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0:03 Greetings, and welcome to the Hillenbrand’s Fiscal First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. 0:22 At this time, I will turn the conference over to Sam Mynsberge, Director of Investor Relations. Mr. Mynsberge. Thank you, you may begin.

0:28 Thank you, operator, and good morning, everyone. Welcome to Hillenbrand's Fiscal First Quarter 2022 Earnings Call. I'm joined by our President and CEO, Kim Ryan; and our Senior Vice President and CFO, Kristina Cerniglia. I'd like to direct your attention to the supplemental slides posted on our IR website that will be referenced on today's call. 0:49 Turning to Slide 3. A reminder that our comments may contain certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance, and our actual results could differ materially. Also, during the course of this call, we will be discussing certain non-GAAP operating performance measures, including pro forma comparisons for our segments. I encourage you to review the appendix in Slide 3 of the presentation as well as our 10-Q, which can be found on our website, for a deeper discussion of non-GAAP information, forward-looking statements and the risk factors that could impact our actual results. 0:49 With that, I'll now turn the call over to Kim. Kim?

1:29 Thank you, Sam. Good morning, everyone. Thank you for joining us today, and I hope you and your families are safe and well. I'd like to begin by acknowledging the continued dedication of our more than 10,000 employees in managing the business throughout this challenging and unpredictable environment. Throughout the pandemic, we remain committed to protecting the health and well-being of our employees in all of our locations around the world, and we appreciate their commitment to continue to serve and support our customers. 1:57 Demand for our industrial products and solutions remained healthy, as evidenced by another strong quarter of order intake and near record backlog, while Batesville was relentlessly focused on serving our customers and delivered results that were above our expectation coming into the quarter. Overall, we are well positioned heading into the remainder of the fiscal year. 2:18 The conditions under which we and most companies are operating have continued to face challenges. Since our last update in November, we have seen a significant spike in COVID-19 cases with the Omicron variant. Additionally, we have seen global supply challenges and labor market constraints in North America escalate throughout the quarter. And commodity inflation has not shown signs of abating. Despite these challenges, I'm proud of how our employees have responded in meeting the needs of our customers and delivering a solid start to our fiscal year. 2:51 As I enter my second month as CEO, I'd like to take a moment to reiterate with you some of my key priorities as we move forward. First, to maintain our momentum as we complete the third and final year of the Milacron integration. We continue to find opportunities and remain confident in achieving our target of $75 million in run rate synergies by the end of year 3. Second, to drive continued growth for Hillenbrand through innovation, new product development and strategic acquisitions that position us for continued success in our key end markets. 3:24 Next, to ensure our company culture, values and working norms are aligned to the needs of the evolving global workforce and that we are well positioned to retain, develop and attract the best talent. And finally, I'm confident in our strategy and will continue to focus on areas where it will evolve to meet the needs of the future. 3:46 As you know, our strategy is comprised of four pillars. The first strategic pillar is to strengthen and build business platforms, both organically and through M&A. We started fiscal '22 with a now streamlined portfolio and a clear line of sight to the areas we want to focus on for continued growth with our industrial platform. 4:07 Demand for our products is supported by several key macro trends that we believe will position us well for the future. First, an expanding global middle class increases the demand for durable plastics which can be created or shaped using our system. Durable plastics are a key enabler of quality and efficiency across many end markets and the applications, including lightweighting in automobiles for improved fuel efficiency, more effective and safer packaging for better food preservation, more durable and energy-efficient construction materials and improved medical product safety and therapy delivery. 