Rauen Sales http://rauensales.com/ Thu, 24 Nov 2022 05:40:21 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 TEN Ltd expects a strong tanker market over the next few years https://rauensales.com/ten-ltd-expects-a-strong-tanker-market-over-the-next-few-years/ Wed, 23 Nov 2022 22:20:46 +0000 https://rauensales.com/ten-ltd-expects-a-strong-tanker-market-over-the-next-few-years/

TEN, Ltd (TEN) has released its results (unaudited) for the nine months and third quarter ended September 30, 2022.

2022 NINE-MONTH SUMMARY RESULTS

In the first nine months of 2022, TEN’s modern and diverse fleet generated gross revenues of $590 million, $183 million more than the first nine months of 2021, reflecting the strength in tanker markets. Operating profit soared to $134 million, a six-fold increase.

Net income for the first nine months of 2022 exceeded $103 million or $2.77 per share.

Adjusted EBITDA reached $236 million in the first nine months of 2022, $150 million higher than the first nine months of 2021 level.

Average TCE per vessel per day for the first nine months of this year was $27,075, 60% higher than the nine-month level of 2021, while utilization reached 93.7% after 14 ships completed drydock ahead of schedule to be ready for market upgrades.

Average daily operating expenses per vessel remained competitive at $8,345, slightly higher than the nine-month level of 2021.

Combined depreciation decreased 3.5% from the nine-month period of 2021 to $103.4 million.

In the first nine months of this year, debt payments amounted to $332 million, further reducing related interest payments while maintaining strong cash reserves of over $200 million. .

Q3 2022 SUMMARY RESULTS

TEN had a strong third quarter with gross revenue of $224 million, $92 million more than the third quarter of 2021, and operating profit of $67 million, with the same number of ships between both periods.

Net income attributable to TEN during the third quarter of 2022 reached $51.3 million, a 300% increase over last year, or $1.48 per share.

Adjusted EBITDA was $103 million in the third quarter of 2022, more than five times higher than in the third quarter of 2021.

Although five vessels completed dry docking this third quarter, fleet utilization increased to 94.3%, translating to an average TCE per vessel per day of $32,085, or 105% more than the equivalent period of 2021.

Combined depreciation decreased 1.3% from the third quarter of 2021 to $35.8 million.

Daily ship operating expenses, reflecting global inflationary pressures, dry-docking expenses and the introduction of two newly acquired LNG carriers and shuttle ships with inherently higher costs, averaged 8,915 $, still competitive, in the third quarter of 2022.

SUBSEQUENT EVENTS

After South Korea’s deliveries of the LNG “TENERGY” in January 2022 and the DP2 shuttle tanker “PORTO” in July 2022, TEN took delivery in November 2022 of the VLCC built in South Korea in 2020, “DIAS I” , TEN’s third. fleet.

In addition, this month TEN was awarded a contract for up to 15 years, for up to three shuttle tankers by a major energy company. This brings the company’s DP2 tanker fleet to seven units, all on long-term accretive contracts.

TEN has completed its first Environmental, Social and Governance (“ESG”) report, detailing the company’s ESG strategy and performance, which will be available on the company’s website.

DIVIDEND – ORDINARY SHARES

TEN’s Board of Directors has approved a dividend of $0.15 per common share to be paid on December 20, 2022 to holders of record as of December 14, 2022. This distribution reflects the second payment for 2022 which is consistent with TEN’s semi-annual dividend and represents a 50% increase over the previous dividend of $0.10 per common share paid in July 2022. Including this upcoming distribution, TEN will have paid common shareholders half a billion dollars in dividends since its listing on the NYSE in 2002.

STRATEGY & OUTLOOK

With favorable market fundamentals and an order book that continues to remain at historically low levels and a tight site capacity for at least the next three years, the context for a solid and sustainable oil market has been established. Geopolitical events that led to an increase in ton-miles, as well as global oil demand approaching pre-covid levels could further support this fact.

In this environment, TEN’s modern and diverse fleet is well positioned to take advantage of high spot rates and secure long-term accretive jobs for key end users.

Building on the strength of the tanker market, management will also consider strategic divestiture of some of its previous generation tankers, both in the crude and products space, and reinvest some or all of the gains potential for new generation ships.

TEN’s presence and expansion in more specialized sectors such as tankers and LNG should continue as management actively explores attractive opportunities in these two segments for longer-term industrial transactions.

“Having navigated safely through the choppy waters of recent years, TEN is well positioned to capitalize on the positive medium to long-term fundamentals in the tanker industry,” commented George Saroglou, COO of TEN. “Our combination of long-term accretive strategic transactions and upside exposure ensures positive earnings, a strong balance sheet, cash for expansion and continued dividends,” Mr. Saroglou concluded.

The Company reports its financial results in accordance with US generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP measures used within the financial community may provide users of this financial information with additional meaningful comparisons between current results and results of prior operating periods as well as comparisons between performance of shipping companies. Management also uses these non-GAAP financial measures to make financial, operational and planning decisions and to assess the performance of the Company. We use the following non-GAAP measures:

(i) TCE, which represents trip revenue minus trip expenses, is divided by the number of operating days less 236 days lost for the third quarter and 610 days for the nine months of 2022 and 182 days for the quarter of the previous year of 2021 and 609 days for the nine months, respectively, following the calculation of revenues on a loading-unloading basis.

(ii) Vessel overhead is general and administrative expense, which also includes management fee, stock compensation expense and management incentive bonus.

(iii) Operating expenses per vessel per day which excludes management, general and administrative expenses, stock compensation expenses and management incentive bonus.

(iv) Adjusted EBITDA. See above for reconciliation to net income (loss).

Non-GAAP financial measures should be considered a supplement to, and not an alternative to, the Company’s reported results prepared in accordance with GAAP.

The Company is not subject to corporation tax.

Full report

Source: Tsakos Energy Navigation

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UK’s Hunt rules out ‘walking away’ from Brexit trade deal with EU https://rauensales.com/uks-hunt-rules-out-walking-away-from-brexit-trade-deal-with-eu/ Wed, 23 Nov 2022 15:50:00 +0000 https://rauensales.com/uks-hunt-rules-out-walking-away-from-brexit-trade-deal-with-eu/

LONDON, Nov 23 (Reuters) – Britain’s Finance Minister Jeremy Hunt on Wednesday ruled out an easing of Brexit by amending the trade deal with the European Union, following demands from companies to make it easier to hire foreign staff and to remove trade barriers.

Britain’s bleak economic outlook, marked by sluggish business investment and sluggish post-Brexit trade, has prompted calls from businesses and economists for closer ties to the EU and a more relaxed approach to immigration to stimulate growth.

Appearing before the Treasury Committee of the UK Parliament, Hunt was asked about media reports that he was in favor of Britain adopting a relationship with the EU similar to that of Switzerland, which implies an alignment tight on EU rules and few restrictions on EU worker migration.

“I can rule out any suggestion that the government ever intended to move away from the ATT (Brexit deal), to move to a situation where we don’t have full control of our regulations, to jeopardize freedom of movement,” says Hunt.

“I can absolutely say that has never been our position.”

Hunt added that he believed existing trade frictions with the EU could be reduced through better use of technology.

Under Britain’s post-Brexit Trade and Cooperation Agreement (TCA) with the EU, there are no customs duties payable on goods moving between Britain and EU, but separate regulations, customs and immigration rules.

Prime Minister Rishi Sunak told business leaders at a Confederation of British Industry (CBI) conference on Monday that it was “unequivocal” that Britain should pursue its own agenda on regulation and migration.

The CBI has said Britain should create a temporary work visa scheme to boost economic growth and also resolve a dispute with the EU over trade rules in Northern Ireland.

Reporting by David Milliken, Kylie Maclellan and Suban Abdulla; written by Andy Bruce

Our standards: The Thomson Reuters Trust Principles.

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JM SMUCKER CO Management’s discussion and analysis of financial condition and results of operations. (Form 10-Q) https://rauensales.com/jm-smucker-co-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/ Mon, 21 Nov 2022 21:14:07 +0000 https://rauensales.com/jm-smucker-co-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/

(Dollars and shares in millions, unless otherwise indicated, except per share data)


This discussion and analysis deals with comparisons of material changes in the
unaudited condensed consolidated financial statements for the three and six
months ended October 31, 2022 and 2021. All comparisons presented are to the
corresponding period of the prior year, unless otherwise noted.

On January 31, 2022, we sold the natural beverage and grains businesses to
Nexus. The transaction included products sold under the R.W. Knudsen and
TruRoots brands, inclusive of certain trademarks, a licensing agreement for
Santa Cruz Organic beverages, dedicated manufacturing and distribution
facilities in Chico, California, and Havre de Grace, Maryland, and approximately
150 employees who supported the natural beverage and grains businesses. The
transaction did not include Santa Cruz Organic nut butters, fruit spreads,
syrups, or applesauce. Under our ownership, the businesses generated net sales
of $106.7 in 2022, primarily included in the U.S. Retail Consumer Foods segment.
Final net proceeds from the divestiture were $98.7, which were inclusive of a
working capital adjustment and net of cash transaction costs. We recognized a
pre-tax gain of $28.3 related to the natural beverage and grains businesses,
including $1.6 during the first quarter of 2023, within other operating expense
(income) - net in the Condensed Statement of Consolidated Income, upon
finalization of the working capital adjustment. The remaining pre-tax gain was
recognized during the second half of 2022.

On December 1, 2021, we sold the private label dry pet food business to Diamond
Pet Foods. The transaction included dry pet food products sold under private
label brands, a dedicated manufacturing facility located in Frontenac, Kansas,
and approximately 220 employees who supported the private label dry pet food
business. The transaction did not include any branded products or our private
label wet pet food business. Under our ownership, the business generated net
sales of $62.3 in 2022, included in the U.S. Retail Pet Foods segment. Final net
proceeds from the divestiture were $32.9, which were net of cash transaction
costs. Upon completion of this transaction during the third quarter of 2022, we
recognized a pre-tax loss of $17.1.

We are the owner of all trademarks referenced herein, except for the following,
which are used under license: Dunkin' is a trademark of DD IP Holder LLC, and
Rachael Ray is a trademark of Ray Marks II LLC. The Dunkin' brand is licensed to
us for packaged coffee products, including K-Cup® pods, sold in retail channels
such as grocery stores, mass merchandisers, club stores, e-commerce, and drug
stores. Information in this document does not pertain to products for sale in
Dunkin' restaurants. K-Cup® is a trademark of Keurig Green Mountain, Inc., used
with permission.

Trends Affecting our Business

The spread of the novel coronavirus ("COVID-19") throughout the United States
and the international community has had, and will continue to have, an impact on
financial markets, economic conditions, and portions of our business and
industry. During 2022, we experienced significant input cost inflation and a
dynamic macroeconomic environment, which we anticipate will persist through
2023. In addition, the higher costs required us to implement material price
increases across all of our businesses in 2022, and we anticipate the price
elasticity of demand will continue to increase during 2023 as consumers respond
to broader inflation pressures.

During the first half of 2023, we continued to experience disruption in our
supply chain network, including labor shortages and the supply of certain
ingredients, packaging, and other sourced materials, which has resulted in the
continued elevation of transportation and other supply chain costs. It is
possible that more significant disruptions could occur if the COVID-19 pandemic
and certain geopolitical events continue to impact markets around the world,
including the impact of e-commerce pressures on freight charges and potential
shipping delays due to supply and demand imbalances, as well as labor shortages.
We also continue to work closely with our customers and external business
partners, taking additional actions to ensure safety and business continuity,
and maximize product availability. We have maintained production at all our
facilities and availability of appointments at distribution centers.
Furthermore, we have implemented measures to manage order volumes to ensure a
consistent supply across our retail partners during this period of high demand.
However, to the extent that high demand levels or the current supply chain
environment continues to disrupt order fulfillment, we may experience volume
loss and elevated penalties.

Although we do not have any operations in Russia or Ukraine, we continue to
monitor the environment for any significant escalation or expansion of economic
or supply chain disruptions, including broader inflationary costs, as well as
regional or global economic recessions. During the first half of 2023, the
conflict between Russia and Ukraine primarily impacted the price of grains,
oils, and fat-based products, which may continue to have an adverse impact on
our results of operations during 2023.
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Overall, the impact of COVID-19 and the conflict between Russia and Ukraine,
including broad-based supply chain disruptions and rising levels of inflation,
remain uncertain and ultimately depend on the length and severity of the
conflict and the pandemic, inclusive of the introduction of new strains of the
virus; the federal, state, and local government actions taken in response to the
pandemic; vaccination rates and effectiveness; and the macroeconomic
environment. We will continue to evaluate the nature and extent to which
COVID-19 and the conflict between Russia and Ukraine will impact our business;
supply chain, including labor availability and attrition; consolidated results
of operations; financial condition; and liquidity.

Results of Operations
                                                         Three Months Ended October 31,                                     Six Months Ended October 31,
                                                                                         % Increase                                                        % Increase
                                                 2022                  2021              (Decrease)                2022                  2021              (Decrease)
Net sales                                 $      2,205.1           $ 2,050.0                      8  %       $     4,078.1           $ 3,908.0                      4  %
Gross profit                              $        701.1           $   711.5                     (1)         $     1,253.6           $ 1,350.9                     (7)
% of net sales                                      31.8   %            34.7  %                                       30.7   %            34.6  %
Operating income                          $        293.4           $   311.8                     (6)         $       473.1           $   571.2                    (17)
% of net sales                                      13.3   %            15.2  %                                       11.6   %            14.6  %
Net income:
Net income                                $        191.1           $   206.0                     (7)         $       300.9           $   359.9                    (16)
Net income per common share - assuming    $         1.79           $    1.90                     (6)         $        2.82           $    3.32                    (15)

dilution

Adjusted gross profit (A)                 $        731.0           $   730.9                      -          $     1,318.4           $ 1,377.1                     (4)
% of net sales                                      33.2   %            35.7  %                                       32.3   %            35.2  %
Adjusted operating income (A)             $        379.6           $   387.9                     (2)         $       649.6           $   711.3                     (9)
% of net sales                                      17.2   %            18.9  %                                       15.9   %            18.2  %
Adjusted income: (A)
Income                                    $        256.2           $   263.8                     (3)         $       434.3           $   469.6                     (8)
Earnings per share - assuming dilution    $         2.40           $    2.43                     (1)         $        4.07           $    4.33                     (6)


(A) We use non-GAAP financial measures to assess our performance. Refer to the “Non-GAAP Financial Measures” section in this discussion and analysis for a reconciliation to the comparable GAAP financial measure.

Net Sales
                                                      Three Months Ended October 31,                                                 Six Months Ended October 31,
                                                                                Increase                                                                    Increase
                                        2022                  2021             (Decrease)            %                2022                2021             (Decrease)            %
Net sales                        $    2,205.1             $ 2,050.0          $     155.1              8  %       $   4,078.1          $ 3,908.0          $     170.1             4  %

Private label dry pet food
divestiture                                 -                 (27.8)                27.8              1                    -              (52.9)                52.9             1
Natural beverage and grains
divestiture                                 -                 (37.2)                37.2              2                    -              (70.6)                70.6             2
Foreign currency exchange                 7.0                     -                  7.0              -                 11.4                  -                 11.4             -
Net sales excluding divestitures
and foreign currency exchange
(A)                              $    2,212.1             $ 1,985.0          $     227.1             11  %       $   4,089.5          $ 3,784.5          $     305.0             8  %

Amounts may not add up due to rounding.

(A) Net sales excluding disposals and foreign exchange is a non-GAAP financial measure used to assess performance internally. This measure provides useful information to investors as it allows comparison of results from year to year.


Net sales in the second quarter of 2023 increased $155.1, or 8 percent, which
includes $65.0 of noncomparable net sales in the prior year related to
divestitures. Net sales excluding divestitures and foreign currency exchange
increased $227.1, or 11 percent. Higher net price realization contributed 17
percentage points to net sales, primarily reflecting list price increases for
each of our U.S. Retail segments and for International and Away From Home. The
favorable net price realization was partially offset by a 6 percentage point
decrease from volume/mix, primarily driven by the U.S. Retail Coffee segment.

Net sales in the first six months of 2023 increased $170.1, or 4 percent, which
includes $123.5 of noncomparable net sales in the prior year related to
divestitures. Net sales excluding divestitures and foreign currency exchange
increased $305.0, or 8 percent. Higher net price realization contributed 16
percentage points to net sales, primarily reflecting list price increases for
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each of our U.S. Retail segments and for International and Away From Home,
partially offset by the unfavorable impact of customer returns and fees related
to the Jif peanut butter product recall. The favorable net price realization was
partially offset by a 7 percentage point decrease from volume/mix, primarily
driven by the U.S. Retail Coffee segment and manufacturing downtime related to
the recall.

Operating Income

The following table presents the components of operating income as a percentage
of net sales.

                                                          Three Months Ended October 31,             Six Months Ended October 31,
                                                             2022                 2021                 2022                 2021
Gross profit                                                   31.8  %              34.7  %              30.7  %              34.6  %
Selling, distribution, and administrative expenses:
Marketing                                                       5.1  %               5.9  %               5.1  %               5.6  %
Selling                                                         2.5                  2.6                  3.1                  3.0
Distribution                                                    3.5                  3.4                  3.7                  3.6
General and administrative                                      4.9                  5.0                  5.3                  5.0
Total selling, distribution, and administrative                16.1  %              17.0  %              17.1  %              17.2  %
expenses
Amortization                                                    2.5                  2.7                  2.7                  2.8

Other special project costs                                       -                  0.1                  0.1                  0.1
Other operating expense (income) - net                         (0.1)                (0.2)                (0.8)                (0.2)
Operating income                                               13.3  %              15.2  %              11.6  %              14.6  %

Amounts may not add up due to rounding.


