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Milacron Holdings Corp. Reports Third Quarter 2017 Results
CINCINNATI, Oct 26, 2017 (BUSINESS WIRE) -- Copyright Business Wire 2017

--2017 Third Quarter Overview

--Sales of $314.7 million increased 7.7% on an as-reported basis and 6.1% on a constant currency basis

--Orders of $322.3 million increased 13.4% on an as-reported basis and 11.3% on a constant currency basis

--Operating earnings (GAAP) increased 1.7% to $29.6 million; Adjusted EBITDA (non-GAAP) increased 5.5% to $57.3 million

--Diluted EPS (GAAP) increased 70.0% to $0.17; Diluted adjusted EPS (non-GAAP) increased 22.2% to $0.44

--Cash flow from operations of $8.8 million decreased $2.6 million, driving free cash flow of $(0.3) million, a $1.8 million decrease versus $1.5 million from the prior year

Milacron Holdings Corp. ("Milacron") (NYSE: MCRN), a leading industrial technology company serving the plastic processing industry, today announced financial results for the third quarter ended September 30, 2017.

"We are pleased with our third quarter sales performance of 6.1% constant currency growth as this reflects the continued strength in our global markets, particularly in Asia and Europe," said Milacron Chief Executive Officer, Tom Goeke. "This was an outstanding topline growth quarter as our consumables businesses grew double digits led by our hot runner business at over 15% and Fluids at 6%. Our APPT aftermarket business also performed well in the quarter and we remain confident that our performance and investment efforts here will position us to build momentum through the fourth quarter and into 2018."

Milacron Chief Financial Officer, Bruce Chalmers, added, "With regard to guidance, we are raising our full year organic sales guide to 3.0% to 3.5%, with Adjusted EBITDA between $222 to $224 million."

2017 Revised Outlook

Milacron forecasts 3.0% to 3.5% organic sales growth in 2017, which is in line with current market conditions. Adjusted EBITDA is forecasted to be between $222 million and $224 million. Free Cash Flow before restructuring is forecasted to be between $80 million and $90 million.

Third Quarter Results

For the third quarter of 2017, sales of $314.7 million increased 7.7% from sales of $292.2 million in the same period a year ago. Excluding the favorable effects of currency movements, organic sales for the third quarter of 2017 increased 6.1% versus the prior year period. Operating earnings for the third quarter of 2017 increased 1.7% to $29.6 million compared to operating earnings of $29.1 million in the prior year period. Operating earnings for the third quarter of 2017 were negatively impacted by $3.2 million of incremental restructuring costs when compared to the prior year period. Adjusted EBITDA for the third quarter of 2017 increased 5.5% to $57.3 million, or 18.2% of sales, compared to Adjusted EBITDA of $54.3 million, or 18.6% of sales, in the prior year period. Net earnings totaled $12.3 million, or $0.18 per basic share and $0.17 per diluted share, in the third quarter of 2017 compared to net earnings of $6.7 million, or $0.10 per basic and diluted share, in the prior year period. Adjusted Net Income totaled $31.0 million, or $0.44 per diluted share, in the third quarter of 2017 compared to Adjusted Net Income of $25.1 million, or $0.36 per diluted share, in the prior year period.

Year-to-Date Results

For the first nine months of 2017, sales of $909.3 million increased 3.6% from sales of $877.6 million in the same period a year ago. Excluding the unfavorable effects of currency movements, organic sales for the first nine months of 2017 increased 3.9% versus the prior year period. Operating earnings for the first nine months of 2017 decreased 19.5% to $77.9 million compared to operating earnings of $96.8 million in the prior year period. Operating earnings for the first nine months of 2017 were negatively impacted by $12.3 million of incremental restructuring costs when compared to the prior year period. Adjusted EBITDA for the first nine months of 2017 increased 4.8% to $166.9 million, or 18.4% of sales, compared to Adjusted EBITDA of $159.2 million, or 18.1% of sales, in the prior year period. Net loss totaled $2.2 million, or $0.03 per basic and diluted share, in the first nine months of 2017 compared to net earnings of $29.4 million, or $0.44 per basic share and $0.42 per diluted share, in the prior year period. Adjusted Net Income totaled $86.2 million, or $1.22 per diluted share, in the first nine months of 2017 compared to Adjusted Net Income of $72.9 million, or $1.04 per diluted share, in the prior year period.