4:45 Additionally, we believe the desire for more sustainable solutions will create significant opportunity for Hillenbrand as customer and consumer demands indicate an increased desire for recycled or bio-based materials. We are making investments in product innovation and test labs and forming strategic partnerships to meet these demands. Our equipment is also well suited for the production of plant-based protein such as texturized vegetable proteins and high-moisture meat analogs, which offer eco-friendly alternatives to animal proteins. 5:21 Lastly, we see opportunity for our equipment to play a critical role in improved battery production for electric vehicles as consumers and companies look for alternatives to fossil fuels. To that end, we were recently awarded and ordered to partner on the first continuous production gigafactory in Europe. As customer needs in these markets continue to evolve towards higher output and more technically demanding applications, we are well positioned to meet these needs due to three key factors: our leading product offerings, our applications engineering expertise and our global service network. 5:57 In addition to expanding our own technologies and offerings in these areas, we continue to evaluate targets within our M&A pipeline where we see the opportunity to accelerate our growth and create long-term value for our shareholders. We are excited about the opportunities in front of us and believe they will drive continued growth for Hillenbrand well into the future. 6:18 Our next strategic pillar is to manage Batesville for cash. As we continue to grow our industrial product platforms, Batesville is becoming a smaller part of the portfolio, now comprising only about 20% of company revenues. Batesville continues to be a well-run business that generates stable and predictable cash flows to support our profitable growth strategy. 6:41 Our third strategic pillar is to build a scalable foundation for growth using the Hillenbrand operating model. The integration of Milacron has been a great success, not only in the synergies we've realized to date but also in improving the way we run the business through the deployment of the Hillenbrand operating model. The foundation established through this integration is a critical success factor in helping us navigate this difficult operating environment, and we believe it will accelerate our ability to create value from future acquisitions. As we continue to utilize the tools and expand the capabilities of the HOM, we expect to drive further efficiencies throughout the enterprise while also enhancing our tools to support future growth, specifically, around innovation, digitization and commercial excellence. 7:29 Our fourth and final pillar is to effectively deploy strong free cash flow. Hillenbrand has a proven track record of generating cash and deploying that cash in a disciplined manner to deliver long-term shareholder value. We are confident in our ability to continue to generate robust free cash flow, maintain a strong balance sheet and grow our industrial platforms through organic investments and strategic acquisitions, while also returning capital to our shareholders. In December, we announced a new $300 million share repurchase program, extending our commitment to deploy cash in a manner we believe will create long-term value for our shareholders. 8:08 Before I turn the call over to Kristina to cover our financial results, I want to provide an update on our sustainability journey as well as a recent addition to our executive leadership team. In our most recent sustainability report, we acknowledged the critical importance of understanding our impact on climate change, as this is a key area of focus for us and for our stakeholders. As mentioned in the report, we engaged a consultant to help accelerate our data collection and reporting efforts around energy and emissions. This work has been going very well, and we plan to disclose Scope 1 and Scope 2 emissions as well as energy usage for our major sites in our next sustainability report, which we expect to publish in the second half of our fiscal year. I look forward to continuing to share our progress with you as we move forward. 8:57 Finally, last month, we welcomed Aneesha Arora as our Chief Human Resources Officer. Aneesha brings nearly two decades of experience to Hillenbrand after serving in many different HR leadership roles at Honeywell International. As we face a challenging and competitive labor market with evolving workforce dynamics, I am thrilled to have Aneesha onboard to drive our HR strategy, including our ongoing commitment to retain, develop and attract the best talent around the world. 9:26 With that, I'll now turn the call over to Kristina to provide details on our overall financial performance, segment performance and outlook.

