we've had the ability to insource those hours and reduce that outsource work and so that's really why you see with the volume decline our margins and appss have relatively stable the other the other tail and we have oneed into next year you know the f p m business as as kim highlighted in a prepared remarks

Kimberly Ryan: The other, you know, the other tailwind we have going into next year, you know, the FPM business, as Kim highlighted in a prepared remarks. You know, we're seeing really strong performance in that business on operational efficiencies as they execute contracts, but also on the synergies where we're accelerating that. So those would be some of the tailwinds we have going in to offset some top line pressure. Yeah, and I think, you know, as you look at kind of the topography of how the business builds up. Remember that the strategic focus of this was to build, to continue to build the portfolio towards businesses that have less exposure to cyclicality.

Kimberly Ryan: I remain confident in our strategy and the long-term catalyst for our business, as the growing global middle class and a driver increase sustainability supports long-term demands for durable plastics, processed food, and more sustainably focused solutions, including recycling and battery. I'm confident that we're well-positioned to meet those demands through our leading brands and are differentiated and highly engineered processing solutions.

Speaker Change: You know, we're seeing really strong performance in that business on operational efficiencies as they execute contracts, but also on the synergies where we're accelerating that. So those will be some of the tailwinds we have going into offset some top line pressure.

Kimberly Ryan: Yeah, and I think, you know, as you look at kind of the topography of how the business builds up, remember that the strategic focus of this was to build, and continue to build the portfolio towards businesses that have less exposure to cyclicality. And even though we're seeing a bit more than perhaps is normal in that FHN business or the food health and nutrition business, it's still, compared to what you see in the large capital projects businesses, significantly less.

Speaker Change: Yeah, and I think, you know, as you look at kind of the topography of how the business builds up, remember that the strategic focus of this was to build, to continue to build the portfolio towards businesses that have less exposure to cyclicality. And even though we're seeing a bit more than perhaps is normal in that FHN business or the food health and nutrition business,

Kimberly Ryan: And even though we're seeing a bit more than perhaps is normal in that in that FHN business or the food health nutrition business. It's still compared to what you see in the large capital projects businesses. It's significantly less. So remember that the businesses we're using to really help balance that out are the food health nutrition businesses we've invested heavily in and the aftermarket business. Those two businesses were heavily focused on so that we can continue to kind of balance out some of the cyclicality that you may see in other parts of the business. And our ability to react to what we see in those that cyclicality is again if Bob mentioned, really driven by creating flexibility with our capacities.

Robert VanHimbergen: Now, the forward training call over to Bob to discuss our financials in more detail. I want to highlight the progress of our integration, as well as touch on our most recent sustainability report. As we approach the one-year anniversary of our FPM acquisition, I'm tremendously pleased with the fit of the business within our portfolio, the people, the culture, the technologies and capabilities of the combined companies. We are stronger as we've come together as one team.

Speaker Change: It's still, compared to what you see in the large capital projects business, it's...

Kimberly Ryan: So, remember that the businesses we're using to really help balance that out are the food health and nutrition business that we've invested heavily in and the aftermarket business. Those two businesses were heavily focused on so that we could continue to, to kind of balance out some of the cyclicality that you may see in other parts of the business, and our ability to react to what we see in that cyclicality is, again, as Bob mentioned, really driven by creating flexibility with our capacities.

Speaker Change: is significantly less. So remember that the businesses we're using to really help balance that out are the food health and nutrition businesses we've invested heavily in and the aftermarket business. Those two businesses we're heavily focused on so that we can continue to.

Robert VanHimbergen: Through the deployment of our Hillenbrand operating model and the utilization of temporary external resources, we've been able to accelerate operational efficiencies and cost synergies, resulting in even a margins over 300 basis points ahead of what we had originally planned by this time within the FPM business. While the team and I are disappointed that the broader dynamic environment has limited the speed in which we can capitalize on more commercial opportunities, I'm very proud of how we've executed our integration plans to create a winning organization for the future.

Speaker Change: to kind of balance out some of the cyclicality that you may see in other parts of the business and and our ability to react to what we see in those that cyclicality is again as Bob mentioned really driven by creating flexibility with our capacities and and I was really pleased to see how well that that has

Daniel Moore: And I was really pleased to see how well that that has translated, being down on the top and really not seeing an exponential figure down on the bottom. I mean that APS side you can really see how valuable that setup is for being able to flex up and down as volumes as volumes change throughout the year.

Kimberly Ryan: And I was really pleased to see how well that translated being down on the top and really not seeing an exponential figure down on the bottom. And on the APS side, you can really see how valuable that setup is for being able to flex up and down as volumes change throughout the year.

Bob: Translated, being down on the top and really not seeing an exponential figure down on the bottom in that ATS side, you can really see how valuable that setup is for being able to flex up and down as volumes.

Robert VanHimbergen: Most importantly, I'm highly confident in our team and our portfolio of leading process technologies for ingredient automation, mixing, extruding, portioning as well as full systems integration that will allow us to deliver best-in-class solutions to customers in the years ahead. Finally, as you saw in May, we published our fifth sustainability report, which focused on product innovation, supply chain, and increased transparency around our key environmental metrics like waste, water, and scope 1, 2, and 3 emissions. We're pleased with the continued progress we're making in this regard and as a result, we've received top core tile scores amongst the industrial companies by third-party reporting agencies.

Kimberly Ryan: That's helpful and certainly evident. Maybe the last one for me, and I'll jump back in the queue. I appreciate the commentary around accelerating the synergies and the integration ahead of schedule on the FPM side. Maybe just talk about beyond the vision when you put them together. Is there opportunity in a downturn like this to get closer to customers and even maybe accelerate some of the share gains that you had hoped to achieve when you put them together when we think about coming out on the other side? That's it for me. Thanks.

Daniel Moore: Yeah, that's helpful.

Speaker Change: change throughout the year.

Daniel Moore: and certainly evident.

Daniel Moore: Maybe the last one for me, and I'll jump back and cue. Appreciate the commentary around, you know, accelerating the synergies and the integration ahead of schedule on the FPM side.

Speaker Change: No, that's helpful, and certainly evident. Maybe the last one for me, and I'll jump back in queue.

Speaker Change: Appreciate the commentary around, you know, accelerating the synergies and the integration ahead of schedule on the FPM side, you know, maybe just talk about beyond kind of the vision when you put them together.

Kimberly Ryan: You know, maybe just talk about beyond the kind of a vision when you put them together, is there opportunity in a downturn like this to, you know, get closer to customers and even maybe accelerate some of the share gains that you had hoped to achieve when you put, you know, put them together when we think about coming out the other side.

Speaker Change: Is there opportunity in a downturn like this to, you know, get closer to customers and even maybe accelerate some of the share gains that you had hoped to achieve when you put, you know, put them together when we think about coming out the other side? That's it for me. Thanks.

Robert VanHimbergen: With that, I'll now turn the call over to Bob. Thanks, Kim, and good morning, everyone. Turning to our consolidated performance on Slide 5, we delivered revenue of $787 million, an increase of 10% compared to the prior year, primarily due to the acquisition of FPM. On an organic basis, revenue decreased 8% year over year, as pricing and higher aftermarket revenue were more than offset by lower capital equipment volume. Adjusted EBITDA of $131 million increased 4%, the decreased 14% organically, as pricing, the impact of cost actions, and favorable product mix were more than offset by the flow through effect of lower volume and cost inflation.

Kimberly Ryan: That's it for me, thanks. Yeah, I would say that, you know, this necessity, you know, as the mother of invention or some, some quote like that, you know, what we've really seen with the teams coming together is, is coming together on portfolio, coming together commercially, coming together, thinking about how we can manage projects, how can we more quickly move them into different geographies where we have a footprint and they did not yet have a footprint. These are all of the things that the team is working on to continue to push the FPM opportunity ahead. And I'm really, really pleased with the way these teams are coming together.

Kimberly Ryan: Yeah, I would say that, you know, this is a necessity, you know, as the mother of invention or some quote like that. You know, what we've really seen with the teams coming together is coming together on the portfolio, coming together commercially, coming together thinking about how we can manage projects, how can we more quickly move them into different geographies where we have a footprint and they do not yet have a footprint.

Kimberly Ryan: Yeah, I would say that, you know, this is a necessity, you know, as the mother of invention or some quote like that. You know, what we've really seen with the teams coming together is coming together on the portfolio, coming together commercially, coming together thinking about how we can manage projects, how can we more quickly move them into different geographies where we have a footprint and they do not yet have a footprint.

Speaker Change: Yeah, I would say that, you know, this is a necessity, you know, as the mother of invention or some quote like that. You know, what we've really seen with the teams coming together

Speaker Change: is coming together on portfolio, coming together commercially, coming together thinking about how we can manage projects, how can we more quickly move them into different geographies where we have a footprint and they did not yet have a footprint. These are all of the things that the team is working on to continue to push the FPM opportunity ahead. And I'm really, really pleased with the way these teams are coming together. At this point, we had hoped that we would have the operating structure in place and that we would have global, we would be pretty far down the road on having our global shared services implemented. And we are, but we are also already at the point where manufacturing teams are talking to one another, engineering.