Segment Results

Advanced Plastic Processing Technologies (APPT)

Sales for the third quarter of 2017 were $175.9 million compared to $168.7 million in the same period a year ago. Excluding $2.6 million of favorable effects of currency movements, sales increased 2.7% over the prior year period. Operating earnings for the third quarter of 2017 decreased 29.5% to $7.9 million compared to operating earnings of $11.2 million in the prior year period, due to increased restructuring costs. Adjusted EBITDA in the third quarter of 2017 increased 7.4% to $23.1 million, or 13.1% of sales, from Adjusted EBITDA of $21.5 million, or 12.7% of sales, in the prior year period.

For the first nine months of 2017, sales were $498.8 million compared to $503.8 million in the same period a year ago. Excluding $1.9 million of favorable effects of currency movements, sales decreased 1.4% over the prior year period. Operating earnings for the first nine months of 2017 decreased 59.2% to $14.9 million compared to operating earnings of $36.5 million in the prior year period. Adjusted EBITDA for the first nine months of 2017 decreased 1.5% to $60.5 million, or 12.1% of sales, versus Adjusted EBITDA of $61.4 million, or 12.2% of sales, in the prior year period.

Melt Delivery & Control Systems (MDCS)

Sales for the third quarter of 2017 were $108.1 million compared to $95.4 million in the same period a year ago. Excluding $1.4 million of favorable effects of currency movements, sales increased 11.8% over the prior year period. Operating earnings for the third quarter of 2017 increased 31.2% to $26.9 million compared to operating earnings of $20.5 million in the prior year period. Adjusted EBITDA in the third quarter of 2017 increased 8.2% to $33.1 million, or 30.6% of sales, from Adjusted EBITDA of $30.6 million, or 32.1% of sales, in the prior year period.

For the first nine months of 2017, sales were $320.3 million compared to sales of $288.9 million in the same period a year ago. Excluding $3.7 million of unfavorable effects of currency movements, sales increased 12.1% over the prior year period. Operating earnings for the first nine months of 2017 increased 13.0% to $82.5 million compared to operating earnings of $73.0 million in the prior year period. Adjusted EBITDA for the first nine months of 2017 increased 12.1% to $106.0 million, or 33.1% of sales, from Adjusted EBITDA of $94.6 million, or 32.7% of sales, in the prior year period.

Fluid Technologies

Sales for the third quarter of 2017 were $30.7 million compared to $28.1 million in the same period a year ago. Excluding $0.8 million of favorable effects of currency movements, sales increased 6.4% over the prior year period. Operating earnings for the third quarter of 2017 increased 14.6% to $4.7 million compared to operating earnings of $4.1 million in the prior year period. Adjusted EBITDA in the third quarter of 2017 increased 13.6% to $6.7 million, or 21.8% of sales, from Adjusted EBITDA of $5.9 million, or 21.0% of sales, in the prior year period.

For the first nine months of 2017, sales were $90.2 million compared to sales of $84.9 million in the same period a year ago. Excluding $0.6 million of unfavorable effects of currency movements, sales increased 6.9% over the prior year period. Operating earnings for the first nine months of 2017 increased 12.1% to $14.8 million compared to operating earnings of $13.2 million in the prior year period. Adjusted EBITDA for the first nine months of 2017 increased 5.4% to $19.5 million, or 21.6% of sales, from Adjusted EBITDA of $18.5 million, or 21.8% of sales, in the prior year period.

Additional Financial Information

Milacron ended the third quarter of 2017 with cash and cash equivalents of $93.4 million and total debt, excluding unamortized discount and debt issuance costs, of $947.4 million, resulting in net debt of $854.0 million and a net total leverage ratio of 3.9x.

Conference Call

Milacron will host a conference call to discuss its third quarter 2017 financial results at 8 a.m. Eastern Time on October 26, 2017. The live webcast of the call can be accessed at the Milacron Investor Relations website at http://investors.milacron.com, along with the company's earnings press release and related presentation materials. The U.S. dial-in for the call is 1-877-407-8037 (1-201-689-8037 for non-U.S. callers). A replay of the conference call will be available until November 9, 2017 at 11:59 p.m. Eastern Time, while an archived version of the webcast will be available on the Milacron Investor Relations website for 90 days. The U.S. dial-in for the conference call replay is 1-877-660-6853 (1-201-612-7415). The replay access code is 13672225.

About Milacron

Milacron is a global leader in the manufacture, distribution and service of highly engineered and customized systems within the plastic technology and processing industry. Milacron is the only global company with a full-line product portfolio that includes hot runner systems, injection molding, blow molding, mold components and extrusion equipment plus a wide market range of advanced fluid technologies.