9:36 Thanks, Kim. And good morning, everyone. Throughout my section, I will be discussing our performance on a pro forma basis, which has been adjusted for the divestitures of Red Valve, ABEL and TerraSource Global. We believe this provides a better assessment of our ongoing operations. And you will find a reconciliation of reported and pro forma results in the appendix of the earnings slide deck. 9:59 During the fiscal first quarter, we delivered pro forma revenue of $726 million, an increase of 9%, or 10% excluding the impact of foreign currency. This growth was led by a strong performance within our Advanced Process Solutions segment and improved pricing across all three operating segments. As Kim mentioned earlier, the global supply chain and labor market challenges escalated throughout the quarter, resulting in higher transportation costs, supply chain challenges across both raw materials and components and increased labor-related costs, including overtime and outsourcing. We continue to see elevated inflation across our supply chain, resulting in price-cost coverage of approximately 65% for the quarter, which was in line with our expectations. 10:54 In response to the continued inflationary headwinds, we have taken additional pricing actions and expect our price-cost coverage to improve to approximately 100% as we move through the rest of the fiscal year. We reported GAAP net income of $49 million, or $0.67 per share, a decrease from $1.01 per share in the prior year, primarily due to a gain on the sale of Red Valve last year. 11:22 Adjusted earnings per share of $0.94 came in at the high end of our expectations, but was down $0.02 or 2% compared to the prior year as inflation, unfavorable mix and an increase in strategic investments more than offset higher volume, favorable pricing and productivity improvements, including synergies. 11:47 Pro forma adjusted EBITDA of $130 million decreased 4%, while adjusted EBITDA margin of 17.9% decreased 250 basis points, primarily due to inflation and unfavorable mix. We had cash flow from operations of $45 million in the quarter, which was better than our original expectations, primarily due to continued strong working capital performance in APS and Batesville. Compared to the prior year, cash flow was lower, primarily due to an increase in cash paid for taxes. 12:25 Capital expenditures were approximately $10 million, which was lower than expected due to continued delays from our suppliers which we anticipate will persist through the year. We continue to focus on high-return investments for our business, particularly in the areas of growth and innovation as well as automation to improve overall efficiency. 12:47 Finally, total backlog, $1.72 billion, increased 30% compared to the prior year and 3% sequentially, driven by a healthy industrial demand environment and solid orders in both APS and MTS. We are pleased with the strength of our backlog and the foundation it provides as we move forward with approximately 23% of the backlog scheduled for beyond the next 12 months. 13:18 Moving to segment performance. Pro forma APS revenue of $315 million increased 19%, or 22% excluding the impact of foreign currency, driven by higher volume of large plastics projects, favorable pricing and higher aftermarket parts and service revenue. We saw a modest impact on our ability to deliver certain aftermarket parts due to supply chain delays and shortages. In response, we've established a cross-functional task force and brought in additional temporary resources to improve capacity and work with our suppliers to optimize delivery schedules to help minimize the impact over the full year. Despite the challenges to aftermarket revenue, we were pleased to see another strong performance in aftermarket orders in the quarter with double-digit year-over-year and sequential growth. 14:14 Pro forma adjusted EBITDA of $55 million increased 18%, while adjusted EBITDA margin of 17.4% decreased 10 basis points from the prior year as operating leverage from higher volume, favorable pricing and productivity improvements were offset by inflation, unfavorable mix due to a higher proportion of large plastics projects and strategic investments. 14:39 Margin in the quarter was lower than we initially expected, primarily due to the lower mix of aftermarket revenue as well as some isolated operational inefficiencies resulting from recent restructuring actions we've taken. We have dedicated resources focused on addressing these inefficiencies and expect this to be largely mitigated in our fiscal second quarter. Order backlog of $1.3 billion increased 27% year-over-year, or 36% excluding the impact of foreign currency, primarily driven by an increase in orders for large polyolefin systems. Backlog was flat sequentially and continues to provide a strong foundation for the remainder of fiscal '22 and beyond. 15:30 The pipeline for large plastics projects remains healthy. And we continue to be encouraged by the opportunities we see across the strategic end markets of food, recycling, biopolymers and battery. While these markets are relatively small portions of our business today, we are confident that our efforts in developing innovative products and solutions and forging strategic partnerships will position us well for future growth in these areas. 16:00 Turning to Molding Technology Solutions. Revenue of $249 million increased 5% compared to the prior year, or 6% excluding the impact of foreign currency, with higher volume in both injection molding and hot runner equipment, particularly for applications related to automotive, construction and packaging. We saw a normalization in orders and revenue for medical applications, which was in line with our expectations due to the elevated COVID-related demand in the prior year. 16:36 Adjusted EBITDA of $52 million increased 7%, while adjusted EBITDA margin of 20.8% increased 40 basis points as favorable pricing and productivity improvements, including synergies, and operating leverage from higher volumes were partially offset by inflation. We continue to deploy the Hillenbrand operating model in the MTS segment, particularly within the injection molding product line where we expect to achieve sustained margin improvement over the coming years. 