Gross profit decreased $10.4, or 1 percent, in the second quarter of 2023,
primarily reflecting a lower contribution from volume/mix and the noncomparable
impact of the divested natural beverage and grains businesses, partially offset
by a favorable net impact of higher net price realization and increased
commodity and ingredient, manufacturing, transportation, and packaging costs,
inclusive of the unfavorable impact related to the Jif peanut butter product
recall.

Operating profit decreased $18.4or 6%, mainly reflecting lower gross margin and a $6.6 increased selling, distribution and administrative (“SD&A”) expenses.


Our non-GAAP adjustments include amortization expense and impairment charges
related to intangible assets, special project costs, gains and losses on
divestitures, the change in net cumulative unallocated derivative gains and
losses, and other one-time items that do not directly reflect ongoing operating
results. Refer to "Non-GAAP Financial Measures" in this discussion and analysis
for additional information. Gross profit excluding non-GAAP adjustments
("adjusted gross profit"), primarily reflecting the exclusion of the change in
net cumulative unallocated derivative gains and losses as compared to GAAP gross
profit, increased $0.1 in the second quarter of 2023. Operating income excluding
non-GAAP adjustments ("adjusted operating income") decreased $8.3, or 2 percent,
as compared to the prior year.

Gross profit decreased $97.3, or 7 percent, in the first six months of 2023,
primarily reflecting a lower contribution from volume/mix and the noncomparable
impact of the divested natural beverage and grains businesses, partially offset
by a favorable net impact of higher net price realization and increased
commodity and ingredient, manufacturing, packaging, and transportation costs,
inclusive of the unfavorable impact related to the Jif peanut butter product
recall.

Operating profit decreased $98.1or 17%, mainly reflecting lower gross margin and a $26.4 increase in SD&A expenses, partially offset by a $25.0 increase in other net operating income, primarily reflecting an expected insurance recovery related to the recall of Jif peanut butter products.


Adjusted gross profit, primarily reflecting the exclusion of the change in net
cumulative unallocated derivative gains and losses as compared to GAAP gross
profit, decreased $58.7, or 4 percent, in the first six months of 2023. Adjusted
operating income decreased $61.7, or 9 percent, as compared to the prior year.
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Interest charges


Net interest expense decreased $0.6 and $4.6 in the second quarter and first six
months of 2023, respectively, primarily due to a net favorable impact of the
repayment of Senior Notes and the issuance of debt in the prior year. For
additional information, refer to Note 7: Debt and Financing Arrangements.

Income taxes


Income taxes decreased $1.0, or 2 percent, in the second quarter of 2023, and
decreased $21.0, or 18 percent, in the first six months of 2023, primarily due
to the decrease in income before income taxes. The effective income tax rates
for the three months ended October 31, 2022 and 2021, were 24.4 and 23.4
percent, respectively, and for the six months ended October 31, 2022 and 2021,
were 23.6 and 24.1 percent, respectively.

During both the current and prior years, the effective income tax rates varied
from the U.S. statutory income tax rate of 21.0 percent, primarily due to the
impact of state income taxes. We anticipate a full-year effective income tax
rate for 2023 of approximately 24.1 percent. For further information, refer to
Note 12: Income Taxes.

Restructuring Activities

A restructuring program was approved by the Board during 2021, associated with
opportunities identified to reduce our overall cost structure, optimize our
organizational design, and support our portfolio reshape. This is inclusive of
certain restructuring costs associated with the divestitures of the Crisco,
Natural Balance, private label dry pet food, and natural beverage and grains
businesses. For additional information related to the divestitures, see Note 4:
Divestitures.

During 2021, we substantially completed an organizational redesign related to
our corporate headquarters and announced plans to close our Suffolk, Virginia,
facility as a result of a new strategic partnership for the production of our
liquid coffee products. During 2022, we completed the transition of production
to JDE Peet's N.V., as anticipated. Furthermore, the restructuring program was
expanded during the third quarter of 2022 to include certain costs associated
with the recent divestitures of the private label dry pet food and natural
beverage and grains businesses, as well as the closure of our Ripon, Wisconsin,
production facility by the end of calendar year 2022 to further optimize
operations for our U.S. Retail Consumer Foods business. We expect to incur costs
of approximately $70.0 associated with the restructuring activities planned to
date. More than half of these costs are expected to be other transition and
termination costs associated with our cost reduction and margin management
initiatives, inclusive of accelerated depreciation, while the remainder
represents employee-related costs. We anticipate the planned activities
associated with this restructuring program will be completed by the end of 2023.
We have incurred total cumulative restructuring costs of $58.6, of which $3.5
and $6.0 were incurred during the second quarter and first six months of 2023,
respectively. For further information, refer to Note 3: Restructuring Costs.

Sector results


We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee,
and U.S. Retail Consumer Foods. The presentation of International and Away From
Home represents a combination of all other operating segments that are not
individually reportable.

The U.S. Retail Pet Foods segment primarily includes the domestic sales of
Rachael Ray Nutrish, Meow Mix, Milk-Bone, 9Lives, Kibbles 'n Bits, Pup-Peroni,
and Nature's Recipe branded products; the U.S. Retail Coffee segment primarily
includes the domestic sales of Folgers, Dunkin', and Café Bustelo branded
coffee; and the U.S. Retail Consumer Foods segment primarily includes the
domestic sales of Smucker's and Jif branded products. International and Away
From Home includes the sale of products distributed domestically and in foreign
countries through retail channels and foodservice distributors and operators
(e.g., health care operators, restaurants, lodging, hospitality, offices, K-12,
colleges and universities, and convenience stores).

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                                                         Three Months Ended October 31,                                    Six Months Ended October 31,
                                                                                        % Increase                                                        % Increase
                                                  2022                 2021             (Decrease)                2022                  2021              (Decrease)
Net sales:
U.S. Retail Pet Foods                       $       765.2           $ 701.6                      9  %       $     1,494.2           $ 1,349.6                     11  %
U.S. Retail Coffee                                  709.8             645.1                     10                1,307.7             1,188.3                     10
U.S. Retail Consumer Foods                          432.2             441.2                     (2)                 743.3               876.8                    (15)
International and Away From Home                    297.9             262.1                     14                  532.9               493.3                      8
Segment profit:
U.S. Retail Pet Foods                       $       120.1           $  99.6                     21  %       $       240.4           $   179.5                     34  %
U.S. Retail Coffee                                  187.7             207.8                    (10)                 333.6               359.1                     (7)
U.S. Retail Consumer Foods                          100.3             111.0                    (10)                 155.1               229.7                    (32)
International and Away From Home                     41.5              40.4                      3                   58.1                73.3                    (21)
Segment profit margin:
U.S. Retail Pet Foods                                15.7   %          14.2  %                                       16.1   %            13.3  %
U.S. Retail Coffee                                   26.4              32.2                                          25.5                30.2
U.S. Retail Consumer Foods                           23.2              25.2                                          20.9                26.2
International and Away From Home                     13.9              15.4                                          10.9                14.9


U.S. Retail Pet Foods

The U.S. Retail Pet Foods segment net sales increased $63.6 in the second
quarter of 2023, inclusive of the impact of $27.8 of noncomparable net sales in
the prior year related to the divested private label dry pet food business.
Excluding the noncomparable impact of the divested business, net sales increased
$91.4, or 14 percent. Higher net price realization increased net sales by 16
percentage points, primarily reflecting list price increases across the
portfolio, partially offset by a decreased contribution from volume/mix of 3
percentage points, primarily driven by decreases for dog food. Segment profit
increased $20.5, primarily reflecting a favorable net impact of higher net price
realization and increased commodity and ingredient, transportation, and
packaging costs.

The U.S. Retail Pet Foods segment net sales increased $144.6 in the first six
months of 2023, inclusive of the impact of $52.9 of noncomparable net sales in
the prior year related to the divested private label dry pet food business.
Excluding the noncomparable impact of the divested business, net sales increased
$197.5, or 15 percent. Higher net price realization increased net sales by 18
percentage points, primarily reflecting list price increases across the
portfolio. Lower contribution from volume/mix of 3 percentage points partially
offset the higher net price realization, primarily driven by decreases for dog
food and private label offerings, partially offset by increases for dog snacks.
Segment profit increased $60.9, primarily reflecting a favorable net impact of
higher net price realization and increased commodity and ingredient, packaging,
transportation, and manufacturing costs, as well as lower marketing spend,
partially offset by the unfavorable volume/mix.

WE retail cafe


The U.S. Retail Coffee segment net sales increased $64.7 in the second quarter
of 2023. Net price realization contributed 23 percentage points to net sales,
primarily reflecting list price increases across the portfolio. Unfavorable
volume/mix decreased net sales by 13 percentage points, primarily driven by the
Folgers and Dunkin' brands. Segment profit decreased $20.1, primarily reflecting
the unfavorable volume/mix and higher marketing spend, partially offset by a
favorable net impact of higher net price realization and increased commodity and
manufacturing costs.

The U.S. Retail Coffee segment net sales increased $119.4 in the first six
months of 2023. Net price realization contributed 23 percentage points to net
sales, primarily reflecting list price increases across the portfolio.
Unfavorable volume/mix decreased net sales by 13 percentage points, primarily
driven by the Folgers and Dunkin' brands. Segment profit decreased $25.5,
primarily reflecting the unfavorable volume/mix and higher marketing spend,
partially offset by a favorable net impact of higher net price realization and
increased commodity and manufacturing costs.
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U.S. consumer food retail


The U.S. Retail Consumer Foods segment net sales decreased $9.0 in the second
quarter of 2023, inclusive of the impact of $35.7 of noncomparable net sales in
the prior year related to the divested natural beverage and grains businesses.
Excluding the noncomparable impact of the divested businesses, net sales
increased $26.7, or 7 percent. Net price realization contributed 9 percentage
points to net sales, primarily reflecting list price increases across the
portfolio. Volume/mix decreased net sales by 3 percentage points, primarily
driven by decreases for peanut butter and fruit spread products, partially
offset by an increase for Smucker's Uncrustables® frozen sandwiches. Segment
profit decreased $10.7, primarily reflecting higher manufacturing, commodity and
ingredient, and packaging costs, inclusive of costs related to the Jif peanut
butter product recall, and the impact of the noncomparable segment profit in the
prior year related to the divested natural beverage and grains businesses,
partially offset by higher net price realization, lower marketing spend, and
favorable volume/mix.

The U.S. Retail Consumer Foods segment net sales decreased $133.5 in the first
six months of 2023, inclusive of the impact of $67.1 of noncomparable net sales
in the prior year related to the divested natural beverage and grains
businesses. Excluding the noncomparable impact of the divested businesses, net
sales decreased $66.4, or 8 percent. Volume/mix decreased net sales by 11
percentage points, primarily driven by downtime related to the Jif peanut butter
product recall and decreases for fruit spread products, partially offset by an
increase for Smucker's Uncrustables frozen sandwiches. Net price realization
contributed 3 percentage points to net sales, primarily driven by list price
increases for the Smucker's brand, partially offset by declines for Jif peanut
butter, inclusive of the unfavorable impact of customer returns and fees related
to the recall. Segment profit decreased $74.6, primarily reflecting higher
commodity and ingredient, manufacturing, and packaging costs, inclusive of costs
related to the recall, unfavorable volume/mix, and the impact of the
noncomparable segment profit in the prior year related to the divested natural
beverage and grains businesses, partially offset by higher net price
realization, and lower marketing spend.

International and away from home


The International and Away From Home segment net sales increased $35.8 in the
second quarter of 2023, including the noncomparable impact of $1.5 of net sales
in the prior year related to the divested natural beverage and grains businesses
and $7.0 of unfavorable foreign currency exchange. Excluding the noncomparable
impact of the divested businesses and foreign currency exchange, net sales
increased $44.3, or 17 percent, reflecting a 19 percent and 15 percent increase
for the Away From Home and International operating segments, respectively. Net
price realization contributed an 18 percentage point increase to net sales for
the combined businesses, primarily driven by increases for coffee products and
baking mixes and ingredients, partially offset by a decreased contribution from
volume/mix of 1 percentage point. Segment profit increased $1.1, primarily
reflecting a favorable net impact of higher net price realization and higher
commodity costs, partially offset by the unfavorable volume/mix.

The International and Away From Home segment net sales increased $39.6 in the
first six months of 2023, including the noncomparable impact of $3.5 of net
sales in the prior year related to the divested natural beverage and grains
businesses and $11.4 of unfavorable foreign currency exchange. Excluding the
noncomparable impact of the divested businesses and foreign currency exchange,
net sales increased $54.5, or 11 percent, reflecting a 17 percent and 5 percent
increase for the Away From Home and International operating segments,
respectively. Net price realization contributed a 12 percentage point increase
to net sales for the combined businesses, primarily driven by increases for
coffee products, baking mixes and ingredients, and frozen handheld products,
partially offset by the unfavorable impact of customer returns and fees related
to the Jif peanut butter product recall. Segment profit decreased $15.2,
primarily reflecting the impact of the recall and higher commodity costs,
partially offset by higher net pricing.

Financial position – Liquidity and capital resources

Liquidity


Our principal source of funds is cash generated from operations, supplemented by
borrowings against our commercial paper program and revolving credit facility.
At October 31, 2022, total cash and cash equivalents was $27.1, compared
to $169.9 at April 30, 2022.
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The following table presents certain cash flow information.

Semester completed October 31,

                                                                              2022                 2021
Net cash provided by (used for) operating activities                    $        166.0          $  302.9
Net cash provided by (used for) investing activities                            (209.3)           (143.0)
Net cash provided by (used for) financing activities                             (98.8)           (338.8)

Net cash provided by (used for) operating activities                    $        166.0          $  302.9
Additions to property, plant, and equipment                                     (190.4)           (127.2)
Free cash flow (A)                                                      $        (24.4)         $  175.7

(A) Free cash flow is a non-GAAP financial measure used by management to assess the amount of cash available for debt repayment, dividend distribution, acquisition opportunities, share buybacks and other business objectives.


The $136.9 decrease in cash provided by operating activities in the first six
months of 2023 was primarily driven by the $70.0 contribution to our U.S.
qualified defined benefit pension plans during the first quarter of 2023 and
lower net income adjusted for noncash items in the current year, partially
offset by lower working capital requirements in 2023. The cash required to fund
working capital decreased compared to the prior year, primarily related to an
increase in cash from trade receivables due to timing of sales and a decrease in
incentive compensation, which was partially offset by an unfavorable net impact
of increased inventory levels and accounts payable, primarily driven by input
cost inflation.

Cash used for investing activities in the first six months of 2023 consisted
primarily of $190.4 in capital expenditures, primarily driven by investments in
the new manufacturing and distribution facilities in McCalla, Alabama, and
capacity expansions in Longmont, Colorado, to support growth for the Smucker's
Uncrustables brand, as well as plant maintenance across our facilities.
Furthermore, an increase in collateral pledged of $23.3 in our derivative cash
margin account balances contributed to the use of cash in 2023. Cash used for
investing activities in the first six months of 2022 consisted primarily of
$127.2 in capital expenditures, which reflected capacity expansion at our
Longmont facility, as well as plant maintenance across our facilities. An
increase in collateral pledged of $14.0 in our derivative cash margin account
balances also contributed to the use of cash in 2022.

Cash used for financing activities in the first six months of 2023 consisted
primarily of dividend payments of $213.5, partially offset by a net increase in
short-term borrowings of $118.2. Cash used for financing activities in the first
six months of 2022 consisted primarily of long-term debt repayments of $1,157.0
and dividend payments of $204.1, partially offset by $797.6 in long-term debt
proceeds and a net increase in short-term borrowings of $237.8.

Vendor Financing Program


As part of ongoing efforts to maximize working capital, we work with our
suppliers to optimize our terms and conditions, which includes the extension of
payment terms. Payment terms with our suppliers, which we deem to be
commercially reasonable, range from 0 to 180 days. We have an agreement with a
third-party administrator to provide an accounts payable tracking system and
facilitate a supplier financing program which allows participating suppliers the
ability to monitor and voluntarily elect to sell our payment obligations to a
designated third-party financial institution. Participating suppliers can sell
one or more of our payment obligations at their sole discretion, and our rights
and obligations to our suppliers are not impacted. We have no economic interest
in a supplier's decision to enter into these agreements. Our obligations to our
suppliers, including amounts due and scheduled payment terms, are not impacted
by our suppliers' decisions to sell amounts under these arrangements. As of
October 31, 2022 and April 30, 2022, $370.7 and $314.3 of our outstanding
payment obligations, respectively, were elected and sold to a financial
institution by participating suppliers. During the first six months of 2023 and
2022, we paid $692.4 and $530.4, respectively, to a financial institution for
payment obligations that were settled through the supplier financing program.

Contingencies


We, like other food manufacturers, are from time to time subject to various
administrative, regulatory, and other legal proceedings arising in the ordinary
course of business. We are currently a defendant in a variety of such legal
proceedings, including certain lawsuits related to the alleged price-fixing of
shelf stable tuna products prior to 2011 by a business previously owned by, but
divested prior to our acquisition of, Big Heart Pet Brands, the significant
majority of which were settled and paid during 2019 and 2020. While we cannot
predict with certainty the ultimate results of these proceedings or potential
settlements associated with these or other matters, we have accrued losses for
certain contingent liabilities that we have determined are
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probable and reasonably estimable at October 31, 2022. Based on the information
known to date, with the exception of the matters discussed below, we do not
believe the final outcome of these proceedings would have a material adverse
effect on our financial position, results of operations, or cash flows.