Kimberly Ryan: These are all of the things that the team is working on to continue to push the FPM opportunity ahead. And I'm really, really pleased with the way these teams are coming together. At this point, we had hoped that we would have the operating structure in place and that we would have global, and we would be pretty far down the road on having our global shared services implemented.

Kimberly Ryan: These are all of the things that the team is working on to continue to push the FPM opportunity ahead. And I'm really, really pleased with the way these teams are coming together. At this point, we had hoped that we would have the operating structure in place and that we would have global, and we would be pretty far down the road on having our global shared services implemented.

Kimberly Ryan: At this point, we had hope that we would have the operating structure in place and that we would have global; we would be pretty far down the road on having our global shared services implemented. And we are, but we are also already at the point where manufacturing teams are talking to one another, engineering teams are talking to one another, portfolio marketing resources are talking to one another about how we make sure that we have the right products in the portfolio to be able to offer systems and solutions. So we are very excited about, about the opportunities that, that this brings together and the, and the ability of these teams to work with one another.

Robert VanHimbergen: We delivered consolidated adjusted EBITDA margin of 16.7%, a decrease of 90 basis points over the prior year. We reported gap net loss of $249 million, or a loss of $3.53 per share, down from income of $0.60 per share in the prior year, primarily due to a $265 million non-cash of parameter charge in the quarter, related to the hot runner product line within the molding technology solution segment. As Kim referenced, this charge was necessitated by the prolonged decline in demand in uncertain recovery timing for that business.

Kimberly Ryan: And we are, but we are also already at the point where manufacturing teams are talking to one another, engineering teams are talking to one another, and portfolio marketing resources are talking to one another about how we make sure that we have the right products in the portfolio to be able to offer systems and solutions. So we are very excited about the opportunities that this brings together and the ability of these teams to work with one another.

Kimberly Ryan: And we are, but we are also already at the point where manufacturing teams are talking to one another, engineering teams are talking to one another, and portfolio marketing resources are talking to one another about how we make sure that we have the right products in the portfolio to be able to offer systems and solutions. So we are very excited about the opportunities that this brings together and the ability of these teams to work with one another.

Speaker Change: These teams are talking to one another.

Speaker Change: portfolio marketing resources are talking to one another about how we make sure that we have the right products in the portfolio to be able to offer systems and solutions, so

Speaker Change: we are very excited about about the opportunities that this brings together and the the ability of these teams to work with one another you know that's always a question when you do m a are that it's not just about the strategy in the products in the pfolio it's the culture come together and work effectively together and i'm pleased that we're seeing

Kimberly Ryan: You know, that's always a question when you do M&A; it's not just about the strategy and the products and the portfolio, it's whether the cultures can come together and work effectively together. And I'm pleased that we're seeing really positive results on all of those fronts. So we are, you know, we signed up for $30 million in synergies across these assets. We feel that we are well on track for that, and the team is continuing to identify and ideate and put ideas in the pipeline that we will act on as quickly as we can.

Kimberly Ryan: You know, that's always a question when you do M&A; it's not just about the strategy and the products and the portfolio, it's whether the cultures can come together and work effectively together. And I'm pleased that we're seeing a really positive result on all of those fronts. So we are, you know, we signed up for $30 million in synergies across these assets. We feel that we are well on track for that, and the team is continuing to identify and ideate and put ideas in the pipeline that we will act on as quickly as we can.

Kimberly Ryan: You know, that's always a question when you do M&A. Are the, it's not just about the strategy and the products in the portfolio, it's, can the cultures come together and work effectively together? And I'm pleased that we're seeing a really positive result on all of those fronts. So we are, you know, we find up for $30 million in synergies across these assets. We feel that we are well on track for that, and the team has continued to identify and ideate and put ideas in the pipeline that we will action as quickly as we can. And that is, that has been the, you know, the course that we are charting, especially given some of the volume pressure.

Robert VanHimbergen: We continue to take action to right size the cost structure in this business, improve operational efficiency, and focus on new product development to ensure we're well positioned to serve customers once market conditions improve. The adjusted earnings per share of $0.85 decreased 10 cents, or 11% year-over-year, but was at the high end of our expectations coming into the quarter, aided by the benefit of accelerated cost actions, which helped to offset the short-ballon volumes.

Speaker Change: really positive results on all of those fronts so we are

Speaker Change: we signed up for thirty million dollars and synergies across these assets we feel that we are well on track of that and the team has continued to identify and ideight and put ideas in the pipeline that we will action as quickly as we can and that as

Robert VanHimbergen: Our adjusted effect of tax rate in the quarter was 28.6%, which was in line with our expectation. Our capital from operations was $46 million in the quarter, down approximately $43 million from the prior year, primarily due to continued pressure of lower order intake and timing of working capital on large projects. Capital expenditures were $60 million in the quarter, and we returned approximately $16 million to shareholders throughout quarterly dividend. We continue to drive operational improvements in our trade working capital, however we are staying pressure for our cash flow performance until order patterns normalize.

Kimberly Ryan: And that is.................. That has been the course that we are charting, especially given some of the volume pressure that makes all of those ideas even more important to implement quickly.

Kimberly Ryan: And that is.................. That has been the course that we are charting, especially given some of the volume pressure. That makes all of those ideas even more important to implement quickly.

Speaker Change: That has been the course that we are charting, especially given some of the volume pressure, that makes all of those ideas even more important to implement quickly.

Kimberly Ryan: That makes all of those ideas even more important to implement quickly.

Daniel Moore: All right.

Operator: All right, thanks again. I'll jump back. Let me follow up.

Daniel Moore: All right, thanks again. I'll jump back when it follows.

Daniel Moore: Thanks, Ian. I'll jump back when it follows. All right.

Speaker Change: All right, thanks again. I'll jump back when it follows.

Daniel Moore: Thanks, Dan.

Matt Somerville: Our next question is from the line of Matt Somerville with DA Davidson. Let's just see with your questions. Thanks. Maybe just to review where we're ATS and MTS in the quarter with price cost. And does that spread widen or narrow as we look ahead based on the fundamentals you're seeing in the business today? Hey, Matt, so I'll take that one. Yeah, so similar answer to what we've said in the past, right? We continue to have price cost coverage on the APS side. And then on the MTS side, you know, continued pricing pressure. Really, you know, in Q3, we've seen that really all year as, you know, as competitors are fighting for volumes.

Operator: Our next question is from the line of Matt Summerville with D.A. Davidson. Please proceed with your question.

Operator: Our next question is from the line of Matt Summerville with D.A. Davidson. Please proceed with your question.

Dan: All right, thanks, Dan.

Dan: Our next question is from the line of Matt Summerville with D.A. Davidson. Please proceed with your questions.

Matt Summerville: Thanks. Maybe just to review, where were ATS and MTS in the quarter with price cost? And does that spread, widen, or narrow as we look ahead based on the fundamentals you're seeing in the business?

Matt Summerville: Thanks. Maybe just to review, where were ATS and MTS in the quarter with price cost? And does that spread, widen, or narrow as we look ahead based on the fundamentals you're seeing in the business?

Matt Summerville: Thanks. Maybe just to review, where were ATS and MTS in the quarter with price cost and does that spread widen or narrow as we look ahead based on the fundamentals you're seeing in the business today?

Robert VanHimbergen: We now project free cash flow in the year to be approximately $100 million. Now moving to second performance, starting on APS on slide sets, revenue of $569 million increased 23% compared to the prior year, primarily driven by FPM. Organic revenue decreased 6% year by year, as lower capital equipment volume, more than offset price realization and aftermarket revenue growth. Adjusted EBITDA of $109 million increased 17% year over year and was down 8% organically, primarily driven by lower volume and cost inflation, which more than offset pricing.

Robert VanHimbergen: Hey, Matt, so I'll take that one. Yeah, so similar answer to what we've said in the past, right, we continue to have price costs and coverage on the APS side. And then on the MTS side, you know, continued pricing pressure, really, you know, in Q3 we've seen that all year as, you know, as competitors are fighting for volumes. And so we've been under price cost coverage on the MTS side. And, you know, Hillenbrand, you know, we are over that 100% coverage, but I don't see that changing, you know, in Q4 going forward.

Robert VanHimbergen: Yeah, hey, Matt, so I'll take that one. Yeah, so similar answer to what we've said in the past, right, we continue to have price costs and coverage on the APS side. And then on the MTS side, you know, continued pricing pressure, really, you know, in Q3 we've seen that all year as, you know, as competitors are fighting for volumes. And so we've been under price cost coverage on the MTS side. And, you know, Hillenbrand, you know, we are over that 100% coverage, but I don't see that changing, you know, in Q4 going forward.

Speaker Change: Hey Max, I'll take that one. Yeah so similar answer to what we've said in the past right we continue to have price cost

Max: coverage the ap side and then on the nt side continued pricing pressure really in q three we've seen that really all a year as know competitors fighting for volumes and so we've been under price cost cored in the side

Robert VanHimbergen: And so we've been under price cost covered in the MTS side. And, you know, the number and, you know, we are over that 100% coverage. But I don't see, you know, that changing, you know, in Q4 going forward. And so it's been relatively stable. We keep that pricing; I'd say favorability on the APS side. It's going to be short on MTS. It's not getting worse. It's not getting better.