17:11 The labor market in North America continues to be a significant challenge and was exacerbated by the impacts of the Omicron variant over the past quarter. We continue to focus on our recruitment and retention efforts while also evaluating additional automation opportunities to improve efficiency. We had a strong quarter of order intake, particularly within the injection molding product line, resulting in order backlog of $406 million, up 39% compared to the prior year and 11% sequentially. 17:50 Turning to Batesville. As a reminder, we faced a difficult comp against the prior year where we saw volume and margin at their highest levels in nearly a decade. With that, Batesville performed above our expectations for both revenue and margin given the unfortunate COVID surge related to the Omicron variant. Revenue of $163 million decreased 1% compared to the prior year due to lower burial volume, primarily resulting from an estimated decrease in death associated with the COVID-19 pandemic and an estimated increased rate at which families opted for cremation, partially offset by improved average selling price. While we are closely monitoring the continued impacts of COVID-19, we continue to expect deaths to normalize as we progress through the second half of fiscal year '22. 18:46 Adjusted EBITDA of $41 million decreased 23%. And adjusted EBITDA margin of 24.9% declined 680 basis points compared to the prior year as inflation, higher transportation premiums and lower volume more than offset the impact of the price increase we took on October 1. In response to continued inflationary pressure in key commodities such as steel, wood and fuel, we implemented an additional price surcharge effective January 1 19:20 Since the surcharge is on a dollar-for-dollar basis, we will see a dilutive impact to margins. As we've discussed before, the Batesville team has been fully focused on meeting the elevated demand needs of their customers throughout the pandemic, and we are proud of what the team has accomplished. When demand normalizes, the business plans to reallocate resources to drive productivity projects. 19:46 Turning to the balance sheet. Net debt at the end of the first quarter was $766 million with a net debt-to-adjusted EBITDA ratio of 1.5x, which was essentially flat on a sequential basis. As of quarter end, we have liquidity of approximately $1.3 billion, including $447 million in cash on hand and the remainder available under our revolving credit facility. As of December 31, we had no borrowing on our revolver and no near-term debt maturities due. 20:23 Moving to capital deployment. We returned approximately $45 million to shareholders during the quarter through the previously announced repurchase of approximately 620,000 shares for $29 million and $16 million through quarterly dividend. Following those repurchases, we announced a new share repurchase authorization of $300 million, which replaced the remaining balance under the prior program and provides additional flexibility in how we deploy capital going forward. 20:55 As you know, we maintain a disciplined approach to capital allocation with a focus on maximizing long-term shareholder returns. Our top priority for capital continues to be strategic investments to drive profitable growth in our large product platforms in APS and MTS. Additionally, we continue to evaluate our M&A pipeline for strategic targets that we expect will accelerate our growth and provide a high return. We also continue to consider opportunistic share repurchases. 21:32 Now let me conclude my prepared remarks with an update on our full year and second quarter outlook. As a reminder, our guidance is on a pro forma basis which excludes the results of the divested Red Valve, ABEL and TerraSource Global businesses. As the basis for our outlook, we continue to expect supply chain disruptions, high transportation costs, labor market shortages and currency to remain a headwind through the end of our fiscal year. 22:01 Additionally, we expect commodity inflation to remain elevated through at least our fiscal third quarter. Given the higher-than-expected volume and price surcharge actions in Batesville, we are updating our full year outlook for fiscal '22. We now expect consolidated revenue in the range of $2.88 billion to $2.96 billion, a year-over-year increase of 3% to 6% compared to our previous guidance which anticipated growth of 1% to 4%. We are tightening our range for full year adjusted earnings per share to be $3.80 to $4 compared to our previous guidance of $3.70 to $4. 22:50 We expect our annual adjusted effective tax rate to now be 28% to 30% compared to our previous estimate of 27% to 29%. We expect Batesville revenue to be down 5% to 6% versus our previous expectation of down 11% to 13%. We are increasing our expectation for Batesville margin to be in the range of 20% to 21% compared to our previous guidance of 19% to 20%. Approximately half of the increase in our top line expectation for Batesville is attributed to the price surcharge, which is fully offset by inflation on a dollar-for-dollar basis. 23:35 We are maintaining our full year revenue and margin expectations for the APS and MTS segments but remain cautious given the continued uncertainty in the global supply chain. For our fiscal second quarter, we expect adjusted EPS in the range of $0.96 to $1.02. We expect COVID volume for Batesville to be lower than Q1, but overall revenue will be approximately flat due to the additional price surcharge. However, we expect margin will be down from Q1 due to the lower volume and the price surcharge being fully offset by inflation on a dollar-for-dollar basis. 24:19 We expect APS revenue to be in line with Q1 with moderately higher margin. And lastly, for MTS, we expect modest revenue growth compared to Q1 driven by a sequential increase in revenue for injection molding equipment, partially offset by a decline in hot runner sales due to normal seasonality from the Chinese New Year. 24:44 We expect MTS margin to be slightly lower compared to Q1 due to unfavorable product mix. Please review Slide 16 of the earnings presentation for additional guidance assumptions. 24:58 And now I'll turn the call back over to Kim.