In addition to the legal proceedings discussed above, we are currently a
defendant in CERT v. Brad Barry LLC, et al., which alleges that we, in addition
to the Defendants who manufacture, package, distribute, or sell packaged coffee,
failed to provide warnings for our coffee products of exposure to the chemical
acrylamide as required under Proposition 65. CERT sought equitable relief,
including warnings to consumers, as well as civil penalties in the amount of the
statutory maximum of $2,500 per day per violation of Proposition 65. In
addition, CERT asserted that every consumed cup of coffee, absent a compliant
warning, was equivalent to a violation under Proposition 65. In June 2019, the
state agency responsible for administering the Proposition 65 program, OEHHA,
approved a regulation clarifying that cancer warnings are not required for
coffee under Proposition 65, and in August 2020, the trial court granted the
Defendants' motion for summary judgment based on the regulation. CERT appealed
the ruling in November 2020 to the California Court of Appeals for the Second
Appellate District. The Court issued its order on October 26, 2022, affirming
the lower court's decision. CERT may petition the California Supreme Court for
further appeal by December 5, 2022.

We are also defendants in a series of putative class action lawsuits that were
originally filed in federal courts in California, Florida, Illinois, Missouri,
New York, Texas, and Washington D.C., but have been transferred to the United
States District Court for the Western District of Missouri for coordinated
pre-trial proceedings. The plaintiffs assert claims arising under various state
laws for false advertising, consumer protection, deceptive and unfair trade
practices, and similar statutes. Their claims are premised on allegations that
we have misrepresented the number of servings that can be made from various
canisters of Folgers coffee on the packaging for those products.

We are a defendant in five putative class action lawsuits as a result of our
voluntary recall of select Jif peanut butter products. The plaintiffs assert
causes of action for negligence, breach of warranties, fraudulent concealment,
unjust enrichment, and, in some of the lawsuits, violations of state consumer
protection and deceptive trade practices laws. Their claims are premised on
allegations that we engaged in business practices designed to mislead the public
regarding the safety of Jif peanut butter for human consumption due to the
alleged presence of salmonella. The cases are pending and consolidated in the
United States District Court for the Northern District of Ohio.

The outcome and the financial impact of these cases, if any, cannot be predicted
at this time. Accordingly, no loss contingency has been recorded for these
matters as of October 31, 2022, and the likelihood of loss is not considered
probable or estimable. However, if we are required to pay significant damages,
our business and financial results could be adversely impacted, and sales of
those products could suffer not only in these locations but elsewhere.

Product recall


In May 2022, we initiated a voluntary recall of select Jif peanut butter
products produced at our Lexington, Kentucky, facility and sold primarily in the
U.S., due to potential salmonella contamination. At that time, we also suspended
the manufacturing of these products at our Lexington facility and temporarily
paused shipments from our Memphis, Tennessee, facility. No other products
produced at our other facilities were affected by this recall. In June 2022, we
resumed manufacturing and shipping at our Lexington facility, as well as
shipping from our Memphis facility. We continue to partner with retailers to
restock Jif peanut butter products as quickly as possible and anticipate a
return to normal levels by the end of 2023. In addition to the impact of
manufacturing downtime, we expect to incur total direct costs of approximately
$100.0 by the end of 2023, net of the remaining anticipated insurance
recoveries, related to customer returns, fees, unsaleable inventory, and other
product recall-related costs, primarily within our U.S. Retail Consumer Foods
segment. Approximately $25.0 and $90.0 of direct costs were recognized, net of
the remaining anticipated insurance recoveries, during the three and six months
ended October 31, 2022, respectively. We expect the majority of the remaining
costs will be incurred through the third quarter of 2023.
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Capital resources

The following table shows our capital structure.

                         October 31, 2022       April 30, 2022

Short-term borrowings   $           302.0      $         180.0
Long-term debt                    4,312.4              4,310.6
Total debt              $         4,614.4      $       4,490.6
Shareholders' equity              8,217.3              8,140.1
Total capital           $        12,831.7      $      12,630.7


We have available a $2.0 billion unsecured revolving credit facility with a
group of 11 banks that matures in August 2026. Additionally, we participate in a
commercial paper program under which we can issue short-term, unsecured
commercial paper not to exceed $2.0 billion at any time. The commercial paper
program is backed by our revolving credit facility and reduces what we can
borrow under the revolving credit facility by the amount of commercial paper
outstanding. Commercial paper is used as a continuing source of short-term
financing for general corporate purposes. As of October 31, 2022, we had $302.0
of short-term borrowings outstanding, all of which were issued under our
commercial paper program, at a weighted-average interest rate of 3.40 percent.

We are in compliance with all our debt covenants as of October 31, 2022, and
expect to be for the next 12 months. For additional information on our long-term
debt, sources of liquidity, and debt covenants, see Note 7: Debt and Financing
Arrangements.

During the first three months of 2023 and 2022, we did not repurchase any common
shares under a repurchase plan authorized by the Board. At October 31, 2022,
approximately 5.8 million common shares remain available for repurchase pursuant
to the Board's authorizations. There is no guarantee as to the exact number of
shares that may be repurchased or when such purchases may occur.

In November 2021, we announced plans to invest $1.1 billion to build a new
manufacturing facility and distribution center in McCalla, Alabama, dedicated to
production of Smucker's Uncrustables frozen sandwiches. Construction of this
facility began in the third quarter of 2022, with production expected to begin
in calendar year 2025. The project demonstrates our commitment to meet
increasing demand for this highly successful product and deliver on our strategy
to focus on brands with the most significant growth opportunities. Construction
of the facility and production will occur in three phases over multiple years
and will result in the creation of up to 750 jobs. Financial investments and job
creation will align with each of the three phases.

Absent any material acquisitions or other significant investments, we believe
that cash on hand, combined with cash provided by operations, borrowings
available under our revolving credit facility and commercial paper program, and
access to capital markets, will be sufficient to meet our cash requirements for
the next 12 months, including the payment of quarterly dividends, principal and
interest payments on debt outstanding, and capital expenditures. However, as a
result of the current macroeconomic environment, including the ongoing impacts
of COVID-19 and the conflict between Russia and Ukraine, we may experience an
increase in the cost or the difficulty to obtain debt or equity financing, or to
refinance our debt in the future. We continue to evaluate these risks, which
could affect our financial condition or our ability to fund operations or future
investment opportunities.

As of October 31, 2022, total cash and cash equivalents of $17.7 was held by our
foreign subsidiaries, primarily in Canada. We have not repatriated foreign cash
to the U.S. during the first six months of 2023.

Material cash needs


We do not have material off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons, also known as
variable interest entities. Transactions with related parties are in the
ordinary course of business and are not material to our results of operations,
financial condition, or cash flows.

From October 31, 2022there have been no material changes in our significant cash requirements, as previously disclosed in our Annual Report on Form 10-K for the year ended April 30, 2022.



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Non-GAAP Financial Measures


We use non-GAAP financial measures, including: net sales excluding divestitures
and foreign currency exchange, adjusted gross profit, adjusted operating income,
adjusted income, adjusted earnings per share, and free cash flow, as key
measures for purposes of evaluating performance internally. We believe that
investors' understanding of our performance is enhanced by disclosing these
performance measures. Furthermore, these non-GAAP financial measures are used by
management in preparation of the annual budget and for the monthly analyses of
our operating results. The Board also utilizes certain non-GAAP financial
measures as components for measuring performance for incentive compensation
purposes.

Non-GAAP financial measures exclude certain items affecting comparability that
can significantly affect the year-over-year assessment of operating results,
which include amortization expense and impairment charges related to intangible
assets, special project costs, gains and losses on divestitures, the change in
net cumulative unallocated derivative gains and losses, and other one-time items
that do not directly reflect ongoing operating results. Income taxes, as
adjusted is calculated using an adjusted effective income tax rate that is
applied to adjusted income before income taxes and reflects the exclusion of the
previously discussed items, as well as any adjustments for one-time tax-related
activities, when they occur. While this adjusted effective income tax rate does
not generally differ materially from our GAAP effective income tax rate, certain
exclusions from non-GAAP results can significantly impact our adjusted effective
income tax rate.

These non-GAAP financial measures are not intended to replace the presentation
of financial results in accordance with U.S. GAAP. Rather, the presentation of
these non-GAAP financial measures supplements other metrics we use to internally
evaluate our businesses and facilitate the comparison of past and present
operations and liquidity. These non-GAAP financial measures may not be
comparable to similar measures used by other companies and may exclude certain
nondiscretionary expenses and cash payments.

The following table reconciles certain non-GAAP measures to the comparable GAAP
financial measure. See page 20 for a reconciliation of net sales adjusted for
certain noncomparable items to the comparable GAAP financial measure.

                                                           Three Months Ended October
                                                                       31,                           Six Months Ended October 31,
                                                              2022              2021                    2022                  2021
Gross profit reconciliation:
Gross profit                                              $   701.1          $ 711.5             $       1,253.6          $ 1,350.9

Change in cumulative net gains on unallocated derivatives and 27.1

     13.3                        60.9               15.5

losses

Cost of products sold - special project costs                   2.8              6.1                         3.9               10.7
Adjusted gross profit                                     $   731.0          $ 730.9             $       1,318.4          $ 1,377.1
Operating income reconciliation:
Operating income                                          $   293.4          $ 311.8             $         473.1          $   571.2
Amortization                                                   55.6             55.4                       111.2              110.8

Gain on divestiture                                               -                -                        (1.6)                 -

Change in cumulative net gains on unallocated derivatives and 27.1

     13.3                        60.9               15.5

losses

Cost of products sold - special project costs                   2.8              6.1                         3.9               10.7
Other special project costs                                     0.7              1.3                         2.1                3.1
Adjusted operating income                                 $   379.6          $ 387.9             $         649.6          $   711.3
Net income reconciliation:
Net income                                                $   191.1          $ 206.0             $         300.9          $   359.9
Income tax expense                                             61.8             62.8                        93.1              114.1
Amortization                                                   55.6             55.4                       111.2              110.8

Gain on divestiture                                               -                -                        (1.6)                 -

Change in cumulative net gains on unallocated derivatives and 27.1

     13.3                        60.9               15.5

losses

Cost of products sold - special project costs                   2.8              6.1                         3.9               10.7
Other special project costs                                     0.7              1.3                         2.1                3.1

Adjusted income before income taxes                       $   339.1          $ 344.9             $         570.5          $   614.1
Income taxes, as adjusted                                      82.9             81.1                       136.2              144.5
Adjusted income                                           $   256.2          $ 263.8             $         434.3          $   469.6
Weighted-average shares - assuming dilution                   106.9            108.4                       106.8              108.4
Adjusted earnings per share - assuming dilution           $    2.40          $  2.43             $          4.07          $    4.33


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Critical accounting estimates and policies


A discussion of our critical accounting estimates and policies can be found in
the "Management's Discussion and Analysis" section of our Annual Report on Form
10-K for the year ended April 30, 2022. There were no material changes to the
information previously disclosed.

© Edgar Online, source Previews

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Northeast seed potato growers continue to struggle due to post-Brexit negotiations https://rauensales.com/northeast-seed-potato-growers-continue-to-struggle-due-to-post-brexit-negotiations/ Mon, 21 Nov 2022 09:15:00 +0000 https://rauensales.com/northeast-seed-potato-growers-continue-to-struggle-due-to-post-brexit-negotiations/

Aberdeenshire East MSP Gillian Martin has urged the UK government to involve Scottish agriculture and the Scottish government in business decisions affecting the sector.

Seed potato exports continue to be affected by Brexit

Ms Martin raised concerns in Parliament last week over the lack of a legal requirement in UK bills to seek the consent of Scottish ministers when legislating in devolved areas, the lack of scope for scrutiny of the Scottish Parliament committee and the inability to make recommendations in relation to such decisions.

Ms Martin also spoke of her concerns for seed potato growers, for whom she said leaving the EU had had dire consequences, as the current post-Brexit ban on the sale of seed potatoes seed in the valuable EU market continues to disadvantage Scottish growers.

During a debate on the impact of Brexit on devolution, she claimed that the significant bans on Scottish seed potatoes to the EU have created a vacuum, where Scottish growers have lost massively, despite seed Scottish products conforming to the same grades and disease tolerances as the EU. requests.

Gillian Martin said: ‘The 2020 Trade and Cooperation Agreement with Europe did not include equivalence for seed potatoes, and the Scottish Parliament and Scottish Government did not have their say in the matter.

“The neglect of the seed potato sector is only part of a Brexit trade deal in which Scotland had no say and on which we had no opportunity to exam.

“At the end of 2020, the failure of Westminster to include an agreement with Europe on equivalence for the sector in the cooperation agreement was an omission which cost Scottish producers dearly.

“A large number of Brexit-related bills have been passed in Westminster without the consent of at least one of the devolved legislatures, and the EU exit deals have all been done without regard to delegated powers. We have everyone needs to be around the table with the consent obtained before the decisions and never after the fact.

Commenting, Ms Martin said: ‘The seed potato and tableware sector is a vital industry in which Scotland is a world leader, and the seed potato varieties exported from the North East in particular , are highly sought-after premium products throughout Europe.

“They are now losing that trade to Irish producers, who of course have unfettered access to the EU single market.

“Scottish farmers have been disproportionately affected by leaving the EU and this is a prime example of the UK Government’s failure to achieve, through negotiations with the EU, an unnecessary outcome which could have protect this key Scottish industry from the impacts of leaving the EU.

“I urge the UK government to seek a solution to this unfolding disaster.”


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Lease waivers trigger accounting issues https://rauensales.com/lease-waivers-trigger-accounting-issues/ Fri, 18 Nov 2022 22:46:55 +0000 https://rauensales.com/lease-waivers-trigger-accounting-issues/

When it comes to how companies should account for reducing or rationalizing their real estate footprint in their financial statements, it’s complicated.

It’s not just for CFOs to call quickly to move out and move on. Instead, companies looking to save money by reducing office or other excess space are grappling with many questions as they seek to properly account for discontinued assets or amended leases in accordance with generally accepted accounting principles ( GAAP), said two experts in a recent Accounting Today webinar.

The pandemic and the rise of remote working have accelerated efforts already underway by many companies to take a hard look at how much brick-and-mortar real estate their businesses need, said Tim Kolber, managing director of Deloitte, during of the seminar, “Insights on abandonment of lease and depreciation in a post-pandemic world.

Over the past two years, Kolber said he has worked with numerous companies involved in streamlining initiatives. “The end game is to analyze the overall real estate footprint across the organization and scale the real estate footprint where it makes sense.”

Accountants aren’t the only ones adjusting to the implications of ongoing changes in where people work. U.S. property developers are suspending major office projects underway or in the planning stages, according to a November 8 Wall Street Journal report. Meanwhile in Chicago, Mayor Lori Lightfoot has a plan to revive an area of ​​downtown Loop as a mixed-use neighborhood by converting office buildings into apartments, according to a Nov. 3 Crain’s Chicago Business report.

Businesses are looking to better adapt their real estate footprint to their changing needs in a variety of ways. Some companies are terminating their leases before their contracts end, others are buying or renting more space for social distancing purposes, he said. Some modify existing leases and eliminate or reduce space and still others execute sale-leaseback agreements, he said.

“If you enter into any of these types of transactions, it will be really important to understand the accounting implications and to make sure that you are doing the right thing and involving the right people at the start of the transaction,” said Kolber.

Communication between a company’s real estate and accounting departments is critical because even the vocabulary used by each group can be significantly different, said Matt Waters, director of lease accounting at CoStar Group, a data and analytics company. real estate analysis, during the webinar. .

“Sometimes the word abandonment might be used…and that doesn’t necessarily mean it’s abandonment for accounting purposes,” Waters said. “The real estate team may be saying ‘we’re dropping this’, but on the accounting side, the accounting team needs to treat this as a potential writedown.”

For accounting purposes, companies need to consider several issues before they can decide how to treat vacant but still-leased properties in their reports.

For example, determining whether a lease asset is impaired requires examining the undiscounted cash flows and comparing them to the carrying amount and fair value of the asset.

Meanwhile, even empty rented properties must meet certain criteria to be considered abandoned, Kolber said. For example, if the tenant or lessee derives an economic benefit from the space, such as housing servers or otherwise using it for storage, it cannot be treated as abandoned for accounting purposes, a he declared. Additionally, to be treated as abandoned in accounting, a second criterion that must be met is that there is no ability to sublet it to another party or lessee, Kolber said.

“That valuation depends on several factors: the remaining lease terms, the nature of the property, and the level of market demand,” Kolber said, noting that the process requires judgment and may not be straightforward. “Concluding that an asset is abandoned is really meant to be a significant hurdle.”

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Once I sold cheese in Europe. Brexit has brought my business to the brink of destruction | Simon Spurrell https://rauensales.com/once-i-sold-cheese-in-europe-brexit-has-brought-my-business-to-the-brink-of-destruction-simon-spurrell/ Fri, 18 Nov 2022 19:36:00 +0000 https://rauensales.com/once-i-sold-cheese-in-europe-brexit-has-brought-my-business-to-the-brink-of-destruction-simon-spurrell/

Ohen I voted to remain a member of the EU, it was for practical rather than political reasons. As the founder of a cheese-making company, my experience exporting outside the EU had taught me that leaving the single market would lead to increased costs for my business and countless problems with bureaucracy.

News of the referendum result came as a shock, but I was heartened by subsequent promises of a “smooth transition”. Maybe if we had stayed in the single market, the transition really would have been seamless. I resolved to make the best of a bad situation. I had the funds and a plan to build a new fulfillment warehouse for my Cheshire Cheese Factory Mark. We have hopefully created a multilingual version of our website for e-commerce sales and increased our marketing, providing some wholesale distribution in the EU.

The 2019 nomination of Boris Johnson as Prime Minister and the subsequent landslide election at the end of that year gave up any chance of a sensible Democratic outcome for a Brexit deal. Brexit has become a matter of tax avoidance for those who would lose the most EU transparency regulations. The aim of a hard Brexit was to remove any authority and leverage the EU might retain, including the UK’s membership of the single market. The government shows no sign of acknowledging the hardship this has caused small business owners; in the recent budget, Brexit was barely mentioned.