Speaker Change: and pe the liber brandsyou know we are are over that one hundred percent coverage

Speaker Change: But I don't see, you know, that changing, you know, in Q4 going forward. And so it's been relatively stable. We keep that pricing, I'd say, favorability on the EPS side. It's going to be short on MTS. It's not getting worse. It's not getting better. So as I said earlier, it's really status quo.

Robert VanHimbergen: And so it's been relatively stable. If we keep that pricing, I'd say favorability on the APS side, it's going to be short on MTS. It's not getting worse. It's not getting better. So, as I said earlier, it's really the status quo.

Robert VanHimbergen: And so it's been relatively stable. We keep that pricing, I'd say favorability on the APS side, it's going to be short on MTS. It's not getting worse. It's not getting better. So, as I said, I think it's really status quo.

Robert VanHimbergen: We delivered adjusted EBITDA margin in the quarter of 19.2%, which was down 90 basis points over the prior year, or 30 basis points organically. We expected seventh margin delusion given FPM's 13% margins at the time of acquisition. But as a result, the stronger margin performance through accelerated cost scenario achievement, operational efficiency gains, and aftermarket growth and pricing, we've been able to mitigate the due to the fact more quickly than originally anticipated, even with top line challenges related to capital equipment volumes.

Matt Somerville: So, as I said, they look really. I think Kim, you mentioned in your prepared remarks that typically these projects come with an initial, you know, parts package provision. If we're kind of lower for longer in that business, what does that mean for aftermarket? I guess I'm trying to think about when you look at APS, when you look at even an MTS, how sustainable is the growth you're seeing in aftermarket? And I know the pandemic had contributed to some level of pent-up demand in that regard. Have you worked your way through that access?

Kimberly Ryan: I think, Kim, you mentioned in your prepared remarks that typically these projects come with an initial, you know, parts package provision. If we're kind of lower for longer in that business, what does that mean for the aftermarket? I guess I'm trying to think about when you look at APS, when you look at even MTS, how sustainable is the growth you're seeing in the aftermarket? And I know the pandemic has contributed to some level of pent-up demand in that regard. Have you worked your way through that excess, if you will? Just talk a minute about the aftermarket, and then I have one other quick follow-up.

Kim: I think, Kim, you mentioned in your prepared remarks that typically these projects come with an initial, you know, parts package provision.

Speaker Change: it's we' kind of lower for longer

Kim: in that business.

Speaker Change: what does that meanans for aftermarkketand i guess i'm trying to think about when you look at a ps s when you look at it even m t s how sustainable is the growth you're seeing in aftermark and i know the pandemic had contributed to some level of pent up demand in that regard

Robert VanHimbergen: Backlog of $1.73 billion increased 8% compared to the prior year, driven by the addition of FPM. On an organic basis, backlog decreased 8%, and was also down 8% sequentially due to the execution of existing backlog and increased order softness across mid and long cycle parts of the segment. We continue to focus on accelerating cost actions in the segment, such as pursuing additional procurement, value engineering, and product standardization opportunities, driving productivity within our plants, and right sizing our cost structure in response to the challenging demand environment.

Robert VanHimbergen: If you will, just talk a minute about aftermarket, and then I have one other quick follow-up. So, Matt, I could provide some color on aftermarket. So this has been a strategic priority for us for obviously some time here, considering the margin benefit we get on aftermarket versus capital. So, you know, this quarter was no different than the last several, where we're seeing, you know, really strong, I'd say mid to high single-digit growth year over year on aftermarket revenue. You know, we do, to your point, you know, we did have pressure in the quarter, and that could continue with some of these larger orders getting pushed out because we generally do sell, you know, spare part packages with those orders. But some of the tailings we have, you know, one, we do have a large install base, and so we're seeing the continued benefit of that come through.

Speaker Change: have you worked your way through that that access if you will just talk a minute about aftermarket then ihave one other quick following

Robert VanHimbergen: Yeah, so Matt, I could provide some color on aftermarket. So this has been a strategic priority for us for, obviously, some time here, considering the margin benefit we get on aftermarket versus capital. So, you know, this quarter was no different from the last several where we're seeing, you know, really strong, I'd say mid to high single-digit growth year-over-year on aftermarket revenue. But, to your point, we did have pressure in the quarter and that could continue with some of these larger orders getting pushed out because we generally do sell, you know, spare part packages with those orders.

Robert VanHimbergen: Yeah, so Matt, I could provide some color on aftermarket. So this has been a strategic priority for us for, obviously, some time here, considering the margin benefit we get on aftermarket versus capital. So, you know, this quarter was no different from the last several where we're seeing, you know, really strong, I'd say mid to high single-digit growth year-over-year on aftermarket revenue. But, to your point, we did have pressure in the quarter and that could continue with some of these larger orders getting pushed out because we generally do sell, you know, spare part packages with those orders.

Speaker Change: so so that i could provide some color on on aftermarket so this has been a strategic priority for us for for obviously some time here considering the margin benefit we get on aftermarket versus capital so you know this quarter was no different than the last several where we're seeing you really strong i'd say mid the high single digit growth the overyear aftermarket revenue

Robert VanHimbergen: As we head toward fiscal 2025, we recognize the pressure lower backlog may put on our ability to drive top line performance, which makes the acceleration of these cost actions even more critical in order to protect profitability. Now, turning to MTS on slide 7, revenue of $217 million decreased 14% your year, primarily due to lower volume from Jackson moving equipment, partially offset by aftermarket growth. Adjusted EBITDA of $35 million decreased 32%, and adjusted EBITDA margin of 15.9%, decreased 440 basis points compared to the prior year.

Speaker Change: You know, we do, to your point, you know, we did have pressure in the quarter and that could continue with some of these larger orders getting pushed out because we generally do sell, you know, spare part packages with those orders.

Robert VanHimbergen: But some of the tailwinds we have, you know, one, we do have a large installed base, and so we're seeing the continued benefit of that come through. And then, you know, we're seeing progress, certainly, in the acquisitions that we've had. We're seeing some of the fundamentals we expected to come through on pricing and volume, you know, certainly benefiting the year. Obviously, you know, with orders, you know, how those come out in the next, call it, six months. And again, those spare part packages, you know, that would certainly impact 2025. But some of the fundamentals we put in place and then the installed base, we feel good about.

Robert VanHimbergen: But some of the tailwinds we have, you know, one, we do have a large installed base, and so we're seeing the continued benefit of that come through. And then, you know, we're seeing progress, certainly, in the acquisitions that we've had. We're seeing that some of the fundamentals we expected to come through on pricing and volume, you know, certainly benefit the year. Obviously, you know, with orders, you know, how those come out in the next, call it, six months. And again, the spare part packages, you know, that would certainly impact 2025. But some of the fundamentals we put in place and then the installed base, we feel good about.

Speaker Change: but some of the tailinds we have one we do have a large install ase and so we're seeing continued benefit of that come through

Kimberly Ryan: And then, you know, we're seeing progress certainly, you know, in the, in the app positions that we've had. We're seeing some of the fundamentals we expected to come through on pricing and volume, you know, certainly benefit of the year. Obviously, you know, with orders, you know, how those come out in the next call it six months, and again, the spare part packages, you know, that would certainly impact 2025, but some of the fundamentals we put in place and then the install base we feel good about. Yeah, and I would just add to that, that, that, that said, you know, aftermarket expansion and FHN is a continued area of focus. Remember that we felt that each of the companies, Links and FPM that we acquired, each had a different kind of a different medicine that we wanted to provide. On the Links of side, we wanted to improve; we wanted to improve our share of aftermarket.

Speaker Change: And then, you know, we're seeing progress certainly, you know, in the acquisitions that we've had. We're seeing that some of the fundamentals we expected to come through on pricing and volume, you know, certainly benefit the year. Obviously, you know, with orders...

Speaker Change: You know, how those come out in the next, call it, six months, and again, those spare part packages, you know, that would certainly impact 2025, but some of the fundamentals we put in place and then the install base we feel good about.

Robert VanHimbergen: Largely driven by the impact of lower volumes on operating leverage and price cost pressure. However, on a sequential basis, margins were up 100 basis points, as we began to realize the benefit of our structuring action. Backlog of $238 million decreased 11% compared to the prior year, but increased 4% on a sequential basis. As can mentioned, we saw pockets of improvement outside of North America as orders remained relatively stable on a sequential basis, and improved 3% year over year.

Kimberly Ryan: Yeah, and I would just add to that. That said, you know, aftermarket expansion and FHN are a continued areas of focus. Remember that we felt that each of the companies, Lynx and FPM, that we acquired, each had a different kind of different medicine that we wanted to provide. On the Lynx side, we wanted to improve our share of the aftermarket. On the Schenck side or the FPM side, we wanted to improve the pricing of the aftermarket. So we have continued to focus on and will continue to focus on that. You see that in the results as well.