25:02 Thanks, Kristina. Let me leave you with just a few final remarks before we take your questions. First, underlying industrial end market demand remains healthy, and our strong backlog continues to provide us visibility and confidence as we operate in this uncertain macro environment. Second, we continue to drive the Milacron integration towards achieving our 3-year run rate synergy target of $75 million. Third, despite the challenges we are facing, our teams continue to build upon our track record of execution which is enabled by the Hillenbrand operating model. Fourth, we are excited about the opportunities for growth in key strategic end markets that are supported by long-term macro, consumer and sustainability demands. 25:49 And finally, our strong balance sheet has us poised for continued growth, both organically and through M&A, and we are confident that we can continue to deliver meaningful long-term value to our shareholders. We will now open the line for your questions.

26:04 Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Now our first question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

26:37 Thank you and good morning, Kim. Good morning, Kristina. Let me start with APS, and you can chime in on MTS as well. Just talk about where you're seeing the demand strength, if there's any shifts in either geography or breadth of -- size of projects or end markets and specifically any incremental pickup in food, pharma, those types of areas. Thanks.

27:10 For the -- I'll start with the APS business. We continue to see strength in that business. And we continue to see that generally in the geographies that we've been speaking about over the last couple of quarters with that -- with a strong order pipeline in China that has continued to -- that has continued over the last several quarters, actually over the last about 1.5 years. We've also started to see some increasing interest in projects in the India region, and that has also always historically been a strong region for us. And although we saw some delays in decisions over the course of the last year as COVID moved into that region, we are starting to see those projects again -- the work beginning on those projects again, so we're continuing to see strength there. And even some increasing inquiries in the Middle East region, which again has historically been a strong region for us. 28:08 So we are optimistic about the continued outlook for -- especially in the regions of large projects. And once those large projects complete in the polyolefin area, then we continue to look for the opportunity to conduct downstream projects. In the processing of those polyolefin pellets, we continue to penetrate those markets to look for opportunities to be in the second step of processing and the engineering plastics area. So those are the regions where we're seeing that. 28:37 In the MTS business, we continue to see good, stable demand in our hot runner product lines in the regions where they continue to be strong, specifically in China and in the U.S., but we are also seeing some increased -- continued increase in our injection molding business. And remember those businesses operate primarily in North America and India, and both of those regions have been and our outlook is for those regions to continue to be strong as well. 29:11 And then relative to…

29:13 Great. Go ahead.

29:13 And then relative to some of the new markets that we've been operating in, specifically in the areas of food and recycling and battery, we have continued to see growing pipelines in those areas as well. And you note that we mentioned in our prepared remarks, the award of the latest gigafactory in Europe for continuous battery production, which is an important opportunity for us. And as the technology in battery production continues to evolve towards more stable battery production in terms of the way the batteries operate and also the materials that are used for that, it moves more and more towards the types of equipment that we put together in systems. So as the material becomes more viscous and requires more technical expertise to handle, that starts moving towards the capabilities that we offer into that market. We've also continued to see robust order pipeline in the areas of recycling and food as well.

30:26 Very helpful. Maybe just talk a little about, Kristina mentioned, the uptick in orders for aftermarket maintenance repair work. How significant is that? And, when might we see that in a more meaningful way in the margin profile? Or is it, still early days? Thanks.

30:49 No. I think we have seen -- over the last two quarters, we've seen an increase in orders, and that has been -- they are a bit of our bellwether. They are kind of the first ones to start detecting when there are challenges, for instance, COVID. Those are some of the first places we see it. They are also the places where we watch carefully to see recovery. So we have started seeing recovery in those order pipelines. We certainly experienced in the first quarter, and we mentioned this in the prepared remarks, that we saw some supply chain challenges. And so you first see those supply chain challenges in that business as well, but we do have a significant amount of energy focused on task forces, managing our vendor supply chains, the number of resources that we have really working to mitigate those supply chain challenges. So I certainly expect that, as those abate over the course of the year, that you'll first start seeing that show up in the production of revenue related to the aftermarket orders that we already have in house. So hopefully, that gives you a little bit of color on that

32:02 It does. Maybe one more and then I'll jump back to queue, but Batesville, obviously it's seeing continued strength in end markets there. And you've got strong pricing. Two questions. One, are you seeing, we're two years into the pandemic, any meaningful changes in the trajectory of kind of longer term shift toward cremation? And number two, you mentioned the surcharges. Just refresh -- my apologies, but refresh us on when those went in and if those are permanent. You usually raise prices once a year, but I'm just trying to understand the dynamic there and whether you need to raise prices again between now and, let's say, next -- this coming October, November? Thanks.