The disastrous turning point for meat and dairy producers came in October 2020, when Johnson used the whip and his majority to force an amendment to the farm bill. Food standards protections introduced in the Farm Bill by the House of Lords have been voted against. Johnson needed to be able to lower food standards to accommodate an expected US trade deal with a second-term Donald Trump. Until now, the UK was expected to align its food standards with those of the EU and provide UK producers with the smooth transition we were promised.

Before the end of the transition period, we knew that our wholesale shipments to the EU would need additional checks. We were aware of the requirement for a vet check Export health certificate (EHC) for each bulk order, and the associated cost of £180 each time.

But what we weren’t prepared or warned about was the lack of an exemption for consumer orders to this regulation, meaning that even a single slice of cheese sent to an EU customer would be also liable to tax.

During the first week of January 2021, several parcels sent via DHL to consumers in France, Germany and Italy were returned. Our couriers could not provide any explanation, but suggested it was a starting problem. Further inquiries and failed attempts to place orders on the website caused us to discontinue our sales to EU consumers. Our average e-commerce order before Brexit was 1.5kg of cheese, priced around £35 including delivery. But to achieve this we now had to absorb £180 of extra export costs on every order, no matter how small.

Most countries include an allowance for food to be imported for personal consumption, so did UK negotiators miss this clause? An exemption for 20 kg of fish has been included, with companies able to send this quantity to EU consumers without any export charges. European commissioners told me that this exemption on fish had been added to the agreement by the British government, which the government denies.

Over the course of 12 months we lost around £250,000 in sales. After extensive media coverage, I was granted a meeting with the Department of Environment, Food and Rural Affairs (Defra) and the Minister of Agriculture, Victoria Prentis. Their recommendation was to consider opening a hub in the EU or focus on emerging markets. Neither is affordable or feasible for a small business.

In the summer of 2021, our wholesale exports to our distributors ended. The cost of sending a shipment has become commercially unviable. The cost of shipping an average bulk order of around 2.5 tonnes has fallen from £400 to £1,200 in the space of three months and we could not absorb the time and expense of bureaucracy and paperwork. We found ourselves, like other small businesses, trapped on UK islands and facing increasing competition as small businesses like ours were forced to target domestic customers, can no longer afford to ship to the EU. Agreements with new emerging markets favor big business and Britain has lost access to the EU single market.

We were lucky enough to find a solution: our company was recently taken over by Britain’s largest Cheshire cheese maker. The third generation family business took a majority stake in our business and provided us with security, growth and most importantly a gateway to the EU through their Dutch hub.

The cost and complexity of shipping, along with navigating bureaucracy due to each EU country interpreting the Brexit deal differently, makes it incredibly difficult for small businesses to export to the EU. Small businesses in the UK contribute 45% of annual turnover, but we have been the victims of every trade deal that has been negotiated. No consideration was given to our contribution to the economy or any support to gain a convenient route to export markets. The time since Brexit has been devastating for us, destroying any plans we had for a great future in Europethe one we were promised.

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Gap stock gains strongly after comparable sales crush expectations (NYSE:GPS) https://rauensales.com/gap-stock-gains-strongly-after-comparable-sales-crush-expectations-nysegps/ Thu, 17 Nov 2022 21:45:00 +0000 https://rauensales.com/gap-stock-gains-strongly-after-comparable-sales-crush-expectations-nysegps/

Rob Pinney

The hole (New York Stock Exchange: GPS) rose sharply in Thursday’s extended session after reporting higher-than-expected earnings, including positive comparable sales.

The San Francisco-based retailer posted adjusted EPS of $0.71 for the quarter, alongside a surprise increase in revenue to $4.04 billion, $210 million. above analysts’ expectations. Same-store sales rose 1% from the year-ago quarter, surprising a bearish Wall Street estimate of -3.44%. Gap Global reported a 4% jump in comparable sales and Athleta saw flat year-over-year trends, comfortably beating expectations of -5% and -5.59%, respectively. Meanwhile, the Old Navy brand saw comparable sales decline just 1% from an expectation of -5.1%.

“I have a deep belief that we have a portfolio of iconic brands our clients love, increased confidence in our platform to drive leverage and economies of scale, and confidence in the team’s ability to deliver,” commented CEO Bob Martin. “We have increased our focus on execution to optimize profitability and cash flow, bring more rigor to our operations and balance our assortments in response to what our customers tell us.”

Of particular note, inventories increased a modest 12% from a year earlier and decreased approximately $60 million sequentially to $3.04 billion. Management aims to reduce total inventory to below prior year levels by the end of the fiscal year.

“While our third quarter results underscore the initial progress we are making to rebalance our assortments and reduce inventory, we continue to take a cautious approach in light of consumer uncertainty and the growing environment. promotional as we look ahead to the remainder of fiscal 2022,” the CFO said. Katrina O’Connell concluded. “In the near term, we remain focused on the actions needed to reduce inventory, rebalance our assortments to better meet changing consumer needs, aggressively manage and reassess our investments, and strengthen our balance sheet. While we have work to do, we believe we are taking the right steps to position Gap Inc. for sustainable, profitable growth and to create long-term shareholder value.

The company expects fourth-quarter net sales could be lower in single digits year-over-year. The reported results add that the company expects 540 basis points of margin leverage in the fourth quarter as air freight spending normalizes.

Stocks rose 6.53% shortly after the report.

Dig into the details of the results.

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The global geomembrane industry is expected to reach https://rauensales.com/the-global-geomembrane-industry-is-expected-to-reach/ Thu, 17 Nov 2022 09:13:45 +0000 https://rauensales.com/the-global-geomembrane-industry-is-expected-to-reach/

Dublin, Nov. 17, 2022 (GLOBE NEWSWIRE) — The “Global geomembranes market by type (HDPE, LDPE & LLDPE, PVC, EPDM, PP), manufacturing process (extrusion, calendering), application (mining, Waste, Water Management, Civil Construction) and Geography – Forecast to 2027″ report has been added to from ResearchAndMarkets.com offer.

The global Geomembranes Market is expected to grow from USD 2.6 Billion in 2022 to USD 3.7 Billion by 2027, at a CAGR of 7.6% during the forecast period.

The HDPE membranes type segment is expected to grow at a higher CAGR during the forecast period

By type, HDPE is the largest and fastest growing segment in the geomembrane market. The geomembrane market has been categorized into HDPE, LDPE & LLDPE, PVC, EPDM, and PP. HDPE membranes are available at low cost and have a dense configuration (>0.94 g/cm3) compared to other types of polyethylene.

They are readily available and have long term durability. They also have excellent chemical and UV resistance. These membranes are used in various applications, such as landscaping, mining, aquaculture, energy, waste and water.

The mining application is expected to have the largest market share during the forecast period

Based on application, the geomembrane market has been categorized into mining, waste management, waste management and civil construction.

Mining is expected to be the largest application in the geomembrane market. Geomembranes have various applications in the mining industry such as containment systems which limit the effect of mining operations on the environment due to their excellent properties such as chemical resistance, high temperature range, low permeability , weather resistance, UV resistance and high tear and puncture resistance. .

APAC is expected to witness the highest growth rate during the forecast period

APAC is expected to experience the highest growth rate over the forecast period owing to an increase in development activities related to the mining and construction industry. The large population of countries like China, India, South Korea, Indonesia and other countries provides huge opportunities for APAC mining sectors. Moreover, a high population also leads to a large amount of waste and a demand for clean water, which, in turn, will lead to the need for waste and water management. The above mentioned factors will drive the geomembrane market in this region.

Main topics covered:

1. Introduction

2 Research methodology

3 Executive summary

4 premium previews
4.1 Attractive Opportunities in Geomembranes Market
4.2 Geomembranes Market, by Type
4.3 Geomembranes Market, by Application
4.4 Global Geomembranes Market, by Country
4.5 APAC: Geomembranes Market, by Application and Country, 2022

5 Market Overview
5.1 Presentation
5.2 Market Dynamics
5.2.1 Drivers
5.2.1.1 Increase in mining activities in APAC and South America
5.2.1.2 Growing concerns about waste and water management activities
5.2.2 Constraints
5.2.2.1 Fluctuation in commodity prices due to crude oil price volatility
5.2.3 Opportunities
5.2.3.1 Increase in expenditure for infrastructural developments
5.3 Porter’s Five Forces Analysis
5.4 Value chain analysis
5.4.1 Research & Development
5.4.2 Manufacture, composition and formulation
5.4.3 Distribution, marketing and sales
5.5 Ecosystem
5.6 Average Selling Price Analysis
5.7 Pricing and regulatory landscape
5.8 Technology Analysis
5.9 Patent Analysis
5.9.1 Preview
5.9.1.1 Methodology
5.10 Analysis of case studies
5.10.1 Extreme slope with Agru HDPE geomembrane
5.10.2 Singapore Landfill
5.11 Macroeconomic indicators
5.11.1 GDP trends and forecasts
5.11.2 Trends in the mining industry
5.11.3 Build Statistics

6 Geomembranes Market, by Type
6.1 Presentation
6.2 HDPE
6.2.1 HDPE will account for the largest market share
6.3 LDPE & LLDPE
6.3.1 Low Density Combined with High Elasticity and Flexibility to Drive Demand
6.4 PVC
6.4.1 Better Quality of PVC Geomembranes to Sustain Use
6.5 EPDM
6.5.1 Superior Properties of EPDM Geomembranes to Drive Demand
6.6 PP
6.6.1 Low levels of crystallinity in PP to drive end-user preferences
6.7 Others

7 Geomembranes Market, by Application
7.1 Presentation
7.2 Mining
7.2.1 Mining to Dominate the Application Market
7.3 Waste management
7.3.1 Population growth to stimulate waste management activities
7.4 Water management
7.4.1 Use of Geomembranes to Prevent Groundwater Contamination to Drive Market
7.5 Civil construction
7.5.1 Potential for preventing water infiltration to promote the use of geomembranes in civil construction
7.6 Others

8 Geomembranes Market, by Manufacturing Process
8.1 Presentation
8.2 Extrusion
8.2.1 Wide Use of Blown Film Extrusion to Drive Market Growth
8.3 Calendering
8.3.1 High Production Rate and Accuracy of Specification Drive Growth of Calendering
8.4 Others

9 Geomembranes Market, by Region

10 Competitive Landscape
10.1 Overview
10.2 Market Assessment Framework
10.3 Market share, 2021
10.4 Market Ranking
10.5 Business Assessment Matrix Definitions
10.5.1 Stars
10.5.2 Emerging Leaders
10.5.3 Ubiquitous Players
10.5.4 Participants
10.6 Competitive Leadership Mapping for SMEs
10.6.1 Progressive companies
10.6.2 Sensitive companies
10.6.3 Dynamic companies
10.6.4 Starting Blocks
10.7 Product Footprint (SME)
10.8 Strategic Footprint (SME)
10.8.1 Solmax
10.8.2 Raven Industries
10.8.3 Agru
10.8.4 Carlisle Building Materials LLC
10.8.5 Tarfill
10.9 Key Market Developments
10.9.1 Purchases
10.9.2 Extensions

11 company profiles
11.1 Key Players
11.1.1 Solmax
11.1.2 Raven Industries
11.1.3 Agru
11.1.4 Carlisle Building Materials LLC
11.1.5 Atarfil
11.1.6 Firestone Building Products
11.1.7 Juta
11.1.8 Maccaferri
11.1.9 Plastika Kritis
11.1.10 Naue Group
11.2 Additional Players
11.2.1 Anhui Huifeng New Synthetic Materials
11.2.2 Windmills of Carthage
11.2.3 Environmental protection
11.2.4 Geotextiles
11.2.5 Geosynthetics Limited
11.2.6 Plastic Ginger Products
11.2.7 Global Synthetics
11.2.8 Layfield Group
11.2.9 Cetco
11.2.10 Nilex
11.2.11 Sotrafa
11.2.12 Soprema
11.2.13 Texel Industries Limited
11.2.14 Titan Environmental Containment
11.2.15 American fabrics

12 Appendix

For more information about this report visit https://www.researchandmarkets.com/r/7bkqow

  • Global geomembrane market

        
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		HILLENBRAND, INC.  MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)
		https://rauensales.com/hillenbrand-inc-management-report-and-analysis-of-financial-position-and-operating-results-form-10-k/
		
		
		Wed, 16 Nov 2022 21:35:10 +0000
				
		https://rauensales.com/hillenbrand-inc-management-report-and-analysis-of-financial-position-and-operating-results-form-10-k/

					
										

(in millions of dollars throughout the MD&A and Analysis of Financial Condition and Results of Operations)

(unless otherwise stated, references to years refer to fiscal years)


The following discussion compares our results for the year ended September 30,
2022, to the year ended September 30, 2021. The discussion comparing our results
for the year ended September 30, 2021, to the year ended September 30, 2020, is
included within Management's Discussion and Analysis of Financial Condition and
Results of Operation in our Annual Report on Form 10-K for the year ended
September 30, 2021, filed with the SEC on November 17, 2021. We begin the
discussion at a consolidated level and then provide separate detail about
Advanced Process Solutions, Molding Technology Solutions, and Batesville
reportable operating segments, as well as Corporate.  These financial results
are prepared in accordance with United States ("U.S.") generally accepted
accounting principles ("GAAP").

We also provide certain non-GAAP operational performance measures. These non-GAAP measures are referred to as “adjusted” measures and primarily exclude the following items:


•business acquisitions, disposition, and integration costs;
•restructuring and restructuring-related charges;
•impairment charges;
•gains and losses on divestitures;
•the related income tax impact for all of these items; and
•certain tax items related to the acquisition of Milacron and divestitures of
TerraSource, ABEL, Red Valve, and Cimcool, the revaluation of deferred tax
balances in connection with enacted statutory tax rate reductions in certain
foreign jurisdictions, foreign income inclusion tax provisions, including the
impact the Milacron loss carryforward attributes have on tax provisions related
to the imposition of tax on Global Intangible Low-Taxed Income (GILTI) earned by
certain foreign subsidiaries, the Foreign Derived Intangible Income Deduction
(FDII), and the Base Erosion and Anti-Abuse Tax (BEAT).

Non-GAAP information is provided as a supplement to, not as a substitute for, or
as superior to, measures of financial performance prepared in accordance with
GAAP.

We use this non-GAAP information internally to make operating decisions and believe it is useful to investors because it allows for more meaningful period-to-period comparisons of our current operating results. The information may also be used to perform trend analysis and to better identify operating trends that might otherwise be obscured or distorted by items such as the items excluded above. We believe that this information provides a higher degree of transparency.


An important non-GAAP measure that we use is adjusted earnings before interest,
income tax, depreciation, and amortization ("adjusted EBITDA"). A part of
Hillenbrand's strategy is to selectively acquire companies that we believe can
benefit from the Hillenbrand Operating Model ("HOM") to spur faster and more
profitable growth. Given that strategy, it is a natural consequence to incur
related expenses, such as amortization from acquired intangible assets and
additional interest expense from debt-funded acquisitions. Accordingly, we use
adjusted EBITDA, among other measures, to monitor our business performance.
Adjusted EBITDA is not a recognized term under GAAP and therefore does not
purport to be an alternative to consolidated net income. Further, the Company's
measure of adjusted EBITDA may not be comparable to similarly titled measures of
other companies.

We expect that future net revenue associated with the Advanced Process Solutions
and Molding Technology Solutions reportable operating segments will be
influenced by order backlog because of the lead time involved in fulfilling
engineered-to-order equipment and solutions for customers. Although backlog can
be an indicator of future net revenue, it does not include projects and
aftermarket parts orders that are booked and shipped within the same quarter.
The timing of order placement, size, extent of customization, and customer
delivery dates can create fluctuations in backlog and net revenue. Net revenue
attributable to backlog may also be affected by foreign exchange fluctuations
for orders denominated in currencies other than U.S. dollars.

We calculate the foreign currency impact on net revenue, gross profit, operating
expenses, consolidated net income and consolidated adjusted EBITDA, in order to
better measure the comparability of results between periods. We calculate the
foreign currency impact by translating current year results at prior year
foreign exchange rates. This information is provided because exchange rates can
distort the underlying change in these metrics, either positively or negatively.
The cost structures
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for Corporate and Batesville are generally not significantly impacted by the
fluctuation in foreign exchange rates, and we do not disclose the foreign
currency impact in the Operations Review below where the impact is not
significant.

Another important operational measure used is backlog.  Backlog is not a term
recognized under GAAP; however, it is a common measurement used in industries
with extended lead times for order fulfillment (long-term contracts), like those
in which the Advanced Process Solutions and Molding Technology Solutions
reportable operating segments compete.  Backlog represents the amount of net
revenue that we expect to realize on contracts awarded to the Advanced Process
Solutions and Molding Technology Solutions reportable operating segments.  For
purposes of calculating backlog, 100% of estimated net revenue attributable to
consolidated subsidiaries is included. Backlog includes expected net revenue
from large systems and equipment, as well as aftermarket parts, components, and
service. The length of time that projects remain in backlog can span from days
for aftermarket parts or service to approximately 18 to 24 months for larger
system sales within the Advanced Process Solutions reportable operating
segment.  The majority of the backlog within the Molding Technology Solutions
reportable operating segment is expected to be fulfilled within the next twelve
months. Backlog includes expected net revenue from the remaining portion of firm
orders not yet completed, as well as net revenue from change orders to the
extent that they are reasonably expected to be realized.  We include in backlog
the full contract award, including awards subject to further customer approvals,
which we expect to result in net revenue in future periods. In accordance with
industry practice, our contracts may include provisions for cancellation,
termination, or suspension at the discretion of the customer.