Speaker Change: Yeah, and I would just add to that, that said, you know, aftermarket expansion and FHN is a continued area of focus. Remember that we felt that

Speaker Change: Each of the companies, Lynx's and FPM that we acquired, each had a different, kind of a different medicine that we wanted to provide on the Lynx's side. We wanted to improve

Kimberly Ryan: On the shank side or the FPM side, we wanted to improve the pricing of aftermarket. So we have continued to focus, and we'll continue to focus on that. You see that in the results as well. But I agree with, I agree with Bob's assessment on the, on the core business. That said, we are very proactively going out and keeping in touch with customers who are part of the install base, both for ongoing parts and service, as well as modernization projects. Which are also a key offering that we have in the market to modernize and upgrade lines that are existing.

Speaker Change: we wanted to improve our share of aftermarket on the shankksside or the fpm side we wanted to improve the pricing of aftermarket so we have continued to focus and 'll continue to focus on that you see that in the results as well

Robert VanHimbergen: Continued execution of our cost actions remained the top priority for the segment until the man recovers. Now turning to slide 8, net debt at the end of the third quarter was $1.87 billion, and net debt to adjusted EBITDA ratio was 3.5 times. Debt reduction remains our number one priority for capital allocation, but as discussed last quarter, our timeline for returning to within our guardrails of 1-7-2-7 remains prolonged. A mile wrap up with an update to our outlook for the remainder of 2024, the demand environment remains weaker than expected as global macroeconomic uncertainty has increased, and customer order timing has elongated and cheerily within our APS segment.

Speaker Change: But I agree with Bob's assessment on the core business. That said, we are very proactively going out and

Robert VanHimbergen: But I agree with Bob's assessment of the core business. That said, we are very proactively going out and keeping in touch with customers who are part of the installed base, both for ongoing parts and service, as well as modernization projects, which are also a key offering that we have in the market to modernize and upgrade lines that are existing. And that is also, you know, those are all three heavy focus areas for proactive selling, which is part of our operating model, as opposed to waiting for the phone call. And so those are the actions that I would say we're taking, especially in the face of what we're seeing with some of the delayed parts packages that come with those large orders.

Speaker Change: Keeping in touch with customers who are part of the install base, both for ongoing parts and service, as well as modernization projects, which are also a key offering that we have in the market to modernize and upgrade lines that are existing.

Kimberly Ryan: And, and that is also, you know, those are all three heavy focus areas for proactive selling, which is part of our operating model as opposed to waiting for the filtering. And so those are the actions that I would say we're taking, especially in the face of what we're seeing with some of the delayed parts packages that come with those large orders.

Speaker Change: And that is also, you know, those are all three heavy focus areas for proactive sewing, which is part of our operating model, as opposed to waiting for the phone to ring. And so those are the actions that I would say we're taking.

Robert VanHimbergen: Given these challenges, we are updating our outlook for the final quarter of the year. Our full year guidance now assumes total annual revenue of approximately $3.13 to $3.16 billion, down from our previous range of $3.2 to $3.3 billion. The adjusted EBITDA is now expected to be in the range of $502 million to $512 million, down from $512 million to $536 million. Margins in each segment remain generally in line with previous expectations, despite the lower revenue assumptions.

Speaker Change: especially in the face of what we're seeing with some of the delayed parts packages that come with those large orders.

Matt Somerville: And then just real quick, if you guys could summarize your realized cost synergies in 24 and what is left over in 25 from the acquisitions. And then in addition, how much is realized in 24 left over for 25 from the MTS restructuring and any other targeted actions you're taking is trying to think about the over. of Cost Profile.

Matt Summerville: And then, just real quick, if you guys could summarize your realized cost synergies in 24 and what is left over in 25 from the acquisitions, and then, in addition, how much is realized in 24 left over for 25 from the MTS restructuring and any other targeted actions you're taking. Just trying to think about the overall cost profile. Thank you.

Matt Summerville: And then, just real quick, if you guys could summarize your realized cost synergies in 24 and what is left over in 25 from the acquisitions, and then, in addition, how much is realized in 24 left over for 25 from the MTS restructuring and any other targeted actions you're taking. Just trying to think about the overall cost profile. Thank you.

Speaker Change: And then just real quick, if you guys could summarize your realized cost synergies in 24 and what is left over in 25 from the acquisitions.

Speaker Change: and then in addition how much is realized in twenty four le over for twenty five from the m t s restructuring and any other target and actions you're taking is trying to think about the overall cost grow

Robert VanHimbergen: Thank you. Yeah, so on the cost side. So, you know, we enter the year thinking we'd see about $7 to $9 million of cost energies coming from the Lynxist and FPM acquisitions. And I'd say we are certainly trending ahead of that through 24. And so I think, you know, certainly we're going to see that run rate benefit coming through, you know, Q4 as well as next year. And then on the MTS side, we're still on pace. And so we expect about $8 million of cost energies coming through or the benefit coming through this year, with an incremental 12 run rate coming through in 2025.

Robert VanHimbergen: Yeah, so on the cost side, so we entered the year thinking we'd see about seven to nine million dollars of cost synergies coming from the Linksys and FPM acquisitions, and I'd say we are certainly trending ahead of that through 24. And so I think, you know, certainly we're going to see that run rate benefit coming through in Q4 as well as next year. And then on the MTS side, we're still on pace, and so we expect about eight million dollars of cost synergies coming through or the benefit coming through this year with an incremental 12 run rate coming through in 2025, and we're right on pace for that. So all restructuring actions will be executed by the end of the year, and we'll see that full benefit coming through next year.

Robert VanHimbergen: The adjusted EPS is now expected to be $3.20 to $3.30, previously $3.30 to $3.50, driven by the impact of lower volumes, partially offset by accelerated cost actions being taken across the enterprise, and strongly unexpected synergy realization with an FPM and links us. Please review slide 9 for additional guidance assumptions. As the timing for and more normalized demand environment remains unclear, we will continue to take necessary steps to position the business for long-term success. We cannot dictate the macro environment to remain disciplined on controlling costs, executing on our target restructuring and integration plans, and accelerating costs saving initiatives to ensure we remain well positioned when market demand recovers.

Speaker Change: thank you

Speaker Change: Yeah, so on the cost side, so, you know, we entered the year thinking we'd see about seven to nine million dollars of cost synergies coming from the Linksys and FPM acquisitions.

Speaker Change: And I'd say we are certainly trending ahead of that through 24. And so I think, you know, certainly we're going to see that run rate benefit coming through, you know, Q4 as well as next year.

Speaker Change: And then on the MTS side, we're still on pace, and so we expect about $8 million of cost synergies coming through.

Speaker Change: the benefit coming through this year within incremental twelve runrate coming through in two thousandand twenty-five and 're rightite out basase for at while all restructuring actions will be executed bytheend of the year we'll see thatfullbenefit coming through next year

Robert VanHimbergen: And we're right on base for that. So, while all restructuring actions will be executed by the end of the year, we'll see that full benefit coming through next year.

Matt Somerville: Thank you.

Robert VanHimbergen: Does that help you? Or does that only help Matt?

Matt Somerville: Is that, does that help you know, or does that help Matt? Yes, thank you, guys.

Speaker Change: Thank you. Does that help, Dan? Or, does that help Matt?

Kimberly Ryan: With that, I'll turn the call back over to Kim. Thanks, Bob.

Jeffrey Hammond: Okay. Our next questions from the line of Jeff Hammond with Key Bank Capital Markets. Please excuse your questions. Hey, good morning, everyone. Good morning.

Dan: Yes, thank you guys.

Operator: Our next question is from the line of Jeff Hammond with KeyBank Capital Markets. Hey, good morning.

Operator: Our next question is from the line of Jeff Hammond with KeyBank Capital Markets. Please proceed with your question. Hey, good morning.

Speaker Change: okay

Kimberly Ryan: Before taking questions, I'll end our presentation with a few final remarks. The current macroeconomic environment continues to pressure results, which we expect to persist through the end of the year and potentially beyond. Although we do not see clear signals of market recovery timing, we will continue to control what we can, by diligently managing costs, driving productivity, and executing our integration and restructuring plans.

Speaker Change: Our next question is from the line of Jeff Hammond with KeyBank Capital Markets. Please receive your questions.

Jeffrey Hammond: Hey, good morning everyone. Good morning. Just on APS and, you know, some of this, you know, slowness, deferral, maybe just speak to how, you know, this environment is maybe the same or different versus kind of past down cycles. I know you've referenced pipeline and testing, being healthy, but maybe just speak to how this cycle feels, same or different.

Jeff Hammond: Hey, good morning everyone.

Jeffrey Hammond: Just on APS and, you know, some of this, you know, slowness, deferral, maybe just speak to how, you know, this environment is maybe the same or different versus kind of past down cycles. I know you've referenced pipeline and testing, being healthy, but maybe just speak to how this cycle feels the same or different.

Jeffrey Hammond: Just on APS and, you know, some of this, you know, slowness deferral, maybe just speak up to how, you know, this environment is maybe the same or different versus kind of passed down. I know you've referenced, you know, pipeline and testing being healthy, and maybe, but maybe just speak to how this cycle feels same or different. Well, I would say that this, I would say that this still feels different to us, you know. Typically, when we've gone into a down cycle and keep in mind that the last real. The last sizable down cycle was 2008, 2009, and then there was a, I guess I would characterize it as a modest down cycle in 2016.

