Portfolio Restructuring and Debt Reduction Achievements
Hillenbrand completed the divestiture of MIME, generating approximately $265 million in net proceeds, which was a key part of their portfolio simplification strategy.
The company also sold its minority interest in TerraSource, raising about $115 million, further strengthening its balance sheet.
Proceeds from these transactions were used to reduce total debt by over $300 million during fiscal 2025, significantly improving financial stability.
Management emphasized that these moves are part of a broader effort to focus on higher-margin, higher-growth businesses in Performance Materials and Food, Health and Nutrition markets.
The company highlighted that these strategic divestitures have contributed to a lower net leverage ratio, moving from 3.9x to approximately 3.7x after the TerraSource sale.
Adjusted EBITDA rose 5% to $125.8 million with a flat margin of 5.9%.
Free cash flow was $150 million, up $86 million year over year and $135 million sequentially from Q2.
Margins pressured in BNI and M&D due to strategic pricing and escalation timing decisions, with BNI margin at 7.1% and M&D margin at 8.9%.
Net income increased to $41.8 million or $0.67 per diluted share, compared to $4.7 million or $0.07 last year, influenced by absence of prior year adjustments.
Revenue grew 6.2% year over year to $2.2 billion, driven by 5% organic growth and 1.2% from acquisitions.
Segment revenues: BNI up 3% to over $1 billion, Aviation up 9% to $291.8 million, M&D up 8% to $408.9 million, Education up 3% to $235.1 million, Technical Solutions up 19% to $249.5 million.
Share repurchases totaled 1.5 million shares year to date for $71.3 million, with a recent board authorization increase of $150 million.
Total indebtedness stood at $1.6 billion with a debt to adjusted EBITDA ratio of 2.8x and liquidity of $691 million.
Portfolio Transformation and Divestment of Containerboard Business
Greif is in the process of divesting its containerboard business, with the transaction expected to close at the end of September 2025.
The company plans to generate approximately $1.75 billion in cash proceeds from divestments, which will reduce leverage below 1.2x.
These divestitures are part of a strategic portfolio sharpening to focus on markets with higher growth and margin potential.
The containerboard divestment's contribution to EBITDA for the last 11 months is estimated at $122 million, indicating its significance in the company's financials.
Management emphasized that the divestments are aimed at enhancing capital efficiency and shareholder returns.
Adjusted diluted EPS rose 13% to $0.87 from $0.77 in the prior year, reflecting higher net income and share repurchases.
Adjusted EBITDA increased 4% to $266 million, but adjusted EBITDA margin declined 40 basis points to 12.7% due to higher SG&A as a percentage of sales.
Gross margin improved to 26.8%, up 10 basis points sequentially and 40 basis points year over year, driven by private label and sourcing initiatives.
Net debt stood at $2.3 billion with a leverage ratio of 2.4x, and total liquidity was $1.1 billion.
Net sales grew nearly 7% to $2.1 billion in Q2 2025, with approximately 5% organic growth and the remainder from acquisitions.
Operating cash flow was $34 million, down from $48 million last year, mainly due to higher working capital investment.
SG&A expenses increased 13% to $302 million, impacted by acquisitions, inflation, and one-time costs.
Dafinchi