32:50 Okay. So in terms of the surcharge, we put that surcharge in, in January. And that was in response to continued inflationary pressure that we saw specifically in some of the major commodities of steel, wood, fuel, energy, labor. So we put those surcharges in place. And that was following our normal annual price increase, which obviously is intended to stay. And that surcharge is intended to cover these exceptional costs for the duration of our experience in those things. So I would say that is not expected to stay as a permanent charge. Certainly, it's going to stay in place for the amount of time that we continue to see that pressure from an inflationary standpoint. 33:44 On the volume side on Batesville, I think you can also see that in different parts of the U.S., which is obviously primarily the Batesville business, that we are still in a fairly peak period and although -- we obviously monitor this on a very regular basis. Although, it is -- even as recently as last Friday, the numbers seem to be coming down a bit. We've been tricked into believing that they come down and then they spike back up. So the volume related to Omicron has been -- the volume related to Omicron specifically, from an interesting standpoint, has been the deaths have affected a population that is younger. And so we expect the tail on that in terms of where that shows up in our long-term volume trends. We expect that to take longer to show up, if that makes sense, Dan. So if the death trends were affecting younger people that might not have passed away this year or next year, then it takes a longer time for that to show up in the adjusted kind of long-term trends for volume. In terms of the cremation rate, early in the pandemic, we saw that cremation rate popped up, but then it popped down actually below a normal year-over-year increase and has remained very steady at normal levels. We have not seen that come in at an increased rate that has held. 35:19 Hopefully that gives you the color on kind of the volume and cremation impacts as well.

35:25 It does very helpful. I'll jump back in queue as any follow-ups. Thank you, Kim.

35:27 Thank you.

35:30 Our next question comes from line of Matt Summerville with D.A. Davidson. Please proceed with your questions.

35:36 Thanks. A couple questions. The restructuring inefficiencies you saw in APS in the quarter? Can you quantify what the magnitude of drag that was on margin, maybe a little bit more detail as to the nature of the issues and how that's getting resolved?

35:52 Well, I can certainly speak to the nature of it. I'll let Kristina specifically respond to the impact of that. The nature of that was relative towards a couple of activities, one of which we have mentioned in previous earnings calls which were the restructurings that we did in our major facility in Europe, specifically in Stuttgart, to restructure certain elements of -- to restructure and outsource certain elements of that operation. So while we have been working on the plan for that and working on that transition, just recently have we actually started executing the transition. So we expect to work through that quite quickly. That is just a -- I would say, just a onetime in terms of some of the experiences there. 36:42 We also made some restructuring activities in the U.S. in order to consolidate some of our operations for greater efficiency long term. And we're just working through the final stages of that transition and have seen some inefficiencies related to some of the turnover that, I think, most businesses are experiencing right now in a very tight labor market. But we expect to have these resolved as we work through the second quarter and certainly as we go into the back half of the year.

37:11 And then -- Matt, as it relates to the quantification, think roughly 50 to 60 bps on the segment margin. But as Kim mentioned, we're really focused on resolving some of these issues. And we expect that not to linger that much into the second quarter.

37:38 Thank you. Our next question is from the line of John Franzeb with Sidoti. Please proceed with your questions.

37:45 Good morning, Kim, Kristina, nice quarter. Just on the price-cost recovery going from 65% to 100%. Is that entirely embedded and what you're doing it the surcharge in Batesville, or there was another lever involved in that process?

38:02 Yes. So I think a couple of things. So as we think about the 100%, that's as we exit the year for Batesville. And so I think in our materials you'll see that we're roughly 40% price-cost coverage in Batesville today. And so the continued inflation, the surcharge, as we exit the year, we'll be at that 100% price-cost coverage for Batesville. When we think about the entire enterprise or in the industrial side of the business, obviously price-cost coverage is significantly higher there. We've talked about APS, where it's essentially fully covered. And we should -- exiting the second quarter, we should be close to that 100% cost -- price-cost coverage in MTS.

38:57 Got it. And Kim, you talked about the aftermarket revenue problem that you had in the first quarter. Was that revenue lost or was it deferred? And so what kind of magnitude are we talking about here?

39:11 Yes, it's definitely deferred. And so that is just, as we continue to see those supply chain challenges, it will -- that will elongate lead times on those products, but we expect that, that will recover. And remember that's one of the shorter cycle businesses for us, generally speaking. And so we would expect that as those abate, we'll be able to recover that more quickly.

39:34 Got it. Thanks. And just lastly, can you bring us up to speed on the 75 million in synergies. Where are we in a process? And what are the significant programs that are left to execute on?

39:50 Yeah, so we have as you know, we've made really good progress, I would say we probably have roughly $10 million left to hit that $75 million target. All of those projects for the most part are in plan for an inflight. So we are very, very confident in the $75 million today.

40:16 And John in the end of the areas that’s, that is continues to be manufacturing supply chain are the biggest levers within that $10 million.

40:25 Left, yeah.

40:26 Yeah, left.