Gav: Morning, Gav.

Jeff Hammond: Just on APS and some of this slowness, deferral, maybe just speak to how this environment is maybe the same or different versus kind of past down cycles. I know you've referenced

Kimberly Ryan: I'm confident we're taking the appropriate actions to manage the business in the near term, and I have strong conviction about our portfolio, leading brands, and differentiated technologies, and believe we will remain well positioned for long-term growth and value creation.

Speaker Change: pipeline and testing being healthy and maybe but maybe just speak to how this cycle feels same or different

Kimberly Ryan: Well, I would say that this still feels different to us. You know, typically, when we've gone into a down cycle, and keep in mind that the last real, the last sizable down cycle was 2008-2009. And then there was a, I guess I would characterize it as a modest down cycle in 2016. What we would typically see is a slowdown in parts orders, limited quotes coming out, and limited test lab activity as the downturn began to happen.

Speaker Change: well i would say that this i would say that this still feels different to us typically when we've gone into a downcycle and keep in mind up the last real the last sizable down cycle was two thousand and eight two thousand nine and then there was a

Kimberly Ryan: With that, I'll open the line for questions. Thank you.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please will we pull for questions, and we'll see that star one. Thank you.

Speaker Change: i guess characterize it as a a modest downcycle in two thousand and sixteen

Kimberly Ryan: What we would typically see is a slow down in parts orders, a limited quotes coming out, limited test lab activity as the down turn began to happen. But different than those characterizations, we have not seen; you've heard us talk about the strength of the aftermarket business. You've heard us talk about the fact that the test labs are still very full, and you've heard us talk about the fact that we've got a pretty robust pipeline of quotes that we are continuing to see. Different is now you're seeing elongated decision processes, probably much more exacerbated than what we have historically seen around these decisions, but you also have a lot more, I would say a lot more noise in the system with the various factors that we highlighted in our prepared remarks.

Speaker Change: What we would typically see is a slowdown in parts orders, limited quotes coming out, limited test lab activity as the downturn began to happen.

Kimberly Ryan: Different than those characterizations, we have not seen, you've heard us talk about the strength of the aftermarket business, you've heard us talk about the fact that the test labs are still very full, and you've heard us talk about the fact that we've got a pretty robust pipeline of quotes that we are continuing to see, different is now you're seeing elongated decision processes, probably much more exacerbated than what we have historically seen around these decisions. But you also have A lot more, I would say a lot more noise in the system with the various factors that we highlighted in our prepared remarks, interest rate, you know, macroeconomic uncertainty, geopolitical concerns, inflation, you've got a kind of a bit of a pile on effect right now that I think are, you know, especially for midsize projects, I think is really impacting those those decision time, And so that's those are kind of the that's how I would characterize kind of today versus what we would have historically seen and I have the great fortune of having people on my team who've been through a couple of these and have strong recollections of how how things have gone historically and how how this feels different than that.

Kimberly Ryan: Different than those characterizations, we have not seen, but you've heard us talk about the strength of the aftermarket business, you've heard us talk about the fact that the test labs are still very full, and you've heard us talk about the fact that we've got a pretty robust pipeline of quotes that we are continuing to see. Different is that now you're seeing elongated decision processes, probably much more exacerbated than what we have historically seen around these decisions, but you also have

Jeff Hammond: different than those characterizations

Daniel Moore: Our first question comes from the line of Daniel Moore with C.J.S. Securities. Please receive your questions.

Jeff Hammond: we have not seen you've heard us talk about the the strength of the aftermarket business you've heard heard us talk about the fact that the test laps are still are still very full and you've heard us talkabout the fact that we've got a pretty robust pipeline of quotes

Kimberly Ryan: Thank you. Good morning, Kim. Good morning, Bob. Appreciate taking the questions. Good morning, Dan. Let's start with APS. It sounds like it's across the board, but are there certain end markets or geographies that may be reacting to the macro more so than others? And I'm just wondering specifically, it sounds like food and recycling is holding up better than most, but not quite as robust as maybe the prior expectations. I want to make sure I heard that right.

Gav: that we are continuing to see different is now you're seeing elongated decision processes probably much more exacerbated than what we have historically seen around these decisions but you also have

Gav: a lot more i would say a lot more noise in the system with the various factors that we highlighted in our prepared remarks but its interest rate

Kimberly Ryan: But it's interest rate, you know, macroeconomic uncertainty, geopolitical concerns, insulation; you've got a kind of a bit of a pile on effect right now that I think are, you know, especially for mid-sized projects, I think is really impacting those decision timelines. And so that's those are kind of the, that's how I would characterize kind of today versus what we would have historically seen, and I have the great fortune of having people on my team who've been through a couple of these and have strong recollections about how things have gone historically and how this feels different than that.

Kimberly Ryan: Thanks. Yeah, I think from a market standpoint, I think some of the challenges are in those mid-size projects are very prevalently where we're seeing that. And in terms of geographies, I think that the expectations that we had from a polyolusence standpoint, we expected some of these large projects to come through in Middle East and India, and while we still got a lot of activity going on in those projects, that's where we continue to see the delays.

Gav: you know

Gav: macroeconomic uncertainty, geopolitical concerns, inflation.

Gav: You've got a kind of a bit of a pile-on effect right now that I think are, you know, especially for mid-sized projects, I think is really impacting those decision timelines.

Gav: And so that's, those are kind of the, that's how I would characterize kind of today versus what we would have historically seen. And I have the great fortune of having people on my team who've been through a couple of these and have strong recollections of how things have gone historically and how this feels different than that.

Kimberly Ryan: We received the large, as we mentioned in earlier calls, we received a large number of orders in China in the large projects earlier in the year, and we believe we received the majority of the market projects awarded. But again, where we're seeing the pressure and the move out on timing, the move out on timing is the large projects in those agent geographies, in Middle East geographies, and the primary pressures in these mid-size type projects that are really pushing out, and especially characterized by customers who are a bit more sensitive to a lot of the dynamics that are going on, the interest rates, consumer demand, concerns around consumer demand, reduction, et cetera, those types of projects are going to be more sensitive to that in the APS environment.

Jeffrey Hammond: Okay, that's helpful. And then just on the acquisition synergies, it sounds like you're running ahead.

Robert VanHimbergen: Okay, that's helpful. And then just on the acquisition synergies, it sounds like, you know, you're running ahead. You know, is this kind of pull forward, and you're just getting them earlier? Or is there a point where we can say, you know, hey, the synergies that we're finding more synergies in the, you know, the 30 million between the two can be can be upsized?

Speaker Change: okay that's helpful and then just on the acquisition synergies it sounds like you know you're running ahead

Robert VanHimbergen: Are these kind of pull forward and you're just getting them earlier, or is there a point where we can say, you know, hey, the synergies, you know, we're finding more synergies in the 30 million between the two can be upsized. Yeah, so as it's here today, there are certainly pull forwards. Jeff, I would tell you about the teams that are actively looking at additional opportunities. And I'd say we fully expect those to come to fruition. So what we see now is pull forward and then, you know, we've got teams focused on not only the cost side, but also commercial harmonization after market pricing and other, I'd say, cost opportunities.

Speaker Change: You know, is there, are these kind of pull forward and you're just getting them earlier or is there a point where we can say...

Speaker Change: We're finding more synergies and the $30 million between the two can be upsized.

Kimberly Ryan: Yeah, so as it is here today, there's certainly pull-forward. Jeff, I would tell you though the teams are actively looking at additional opportunities, and I'd say we fully expect those to come to fruition. So what we see now is pull-forward, and then you know we've got teams focused on not only the cost side but also commercial harmonization, aftermarket pricing, and other, I would say, cost opportunities.

Speaker Change: Yeah

Speaker Change: So, as it's here today, there are certainly pull-forwards. Jeff, I would tell you, though, the teams are actively looking at additional opportunities and I'd say we fully expect those to come to fruition. So, what we see now is pull-forward and then, you know, we've got teams focused on not only the cost side, but also commercial harmonization, aftermarket pricing, and other, I'd say, cost opportunities.

Kimberly Ryan: Really helpful. I know it's an impossible question, but if you had to rank order, how critical are interest rates? Are people sitting waiting on the sidelines for the 25-50 plus basis point, build a bit of relief? Or is it more just general macro uncertainty from what you're hearing from customers? Well, gosh, I would say that there are just a number of factors right now. I don't think you can point to anyone and say that is the silver bullet, and if and when that changes, everything, you know, that'll be the item that kind of opens up the dam of order flow.

Kimberly Ryan: And so what I'd say is that during this implementation, I think as we've done, you know, I would say we did a good job on the Copperian integration, a better job on the Millicron integration, and better still on the integration of the FPM and Lynx companies. And so, what I would say is that we've got a good process for the capture of ideas, for managing those projects, for creating visibility, not just within the operating company but all the way up through the corporate entity. I mean, Bob and I review these projects weekly, literally weekly, on what their status is.

Kimberly Ryan: And so what I'd say is that during this implementation, I think as we've done, you know, I would say we did a good job on the Copperian integration, a better job on the Mellicron integration, and better still on the integration of the FPM and Lynx's companies. And so, what I would say is that we've got a good process for the capture of ideas, for managing those projects, for creating visibility, not just within the operating company but all the way up through the corporate entity.

