2019 was a milestone year for Hillenbrand. We delivered strong financial results, including record revenue and adjusted earnings per share. In addition, we took a major step forward in our transformational journey to become a world-class, global diversified industrial company with the addition of Milacron, the largest acquisition in our history. This transaction significantly increases the size of our company and expands our presence across the plastics value chain. It enhances our ability to innovate and capitalize on emerging trends across the industry as well as provides new platforms where we can leverage the Hillenbrand Operating Model as we pursue profitable growth.
Our transformation is not complete, but we have made significant progress. We remain focused on making Hillenbrand truly world class.
Strong Financial Performance
In fiscal year 2019, Hillenbrand produced revenue of $1.8 billion, driven by 5% growth in the Process Equipment Group. Adjusted earnings per share was $2.45, a 1% increase over 2018. We generated $179 million of operating cash flow and delivered working capital turns of 9x for the year with focused execution on our initiatives. Our free cash conversion rate was 122% of net income, and we returned $53 million to our shareholders in the form of cash dividends.
Hillenbrand’s growth was primarily driven by robust demand for Coperion’s large extrusion and material handling systems for the production of polyolefins. We continued to see investment in polyolefin capacity expansion, particularly in North America and Asia, and believe our deep applications expertise and comprehensive end-to-end solutions have helped us win some of the largest, most challenging projects in the world. We finished the fiscal year well positioned for the year ahead, with a solid project pipeline and $864 million in order backlog, the highest level ever at the start of a new year. The Process Equipment Group’s aftermarket parts and services revenue grew again this past year, a trend we expect will continue with our growing installed base of systems.
The Batesville business did not see the higher level of demand associated with the flu season that it had in prior years, but a stronger second half of the year resulted in overall performance that was consistent with our expectations. Revenue was down 3% for the year, but our focus on driving efficiency through the Hillenbrand Operating Model combined with targeted restructuring actions helped produce solid margin performance. Importantly, Batesville continued to provide strong, predictable cash flow to fuel our strategy.
Building Platforms for Growth
Those of you familiar with Hillenbrand know that we have been on a journey. Over the past decade, we have transformed the business by capitalizing on Batesville’s strong cash flow and investing in industrial businesses that we believe we can grow and make better with the Hillenbrand Operating Model. Our strategy is to invest both organically and through strategic acquisitions, to strengthen and build business platforms with scale, both economically and in the marketplace.
Historically, we have enjoyed the benefits of scale with Batesville and Coperion. Now we also count Milacron Injection Molding & Extrusion and Mold-Masters among our platforms. These businesses strengthen our portfolio with increased global scale, expanded product lines, and enhanced capabilities across the entire plastics value chain – from base resin production all the way through recycling. We see opportunities to generate long term growth as we explore innovative ways to combine our products, technologies, and global footprint to help our customers improve their businesses.
We have a favorable outlook for plastics and expect continued growth over the long term, particularly in industries that are increasingly recognizing the benefits of durable plastics. These include automotive, as lightweighting becomes more critical with demand for more fuel-efficient and electric vehicles; consumer goods and construction, where plastics improve durability and require less maintenance; and medical products with an increased focus on safety, improved drug and therapy delivery, and durability. We believe that these markets will be important growth drivers for our combined businesses.
As innovative new product development happens in areas like biodegradable plastics and recycling, we think we will be in a great position to capitalize on emerging opportunities. Coperion and Milacron produce equipment that is well suited for these high-growth areas that can also make a positive difference in the world. Our combined product portfolio can process virgin plastics as well as recycled materials, and we think this gives us an important advantage as the demand grows for higher-capacity, more efficient systems.
We believe that our industrial platforms represent our most compelling opportunities to generate profitable growth, and these businesses will be our highest priority for allocating investments. As we recently announced, we are considering strategic alternatives for the Cimcool business. It is a smaller business with a different offering and customer set compared to the other legacy Milacron businesses we acquired. We will continue to strategically evaluate our portfolio and focus on opportunities to maximize potential returns for shareholders.