See page 48 for reconciliation of adjusted EBITDA to consolidated net income,
the most directly comparable GAAP measure. We use non-GAAP measures in certain
other instances and include information reconciling such non-GAAP measures to
the respective most directly comparable GAAP measures. Given that backlog is an
operational measure and that the Company's methodology for calculating backlog
does not meet the definition of a non-GAAP measure, as that term is defined by
the SEC, a quantitative reconciliation is not required or provided.

CRITICAL ACCOUNTING ESTIMATES

Our financial results are influenced by the choice and application of accounting policies and methods. The significant accounting policies that require management judgment are described below. A detailed description of our accounting policies is included in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

Revenue recognition

Net revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services and is recognized when performance obligations are satisfied under customer contracts.


A performance obligation is deemed to be satisfied by the Company when control
of the product or service is transferred to the customer. The transaction price
of a contract, or the amount the Company expects to receive upon satisfaction of
the performance obligation, is determined by reference to the contract's terms
and includes adjustments, if applicable, for any variable consideration, such as
sales discounts, customer rebates, and sales incentives, all of which require us
to make estimates for the portion of these allowances that have yet to be
credited or paid to our customers. We estimate these allowances using the
expected value method, which is based upon historical rates and projections of
customer purchases toward contractual rebate or incentive thresholds. If a
contract contains more than one distinct performance obligation, the transaction
price is allocated to each performance obligation based on the standalone
selling price of each performance obligation; however, these situations do not
occur frequently and are not material to the Consolidated Financial Statements,
as our contracts generally include one performance obligation for the transfer
of goods or services.

The timing of revenue recognition for the contract's performance obligation is
either over time or at a point in time. We recognize revenue over time for
contracts that have an enforceable right to collect payment for performance
completed to date upon customer cancellation and provide one or more of the
following: (i) service over a period of time, (ii) highly customized equipment,
or (iii) parts which are highly engineered and have no alternative use. Net
revenue generated from standard equipment and highly customized equipment or
parts contracts without an enforceable right to payment for performance
completed to date, as well as non-specialized parts sales and sales of death
care products, is recognized at a point in time.

We use the input method of "cost-to-cost" to recognize net revenue over time.
Accounting for these contracts involves management judgment in estimating total
contract revenue and cost. Contract revenue is largely determined by negotiated
contract prices and quantities, modified by our assumptions regarding contract
options, change orders, and incentive and award provisions associated with
technical performance clauses. Contract costs are incurred over longer periods
of time and, accordingly, the estimation of these costs requires judgment. We
measure progress based on costs incurred to date relative to total estimated
cost at completion. Incurred cost represents work performed, which corresponds
with, and we believe thereby
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best depicts, the transfer of control to the customer. Contract costs include
labor, material, and certain overhead expenses. Cost estimates are based on
various assumptions to project the outcome of future events, including labor
productivity and availability, the complexity of the work to be performed, the
cost of materials, and the performance of suppliers and subcontractors.
Significant factors that influence these estimates include inflationary trends,
technical and schedule risk, internal and subcontractor performance trends,
business volume assumptions, asset utilization, and anticipated labor
agreements. Revenue and cost estimates are regularly monitored and revised based
on changes in circumstances. Anticipated losses on long-term manufacturing
contracts are recognized immediately when such losses become evident. We
maintain financial controls over the customer qualification, contract pricing,
and estimation processes designed to reduce the risk of contract losses.

Standalone service revenue is recognized either over time proportionately over
the period of the underlying contract or as invoiced, depending on the terms of
the arrangement. Standalone service revenue is not material to the Company.

Pension plans and post-retirement benefits


We sponsor retirement and postretirement benefit plans covering some of our
employees.  Expense recognized for the plans is based upon actuarial
valuations.  Inherent in those valuations are key assumptions including discount
rates, expected returns on assets, and projected future salary rates.  The
actuarial assumptions we use may differ significantly from actual results due to
changing economic conditions, participant life span, and withdrawal rates. These
differences may result in a material impact to the amount of net periodic
pension cost to be recorded in our Consolidated Financial Statements in the
future. The discount rates used in the valuation of our retirement and
postretirement benefit plans are evaluated annually based on current market
conditions. We use a full yield curve approach in the estimation of the service
and interest cost components of our defined benefit retirement plans. Under this
approach, we applied discounting using individual spot rates from a yield curve
composed of the rates of return on several hundred high-quality, fixed income
corporate bonds available at the measurement date. These spot rates align to
each of the projected benefit obligations and service cost cash flows. The
service cost component relates to the active participants in the plans, so the
relevant cash flows on which to apply the yield curve are considerably longer in
duration on average than the total projected benefit obligation cash flows,
which also include benefit payments to retirees. Interest cost is computed by
multiplying each spot rate by the corresponding discounted projected benefit
obligation cash flows. The full yield curve approach reduces any actuarial gains
and losses based upon interest rate expectations (e.g., built-in gains in
interest cost in an upward sloping projected yield curve scenario), or gains and
losses merely resulting from the timing and magnitude of cash outflows
associated with our benefit obligations.

Our overall expected long-term rate of return on pension assets is based on
historical and expected future returns, which are inflation-adjusted and
weighted for the expected return for each component of the investment
portfolio.  Our rate of assumed compensation increase for pension benefits is
also based on our specific historical trends of past wage adjustments in recent
years and expectations for the future.

Changes in retirement and postretirement benefit expense and the recognized
obligations may occur in the future as a result of a number of factors,
including changes to key assumptions such as the expected long-term rate of
return on pension assets and the weighted-average discount rate.  Our expected
long-term rate of return on domestic and international pension plan assets was
4.7% and 3.7% at September 30, 2022 and 2021, respectively. The weighted-average
discount rate was 4.6% and 2.1% for the domestic and international defined
benefit pension plans and 5.2% and 2.4% for the postretirement healthcare plans
at September 30, 2022 and 2021, respectively.  A 50 basis-point change in the
expected long-term rate of return on domestic and international pension plan
assets would change annual pension expense by $1.6.  A 50 basis-point change in
the weighted-average discount rate would change the annual domestic and
international pension expense by $0.3 and the annual postretirement healthcare
plan expense by less than $0.1.  Impacts from assumption changes could be
positive or negative depending on the direction of the change in rates.  Based
upon rates and assumptions at September 30, 2022, we expect the aggregate
expense associated with our retirement and postretirement benefit plans to
decrease from $1.7 in 2022 to $1.2 in 2023. The expected decrease in expense is
primarily due to decreasing amortization of actuarial loss.

See Note 7 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, for key assumptions and other information regarding our pension and post-employment benefit plans.

Asset impairment determinations

Impairment of goodwill


Goodwill is tested for impairment at least annually and upon the occurrence of
certain triggering events or substantive changes in circumstances that indicate
that the fair value may be below carrying value.
                                       35

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Contents


Impairment of goodwill is tested at the reporting unit level. A reporting unit
is an operating segment or one level below an operating segment if discrete
financial information is prepared and regularly reviewed by operating segment
management. For the purpose of the goodwill impairment test, the Company can
elect to perform a quantitative or qualitative analysis. If the qualitative test
is elected, qualitative factors are assessed to determine whether it is more
likely than not that the fair values of its reporting units are less than the
respective carrying values of those reporting units. Such factors we consider in
a qualitative analysis include, but are not limited to, macroeconomic
conditions, industry and market considerations, cost factors, Company-specific
events, events affecting the reporting unit, and the overall financial
performance of the reporting unit. If after performing the qualitative analysis,
the Company determines that it is more likely than not that the fair value of a
reporting unit is less than its carrying value, then the Company must perform
the quantitative goodwill impairment test.

If we elect to perform or are required to perform a quantitative analysis, we
compare the carrying amount of the reporting unit's net assets, including
goodwill, to the fair value of the reporting unit. If the fair value exceeds the
carrying value, no further evaluation is required, and no impairment loss is
recognized. If the carrying value exceeds the fair value, an impairment charge
is recognized for the difference between carrying amount and fair value, not to
exceed the original amount of goodwill.

In determining the estimated fair value of the reporting units when performing a
quantitative analysis, we consider both the market approach and the income
approach. For purposes of the goodwill impairment test, weighting is equally
attributed to both the market and income approaches in arriving at the fair
value of the reporting units.

Under the market approach, we utilize the guideline company method, which
involves calculating valuation multiples based on operating data from comparable
publicly traded companies. Multiples derived from these companies provide an
indication of how much a knowledgeable investor in the marketplace would be
willing to pay for a company. These multiples are then applied to the operating
data for our reporting units to arrive at an indication of value.

Under the income-based approach, the fair value of the reporting unit is based on the present value of estimated future cash flows using a market-based weighted average cost of capital determined separately for each reporting unit. operation.


To determine the reasonableness of the calculated fair values of our reporting
units, the Company reviews the assumptions described below to ensure that
neither the market approach nor the income approach yields significantly
different valuations. We selected these valuation approaches because we believe
the combination of these approaches, along with our best judgment regarding
underlying assumptions and estimates, provides us with the best estimate of fair
value of our reporting units. We believe these valuation approaches are
appropriate for the industry and widely accepted by investors.

Determining the fair value of a reporting unit requires us to make significant
judgments, estimates, and assumptions. The Company believes these estimates and
assumptions are reasonable. However, future changes in the judgments,
assumptions and estimates that are used in the impairment testing for goodwill,
including discount and tax rates or future cash flow projections, could result
in significantly different estimates of the fair values. As a result of these
factors and the limited cushion (or headroom, as commonly referred) due to the
acquisition of Milacron in fiscal 2020, goodwill for the reporting units within
the Molding Technology Solutions reportable operating segment are more
susceptible to impairment risk.

The key assumptions for the market and income approaches we use to determine
fair value of our reporting units are updated at least annually. Those
assumptions and estimates include macroeconomic conditions, competitive
activities, cost containment, achievement of synergy initiatives, market data
and market multiples (6.0-10.0 times adjusted EBITDA), discount rates
(11.5-13.0%), and terminal growth rates (2.0%), as well as future levels of
revenue growth, operating margins, depreciation, amortization, and working
capital requirements, which are based upon the Company's strategic plan.
Hillenbrand's strategic plan is updated as part of its annual planning process
and is reviewed and approved by management and the Board of Directors. The
strategic plan may be revised as necessary during a fiscal year, based on
changes in market conditions or other changes in the reporting units. The
discount rate assumption is based on the overall after-tax rate of return
required by a market participant whose weighted-average cost of capital includes
both equity and debt, including a risk premium. The discount rates may be
impacted by adverse changes in the macroeconomic environment, volatility in the
equity and debt markets or other factors. While the Company can implement and
has implemented certain strategies to address these events, changes in operating
plans or adverse changes in the future could reduce the underlying cash flows
used to estimate reporting unit fair values and could result in a further
decline in fair value that would trigger a future material impairment charge of
the reporting units' goodwill balance.

Although there are always changes in assumptions to reflect changing business
and market conditions, our overall valuation methodology and the types of
assumptions we use have remained consistent. While we use the best available
information to
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prepare the cash flow and discount rate assumptions, actual future cash flows or
market conditions could differ significantly resulting in future impairment
charges related to recorded goodwill balances.

The Company is required to provide additional disclosures about fair value
measurements as part of the Consolidated Financial Statements for each major
category of assets and liabilities measured at fair value on a nonrecurring
basis (including impairment assessments). Goodwill is valued using Level 3
inputs, which are unobservable by nature, and included internal estimates of
future cash flows (income approach). Significant increases (decreases) in any of
those unobservable inputs in isolation would result in a significantly higher
(lower) fair value measurement.

Annual impairment assessment


The Company performed its annual July 1 goodwill impairment assessment during
the fourth quarter of fiscal 2022 for all reporting units. For all reporting
units, the fair value of goodwill was determined to exceed the carrying value,
resulting in no impairment to goodwill as part of this test. As a result of the
Milacron acquisition in fiscal 2020, there is less cushion or headroom for the
reporting units with the Molding Technology Solutions reportable operating
segment. The estimated fair value, as calculated at July 1, 2022, for the three
reporting units within the Molding Technology Solutions reportable operating
segment ranged from approximately 13% to 54% greater than their carrying value
(9% to 45% at the previous impairment assessment date).

Depreciation recorded in 2020

Fourth quarter 2020


As a result of classifying certain reporting units within the Advanced Process
Solutions reportable operating segment as held for sale at September 30, 2020,
the Company recorded a goodwill impairment of $16.9 during the fourth quarter of
2020. See Note 4 to the Consolidated Financial Statements included in Part II,
Item 8, of this Form 10-K for further information.

Second quarter 2020


In connection with the preparation of the Consolidated Financial Statements for
the second quarter of 2020, an interim impairment assessment was performed for
select reporting units within the Advanced Process Solutions and Molding
Technology Solutions reportable operating segments as a result of certain
triggering events and changes in circumstances discussed in detail below.
Additionally, based on the macroeconomic factors below, as well as the decline
in the Company's common stock price during the second quarter of 2020, the
Company performed a qualitative review for all remaining reporting units and
determined that those reporting units did not require an interim impairment test
as it was more likely than not that the current fair value of those reporting
units exceeded their carrying value, based on their current and projected
financial performance as well as the headroom from previous goodwill impairment
tests.

For certain reporting units within the Advanced Process Solutions reportable
operating segment, an interim impairment review was triggered during the second
quarter of 2020 by the Company's decision to redirect its strategic investments
as it focused on deleveraging following two major events: (1) the continued
evaluation of the Company's operations following the acquisition of Milacron
completed on November 21, 2019, and (2) adverse macroeconomic conditions
primarily driven by the COVID-19 pandemic. In connection with these events, the
Company made the decision to limit its future strategic investment in its two
reporting units that primarily sold and manufactured products in the flow
control sector. The decision to limit future investment, as well as the
Company's updated forecasts, which considered the impact of the COVID-19
pandemic, reduced those reporting units' anticipated annual revenue growth rates
and corresponding profitability and cash flows. The annual revenue growth rates
utilized in the Company's fair value estimate are consistent with the reporting
units' operating plans. As a result of the change to expected future cash flows,
along with comparable fair value information, the Company concluded that the
carrying value for these reporting units exceeded their fair value, resulting in
goodwill impairment charges of $72.3 during the second quarter of 2020. The
pre-impairment goodwill balance for these reporting units was $95.2.
Additionally, under the relief-from-royalty fair value method, the Company
concluded that the carrying value of a trade name associated with one of these
reporting units exceeded its fair value. As a result, an impairment charge of
$0.7 was recorded for this trade name during the second quarter of 2020. The
pre-impairment balance for this trade name was $4.4.

For the reporting units within the Molding Technology Solutions reportable
operating segment, an interim impairment review was triggered during the second
quarter of 2020, due to adverse macroeconomic conditions primarily driven by the
COVID-19 pandemic. Subsequent to the Company completing the acquisition of
Milacron on November 21, 2019, the Company revised its forecasts for all
reporting units within the Molding Technology Solutions reportable operating
segment due to the deterioration in the overall global economy largely as a
result of the COVID-19 pandemic. As a result of the decline in forecasted net
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revenue, under the relief-from-royalty fair value method, the Company concluded
that the carrying value of certain trade names and technology associated with
these reporting units exceeded their fair value. As a result, impairment charges
of $9.5 were recorded for these intangible assets during the second quarter of
2020. The pre-impairment balance for these intangible assets was $125.0.

The impairment charges to goodwill and the intangible assets were nondeductible
for tax purposes. The following table summarizes the impairment charges by
reportable segment recorded by the Company during the year ended September 30,
2020:

                                                       Advanced Process        Molding Technology
                                                           Solutions               Solutions                Total
Goodwill                                               $         72.3          $             -          $     72.3
Trade names                                                       0.7                      7.9                 8.6
Technology, including patents                                       -                      1.6                 1.6
Total                                                  $         73.0          $           9.5          $     82.5


Impairment of long-lived assets


Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. For
assets (disposal group) held for sale, the disposal group as a whole is measured
at the lower of its carrying amount or fair value less cost to sell after
adjusting the individual assets of the disposal group, if necessary. If the
carrying value of assets, after the consideration of other asset valuation
guidance, exceeds fair value less cost to sell, the Company establishes a
valuation allowance which would offset the original carrying value of disposal
group. This valuation allowance would be adjusted based on subsequent changes in
our estimate of fair value less cost to sell. If the fair value less cost to
sell increases, the carrying amount of the long-lived assets would be adjusted
upward; however, the increased carrying amount cannot exceed the carrying amount
of the disposal group before the decision to dispose of the assets was made.
Estimates are required to determine the fair value, the disposal costs and the
time period to dispose of the assets. The estimate of fair value incorporates
the transaction approach, which utilizes pricing indications derived from recent
acquisition transactions involving comparable companies. Such estimates are
critical in determining whether any impairment charge should be recorded and the
amount of such charge if an impairment loss is deemed to be necessary.

During the fourth quarter of 2020, the Company recognized a non-cash charge for
TerraSource and the flow control businesses of $62.3, which included a goodwill
impairment of $16.9 and a valuation adjustment of $45.4, to recognize the assets
of these businesses at fair value less estimated costs to sell. During the
fourth quarter of 2021, the Company recognized a non-cash valuation adjustment
of $11.2 to recognize TerraSource at fair value less estimated cost to sell
based on the definitive agreement the Company entered into to sell TerraSource.
The non-cash charges of $11.2 and $62.3, for the years ended September 30, 2021
and 2020, respectively, were recorded within the impairment charges caption on
the Consolidated Statements of Operations. For further information, see
discussion below within the Executive Overview section and Note 4 to our
Consolidated Financial Statements included in Part II, Item 8, of this
Form 10-K.