Kimberly Ryan: And so what I'd say is that during this implementation, I think as we've done, you know, I would say we, we did a good job on the Copierian integration, better job on the Millicron integration and better still on the integration of the FPM and Links' companies. And so what I would say is that we've got a, we've got a good process for the capture of ideas for managing those projects for creating visibility, not just within the, the operating company that is all the way up through the corporate entity. I mean, Bob and I review these projects weekly, literally weekly, on what their status is.

Speaker Change: and so what i say is that during this implementation i think as we've done you know i would say we did a good job on the the coian integration

Speaker Change: Better job on the Millicron integration and better still on the integration of the FPM.

Speaker Change: and Lynx's companies.

Bob: And so what I would say is that we've got a good process for the capture of ideas, for managing those projects, for creating visibility, not just within the operating company, but all the way up through the corporate entity. I mean, Bob and I review these projects weekly, literally weekly, on what their status is. And so I would say that the process has continued to improve, and once things get to a status where we are

Kimberly Ryan: I mean, Bob and I review these projects weekly, literally weekly, on what their status is. And so I would say that the process has continued to improve. And once things get to a point where we are

Kimberly Ryan: And so I would say that the process has continued to improve. And once things get to a status where we are, they go through, let's call it, a stage gate process, so that we can really see if those projects are going to reach the capability to deliver that we expect. And as we become more confident, and more things reach that kind of stage gate where we're highly confident they're going to deliver, then we'll share more of that information.

Kimberly Ryan: And so I would say that the process is continued to improve. And once things get to a status where we are. They go through what's called a stage-gate process so that we can really see if those projects are going to reach the capability to deliver that we expect. And as we become more confident, more things reach that kind of stage gate where we're highly confident it's going to deliver them. We'll have; we'll share more of that information. Right now, we're, we're heavily committed to making sure that we hit that $30 million target and do it as quickly as we possibly can.

Kimberly Ryan: I think that there are, you know, right now you've got geopolitical concerns, you've got interest rate concerns, you've got inflation, ongoing inflation concerns, and you add in, you know, just kind of what's going to happen, for instance, in the US with election, and what does that mean to policy and trade? You know, all of those concerns, I think, are mounting, and I think it's just causing people to take a step back and continue to watch and see how things work out over the next couple of quarters, and that's really the slowdown that we saw this quarter at a significant and a greater rate than we expected, and that has been the real change that caused us to step back and look at this from a more conservative point of view given that we are not, we are not seeing the change in trajectory that we have expected at this point of the year.

Speaker Change: They go through, let's call it a stage gate process, so that we can really see if those projects are going to reach the capability to deliver that we expect. And as we become more confident, more things reach that kind of stage gate where we're highly confident it's going to deliver, then we'll share more of that information. Right now, we're heavily committed to making sure that we hit that $30 million target and do it as quickly as we possibly can. I know that when we announced the acquisitions, we said three to five was our target for achieving those synergies. Obviously, our internal target is to drive faster than that, and then to add to the pile. So, the first target and the first hurdle that I hope...

Kimberly Ryan: Right now, we're heavily committed to making sure that we hit that $30 million target and do it as quickly as we possibly can. I know that when we announced the acquisitions, we said three to five was our target for achieving those synergies. Obviously, our internal target is to drive faster than that, and then to add to the pile. So the first target and the first hurdle that I hold myself and everyone on my team accountable for is getting to that $30 million as robustly and as quickly as we can, and then we'll continue to communicate as we see other projects that we have high confidence will deliver value. And again, those were cost synergies as opposed to commercial synergies, which we're working on as well.

Kimberly Ryan: I know that when we announced the acquisitions, we said three to five was our target for achieving those synergies. Obviously, our internal target is to drive faster than that and then to add to the, add to the pile. So, so the first target and the first hurdle that I hold myself and everyone on my team accountable for is getting to that $30 million as, as robustly and as quickly as we can. And then we'll continue to communicate as we see other projects that we have high confidence will deliver value. And again, those were cost synergies as opposed to commercial synergies, which obviously we're working on as well.

Speaker Change: All of my team is getting to that 30 million as robustly and as quickly as we can and then will continue to communicate as we see other projects that we have high confidence will deliver value.

Kimberly Ryan: Understood, really helpful. I know you don't want to get into fiscal 25, but it was backlogs ticking lower and just given the uncertainty around capital equipment purchase decisions. I would expect the APS revenue perhaps to be modestly lower in 25 unless we start to put more into backlog in the next quarter or two. Is that a reasonable way to look at the world or am I missing something?

Speaker Change: And again, those were cost synergies as opposed to commercial synergies, which obviously we're working on as well.

Jeffrey Hammond: Okay, great.

Robert VanHimbergen: Okay, great. And then last one, I mean, it sounds like pricing competition is maybe starting to stabilize a little bit or find a bottom here in the hot runner market. You commented in the queue about, you know, the ability of competitors to produce, you know, higher quality parts and become more capable. Just wondering if that's kind of a stale comment that's been out there and justifies, you know, part of justifying the write-down or if there's, you know, anything new or incremental there. Yeah, I don't think so.

Jeffrey Hammond: And then last one, I mean, it sounds like pricing competition is maybe starting to stabilize a little bit or find a bottom here in the hot runner market. You comment in the queue about the ability of competitors to produce higher quality parts and becoming more capable. Just wondering if that's kind of a stale comment that's been out there and part of justifying the write down, or if there's anything new or incremental there. Yeah, I don't think there's anything, anything new. I mean, I think you know, certainly on the hot runner side, you know, we are seeing pressure of, you know, competitors, you know, moving up the chain. We're in that premiere box, a premium box of hot runners.

Robert VanHimbergen: Pricing competition is maybe starting to stabilize a little bit or find a bottom here in the hot runner market. You commented in the queue about the ability of competitors to produce higher quality parts and become more capable. Just wondering if that's kind of a stale comment that's been out there and, you know, part of justifying the, you know, the write-down or if there's, you know, anything new or incremental there. Yeah, I don't.

Speaker Change: Okay, great. And then last one, I mean, it sounds like...

Bob VanHimbergen: Yes, I'll take that one, Dan.

Speaker Change: Pricing competition is maybe starting to stabilize.

Bob VanHimbergen: So obviously, we'll provide guidance in November on fiscal 25, but as we think about next year, there's a couple of things to think about really in both businesses. So we're really not seeing signs of a meaningful market recovery for MTS. But I'd highlight two things. One, the hot-runner business certainly can be quick to recover. And then the other thing to keep in mind is that we do have run rate savings from our structuring charge. We took this year that's going to benefit 2025.

Speaker Change: a little bit or find a bottom here in the hot runner market. You commented in the queue about...

Speaker Change: you know, the ability of competitors to produce, you know, higher quality parts and becoming more capable. Just wondering if that's...

Speaker Change: Kind of a stale comment that's been out there and justified, you know part of justifying the you know The the write-down or if there's you know, anything new or incremental there

Robert VanHimbergen: Yeah, I don't think there's anything, anything new. I mean, certainly on the hot runner side, we are seeing pressure of, you know, competitors, you know, moving up the chain. We're in that premier box, a premium box of hot runners, and we're seeing some kind of move up, not to the level we are. To mitigate some of that, you know, we're moving down.

Robert VanHimbergen: So we've launched, I'd say, mid-tier hot runners to offer lower prices on uh... hot runners and certainly compete at that, call it the B plus level, but say nothing new. Yeah, I do think pricing is somewhat stabilized again, probably at a lower level than we'd like on the hot runner side.

Robert VanHimbergen: I don't think there's anything new. I mean, I think certainly on the hot runner side, we are seeing pressure from competitors moving up the chain. We're in that premier box, the premium box of hot runners, and we're seeing some kind of move up, not to the level we are. To mitigate some of that, we're moving down, so we've launched, I'd say, mid-tier hot runners to offer lower prices and certainly compete at that, call it the B-plus level, but say nothing new. Yeah, I do think pricing is somewhat stabilized again, probably at a Okay, thanks. Just a reminder to ask you question today.

Speaker Change: yes i don't think there's there's anything anything new let me i think certainly on the on the hot runner side we are seeing pressure of

Bob VanHimbergen: Now on the APS side, with order trends that we're seeing right now, we do expect backlog in APS to be down sequentially. And that's certainly going to put pressure on revenue depending on those order patterns. So on the accounting side, you know, we do recognize revenue on a percentage of completion basis. And so time goes orders would certainly impact 25. Certainly would how those orders come in would impact, you know, when those when revenues certainly reported, conferring those orders are mid and long from iterations. So those 12 to 24 months in duration, certainly impacts, you know, when that revenue is booked on those orders being coming in the door, I should say.

Bob: of competitors

Bob: Moving up the Chain we're in that premium box of hot runners and we're seeing some move up not to level we are to mitigate some of that we're moving down. We've launched a mid-tier hot runners to offer lower priced

Robert VanHimbergen: And we're seeing some kind of move up, not to the level we are to mitigate some of that. You know, we're moving down. So we're, we've launched a mid-tier hot runners to offer lower priced hot runners and certainly compete at that called B plus level, but say nothing new. Yeah, I do think pricing is somewhat stabilized. Again, probably a lower level we'd like on the hot runner side.

