To My Fellow Shareholders, Associates, and Other Stakeholders:

This was a transformational year for Hillenbrand. We took significant actions in executing our strategy to become a pure-play industrial company by completing several key acquisitions and divesting our legacy death care segment. We delivered solid operational performance across the portfolio, despite some market headwinds, and achieved strong organic growth and growth from acquisitions in our Advanced Process Solutions segment. As a global leader of highly-engineered, mission-critical processing equipment and solutions, I'm confident Hillenbrand is well-positioned for long-term success.

As I enter my third year as CEO of Hillenbrand, I reflect on how much we've accomplished in transforming Hillenbrand from who we were to who we are today. Only one year ago, approximately 20% of our revenues were generated from the sale of burial caskets, which is an industry in secular decline. Batesville played a key role in supporting Hillenbrand's growth strategy for many years, but its divestiture was a necessary step in bringing clarity to our story and unlocking Hillenbrand's true potential.

An Industrial Growth Company

Since our first acquisition in 2010, we've been building a standalone industrial company that leverages our organizational capabilities. Through organic and inorganic growth, we have developed a portfolio of leading brands and technologies that enable the production of many of the products the world uses every single day. Prior to 2023, the vast majority of our industrial revenue was generated by equipment and systems used to produce durable plastic pellets and equipment that converts those plastic pellets into products. This continues to be an important and attractive part of our business, with long-term growth prospects driven by the growing global middle class and the critically important role durable plastics and polymers can play in the production of products that support sustainability. However, we also recognize the plastics industry can face higher levels of cyclicality, as we experienced during fiscal year 2023, particularly within our Molding Technology Solutions (MTS) segment.

When I came into the CEO position after seven years as the president of our largest operating company, Coperion, I knew there was more we could do to position Hillenbrand for long-term growth by accelerating our focus in the higher-growth areas of food and recycling. These end markets are attractive to us because they are historically less susceptible to economic cycles, they are supported by long-term secular growth trends, and the skills and capabilities required for success highly leverage the skills and infrastructure that fuel our existing portfolio.

The processes of ingredient feeding, conversion of ingredients into a product, and the handling of a product out of the processing system are very similar for a wide variety of materials—plastics, chemicals, baked goods, pet foods, pharmaceuticals, and many others. The highly-engineered processing technologies within our Advanced Process Solutions (APS) segment are well-suited to serve customer needs across all of these areas, and our world-class engineers can design, develop, install, service, and modernize complete solutions that maximize customer value over the long life of our equipment. While we've always served the food and recycling industries, the acquisitions we completed over the last two years have accelerated our progress by building scale and enhancing our capabilities. We've grown our position in these end markets from less than 5% of our revenue in fiscal year 2022 to nearly 30% on a pro forma basis heading into fiscal year 2024 following our most recent acquisition of the Schenck Process Food and Performance Materials (FPM) business in September. This provides significant balance to our portfolio, as we believe these end markets will have stronger and more stable growth characteristics over the long-term, while still leveraging our existing foundation of expertise in developing highly-engineered process technologies, systems, and solutions.

The integration of Linxis and FPM are going well, and there is more excitement than I could have imagined as the teams collaborate around opportunities to leverage the world-class breadth of our combined product portfolio and our strong global sales and service footprint to create significant value for our customers.

Financial Performance and Outlook

I'm pleased with our execution of both strategic and operational objectives in fiscal year 2023. We delivered strong organic revenue and adjusted EBITDA growth in our APS segment. Additionally, our recent acquisitions performed ahead of our expectations for the year. We're energized by the customer response to our newly combined scale and capabilities, which helped us win several multimillion-dollar food projects and a record recycling order of $30 million in the year that otherwise would not have been possible for Hillenbrand, or the acquisitions, on a standalone basis. We also continued to see a high level of customer quote activity and a backlog of customers using our test lab facilities, alongside record aftermarket performance from our strong installed base.

In our MTS segment, the teams did an excellent job delivering on customer commitments and executing projects from the record backlog we had entering fiscal year 2023. However, we faced persistent order softness across the segment throughout the year, particularly in North America and China, as the economic and geopolitical uncertainty around the world caused customers to postpone their investment decisions. This especially impacted our short-cycle, higher-margin hot runner product line in the year. Despite the challenging demand environment, I'm proud of how the teams managed discretionary costs and deployed the Hillenbrand Operating Model to drive operational improvements to help mitigate the volume and mix headwinds in the year.

Heading into fiscal 2024, we continue to see strong momentum in food, recycling, and aftermarket, where we expect to deliver strong growth again this year. While order timing remains lumpy for large plastics projects, the teams are focused on reducing lead times and executing our robust backlog. Given the ongoing uncertainty across the global economic and geopolitical environment, we are being grounded in our outlook for the MTS segment, and do not expect demand to fully recover in the year. However, we remain relentless in our pursuit of building our world-class team and constantly improving the way we operate. I'm excited by the recent addition of a leader for the MTS segment, as we work to drive continued productivity, product innovation, and collaboration across the segment to ensure we are well-positioned when demand rebounds.

Following the close of the FPM acquisition in September, our leverage at the end of fiscal 2023 was 3.2x, as we announced at the time of the transaction. Since this is above our targeted range of 1.7x to 2.7x, we'll be highly focused on deploying our cash toward deleveraging, with a goal of returning to our target range by the end of fiscal Q1 of 2025, as we have consistently communicated. In addition, we'll continue investing in organic initiatives for integration, innovation, and operational efficiency, as well as supporting our attractive dividend, which we've increased each year over the past fifteen years, since our inception in 2008.



22% YoY Growth
(+4% Organic, +9% Organic APS)

Adjusted EBITDA

20% YoY Growth
(+4% Organic, +14% Organic APS)

Adjusted EPS

31% YoY Growth

Sustainability Update

Sustainability continues to be a way we live our Purpose, and we continue to embed it in our culture, strategy, and operations. Sustainability continues to be a growing focus area of our customers, suppliers, associates, and other stakeholders, many of whom participated in our double-materiality assessment, and we are grateful for your comments to help us further focus our sustainability efforts. In May, we published our fourth annual sustainability report and increased our transparency through new disclosures. We also continued to highlight how our product innovations support more sustainable solutions for our customers, and our ongoing commitment to diversity, equity, and inclusion through the signing of the UN Women's Empowerment Principles. I'm proud of our progress in this area, exemplified by our ESG rating upgrade to AA by MSCI, our recognition as a finalist in the Reuter's Responsible Business Awards for our Purpose launch, and the success of our Coperion team in being awarded first place in the 2023 Stuttgart Innovation Awards for their innovations in plastics recycling technologies.

Excitement for Our Future

I'm extremely proud of all we've accomplished over the last two years. We've significantly transformed the profile of Hillenbrand and achieved meaningful scale and leadership positions in end markets such as durable plastics, food, and recycling, all of which are supported by long-term, secular growth drivers. While we continue to operate in a dynamic macro environment, I'm confident in the ability of our talented and experienced leadership team and our 10,000 associates around the world to deliver on our priorities for fiscal year 2024. I'm honored to be leading the charge as we continue to Shape What Matters for Tomorrow.

Kim Ryan President and Chief Executive Officer