40:29 Got it. And just one last question if I may, as far as M&A is concerned, can you talk about the opportunity pipeline you're seeing in the M&A market? Is it robust or is it [Indiscernible] pricey? How do you feel about it right now?

40:42 I would say both. I would say it is robust and pricey. So yes, we will -- we are continuing to be very active in looking at potential opportunities there. Obviously, with the great performance that has been had over the last 1.5 years in terms of paying down debt and being able to move our synergy timing ahead so that we could be in a good position to be looking again at opportunities to deploy capital for incremental shareholder value creation, we will continue, as we have said, to look at opportunities to increase in base business, bolt-ons that help improve technology offerings and system offerings that we offer in our base business but also targeted in some of these very attractive long-term growth end markets like recycling, like food. Specifically, those are some areas that we will be paying particular attention to from an M&A standpoint on kind of bolt-on areas to -- to areas we operate in today, but where we want to grow at a faster rate.

41:50 Great, thanks for taking my questions. Another good quarter.

41:54 Thank you.

41:55 Thanks.

41:58 Thank you. The next question is from the line of Chris Howell with Barrington Research. Please proceed with your questions?

42:04 Good morning, Kim and Kristina.

42:06 Good morning, Chris.

42:09 Good morning. You mentioned the labor environment that we're in, in the labor constraints. Can you put labor into context as far as challenges and also in the context of what type of hiring goals you have? As demand comes online, whether that's in your industrial business or even in Batesville?

42:35 Yes. I would say that the labor challenges that we have faced, they are certainly global in nature, although the North America labor challenges are the greatest that we are facing. In terms of the market, we continue to be -- to remain focused on recruitment and retention. Our -- I have to thank again our employees, who have really worked tirelessly in the face of some labor shortages, in terms of overtime and the dedication that they have put into helping us respond to the demands that we've had from our customers. But we do continue to be facing challenges in terms of recruitment and -- into all of our manufacturing facilities in the U.S. 43:26 The new CHRO, who comes in from Honeywell, I think, is going to bring a number of great ideas and experiences into our practices in terms of how we create that continuous recruitment funnel. And I think that she is already helping to make a mark in our North America locations, both with our partners who help us to recruit for these positions as well as our own teams who are working on that recruitment as well. We do continue to leverage outsourcing as a way to help build out our capabilities while we're trying to address the incoming demand that we've had. And we're also focused on investments from a capital standpoint and using our operating model to continue to drive efficiency and best use of the resources that we have on hand so that we can really optimize the output that we're able to create from the teams that are working with us today.

44:25 Okay, that's helpful. And then following up on that question about the M&A environment. You mentioned it's pricey. It's been pricey for some time. If we take a macro snapshot of where we are now and, let's say, where we could be, do you feel that Hillenbrand will be in a better position, perhaps, than some of your peers that are also competing for some of these opportunities? Or -- what's your take on that, as far as how this M&A environment evolves?

45:04 Honestly, I think that some of the things that put us in a good position are obviously our position relative to our strong balance sheet and our capability to really look at good opportunities. I think the other thing that really is going to help create opportunities for us is, the amount of work that has gone on with the Milacron integration has really helped to hone our capability to see opportunity to really create value in an acquisition and to understand exactly what we can pay for an acquisition while still creating great returns for shareholders. And that has continued to build muscle for us. The infrastructure that's been put into place in the last two years with global supply management, centralized manufacturing function, centralized finance, centralized HR, all of those things help us to be an efficient buyer. And that opens up -- transactions that we may not have been able to conduct several years ago, that now come on our radar screen as things that we think that we can effectively engage in and that can be really great additions to our portfolio.

46:21 Okay. And then my last question, surrounding the MTS segment. You mentioned good growth in hot runner and also injection molding equipment. As we look to your guidance for the fiscal year, has anything changed as far as the mix? Anything changed for your expectations for each of the buckets? And how do you anticipate the second half shaking out for hot runner and injection molding?

46:50 Yes. So Chris, this is Kristina. I would say nothing's changed from our guidance. So really we expect the same type of mix that we had anticipated last quarter. And typically in that business, the back half of the year is going to be stronger than the first half of the year, so we are expecting that same cycle of seasonality in that segment.

47:19 Okay, thank you.

47:23 All right, thanks, Chris.

47:24 [Operator Instructions] The next question is from the line of Matt Summerville with D.A. Davidson. Please proceed with your question.