For assets held and used, impairment may occur if projected undiscounted cash
flows do not exceed the carrying value of the assets. In such cases, additional
analysis is conducted to determine the amount of loss to be recognized, and the
impairment loss is determined as the amount the carrying value of the asset or
asset group exceeds the estimated fair value, measured by future discounted cash
flows. The analysis requires estimates of the amount and timing of projected
cash flows and, where applicable, judgment associated with, among other factors,
the appropriate discount rate. Such estimates are critical in determining
whether any impairment charge should be recorded and the amount of such charge
if an impairment loss is deemed to be necessary. Our judgment regarding the
existence of circumstances that indicate the potential impairment of an asset's
carrying value is based on several factors, including, but not limited to,
changes in business environment, a decline in operating cash flows or a decision
to close a manufacturing facility. The variability of these factors depends on a
number of conditions, including uncertainty about future events and general
economic conditions.

Business combinations


Estimating fair value for acquired assets and liabilities as part of a business
combination typically requires us to exercise judgment, particularly for those
assets and liabilities that may be unique or not easily determined by reference
to market data. Often estimates for these types of acquired assets and
liabilities will be developed using valuation models that require both
historical and forecasted inputs, as well as market participant expectations.
Thus, the valuation is directly affected by the inputs we judge as best under
the given circumstances. When material, we expect to seek assistance of
competent valuation
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professionals when the underlying valuation is more complex or unique. We
anticipate that in most cases, we will exercise significant judgment in
estimating the fair value of intangible assets, contingent liabilities, and
contingent consideration. This list is not exhaustive, but is designed to give
you a better understanding of where we think a larger degree of judgment will be
required due to the nature of the item and the way it is typically valued.

The Company makes an initial allocation of the purchase price at the date of
acquisition based upon its understanding of the fair value of the acquired
assets, including identifiable intangible assets, and assumed liabilities. We
obtain this information during due diligence and through other sources. In the
months after closing, as we obtain additional information about these assets and
liabilities, including through tangible asset appraisals, and learn more about
the newly acquired business, we are able to refine the estimates of fair value
and more accurately allocate the purchase price. The determination of intangible
assets is subjective and generally requires complex valuation methodologies
including the relief from royalty method and multi-period excess earnings
method, for which we generally use a third-party valuation specialist. The
intangible assets are impacted by a number of judgmental assumptions including
future revenue growth rates and margins on such revenue, customer attrition
rates, technology obsolescence factors and the discount rates.

See Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, for more information on recent business combinations.

EXECUTIVE OVERVIEW


Hillenbrand is a global industrial company operating in over 40 countries with
multiple leading brands that serve a wide variety of industries around the
world. Guided by its Purpose, Shape What Matters For Tomorrow™, Hillenbrand
pursues excellence, collaboration, and innovation to shape solutions that best
serve our people, our customers, and our communities. Customers choose
Hillenbrand due to its reputation for designing, manufacturing, and servicing
highly engineered, mission-critical equipment and solutions that meet their
unique product specifications.

Hillenbrand's portfolio is composed of three reportable operating segments:
Advanced Process Solutions, Molding Technology Solutions, and Batesville®.
Advanced Process Solutions is a leading global provider of compounding,
extrusion, and material handling, screening and separating equipment and
systems, and services for a wide variety of manufacturing and other industrial
processes. Molding Technology Solutions is a global leader in highly engineered
and customized equipment and systems and service in plastic technology and
processing. Batesville is a recognized leader in the death care industry in
North America.

We strive to provide superior return for our shareholders, exceptional value for
our customers, great professional opportunities for our employees, and to be
responsible to our communities through deployment of the HOM. The HOM is a
consistent and repeatable framework designed to produce sustainable and
predictable results.  The HOM describes our mission, vision, values and mindset
as leaders; applies our management practices in Strategy Management,
Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three
steps (Understand, Focus, and Grow) designed to make our businesses both bigger
and better.  Our goal is to continue developing Hillenbrand as a world-class
global industrial company through the deployment of the HOM.

Our strategy is to leverage our historically strong financial foundation and the
implementation of the HOM to deliver sustainable profit growth, revenue
expansion and substantial free cash flow, and then reinvest available cash in
new growth initiatives focused on building platforms with leadership positions
in our core markets and near adjacencies, both organically and inorganically, in
order to create shareholder value.

During the year ended September 30, 2022, the following operational decisions
and economic developments had an impact on our current and may impact our future
cash flows, consolidated results of operations, and financial position.

Ukrainian War


As a result of the Ukraine War, various nations, including the U.S., have
instituted economic sanctions and other responsive measures, which have resulted
in an increased level of global economic and political uncertainty. Any such
geopolitical instability and uncertainty could have a negative impact on our
ability to sell to, ship products to, collect payments from, and support
customers in certain regions.

We have suspended all new business in Russia and Belarus but may be
contractually obligated to complete certain existing contracts, insofar as
economic sanctions do not prevent us from doing so. The impacts of sanctions and
other measures being imposed have not had a material impact to the consolidated
results of operations. Russia, Belarus, and Ukraine do not constitute
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Additionally, supply chain disruptions and logistical challenges due to the
Ukraine War and any indirect effects thereof are expected to further complicate
existing supply chain constraints, which could adversely affect profitability.
To date, we have experienced some inability to source certain raw materials and
components, but we have largely been able to mitigate the impact on our
consolidated results of operations.

Given the evolving nature of the Ukraine War, and the related sanctions,
potential governmental actions, and economic impact, the scope and magnitude of
any such potential effects remain uncertain. While we may experience negative
impacts on our business, financial condition, and consolidated results of
operations, we are unable to estimate the ultimate extent or nature of these
impacts at this time.

COVID-19 Impact

The COVID-19 pandemic has impacted and is continuing to impact Hillenbrand very
differently by business, geography, and function. The scope and nature of these
impacts continue to evolve, sometimes rapidly, including through the resurgence
of COVID-19 due to variant strains of the virus and related government actions,
and we cannot reasonably estimate the duration, spread, or severity of the
COVID-19 pandemic and related variants, nor the economic and governmental
responses thereto.

It is difficult to quantify the complete impact the pandemic had for 2022, but
the actions being undertaken to reduce the severity and spread of COVID-19 are
currently creating disruptions, and could continue to create significant
disruptions, with respect to consumer demand, our ability to continue to
manufacture products, and the reliability and sufficiency of our supply chain.
The surge of any variant strain in China, and China's COVID-19 lockdowns that
include mass testing, mandatory quarantines, and international travel bans, have
at times closed and could potentially in the future close commerce in the region
and, if extended, could impact other areas where the Company has operations,
suppliers, and sales. We cannot predict the extent or duration of any such
measures or the associated impacts. While our inventory positions protect our
ability to fulfill customer orders in the short term, a prolonged lockdown may
unfavorably impact our ability to timely manufacture and distribute our products
or negatively impact our supply chain and could also have a significant impact
on the Company's consolidated net revenue, consolidated results of operations,
and cash flows during fiscal 2023 and beyond.

As a result of the current circumstances, we may continue to experience adverse
impacts during fiscal 2023 within our Advanced Process Solutions and Molding
Technology Solutions reportable operating segments, although we cannot
reasonably estimate these impacts. Should these conditions continue for Advanced
Process Solutions or Molding Technology Solutions reportable operating segments,
or should the severity of COVID-19 increase, the Company would similarly expect
adverse impacts on its net revenue, results of operations, and cash flows,
depending upon the severity and length of time such conditions persist. While
the COVID-19 pandemic generally has had a favorable impact on the Batesville
reportable operating segment's net revenue, results of operations, and cash
flows, we are starting to see lower deaths associated with the declining effects
of the COVID-19 pandemic. However, given the ongoing and dynamic nature of the
COVID-19 pandemic, we are currently not able to predict the extent and duration
of the impact for fiscal 2023 or the further potential negative impact that the
increase in deaths in North America due to the COVID-19 pandemic will have on
future deaths when the pandemic has subsided. The timing and effectiveness of
further vaccine development and rollout, in addition to consequences of variants
of the virus, could also have a significant impact on the Company's consolidated
net revenue, results of operations, and cash flows during the remainder of
fiscal 2023 and beyond.

We continue to take actions intended to help minimize the risk to our Company,
employees, customers, and the communities in which we operate, as well as to
lessen the financial impact on the business while protecting our ability to
continue to generate profitable growth over the long-term. We continue to
believe the Company has sufficient liquidity to operate in the current business
environment as a result of these actions.

Employees


We have implemented a number of employee safety measures across our plants and
other locations in an attempt to contain the spread of COVID-19, which we update
as appropriate for the evolving COVID-19 situation depending on the geography
and function.

In addition, we believe various factors have contributed to the current labor
shortage, particularly in the U.S. We have continued to experience effects of
this labor shortage at certain production facilities, and we are mitigating this
impact through the use of overtime and third-party outsourcing as warranted. It
is possible that a prolonged shortage of qualified, available
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workers could result in a further increase in labor costs and could negatively
affect our ability to efficiently operate our production facilities and our
results of operations.

Supply chain and inflation


While global supply chains have recently suffered from various headwinds, those
supporting our products have generally remained intact, providing access to
sufficient inventory of the key materials needed for manufacturing. However, we
have experienced significant delays of certain raw materials and components, but
we have largely been able to mitigate the impact on our consolidated results of
operations. We continue to identify and qualify alternative sources to mitigate
risk associated to single or sole source supply continuity, and we have
purchased and may continue to purchase certain materials in safety stock where
we have supply chain continuity concerns. It remains possible that we may
experience some sort of interruption to our supply chains, and such an
interruption could materially affect our ability to timely manufacture and
distribute our products and could also have a significant impact on the
Company's consolidated net revenue, results of operations, and cash flows during
fiscal 2023 and beyond.

We also experienced material and supply chain inflation, including but not
limited to higher transportation costs, in fiscal 2022 as further discussed in
our Operations Review. Pricing actions and supply chain productivity initiatives
have and are expected to continue to mitigate some of these inflationary
pressures, but we may not be successful in fully offsetting these incremental
costs, which could have a significant impact on the Company's consolidated
results of operations, and cash flows during fiscal 2023 and beyond.

For more information about labor, supply chain, and other risks, including those related to the COVID-19 pandemic, see Item 1A of this Form 10-K.

Strategic alternatives for Batesville


On July 20, 2022, the Company announced its intention to explore strategic
alternatives for the Batesville reportable operating segment. There can be no
assurance that the Strategic Process will result in a Batesville Transaction or
that any Batesville Transaction, if pursued, will be consummated on terms our
investors view as favorable or at all. Based on the ongoing nature of the
Company's process to explore strategic alternatives and there being no decisions
made at September 30, 2022, or by the date of this Form 10-K, the pendency of
this process had no impact on and did not result in any changes to the
consolidated financial statement presentation of Batesville during the year
ended September 30, 2022. The Company does not intend to provide any additional
information on the review of strategic alternatives for Batesville unless or
until the process is completed or terminated.

Subsequent acquisition of LINXIS Group SAS


On October 6, 2022, the Company completed the acquisition of LINXIS Group SAS
("Linxis") from IBERIS INTERNATIONAL S.À R.L, an affiliate of IK Partners, and
additional sellers ("Sellers"). As a result of the acquisition, the Company
acquired from the Sellers all of the issued and outstanding securities of
Linxis, and Linxis became a wholly owned subsidiary of the Company for total
aggregate consideration of $590.8 (€596.2) in cash, reflecting an enterprise
value of approximately $566.8 (€572.0) plus cash acquired at closing, subject to
post-closing adjustments.

Linxis has six leading brands - Bakon, Diosna, Shaffer, Shick Esteve, Unifiller,
and VMI - that serve customers in over 100 countries. With a global
manufacturing, sales and service footprint, Linxis specializes in design,
manufacturing, and service of dosing, kneading, mixing, granulating, drying and
coating technologies that are complementary to the equipment and solutions
offered under Hillenbrand's Coperion brand. Linxis will be included in our
Advanced Process Solutions reportable operating segment.

Proposed acquisition of Peerless Food Equipment


On November 3, 2022, the Company signed a definitive agreement to acquire from
Illinois Tool Works Inc. its Peerless Food Equipment division ("Peerless"), a
premier supplier of industrial food processing equipment, for a purchase price
of $59.0, subject to customary post-closing adjustments. Headquartered in
Sidney, Ohio, Peerless is highly complementary to certain Linxis brands. This
transaction is expected to close during the fiscal first quarter of 2023.
Peerless will be included in our Advanced Process Solutions reportable operating
segment.

Disposal of flow control activities

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On December 31, 2020, the Company completed the divestiture of Red Valve to
DeZURIK, Inc. in a transaction valued at $63.0. The sale included cash proceeds
received at closing of $59.4, including working capital adjustments, and a $5.0
note receivable, included within other long-term assets on the Consolidated
Balance Sheets as of September 30, 2022 and 2021.

As a result of the Red Valve divestiture, the Company recorded a pre-tax gain of
$31.6 in the Consolidated Statement of Operations during the year ended
September 30, 2021. The related tax effect resulted in tax expense of $9.3 and
was included within income tax expense in the Consolidated Statement of
Operations during the year ended September 30, 2021. The Company incurred $2.9
of transaction costs associated with the sale during the year ended September
30, 2021, which were recorded within operating expenses in the Consolidated
Statement of Operations. Red Valve's results of operations were included within
the Advanced Process Solutions reportable operating segment until the completion
of the sale on December 31, 2020.

On March 10, 2021the Company completed the sale of ABEL to IDEX Corporation in a transaction valued at $103.5. The disposal included the cash proceeds received at the closing of $106.3including working capital adjustments.


As a result of the ABEL divestiture, the Company recorded a pre-tax gain of
$35.5, after post-closing adjustments, in the Consolidated Statement of
Operations during the year ended September 30, 2021. The related tax effect
resulted in tax expense of $3.8 included within income tax expense in the
Consolidated Statement of Operations during the year ended September 30, 2021.
The Company incurred $3.9 of transaction costs associated with the divestiture
during the year ended September 30, 2021, which were recorded within operating
expenses in the Consolidated Statement of Operations. ABEL's results of
operations were included within the Advanced Process Solutions reportable
operating segment until the completion of the sale on March 10, 2021.

Disposal of TerraSource


On October 22, 2021, the Company completed the divestiture of TerraSource
pursuant to a Contribution Agreement ("Agreement") between the Company and
certain affiliated companies of industrial holding company Right Lane Industries
("RLI"). Under the terms of the Agreement, Hillenbrand contributed TerraSource
and its subsidiaries to a newly formed entity, TerraSource Holdings, LLC
("Holdings"), with RLI obtaining majority ownership and full operational control
of TerraSource. In exchange for contributing the TerraSource business, the
Company received consideration in the form of a five-year note with initial
principal amount of $25.6, subject to certain adjustments, and also retained a
49% equity interest in Holdings through one of the Company's indirect
wholly-owned subsidiaries. The fair value of the total consideration received by
the Company was $27.7.

As a result of the TerraSource divestiture, the Company recorded a pre-tax loss
of $3.1, after post-closing adjustments, in the Consolidated Statement of
Operations during the year ended September 30, 2022. The Company incurred $0.4
of transaction costs associated with the divestiture during the year ended
September 30, 2022, which were recorded within operating expenses in the
Consolidated Statement of Operations. TerraSource's results of operations were
included within the Advanced Process Solutions reportable operating segment
until the completion of the divestiture on October 22, 2021. Subsequent to the
divestiture, the Company's equity interest in Holdings is accounted for under
the equity method of accounting as prescribed by GAAP.

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OPERATIONS REVIEW - CONSOLIDATED


                                                                                        Year Ended September 30,
                                                                            2022                                            2021
                                                                                          % of                                       % of
                                                               Amount                  Net Revenue             Amount             Net Revenue
Net revenue                                             $     2,940.9                     100.0             $ 2,864.8                100.0
Gross profit                                                    954.6                      32.5                 957.3                 33.4
Operating expenses                                              522.1                      17.8                 526.4                 18.4
Amortization expense                                             54.0                                            55.7
Loss (gain) on divestitures                                       3.1                                           (67.1)
Impairment charges                                                  -                                            11.2
Interest expense                                                 69.8                                            77.6
Other income, net                                                 8.4                                             0.3
Income tax expense                                               98.8                                            98.6
Net income attributable to Hillenbrand                          208.9                                           249.9



Year ended September 30, 2022 Compared to the year ended September 30, 2021

Net sales increased $76.1 (3%), including an unfavorable exchange rate effect (4%).


•Advanced Process Solutions' net revenue increased $24.1 (2%) primarily due to
an increase in large plastics systems sales, favorable pricing, and higher
aftermarket parts and service net revenue, partially offset by the divestitures
of Red Valve on December 31, 2020, ABEL on March 10, 2021, and TerraSource on
October 22, 2021. Foreign currency impact decreased net revenue by 6%.

• Molding Technology Solutions net sales increased $49.8 (5%), mainly due to increased injection molding equipment sales and favorable pricing. The impact of foreign currencies decreased net sales by 3%.


•Batesville's net revenue increased $2.2 (0.4%) primarily due to an increase in
average selling price driven by a commodity surcharge in 2022, mostly offset by
a decrease in volume. Lower volume was driven by a decrease in burial casket
sales primarily due to estimated lower deaths associated with the declining
effects of the COVID-19 pandemic and an estimated increased rate at which
families opted for cremation.

Gross profit decreased $2.7 (0.3%). Gross profit margin decreased 90 basis
points to 32.5%. On an adjusted basis, which excludes restructuring and
restructuring-related charges ($2.2 in 2022 and $10.3 in 2021), business
acquisition, integration, and development costs ($0.4 in 2022 and $3.8 in 2021),
and other one-time costs ($1.0 in 2022 and $0.5 in 2021), gross profit decreased
$14.4 (2%), and adjusted gross profit margin decreased 140 basis points to
32.6%.

•Advanced Process Solutions' gross profit increased $10.2 (2%), primarily due to
favorable pricing, an increase in volume, and productivity improvements and
synergies, partially offset by cost inflation, and the divestitures of Red
Valve, ABEL, and TerraSource. Foreign currency impact decreased gross profit by
6%. Gross profit margin improved 10 basis points to 34.5% in 2022, primarily due
to favorable pricing and productivity improvements, partially offset by cost
inflation.