Forward-Looking Statements

This press release contains forward-looking statements. The words "believe," "expect," "anticipate," "plan," "intend," "should," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. Except as required by law, Milacron undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to demand for our products being significantly affected by general economic conditions, any decline in the use of plastic, the competitiveness of the industries in which we operate and the financial resources of our competitors, our ability to successfully develop and implement strategic initiatives to increase cost savings and improve operating margins and the other risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 28, 2017, and other SEC filings, copies of which are available free of charge on our website at investors.milacron.com.

Non-GAAP Financial Measures

We prepare our financial statements in conformity with United States generally accepted accounting principles ("U.S. GAAP"). To supplement this information, we also use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings Per Share and Free Cash Flow. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDA

Adjusted EBITDA represents net income before interest expense, taxes, depreciation and amortization, as further adjusted for the other items reflected in the reconciliation table set forth below. Adjusted EBITDA is a measure used by management to measure operating performance. Adjusted EBITDA is not a presentation made in accordance with U.S. GAAP, is not a measure of financial condition or profitability, and should not be considered as an alternative to net earnings (loss) determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP or any other performance measure derived in accordance with U.S. GAAP and should not be construed as an inference that our future results will be unaffected by unusual non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include certain cash requirements such as interest payments, tax payments, debt service requirements and certain other cash costs that may recur in the future.

We view Adjusted EBITDA as a key measure of our performance. We present Adjusted EBITDA not only due to its importance for purposes of our credit agreements but also because it assists us in comparing our performance across reporting periods on a consistent basis as it excludes items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA:

-- as a measurement used in evaluating our consolidated and segment-level operating performance on a consistent basis;

-- to calculate incentive compensation for our employees;

-- for planning purposes, including the preparation of our internal annual operating budget;

-- to evaluate the performance and effectiveness of our operational strategies; and

-- to assess compliance with various metrics associated with our debt agreements.

We believe that the inclusion of Adjusted EBITDA is useful to provide additional information to investors about certain material non-cash items as well as items considered to be one-time or non-recurring to the operations of the business. While we believe these financial measures are commonly used by investors to evaluate our performance and that of our competitors, because not all companies use identical calculations, this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP. Adjusted EBITDA is calculated as net earnings (loss) before income tax expense, interest expense, net, depreciation and amortization further adjusted to exclude other items as reflected in the reconciliation table below.

In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by usual or non-recurring items. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementary.

Adjusted Net Income

Adjusted Net Income measures our operating performance by adjusting net earnings (loss) to exclude amortization expense, non-cash currency effect on intercompany loans, organizational redesign costs, long-term equity awards, acquisition integration costs, professional services and certain other non-recurring items. Management uses this measure to evaluate our core operating results as it excludes certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business, but includes certain items such as depreciation, interest expense and interest tax expense, which are otherwise excluded from Adjusted EBITDA. We believe the presentation of Adjusted Net Income enhances our investors' overall understanding of the financial performance and cash flow of our business. You should not consider Adjusted Net Income as an alternative to net earnings (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance.

Adjusted Diluted Earnings Per Share

Adjusted Diluted Earnings Per Share is defined as Adjusted Net Income divided by diluted weighted average shares outstanding. We believe Adjusted Diluted Earnings Per Share is useful to investors because it measures our operating performance, on a per share basis, by adjusting net earnings (loss), on a per share basis, to exclude amortization expense, non-cash currency effect on intercompany loans, organizational redesign costs, long-term equity awards, acquisition integration costs, professional services and certain other non-recurring items. We believe the presentation of Adjusted Diluted Earnings Per Share enhances our investors' overall understanding of the financial performance and cash flow of our business. You should not consider Adjusted Diluted Earnings Per Share as an alternative to earnings per share, determined in accordance with U.S. GAAP, as an indicator of operating performance.

Free Cash Flow

Free Cash Flow is defined as cash provided by operating activities, plus proceeds from disposals of property and equipment, plus proceeds from sale-leaseback financing less cash used in additions to property and equipment. We believe Free Cash Flow is useful to investors because it measures the operating cash flow of the Company, excluding the capital that is spent to continue and improve business operations, such as investment in the Company's existing business. Further, Free Cash Flow provides an indication of the ongoing cash that is available for debt repayment, returning capital to shareholders and other opportunities. We also believe the presentation of this measure enhances investors' ability to analyze trends in the business and evaluate the Company's underlying performance relative to other companies in the industry. Limitations associated with the use of Free Cash Flow include that it does not represent the residual cash flow available for discretionary expenditures as it does not incorporate certain cash payments including payments made on the Company's indebtedness or cash payments for business acquisitions. You should not consider Free Cash Flow as an alternative to similar metrics, determined in accordance with U.S. GAAP, as an indicator of operating performance.

MCRN-IR

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