In its first-quarter earnings call presentation, Hillenbrand announced that it will cut around 5 percent of the jobs in its Molding Technology Solutions (MTS) segment in response to a drop in customer demand.
“Our Molding Technology Solutions segment faced greater than expected softness as we continued to see low customer demand amid the uncertain global macroeconomic environment,” said Kim Ryan, president and CEO of Hillenbrand. “Given the sustained demand softness within the Molding Technologies Solutions segment, we’re executing additional cost savings actions, including structural changes.”
The MTS segment, which includes Milacron, Mold-Masters and DME, showed revenue of $205 million, down 16 percent year over year, which the company said was mainly a result of lower volumes for injection molding and hot-runner equipment. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $32 million was down 26 percent, primarily due to lower volumes and inflation. Adjusted EBITDA margin of 15.7 percent was down 200 basis points from the prior year.
Meanwhile, backlog of $232 million decreased 31 percent compared to the prior year, and was flat on a sequential basis.
In an overview of first-quarter results for its MTS segment, the company noted that its cost savings and restructuring program would include staffing reductions and footprint rationalization initiatives.
“We expect this restructuring program to deliver annual run-rate cost savings of approximately $15 million, with roughly 50 percent to be realized within the current fiscal year,” Ryan said. “We’re not satisfied with the current performance, and we’re confident these actions will help optimize our cost structure as we manage through the current demand environment, while also ensuring we’re well-positioned to return to higher levels of growth and profitability once the market recovers.”
Asked about the job cuts, Ryan said, “We are always planning for the future. And so I would say that we are making decisions that are appropriately sized for the demand trends that we've seen. And we are also taking into consideration where we expect that demand to return so that we can be prepared for that.”
The Advanced Process Solutions segment, which includes Coperion and Herbold Meckesheim, grew revenue 38 percent to $568 million, primarily due to acquisitions.
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