Bob: Hot Runners and certainly compete at that, call it B-plus level, but yeah, I do think pricing is somewhat stabilized, again, probably at a lower level than we'd like on the Hot Runner side.

Operator: Okay, thanks. Thank you.

Operator: That's a reminder to ask a question today.

Operator: You may press star one.

John Franzreb: The next question is from the line of John Franzreb with Cedodian Company. Please just see with your questions.

Bob VanHimbergen: So in your term, you know, we're going to continue to focus on cost actions and operational efficiencies to really mitigate some of that hotline pressure. Really, that's helpful, Bob. And, you know, really impressive what you've done on the margin front and light of, you know, the incremental kind of macro and revenue weakness. We think we can hold the line in terms of APS with the restructuring initiatives, you know, the synergies from at PM, etc.

Kimberly Ryan: Good morning, everyone, and thanks for taking the questions. Most of my questions have been addressed, but I am curious in APS. Is it just lower intake, or has there been deferred deliveries or cancellations in that business? There have not been cancellations. In terms of delivery, I think we've only seen what we would consider pretty normal. You know, something is already at the site yet, or because remember, we're going to bring our equipment in after all the site prep is done. So I think what we would characterize it as as pretty normal, you know, ebbs and flows of projects.

Operator: Good morning, everyone, and thanks for taking the questions.

Jeffrey Hammond: Thank you. As a reminder, to ask a question today, you may press star 1. The next question is from the line of John Franzreb with Sidotium Company. I'm pleased to see you with your question. Good morning, everyone, and thanks for taking the questions.

John Franzreb: There have not been any cancellations. In terms of delivery, I think we've only seen what we would consider pretty normal, you know, something isn't ready at the site yet. Because remember, we're going to bring our equipment in after all the site preparation is done. So I think we would characterize it as pretty normal, you know, ebbs and flows of projects. You're just working on a multi-billion dollar site project, and there are going to be puts and takes on that, but I wouldn't say that there has been anything that has been completely out of the ordinary. And we don't do cancellations on those projects.

Bob VanHimbergen: Just when they're in how you're kind of thinking about maybe, you know, decremental in in your term until we start to see that order book increase. Specifically, yes, I'd thanks. Yeah, it's probably hard to say if we're going to hold the line. I mean, we do have obviously a couple, a couple of letters we can pull. Certainly, you know, on the APS side, we've historically used a contingent, I want to take the workforce, but an outsourcing model.

Kimberly Ryan: You're just working on, you know, you're just working on a multi-billion-dollar site project, and there are going to be puts and takes on that. But I wouldn't say that there has been anything that has been completely out of the ordinary. And we don't, we don't be canceled on those, on those projects.

Operator: That has been completely out of the ordinary.

Bob VanHimbergen: So when volumes do decline, we've had the ability to insource those hours and reduce that outsource work. And so that's, you know, really why you see with the volume decline on margins and APS have been relatively stable. The other, you know, the other tailwind we have going into next year, you know, the FPM business as Kim highlighted in a prepared remarks. You know, we're seeing really strong performance in that business on operational efficiencies as they execute contracts, but also on the synergies where we're accelerating that. So those would be some of the tailwinds we have going in to offset some top line pressure.

Bob: And we don't we don't have any cancels on those on those projects.

John Franzreb: Okay, that's it. All my other questions have been addressed.

Speaker Change: Okay, Let's say at all my other questions have been addressed thank you.

John Franzreb: Thank you.

Operator: All right, thanks. Thank you.

Speaker Change: Alright. Thanks.

Kimberly Ryan: Thank you. At this time, we've reached the end of the question and answer session, and I'll turn the floor over to Kim Ryan for closing remarks.

Kimberly Ryan: Thank you. At this time, we have reached the end of the question and answer session, and I'll turn the floor over to Kim Ryan for closing remarks.

Speaker Change: Thank you at this time, we've reached the end of the question and answer session now I'll turn the floor over to Kim Ryan for closing remarks.

Operator: At this time, we have reached the end of the question and the answer session.

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Kimberly Ryan: Now I'll turn the flow over to Kim Ryan for closing remarks. All right, thanks again, everyone, for joining us on the call today. We appreciate your ownership and interest in Hillenbrand, and we look forward to talking to you again in November with our full year results. Have a great rest of your summer, and thanks for joining us this morning.

Kim Ryan: Alright, Thanks again, everyone for joining us on the call today, we appreciate your ownership and interest in Hillenbrand and we look forward to talking to you again in November with our full year results.

Severe Summer: Great that's severe summer and thanks for joining us this morning.

Kimberly Ryan: Yeah, and I think, you know, as you look at kind of the topography of how the business builds up. Remember that that the strategic focus of this was to build, to continue to build the portfolio towards businesses that have less exposure to cyclicality. And even though we're seeing a bit more than perhaps is normal in that in that FHN business or the food health nutrition business. It's still compared to what you see in the large capital projects businesses.

Operator: This will conclude today's conference.

Speaker Change: This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation and have a wonderful day.

Operator: Let me disconnect your lines at this time. Thank you for your participation and everyone.

Kimberly Ryan: It's significantly less. So remember that the businesses we're using to really help balance that out are the food health nutrition businesses we've invested heavily in and the aftermarket business. Those two businesses were heavily focused on so that we can continue to kind of balance out some of the cyclicality that you may see in other parts of the business. And our ability to react to what we see in those that cyclicality is again if Bob mentioned really driven by creating flexibility with our capacities.

Kimberly Ryan: And I was really pleased to see how well that that has translated being down on the top and really not seeing an exponential figure down on the bottom. I mean that APS side you can really see how valuable that setup is for being able to flex up and down as volumes as volumes change throughout the year. Yeah, that's helpful, and certainly evident.

Kimberly Ryan: Maybe the last one for me, and I'll jump back and cue. Appreciate the commentary around, you know, accelerating the synergies and the integration ahead of schedule on the FPM side. You know, maybe just talk about beyond the kind of a vision when you put them together, is there opportunity in a downturn like this to, you know, get closer to customers and even maybe accelerate some of the share gains that you had hoped to achieve when you put, you know, put them together when we think about coming out the other side.

Kimberly Ryan: That's it for me, thanks. Yeah, I would say that, you know, this is, this necessity, you know, as the mother of invention or some, some quote like that, you know, what we've really seen with the teams coming together is, is coming together on portfolio, coming together commercially, coming together, thinking about how we can manage projects, how can we more quickly move them into different geographies where we have a footprint and they did not yet have a footprint.

Kimberly Ryan: These are all of the things that the team is working on to continue to push the FPM opportunity ahead. And I'm really, really pleased with the way these teams are coming together. At this point, we had hope that we would have the operating structure in place and that we would have global, we would be pretty far down the road on having our global shared services implemented. And we are, but we are also already at the point where manufacturing teams are talking to one another, engineering teams are talking to one another, portfolio marketing resources are talking to one another about how we make sure that we have the right products in the portfolio to be able to offer systems and solutions.

Kimberly Ryan: So we are very excited about, about the opportunities that, that this brings together and the, and the ability of these teams to work with one another. You know, that's always a question when you do M&A. Are the, it's not just about the strategy and the products in the portfolio, it's, can the cultures come together and work effectively together? And I'm pleased that we're seeing a really positive result on all of those fronts.

Kimberly Ryan: So we are, you know, we find up for $30 million in synergies across these assets. We feel that we are well on track for that and the team has continued to identify and ideate and put ideas in the pipeline that we will action as quickly as we can. And that is, that has been the, you know, the course that we are charting, especially given some of the volume pressure. That makes all of those ideas even more important to implement quickly.

Daniel Moore: All right. Thanks, Ian. I'll jump back when it follows.

Daniel Moore: All right. Thanks, Dan.

Matt Somerville: Our next question is from the line of Matt Somerville with DA Davidson. Let's just see with your questions. Thanks. Maybe just to review where we're ATS and MTS in the quarter with price cost. And does that spread widen or narrow as we look ahead based on the fundamentals you're seeing in the business today? Hey, Matt, so I'll take that one. Yeah, so similar answer to what we've said in the past, right?

Matt Somerville: We continue to have price cost coverage on the APS side. And then on the MTS side, you know, continued pricing pressure. Really, you know, in Q3, we've seen that really all year as, you know, as competitors are fighting for volumes. And so we've been under price cost covered in the MTS side. And, you know, the number and, you know, we are over that 100% coverage. But I don't see, you know, that changing, you know, in Q4 going forward.

Matt Somerville: And so it's been relatively stable. We keep that pricing, I'd say favorability on the APS side. It's going to be short on MTS. It's not getting worse. It's not getting better. So as I said, they look really I think Kim, you mentioned your prepared remarks that typically these projects come with an initial, you know, parts package provision. If we're kind of lower for longer in that business, what does that mean for aftermarket?