47:34 Yes. Nice. I got a couple more questions. With respect to the large plastics business, Kim, and this effort on China to capacitize internally to meet their own demand, when do you see that cycle ending? And how big of a driver has that been for Coperion? And at the same time, I guess, how do these other more forward-looking opportunities rank in magnitude versus what you've been seeing in China in these last couple of years?

48:07 Well, I think important to think about the life cycle of these types of projects over the long term. So what you normally see is that these projects kind of move around the world and these investments move around the world. And that is why Coperion's global footprint has been so incredibly valuable to them, because they can follow them. So five years ago, all of the investments almost exclusively were in North America. And we were prepared and we were able to address those projects with a North America-based team that was able to deliver them. As that volume started to shift towards China's initiative to be more self-sufficient in their plastics production, we have an on-the-ground team who, even during the pandemic, has been able to sell, service, solution these contracts in Asia. 48:59 We may have originally thought that we would be kind of at the end of that. It's been a couple of years of investment, but the pipeline that we see there continues to be strong, both for the main polyolefin but also for the engineering plastics systems downstream which are the next step in that process. So we continue to have strong volumes in China, at least for the long window of projects that we can still see. We are also, though, seeing an emerging market in India, which will also have large-scale investments to increase India production. And those were projects that we expected to start maybe a year or 1.5 years ago that were delayed due to COVID and are now -- those are now very active in terms of the decision-making process there. So we expect that we are positioned well for the pipeline that we can see. And remember that we can see these pipelines quite far into the future because the parts of the system that we put in are actually smaller parts of very, very large mega investments that are literally years in the making. And so we can see those things as they're developing.

50:16 And then you mentioned thinking those helpful. You mentioned that you hadn't been able to ship as much aftermarket parts, as you would ideally like to in APS. I'd be curious as to how the backlog just in that piece of the business looks relative to historical norms?

50:38 Yes. So the backlog has been increasing and continues to increase for aftermarket for APS. So I would say we started to see really strong orders probably two, three quarters ago, even maybe four quarters ago but -- as an example, this quarter, another very strong quarter of orders for aftermarket. So the backlog for aftermarket has been increasing and continues to increase.

51:15 Any idea with the book-to-bill and that business looks like?

51:20 Yeah, the book-to-bill, specifically for aftermarket? You know, I don't have aftermarket at the tip of my fingers. But I can tell the book-to-bill on APS itself, roughly, it's over $100. So about $120 or so.

51:43 Got it. Thank you guys.

51:48 Thank you. The next question is from the line of Daniel Moore with CJS securities. Please proceed with your questions.

51:55 Yes. Thanks again. Just on capital allocation. Obviously, you alluded to the $300 million share buyback authorization in lieu of M&A opportunities coming up any color on how aggressive you'd intend to be with that, at around current levels?

52:13 Yes. So listen. We have the authorization. We are balancing, so we're following our framework, so our 1.7 to 2.7. If we're below 1.7, we will repurchase shares. Ideally, we're looking at the share repurchases. We're balancing our need for investment within the business as well as that M&A pipeline. So if you look at our net debt-to-EBITDA, right now we're at 1.5. So I would say that we're monitoring the situation closely, but we're also trying to balance our allocation.

53:02 Got it. And lastly, you mentioned several times along the way and in the prepared remarks and press release, strategic investments increasing. Maybe just remind us what some of those investments and/or projects look like in terms of new products, upgrades, et cetera. Thanks.

53:23 Right. So Dan, you're exactly right. Our first priority is to reinvest in the business. We'll continue to drive innovation and new product development in those businesses, followed by capital investments, followed by initiative investments on things like organically growing some of these key end markets that we've talked to you about. You never know if you're going to find that perfect M&A target, so we don't wait for that. We continue to invest to grow organically in some of those markets. And so those are some of the key investments that we're making. Specifically, around our food initiative, we have FTEs plus equipment. We're investing in our recycling initiative and lab and test space for that. In certain parts of our business, we're investing in e-commerce capabilities, NPD. So those are the areas that we invest. And again, first priority is reinvesting in the business we have; second priority, investing in potential M&A targets.

54:32 Very helpful. Appreciate the color again.

54:35 Great. Thank you.

54:38 Thank you. At this time, we have reached the end of the question-and-answer session. And I'll now turn the call over to Kim Ryan for closing remarks.

54:44 Okay, great. Thanks again for joining us on the call today. We appreciate your ownership and your interest in Hillenbrand. We look forward to talking to you again in May when we report our fiscal second quarter results. And I hope you all have a great rest of your day and a safe, happy and healthy week. And let's go Bengals. Thank you