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From the Survey: Hillenbrand, Inc.
Hillenbrand, Inc. (HI) got its official start in 1906, when Batesville Coffin Company was purchased by John A. Hillenbrand and renamed Batesville Casket Company. The company continued to operate under the umbrella of Hillenbrand Industries until 2007, when the Hillenbrand Board of Directors approved a plan for the separation of Hill-Rom (a subsidiary that dealt with HealthCare services), and Batesville Casket into two separate, publically traded companies. The new company took on the name Hillenbrand, Inc. and started trading on the New York Stock Exchange. It is based in Batesville, Indiana.
The company operates two main subsidiaries: Batesville Caskets, and recently acquired K-Tron. Batesville Caskets is primarily focused on burials and cremations. Other products include containers, urns, display room fixtures, and additional personalization services. Batesville also has an Internet arm which is responsible for creating and hosting web sites for funeral homes.
Hillenbrand is unique in the industry because it has branched away from funeral services in its recent acquisitions. In addition to K-Tron, the company owns the Pennsylvania Crusher, Gundlach, and Jeffrey Rader brands. The three operate under K-Tron’s Size Reduction Group’s umbrella. Pennsylvania Crusher focuses mainly on the design and manufacture of crushing machinery and replacement parts. Gundlach, while in the same line of business, focuses more on potash, salt limes, and high value industrial minerals, areas in which precision is paramount. Finally, the Jeffery Rader company designs and manufactures handling equipment and systems to unload, convey, lift and handle materials for the pulp & paper, forest products, energy generation, petrochemical, resource recovery, cement, and recycling industries.
To date (after making small inroads into markets outside its established niche), Hillenbrand’s most important acquisition has been its purchase of K-Tron International. K-Tron (a New Jersey corporation founded in 1964) has enabled Hillenbrand to step further outside its traditional funeral services role. It focuses on designing, producing, and marketing material responsible for handling equipment and systems for various industrial areas. The subsidiary’s main markets include plastics, food, chemical, pharmaceutical, power generation, and coal mining.
K-Tron has two main business lines: The Process group which provides feeding and pneumatic conveying equipment, and the aforementioned Size Reduction group, which focuses on size reduction equipment, conveying systems, and screening equipment. Using K-Tron’s brands, the company has made headway into Switzerland and China, with plans to further expand into Europe and Asia on the way.
Despite its expansion and diversification into various markets, the company’s foremost business remains funeral service products, where it is a key player. Given the slow pace of the industry’s growth, as well as the highly fragmented nature of the industry, development via acquisition remains Hillenbrand’s most reliable expansion avenue. Though no new acquisitions have yet been announced (the integration of K-Tron being the company’s main focus this year), it is almost certain that the company will be pursuing some deals in the near future. This in turn will increase market share, and likely push the top and bottom lines up.
In addition to being a primary player in the Funeral Services Industry, Hillenbrand has a considerable dividend yield, well above the broader market average. Therefore income oriented investors are likely to be particularly interested in this stock. That said, given Hillenbrand’s recent moves outside the Funeral Services sector, and its continuing expansion and diversification policies, it is quite likely that it’s pace of top- and bottom-line growth could begin to accelerate, making it of some interest to growth investors, too.
At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.