Advanced Process Solutions' gross profit included restructuring and
restructuring-related charges ($2.1 in 2022 and $7.6 in 2021), business
acquisition, disposition, and integration costs ($0.1 in 2022 and $1.9 in 2021),
and other one-time costs ($0.8 in 2022 and $0.5 in 2021). Excluding these
charges, adjusted gross profit increased $3.2 (1%) and adjusted gross profit
margin decreased 40 basis points to 34.8%.

•Molding Technology Solutions' gross profit increased $21.3 (7%), primarily due
to favorable pricing, an increase in volume, and productivity improvements and
synergies, partially offset by cost inflation. Foreign currency impact decreased
gross profit by 3%. Gross profit margin improved 60 basis points to 31.1% in
2022, primarily due to favorable pricing and productivity improvements including
synergies, partially offset by cost inflation.

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Molding Technology Solutions' gross profit included restructuring and
restructuring-related charges ($0.1 in 2022 and $2.6 in 2021), and business
acquisition, disposition, and integration costs ($0.3 in 2022 and $1.9 in 2021).
Excluding these charges, adjusted gross profit increased $16.9 (5%) and adjusted
gross profit margin improved 20 basis points to 31.2%.

• Batesville gross profit fell $34.2 (15%) and the gross profit margin decreased by 560 basis points to 30.5%. The decline in gross profit margin and gross profit margin is mainly due to inflation of raw materials, fuel and wages and benefits, lower volume and additional costs caused by supply chain disruptions. procurement, partially offset by an increase in the average selling price and productivity initiatives.



Operating expenses decreased $4.3 (1%), primarily due to the divestitures of Red
Valve, ABEL and TerraSource, synergy savings, and a decrease in variable
compensation, partially offset by an increase in strategic investments, cost
inflation, and an increase in one-time costs including reserves against certain
receivables. Foreign currency impact decreased operating expenses by 3%. Our
operating expense-to-revenue ratio improved 60 basis points to 17.8%. Operating
expenses included the following items:

                                                                                          Year Ended September 30,
                                                                                          2022                      2021
Business acquisition, disposition, and integration costs                       $       31.2                     $     31.4
Restructuring and restructuring-related charges                                         1.5                            4.1
Other one-time costs                                                                    2.6                              -



On an adjusted basis, which excludes business acquisition, disposition, and
integration costs, restructuring and restructuring-related charges, and other
one-time costs including reserves against certain receivables, operating
expenses decreased $4.3 (1%), which included favorable foreign currency impact
(3%). Adjusted operating expenses as a percentage of net revenue improved 50
basis points to 16.6%.

Depreciation expense decreased $1.7 (3%), mainly due to the impact of foreign currencies (3%).


Loss (gain) on divestitures was a loss of $3.1 in the current year due to the
loss realized on the divestiture of TerraSource and a gain of $67.1 in the prior
year due to the gains realized on the divestitures of Red Valve and ABEL. For
further information on divestitures, see Note 4 to our Consolidated Financial
Statements included in Part II, Item 8 of this Form 10-K.

Impairment charges decreased $11.2 due to a one-time valuation adjustment
related to TerraSource assets held for sale during 2021. For further information
on the one-time valuation adjustment, see Note 4 to our Consolidated Financial
Statements included in Part II, Item 8, of this Form 10-K.

Other income, net increase $8.1primarily due to increased interest income and gains on the sale of property, plant and equipment.


The effective tax rate was 31.5% in fiscal 2022 compared to 27.9% in fiscal
2021. The increase in the effective tax rate was primarily driven by an increase
in tax expense associated with distributions from foreign subsidiaries, an
increase in non-deductible executive compensation, and the impact of
divestitures in the prior period, partially offset by a reduction of the
provisions for uncertain tax positions in the prior period and the revaluation
of deferred tax balances as a result of foreign currency fluctuations.

Our adjusted effective income tax rate was 29.1% in 2022 compared to 28.7% in
2021. The adjusted effective income tax rate primarily excludes the tax effect
of the following items:

•The divestitures of TerraSource, ABEL and Red Valve ($0.6 expense in 2022 and
$7.4 expense in 2021);
•The impact of Milacron tax loss carryforwards on net domestic taxes on foreign
earnings ($3.9 expense in 2022 and $0.6 expense in 2021);
•The revaluation of deferred tax balances as a result of foreign currency
fluctuations ($1.8 benefit in 2022 and $1.6 expense in 2021); and
•Adjustments previously discussed within this section ($22.3 benefit in 2022 and
$28.3 benefit in 2021).

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Excluding these items, the increase in the current year adjusted effective tax
rate was primarily due to an increase in tax expense associated with
distributions from foreign subsidiaries and an increase in non-deductible
executive compensation, partially offset by a reduction of the provisions for
uncertain tax positions in the prior period.

OPERATIONS REVIEW – ADVANCED PROCESS SOLUTIONS


                                               Year Ended September 30,
                                        2022                                  2021
                                                     % of                             % of
                              Amount             Net Revenue        Amount        Net Revenue
Net revenue            $     1,269.8               100.0          $ 1,245.7         100.0
Gross profit                   438.4                34.5              428.2          34.4
Operating expenses             207.7                16.4              220.9          17.7
Amortization expense            17.6                                   19.4
Impairment charge                  -                                   11.2


Year ended September 30, 2022 Compared to the year ended September 30, 2021


Net revenue increased $24.1 (2%) primarily due to an increase in large plastics
systems sales, favorable pricing, and higher aftermarket parts and service net
revenue, partially offset by the divestitures of Red Valve on December 31, 2020,
ABEL on March 10, 2021, and TerraSource on October 22, 2021. Foreign currency
impact decreased net revenue by 6%.

We expect future net revenue for Advanced Process Solutions to continue to be
influenced by order backlog because of the lead time involved in fulfilling
engineered-to-order equipment and solutions for customers. Though backlog can be
an indicator of future net revenue, it does not include projects and aftermarket
parts orders that are booked and shipped within the same quarter. The timing of
order placement, size of orders, extent of order customization, and customer
delivery dates can create fluctuations in backlog and net revenue. Net revenue
attributable to backlog is also affected by foreign exchange rate fluctuations
for orders denominated in currencies other than U.S. dollars. Order backlog
increased $48.5 (4%) from $1,349.4 at September 30, 2021, to $1,397.9 at
September 30, 2022. The increase in order backlog was primarily driven by an
increase in large plastics systems, the acquisition of Herbold, and aftermarket
parts and service, partially offset by unfavorable foreign currency impact
(15%), and the divestiture of TerraSource. On a sequential basis, order backlog
increased $169.3 (14%) to $1,397.9 at September 30, 2022, up from $1,228.6 at
June 30, 2022, primarily due to an increase in large plastics systems and the
acquisition of Herbold, partially offset by the impact of foreign currency (6%).

Gross profit increased $10.2 (2%), primarily due to favorable pricing, an
increase in volume, and productivity improvements and synergies, partially
offset by cost inflation, and the divestitures of Red Valve, ABEL, and
TerraSource. Foreign currency impact decreased gross profit by 6%. Gross profit
margin improved 10 basis points to 34.5% in 2022, primarily due to favorable
pricing and productivity improvements, partially offset by cost inflation.

Advanced Process Solutions' gross profit included restructuring and
restructuring-related charges ($2.1 in 2022 and $7.6 in 2021), business
acquisition, disposition, and integration costs ($0.1 in 2022 and $1.9 in 2021),
and other one-time costs ($0.8 in 2022 and $0.5 in 2021). Excluding these
charges, adjusted gross profit increased $3.2 (1%) and adjusted gross profit
margin decreased 40 basis points to 34.8%.

Operating expenses decreased $13.2 (6%), primarily due to the divestitures of
Red Valve, ABEL, and TerraSource, synergy savings from restructuring actions, a
decrease in restructuring and restructuring-related charges, and a decrease in
business acquisition, disposition, and integration costs, partially offset by an
increase in strategic investments and cost inflation. Foreign currency impact
decreased operating expenses by 6%. Operating expenses as a percentage of net
revenue improved 130 basis points to 16.4%.

Operating expenses included other non-recurring costs, including reservations on certain receivables ($2.6 in 2022), business acquisition, disposal and integration costs ($1.5 in 2022 and $3.1 in 2021), and restructuring and restructuring charges ($0.1 in 2022 and $2.5 in 2021). Excluding these items, adjusted operating expenses decreased $11.4 (5%), including a favorable exchange rate effect (6%). Adjusted operating expenses as a percentage of net revenue improved by 130 basis points to 16.0%.

Depreciation expense decreased $1.8 (9%), mainly due to the impact of foreign currencies (6%).

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Contents


Impairment charges decreased $11.2 due to a one-time valuation adjustment
related to TerraSource assets held for sale during 2021. For further information
on the one-time valuation adjustment, see Note 4 to our Consolidated Financial
Statements included in Part II, Item 8, of this Form 10-K.

REVIEW OF OPERATIONS – TECHNOLOGICAL MOLDING SOLUTIONS


                                                  Year Ended September 30,
                                              2022                                2021
                                                          % of Net                    % of Net
                                      Amount               Revenue       Amount        Revenue
      Net revenue            $      1,045.5               100.0         $ 995.7       100.0
      Gross profit                    325.4                31.1           304.1        30.5
      Operating expenses              149.5                14.3           142.4        14.3
      Amortization expense             36.4                               
36.3



Year ended September 30, 2022 Compared to the year ended September 30, 2021


Net revenue increased $49.8 (5%), primarily driven by an increase in injection
molding equipment sales and favorable pricing. Foreign currency impact decreased
net revenue by 3%.

Order backlog decreased $1.5 (0.4%) from $365.6 at September 30, 2021, to $364.1
at September 30, 2022. Foreign currency impact decreased order backlog by 3%. On
a sequential basis, order backlog decreased $56.1 (13%) to $364.1 at September
30, 2022, down from $420.2 at June 30, 2022. The decrease in order backlog was
primarily driven by a decrease in orders within our injection molding,
extrusion, and hot runner equipment product lines.

Gross profit increased $21.3 (7%) primarily due to favorable pricing, an
increase in volume, and productivity improvements and synergies, partially
offset by cost inflation. Foreign currency impact decreased gross profit by 3%.
Gross profit margin improved 60 basis points to 31.1% in 2022, primarily due to
favorable pricing and productivity improvements including synergies, partially
offset by cost inflation.

Molding Technology Solutions' gross profit included restructuring and
restructuring-related charges ($0.1 in 2022 and $2.6 in 2021), and business
acquisition, disposition, and integration costs ($0.3 in 2022 and $1.9 in 2021).
Excluding these charges, adjusted gross profit increased $16.9 (5%) and adjusted
gross profit margin improved 20 basis points to 31.2%.

Operating expenses increased $7.1 (5%), primarily due to cost inflation and an
increase in strategic investments, partially offset by synergies and savings
from restructuring actions. Foreign currency impact decreased operating expense
by 2%. Operating expenses as a percentage of net revenue remained flat at 14.3%.

Operating expenses included business acquisition, disposition, and integration
costs ($1.3 in 2022 and $1.1 in 2021) (including severance costs related to the
Milacron integration) and restructuring and restructuring-related charges ($0.5
in 2022 and $0.7 in 2021). Excluding these charges, adjusted operating expenses
as a percentage of net revenue remained flat at 14.1%.

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OPERATIONS REVIEW - BATESVILLE


                                              Year Ended September 30,
                                        2022                                   2021
                                                       % of                           % of
                              Amount               Net Revenue       Amount       Net Revenue
Net revenue          $       625.6                   100.0          $ 623.4         100.0
Gross profit                 190.8                    30.5            225.0          36.1
Operating expenses            70.8                    11.3             75.0          12.0


Year ended September 30, 2022 Compared to the year ended September 30, 2021


Net revenue increased $2.2 (0.4%), primarily due to an increase in average
selling price driven by a commodity surcharge in 2022, mostly offset by a
decrease in volume. Lower volume was driven by a decrease in burial casket sales
primarily due to estimated lower deaths associated with the declining effects of
the COVID-19 pandemic and an estimated increased rate at which families opted
for cremation.

Gross profit decreased $34.2 (15%), and gross profit margin decreased 560 basis
points to 30.5%. The decrease in gross profit and gross profit margin was
primarily due to inflation in commodities, fuel, and wages and benefits, lower
volume, and incremental costs driven by supply chain disruptions, partially
offset by an increase in average selling price and productivity initiatives.

Operating expenses decreased $4.2 (6%) to $70.8 in 2022, primarily due to cost
containment actions, a decrease in variable compensation, and a decrease in
restructuring and restructuring-related charges, partially offset by inflation.
Operating expenses as a percentage of net revenue improved 70 basis points to
11.3%.

Operating expenses include restructuring charges and charges related to the restructuring ($0.1 in 2022 and $0.8 in 2021). Excluding charges, adjusted operating expenses as a percentage of net sales improved by 50 basis points to 11.3%

REVIEW OF SOCIAL CHARGES


                                                                                              Year Ended September 30,
                                                                                   2022                                             2021
                                                                                                   % of                                      % of
                                                                      Amount                    Net Revenue            Amount             Net Revenue
Core operating expenses                                     $       65.3                             2.2             $   62.0                  2.2
Business acquisition, disposition, and integration costs            28.0                             1.0                 26.1                  0.9
Restructuring and restructuring-related charges                      0.8                               -                    -                    -

Operating expenses                                          $       94.1                             3.2             $   88.1                  3.1



Corporate operating expenses include the cost of providing management and
administrative services to each reportable operating segment.  These services
include treasury management, human resources, legal, business development,
information technology, tax compliance, procurement, sustainability, and other
public company support functions such as internal audit, investor relations, and
financial reporting. Corporate operating expenses also include costs related to
business acquisition, disposition, and integration, which we incur as a result
of our strategy to grow through selective acquisitions. Core operating expenses
primarily represent corporate operating expenses excluding costs related to
business acquisition, disposition, and integration costs.

Business acquisition, divestiture and integration costs include legal, tax, accounting and other advisory fees and due diligence costs associated with finding opportunities (including acquisitions and divestments) and the integration of acquisitions made (including severance pay).

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Year Ended September 30, 2022 Compared to Year Ended September 30, 2021

Operating expenses increased $6.0 (7%) in 2022, primarily due to increase in
strategic investments, cost inflation, and an increase in business acquisition,
disposition, and integration costs, partially offset by a decrease in variable
compensation. Operating expenses as a percentage of net revenue were 3.2%, an
increase of 10 basis points from the prior year.

Base operating expenses increased $3.3 (5%) in 2022, mainly due to an increase in strategic investments and cost inflation, partially offset by a decrease in variable compensation. Operating expenses as a percentage of net revenues remained stable at 2.2%.

NON-GAAP MEASURES OF OPERATIONAL PERFORMANCE


The following is a reconciliation from consolidated net income, the most
directly comparable GAAP operating performance measure, to our non-GAAP adjusted
EBITDA.

                                                                                           Year Ended September 30,
                                                                                           2022                      2021
Consolidated net income                                                          $       215.2                   $   255.2
Interest income                                                                           (5.5)                       (3.4)
Interest expense                                                                          69.8                        77.6
Income tax expense                                                                        98.8                        98.6
Depreciation and amortization                                                            108.2                       115.2
EBITDA                                                                                   486.5                       543.2
Impairment charge (1)                                                                        -                        11.2
Business acquisition, disposition, and integration costs (2)                              31.3                        34.5
Restructuring and restructuring-related charges (3)                                        3.2                        14.5

Loss (gain) on divestiture (4)                                                             3.1                       (67.1)
Other                                                                                      3.3                         1.9
Adjusted EBITDA                                                                  $       527.4                   $   538.2




(1)Hillenbrand recorded a $11.2 valuation adjustment related to assets held for
sale within the Advanced Process Solutions reportable operating segment during
2021. For further information on the impairment charge, see Note 4 to our
Consolidated Financial Statements included in Part II, Item 8, of this Form
10-K.
(2)Business acquisition, disposition, and integration costs during 2022
primarily included professional fees related to the Gabler, Herbold, and Linxis
acquisitions and professional fees and employee-related costs attributable to
the integration of Milacron and the divestiture of TerraSource. Business
acquisition, disposition, and integration costs during 2021 primarily included
professional fees and employee-related costs attributable to the integration of
Milacron and divestitures of Red Valve and ABEL.
(3)Restructuring and restructuring-related charges primarily included severance
costs, unrelated to the acquisition and integration of Milacron, during 2022 and
2021.
(4)The current year amount represents the loss on divestiture of TerraSource.
The prior year amount represents the gain on divestitures of Red Valve and ABEL.

Consolidated net income for 2022 compared to 2021 decreased $40.0 (16%). The
decrease was primarily driven by cost inflation, the gain on the divestitures of
Red Valve and ABEL in 2021, a decrease in volume at the Batesville reportable
operating segment, and an increase in strategic investments, partially offset by
favorable pricing and productivity improvements, and an increase in demand for
equipment within the Advanced Process Solutions and Molding Technology Solutions
reportable operating segments. Foreign currency impact decreased consolidated
net income $13.9.

Consolidated adjusted EBITDA for 2022 compared to 2021 decreased $10.8 (2%). The
decrease was primarily driven by cost inflation, a decrease in volume at the
Batesville reportable operating segment, and an increase in strategic
investments, partially offset by favorable pricing and productivity
improvements, and an increase in demand for equipment within the Advanced
Process Solutions and Molding Technology Solutions reportable operating
segments. Foreign currency impact decreased consolidated adjusted EBITDA by
$21.8.