Ensuring flawless execution of the Milacron integration is a top priority. We have our best people leading the integration process and have also partnered with a leading consulting firm to provide structure and oversight. The team was well prepared and ready to go when the transaction closed, and they have made significant progress right out of the gate.
We are targeting $50 million in run-rate cost synergies by the end of year three as we get the benefits of scale related to redundant public company costs, procurement, and other operational efficiencies. We are confident in achieving these savings, and we expect to generate a run rate of $20-$25 million by the end of the first year post-close, driven by actions we are already executing. Over the medium to longer term, we see additional opportunity for revenue synergies through cross-selling and shared innovation.
Our people are ready for the challenge. I have added the presidents of the Mold-Masters and Milacron Injection Molding & Extrusion businesses to my leadership team. Additionally, we are embedding resources throughout the businesses with deep understanding of how to deploy the Hillenbrand Operating Model for maximum impact to accelerate operational improvements. We have combined the best talent from both the legacy Hillenbrand and Milacron businesses, and I have great confidence in the team that is in place. We will maintain a sense of urgency to drive the integration forward in pursuit of cost synergies and overall business results.
The Hillenbrand Operating Model is a competitive advantage firmly embedded in our culture and a key enabler of our strategy. It is a consistent and repeatable framework that is designed to produce sustainable and predictable results. The operating model describes our mission, vision, values, and leader’s mindset; leverages our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus, and Grow) to make our businesses both bigger and better. Our goal is to continue developing Hillenbrand as a world-class, global diversified industrial company by leveraging the Hillenbrand Operating Model.
Hillenbrand’s capital deployment priorities are to invest in our business for profitable growth. That includes reinvesting in our current businesses to drive innovation and market expansion, as well as making strategic acquisitions, while continuing to return capital to shareholders in the form of dividends and share repurchases. Our long-term capital deployment strategy has not changed with the Milacron acquisition; however, given our higher than normal leverage level, we are temporarily shifting our primary focus to paying down debt. Therefore, we are curtailing share repurchases and further M&A activity to prioritize de-leveraging the balance sheet. We plan to maintain our dividend policy, and in fact, the Board recently approved a dividend increase for the 11th consecutive year.
"I have never been more excited about the future of Hillenbrand."
Looking Ahead to 2020
I have never been more excited about the future of Hillenbrand.
Our legacy Hillenbrand businesses performed well in fiscal year 2019, and we entered 2020 with a strong order backlog and a robust project pipeline in the Process Equipment Group. This, combined with the potential value that we think we can create with the addition of Milacron, fuels our optimism for the future.
We recognize there will be challenges on the road ahead. We enter 2020 with a backdrop of uncertainty in the geopolitical landscape where global trade and tariffs are ongoing concerns contributing to a slowing macroeconomic environment. These factors present challenges for some of our industrial businesses that can be more susceptible to cyclical changes, but we have taken targeted restructuring actions that we believe will help us to mitigate this impact and remain lean and flexible in the face of these headwinds. We think that we remain well positioned to not only weather any storms, but to grow and thrive over the long-term.
In addition to our pursuit of strong operating results, Hillenbrand strives to be a good corporate citizen. We recently signed the United Nations Global Compact, a voluntary pledge to develop and execute corporate responsibility programs and to increase disclosures of our sustainable business practices. In signing, we joined over 9,500 other companies to more closely align our business strategies to universally accepted principles in the areas of human rights, labor, environment and anticorruption. We remain committed to the UNGC principles as we look at the positive impact we can make to help build a more sustainable future. Not only do we see the benefits this can have for society, we believe it is good for business and can result in better financial performance.
In closing, I want to express my gratitude to our associates, customers, partners, board members, and shareholders for the integral part you have played in our shared success.
Joe. A. Raver
President, Chief Executive Officer, and Director