Matt Somerville: I guess I'm trying to think about when you look at APS, when you look at even an MTS, how sustainable is the growth you're seeing in aftermarket? And I know the pandemic had contributed to some level of pent up demand in that regard. Have you worked your way through that access? If you will, just talk a minute about aftermarket and then I have one other quick follow-up. So Matt, I could provide some color on aftermarket.

Matt Somerville: So this has been a strategic priority for us for obviously some time here considering the margin benefit we get on aftermarket versus capital. So, you know, this quarter was no different than the last several where we're seeing, you know, really strong, I'd say mid to high single digit growth year over year on aftermarket revenue. You know, we do to your point, you know, we did have pressure in the quarter and that could continue with some of these larger orders getting pushed out because we generally do sell, you know, spare part packages with those orders, but some of the tailings we have, you know, one, we do have a large install base and so we're seeing the continued benefit of that come through.

Matt Somerville: And then, you know, we're seeing progress certainly, you know, in the, in the app positions that we've had, we're seeing some of the fundamentals we expected to come through on pricing and volume, you know, certainly benefit of the year. Obviously, you know, with orders, you know, how those come out in the next call it six months, and again, the spare part packages, you know, that would certainly impact 2025, but some of the fundamentals we put in place and then the install base we feel good about.

Matt Somerville: Yeah, and I would just add to that, that, that, that said, you know, aftermarket expansion and FHN is a continued area of focus, remember that we felt that each of the companies, links and FPM that we acquired, each had a different kind of a different medicine that we wanted to provide on the, on the links of side, we wanted to improve, we wanted to improve our share of aftermarket. On the shank side or the FPM side, we wanted to improve the pricing of aftermarket.

Matt Somerville: So we have continued to focus and we'll continue to focus on that. You see that in the results as well. But I agree with, I agree with Bob's assessment on the, on the core business that said we are very proactively going out and, and keeping in touch with customers who are part of the install base, both for ongoing parts and service, as well as modernization projects. Which are also a key offering that we have in the market to to modernize and upgrade lines that are existing.

Matt Somerville: And, and that is also, you know, those are all three heavy focus areas for proactive selling, which is part of our operating model as opposed to waiting for the filtering. And so those are the actions that I would say we're taking, especially in the face of what we're seeing with some of the delayed parts packages that come with those large orders. And then just real quick, if you guys could summarize your realized cost synergies in 24 and what is left over in 25 from the acquisitions.

Matt Somerville: And then in addition, how much is realized in 24 left over for 25 from the MTS restructuring and any other targeted actions you're taking is trying to think about the over, of Cost profile. Thank you. Yeah, so on the cost side. So, you know, we enter the year thinking we'd see about $7 to $9 million of cost energies coming from the Lynxist and FPM acquisitions. And I'd say we are certainly trending ahead of that through 24.

Matt Somerville: And so I think, you know, certainly we're going to see that run rate benefit coming through, you know, Q4 as well as next year. And then on the MTS side, we're still on pace. And so we expect about $8 million of cost energies coming through or the benefit coming through this year with an incremental 12 run rate coming through in 2025. And we're right on base for that. So while all restructuring actions will be executed by the end of the year, we'll see that full benefit coming through next year. Thank you. Is that does that help you know, or does that help Matt? Yes, thank you guys. Okay.

Jeffrey Hammond: Our next questions from the line of Jeff Hammond with key bank capital markets. Please excuse your questions. Hey, good morning, everyone.

Jeffrey Hammond: Good morning. Just on APS and, you know, some of this, you know, slowness deferral, maybe just speak up to how, you know, this environment is maybe the same or different versus kind of passed down. I know you've referenced, you know, pipeline and testing being healthy and maybe, but maybe just speak to how this cycle feels same or different. Well, I would say that this, I would say that this still feels different to us, you know, typically when we've gone into a down cycle and keep in mind that the last real.

Jeffrey Hammond: The last sizable down cycle was 2008, 2009, and then there was a, I guess I would characterize it as a modest down cycle in 2016. What we would typically see is a slow down in parts orders, a limited quotes coming out, limited test lab activity as the down turn began to happen. But different than those characterizations, we have not seen, you've heard us talk about the strength of the aftermarket business. You've heard us talk about the fact that the test labs are still very full, and you've heard us talk about the fact that we've got a pretty robust pipeline of quotes that we are continuing to see.

Jeffrey Hammond: Different is now you're seeing elongated decision processes, probably much more exacerbated than what we have historically seen around these decisions, but you also have a lot more, I would say a lot more noise in the system with the various factors that we highlighted in our prepared remarks. But it's interest rate, you know, macroeconomic uncertainty, geopolitical concerns, insulation, you've got a kind of a bit of a pile on effect right now that I think are, you know, especially for mid-sized projects, I think is really impacting those those decision timelines.

Jeffrey Hammond: And so that's those are kind of the, that's how I would characterize kind of today versus what we would have historically seen, and I have the great fortune of having people on my team who've been through a couple of these and have strong recollections about how things have gone historically and how this feels different than that.

Kimberly Ryan: Okay, that's helpful. And then just on the acquisition synergies, it sounds like you're running ahead. Are these kind of pull forward and you're just getting them earlier, or is there a point where we can say, you know, hey, the synergies, you know, we're finding more synergies in the 30 million between the two can be upsized. Yeah, so as it's here today, there are certainly pull forwards. Jeff, I would tell you about the teams are actively looking at additional opportunities.

Kimberly Ryan: And I'd say we fully expect those to come to fruition. So what we see now is pull forward and then, you know, we've got teams focused on not only the cost side, but also commercial harmonization after market pricing and other, I'd say, cost opportunities. And so what I'd say is that during this implementation, I think as we've done, you know, I would say we, we did a good job on the, the copierian integration, better job on the millicron integration and better still on the integration of the FPM and links his companies.

Kimberly Ryan: And so what I would say is that we've got a, we've got a good process for the capture of ideas for managing those projects for creating visibility, not just within the, the operating company that is all the way up through the corporate entity. I mean, Bob and I review these projects weekly, literally weekly on what their status is. And so I would say that the process is continued to improve. And once things get to a status where we are.

Kimberly Ryan: They go through what's called a stage gate process so that we can really see if those projects are going to reach the capability to deliver that we expect. And as we become more confident, more things reach that kind of stage gate where we're highly confident, it's going to deliver them. We'll have, we'll share more of that information. Right now, we're, we're heavily committed to making sure that we hit that $30 million target and do it as quickly as we possibly can.

Kimberly Ryan: I know that when we announced the acquisitions, we said three to five was our target for achieving those synergies are obviously our internal target is to drive faster than that and then to add to the, add to the pile. So, so the first target and the first hurdle that I hold myself and everyone on my team accountable for is getting to that $30 million as, as robustly and as quickly as we can. And then we'll continue to communicate as we see other projects that we have high confidence will deliver value. And again, those were cost synergies as opposed to commercial synergies, which obviously we're working on as well.

Robert VanHimbergen: Okay, great. And then last one, I mean, it sounds like pricing competition is maybe starting to stabilize a little bit or find a bottom here in the hot runner market. You comment in the queue about the ability of competitors to produce higher quality parts and becoming more capable. Just wondering if that's kind of a stale comment that's been out there and part of justifying the write down or if there's anything new or incremental there.

Robert VanHimbergen: Yeah, I don't think there's anything, anything new. I mean, I think you know, certainly on the hot runner side, you know, we are seeing pressure of, you know, competitors, you know, moving up the chain, we're in that premiere box, a premium box of hot runners. And we're seeing some kind of move up, not to the level we are to mitigate some of that, you know, we're moving down. So we're, we've launched a mid-tier hot runners to offer lower priced hot runners and certainly compete at that called B plus level, but say nothing new. Yeah, I do think pricing is somewhat stabilized. Again, probably a lower level we'd like on the hot runner side.

Operator: Okay, thanks. Thank you. That's a reminder to ask a question today. You may press star one.

John Franzreb: The next question is from the line of John Franzreb with Cedodian Company. Please just see with your questions.

Kimberly Ryan: Good morning, everyone, and thanks for taking the questions. Most of my questions have been addressed, but I am curious in APS. Is it just lower intake or has there been deferred deliveries or cancellations in that business? There have not been cancellations. In terms of delivery, I think we've only seen what we would consider pretty normal. You know, something is already at the site yet or because remember, we're going to bring our equipment in after all the site prep is done.

Kimberly Ryan: So I think what we would characterize it as as pretty normal, you know, ebbs and flows of projects. You're just working on, you know, you're just working on a multi-billion-dollar site project and they're going to be puts and takes on that. But I wouldn't say that there has been anything that has that has been completely out of the ordinary. And we don't we don't be canceled on those on those projects.

John Franzreb: Okay, that's it. All my other questions have been addressed. Thank you. All right, thanks. Thank you.

Operator: At this time, we have reached the end of the question and the answer session.

Kimberly Ryan: Now I'll turn the flow over to Kim Ryan for closing remarks. All right, thanks again, everyone for joining us on the call today. We appreciate your ownership and interest in Hillenbrand and we look forward to talking to you again in November with our full year results.

Operator: Have a great rest of your summer and thanks for joining us this morning. This will conclude today's conference. Let me disconnect your lines at this time. Thank you for your participation and everyone.