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LIQUIDITY AND CAPITAL RESOURCES

In this section, we discuss our ability to access cash to meet business needs.
We discuss how we see cash flow being affected for the next twelve months.  We
describe actual results in generating and using cash by comparing 2022 to 2021.
Finally, we identify other significant matters, such as contractual obligations
and contingent liabilities and commitments that could affect liquidity on an
ongoing basis.

Ability to Access Cash

Our debt financing has historically included revolving credit facilities, term
loans, and long-term notes as part of our overall financing strategy. We
regularly review and adjust the mix of fixed-rate and variable-rate debt within
our capital structure in order to achieve a target range based on our financing
strategy.

We have taken proactive measures to maintain financial flexibility within the
landscape of the ongoing Ukraine War and other uncertainties. We believe the
Company ended the fiscal year with and continues to have sufficient liquidity to
operate in the current business environment.

As of September 30, 2022, we had $1,174.3 of maximum borrowing capacity under
the Credit Agreement (defined below), of which $901.3 was immediately available
based on our most restrictive covenant. The available borrowing capacity
reflects a reduction of $19.0 for outstanding letters of credit issued under the
Credit Agreement. The Company may request an increase of up to $600.0 in the
total borrowing capacity under the Credit Agreement, subject to approval of the
lenders.

In the normal course of business, operating companies within the Advanced
Process Solutions and Molding Technology Solutions reportable operating segments
provide to certain customers bank guarantees and other credit arrangements in
support of performance, warranty, advance payment, and other contractual
obligations. This form of trade finance is customary in the industry and, as a
result, we maintain adequate capacity to provide the guarantees. As of September
30, 2022, we had guarantee arrangements totaling $373.6, under which $247.4 was
utilized for this purpose. These arrangements include the L/G Facility Agreement
(defined below) under which unsecured letters of credit, bank guarantees, or
other surety bonds may be issued. The Company may request an increase to the
total capacity under the L/G Facility Agreement by an additional €100, subject
to approval of the lenders.

We have significant operations outside the U.S. We continue to assert that the
basis differences in the majority of our foreign subsidiaries continue to be
permanently reinvested outside of the U.S. We have recorded tax liabilities
associated with distribution taxes on expected distributions of available cash
and current earnings. The Company has made, and intends to continue to make,
substantial investments in our businesses in foreign jurisdictions to support
the ongoing development and growth of our international operations. As of
September 30, 2022, we had a transition tax liability of $16.9 pursuant to the
2017 Tax Cuts and Jobs Act (the "Tax Act"). The cash at our international
subsidiaries, including U.S. subsidiaries participating in non-U.S. cash pooling
arrangements, totaled $218.0 at September 30, 2022. We continue to actively
evaluate our global capital deployment and cash needs.

12 month outlook

Impact of COVID-19


As discussed in the COVID-19 impact section above, the Company has taken actions
aimed to safeguard its capital position during the COVID-19 pandemic. We believe
the Company has sufficient liquidity to operate in the current business
environment. The challenges posed by the COVID-19 pandemic on our businesses
continue to evolve rapidly and could evolve further as the COVID-19 pandemic
continues and vaccine rollouts continue around the world. Consequently, we will
continue to evaluate our financial position in light of future developments,
particularly those relating to COVID-19 and any of the variant strains of the
virus, and we plan to take necessary steps to manage through such developments.

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Ukraine War

The Ukraine War that began in February 2022 continues as of the date of this
Annual Report. We have suspended all new business in Russia and Belarus but may
be contractually obligated to complete existing contracts, insofar as economic
sanctions do not prevent us from doing so. Russia, Belarus, and Ukraine do not
constitute a material portion of our customer and supplier portfolio, however, a
significant escalation or expansion of economic disruption of the Ukraine War's
current scope could have a negative effect on our consolidated results of
operations and cash flows. However, we do not believe the impact will be
material to our consolidated results of operations and cash flows. For more
information about the Ukraine War and its effect on the Company's business and
results of operations, see Part I Item 1A. Risk Factors within this Annual
Report on Form 10-K.

Leverage Update


The Company's net leverage (defined as debt, net of cash, to adjusted EBITDA) at
September 30, 2022 was 1.8x. Given the strength of the Company's Consolidated
Balance Sheet and with leverage within our targeted range, the Company has
resumed strategic acquisitions and opportunistic share repurchases in support of
its capital structure objectives.

Subsequent Event Fundraising Activities


As discussed in Note 4 to our Consolidated Financial Statements included in Part
II, Item 8 of this Form 10-K, on October 6, 2022, the Company completed the
acquisition of Linxis for total aggregate consideration of $590.8 (€596.2) in
cash, reflecting an enterprise value of approximately $566.8 (€572.0) plus cash
acquired at closing, subject to post-closing adjustments. We utilized
borrowings, subsequent to September 30, 2022, under our Facility (defined below)
to fund this acquisition.

Other activities

The Company is required to pay a transition tax on unremitted earnings of its
foreign subsidiaries, resulting in an estimated liability of $16.9 recorded as
of September 30, 2022. The transition tax liability is expected to be paid over
the next three years.

On December 2, 2021, the Board of Directors authorized a new share repurchase
program of up to $300.0, which replaced the previous $200.0 share repurchase
program authorized on December 7, 2018. The repurchase program has no expiration
date but may be terminated by the Board of Directors at any time.  As of
September 30, 2022, we repurchased approximately 4,143,000 shares under the
December 2, 2021 share repurchase program for approximately $175.0 in the
aggregate. At September 30, 2022, we had approximately $125.0 remaining for
share repurchases under the existing authorization by the Board of Directors.
During the year ended September 30, 2022, we repurchased approximately 4,767,000
shares for approximately $203.9 in the aggregate. Such shares were classified as
treasury stock.

Our anticipated contribution to our defined benefit pension plans in 2023 is
$9.5. We will continue to monitor plan funding levels, performance of the assets
within the plans, and overall economic activity, and we may make additional
discretionary funding decisions based on the net impact of the above factors.

We currently expect to pay approximately $15.0 in cash dividends each quarter
based on our outstanding common stock at September 30, 2022. We increased our
quarterly dividend in 2022 to $0.2175 per common share from $0.2150 per common
share paid in 2021.

We believe existing cash and cash equivalents, cash flows from operations,
borrowings under existing arrangements, and the issuance of debt will be
sufficient to fund our operating activities and cash commitments for investing
and financing activities. Based on these factors, we believe our current
liquidity position is sufficient and will continue to meet all of our financial
commitments in the current business environment.

Main liquidity events

Amendments to current financing agreements

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On June 8, 2022, the Company entered into a Fourth Amended and Restated Credit
Agreement (the "Credit Agreement"), which governs our multi-currency revolving
credit facility (the "Facility"). The Credit Agreement increases the maximum
principal amount available for borrowing under the Facility to $1,000. The
Credit Agreement further provides for a delayed-draw term loan facility in an
aggregate principal amount of up to $200. The Credit Agreement extends the
maturity date of the Facility to June 8, 2027. The Credit Agreement fully
transitions interest rate benchmarks from LIBOR-based interest rates to
SOFR-based interest rates for U.S. dollar borrowings.

On June 21, 2022, Hillenbrand and certain of its subsidiaries entered into a
Syndicated L/G Facility Agreement (the "L/G Facility Agreement"), which replaced
the Company's Syndicated L/G Facility Agreement dated March 8, 2018, as amended
(the "Prior L/G Facility Agreement"), and permits Hillenbrand and certain of its
subsidiaries to request up to an aggregate of €225 in unsecured letters of
credit, bank guarantees, or other surety bonds, an increase from €175 under the
Prior L/G Facility Agreement. The L/G Facility Agreement also conformed certain
terms with those contained in the Credit Agreement and the L/G Facility
Agreement matures in June 2027.

On June 9, 2022, the Company and certain of the Company's domestic subsidiaries
entered into amendments to the Private Shelf Agreement (as amended, the "Shelf
Agreement"), which conformed certain terms of the Shelf Agreement with those
contained in the Credit Agreement.

See Note 6 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for more details on these changes.

Cash flow


                                                                                      Year Ended September 30,
(in millions)                                                                          2022                     2021
Cash flows provided by (used in)
Operating activities                                                         $        191.1                  $  528.4
Investing activities                                                                 (143.4)                    126.0
Financing activities                                                                 (244.2)                   (523.3)
Effect of exchange rate changes on cash and cash equivalents                          (16.8)                      8.0
Net cash flows                                                               $       (213.3)                 $  139.1



Operating Activities

Operating activities provided $191.1 of cash during 2022, and provided $528.4 of
cash during 2021, a $337.3 (64%) decrease.  The decrease in operating cash flow
was primarily due to unfavorable timing of working capital requirements related
to large plastics projects and an increase in inventory due to higher customer
demand and supply chain disruptions.

Working capital requirements for the Advanced Process Solutions and Molding
Technology Solutions reportable operating segments fluctuate and may continue to
fluctuate in the future due primarily to the type of product and geography of
customer projects in process at any point in time. Working capital needs are
lower when advance payments from customers are more heavily weighted toward the
beginning of the project. Conversely, working capital needs are higher when a
larger portion of the cash is to be received in later stages of manufacturing.

Investing activities


The $269.4 decrease in net cash flows from investing activities during 2022 was
primarily due to proceeds received of $165.8 from the divestitures of Red Valve
and ABEL in fiscal 2021, the acquisitions of Gabler ($12.9) and Herbold ($77.7)
in 2022, and an increase in capital expenditures. See Note 4 to our Consolidated
Financial Statements included in Part II, Item 8, of this Form 10-K for further
information on these acquisitions and divestitures.

Fundraising activities


Cash used in financing activities was largely impacted by net borrowing activity
and share repurchases. Our general practice is to use available cash to pay down
debt unless it is needed for an acquisition. Daily borrowing and repayment
activity under the Credit Agreement may fluctuate significantly between periods
as we fulfill the capital needs of our business units.

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Cash used in financing activities during 2022 was $244.2, including $203.9 of
common stock repurchases. Cash used in financing activities during 2021 was
$523.3, including $338.8 of debt repayments, net of proceeds, which included
$350.0 of proceeds from senior unsecured notes issued in 2021. The decrease in
cash used in financing activities was primarily due to higher debt repayment in
2021, partially offset by an increase in repurchases of common stock.

We came back $62.0 to shareholders in 2022 in the form of quarterly dividends compared to $64.0 in 2021. We increased our quarterly dividend in 2022 to $0.2175 per common share, from $0.2150 paid in 2021.

Off-balance sheet arrangements


As part of its normal course of business, Hillenbrand is a party to various
financial guarantees and other commitments. These arrangements involve elements
of performance and credit risk that are not included in the Consolidated Balance
Sheets. The possibility that Hillenbrand would have to make actual cash
expenditures in connection with these obligations is largely dependent on the
performance of the guaranteed party, or the occurrence of future events that
Hillenbrand is unable to predict. We have no off-balance sheet financing
agreements or guarantees at September 30, 2022, that we believe are reasonably
likely to have a current or future effect on our financial condition, results of
operations, or cash flows.

Contractual obligations and contingent liabilities and commitments


The following table summarizes our future obligations not quantified and
disclosed elsewhere in this Form 10-K as of September 30, 2022.  This will help
give you an understanding of the significance of cash outlays that are fixed
beyond the normal accounts payable and other obligations we have already
incurred, have recorded, and disclosed in the Consolidated Financial Statements
included in Part II, Item 8, of this Form 10-K.

                                                             Payment Due by Period
                                                         Less
                                                        Than 1         1-3         4-5        After 5
(in millions)                               Total        Year         Years       Years        Years
Interest on financing agreements (1)        260.1         60.6        110.2        44.5         44.8
Purchase obligations (2)                    404.0        353.8         50.2           -            -
Other obligations (3)                        25.7          9.6         13.9         1.0          1.2

Total contractual obligations (4)(5) $689.8 $424.0 $174.3

     $ 45.5      $  46.0




(1)Cash obligations for interest requirements relate to our fixed-rate debt
obligations at the contractual rates as of September 30, 2022.
(2)Agreements to purchase goods or services that are enforceable and legally
binding and that specify all significant terms, including fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction.
(3)Primarily includes estimated payments for transition tax liability, the
estimated liquidation of liabilities related to both our self-insurance reserves
and severance payments.
(4)We have excluded from the table our $33.9 liability related to uncertain tax
positions as the current portion is not significant and we are not able to
reasonably estimate the timing of the long-term portion.
(5)See Notes 5, 6, and 7 to our Consolidated Financial Statements included in
Part II, Item 8, of this Form 10-K for lease, financing, and pension
obligations, respectively.



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Summarized Financial Information for Guarantors and the Issuer of Guaranteed
Securities

Summarized financial information of Hillenbrand (the "Parent") and our
subsidiaries that are guarantors of our senior unsecured notes (the "Guarantor
Subsidiaries") is shown below on a combined basis as the "Obligor Group." The
Company's senior unsecured notes are guaranteed by certain of our wholly-owned
domestic subsidiaries and rank equally in right of payment with all of our
existing and financial information of the Obligor Group. All intercompany
balances and transactions between the Parent and Guarantor Subsidiaries have
been eliminated and all information excludes subsidiaries that are not issuers
or guarantors of our senior unsecured notes, including earnings from and
investments in these entities.

                                                       September 30, 2022          September 30, 2021
Combined Balance Sheets Information:
Current assets (1)                                    $          2,590.3          $          1,311.6
Non-current assets                                               2,656.1                     5,692.1
Current liabilities                                                623.2                       581.8
Non-current liabilities                                          1,289.6                     1,303.9

                                                           Year Ended                  Year Ended
                                                       September 30, 2022          September 30, 2021
Combined Statements of Operations Information:
Net revenue (2)                                       $          1,042.0          $            999.0
Gross profit                                                       353.5                       374.2
Net income attributable to Obligors                                396.7                       557.6




(1) Current assets include intercompany receivables from non-guarantors of
$1,868.7 and $596.8 as of September 30, 2022 and September 30, 2021,
respectively.
(2) Net revenue includes intercompany sales with non-guarantors of $32.2 as of
September 30, 2022 and $35.8 as of September 30, 2021.

Recently issued and adopted accounting standards

For a summary of recently issued and adopted accounting standards applicable to us, see Note 2 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

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Brexit and Covid could cause a cancer epidemic in Europe https://rauensales.com/brexit-and-covid-could-cause-a-cancer-epidemic-in-europe/ Wed, 16 Nov 2022 09:22:00 +0000 https://rauensales.com/brexit-and-covid-could-cause-a-cancer-epidemic-in-europe/

Following a major review of the current state of European cancer research and its future, a Lancet Oncology commission: “European Groundshot—addressing Europe’s cancer research challenges”, co-led by Professor Richard Sullivan of King’s College London, offers a ‘sense check’ of the significant challenges that urgently need to be addressed to improve cancer survival rates in Europe.

The COVID-19 pandemic has exposed weaknesses in Europe’s cancer research landscape, with clinicians seeing 1.5 million fewer cancer patients in the first year of the pandemic and one in two patients not receiving timely surgery or chemotherapy. In addition, 100 million cancer screening tests were missed.

The study also reveals that Brexit will continue to have a negative impact on European cancer research unless the European funders/research community and the UK government/research community find a way forward. way to continue their collaboration.

“If the UK is not involved in collaborative EU cancer research and is not part of the Horizon Europe research community, this will have a hugely detrimental effect on European research activity. on cancer. Ultimately, cancer patients will pay the price for this decision in terms of health care outcomes.

The Lancet Oncology Commission identifies gaps in Europe’s cancer research landscape and calls for a doubling of Europe’s cancer research budget, as well as prioritization of underserved cancer research areas, including prevention and early diagnosis, radiotherapy and surgery, implementation science, action on gender equality and a stronger focus on survivorship.

Experts say prioritizing cancer research is crucial for European countries to provide more affordable, higher quality and fairer cancer care, with patients treated in research-active hospitals having better outcomes than those who are not.

Professor Sullivan continued: “Despite significant investments in public cancer research over the past decade, research portfolios remain overly focused on scientific discovery and biopharmaceutical research. There has been a lack of funding and research in many key areas such as prevention, palliative care, surgery and, in particular, health services and systems. How to translate innovations into the real world is a missing area and the Commission is calling on all European countries to change their strategies to address this.

“The Commission provides clear evidence that research is not an additional luxury but an essential pillar for countries to build their national cancer control programs to achieve high quality, affordable and equitable results.”

The report also describes how Russia’s invasion of Ukraine represents another huge challenge for cancer research in Europe. Russia and Ukraine are two of the largest contributors to clinical cancer research in the world, especially industry-sponsored clinical research. Many of Ukraine’s cancer clinical trials include cancer centers in Central and Eastern European countries, and the dispute will likely cause many of these major trials to be delayed or failed to recruit.

The authors recommend that, as a matter of urgency, the European cancer community collect data on the impact of the conflict on patients, cancer services, medicine and other shortages, and labor shortages, in Ukraine. and in neighboring countries, as well as developing countries. a plan to mitigate the impact of war on cancer research.

Lead author and chair of the Commission, Professor Mark Lawler of Queen’s University Belfast, said: “Against the backdrop of the COVID-19 pandemic, Brexit and the Russian invasion of Ukraine, it is more important than ever that Europe develops a resilient cancer research landscape to play a transformative role in improving prevention, diagnosis, treatment and quality of life for current and future patients and those living beyond cancer.

“We estimate that around one million cancer diagnoses have been missed in Europe during the COVID-19 pandemic. We are in a race against time to find these missing cancers. Additionally, we saw a chilling effect on cancer research with lab closures and clinical trials delayed or canceled during the first pandemic wave.

“We fear that Europe is heading for a cancer epidemic within the next decade if cancer health systems and cancer research are not urgently prioritized. Our European Commission Groundshot provides crucial findings on the current cancer research landscape, exposes key gaps and demands the prioritization of European cancer research programs over the next decade.

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