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Milacron Holdings Corp. Reports Third Quarter 2019 Results

November 12, 2019

CINCINNATI--(BUSINESS WIRE)--Nov 12, 2019--

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, 2019.

 

Three Months Ended September 30,

In millions (except per share data)

2019

 

2018

 

Change

 

% Change
(Constant Currency)

New orders

$

220.2

 

 

$

256.1

 

 

(14.0

)%

 

(12.7

)%

Sales

$

250.3

 

 

$

282.8

 

 

(11.5

)%

 

(10.2

)%

Operating earnings

$

19.3

 

 

$

31.9

 

 

(39.5

)%

 

 

Adjusted EBITDA (1)

$

45.1

 

 

$

53.7

 

 

(16.0

)%

 

 

% of sales

18.0

%

 

19.0

%

 

-100 bps

 

 

Diluted EPS

$

0.06

 

 

$

0.19

 

 

(68.4

)%

 

 

Diluted adjusted EPS (1)

$

0.34

 

 

$

0.40

 

 

(15.0

)%

 

 

Cash flow from operations

$

11.0

 

 

$

38.0

 

 

$

(27.0

)

 

 

Free cash flow (1)

$

12.1

 

 

$

29.0

 

 

$

(16.9

)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

In millions (except per share data)

2019

 

2018

 

Change

 

% Change
(Constant Currency)

New orders

$

731.2

 

 

$

884.7

 

 

(17.4

)%

 

(15.1

)%

Sales

$

770.4

 

 

$

875.2

 

 

(12.0

)%

 

(9.6

)%

Operating earnings

$

69.0

 

 

$

90.8

 

 

(24.0

)%

 

 

Adjusted EBITDA (1)

$

135.2

 

 

$

167.9

 

 

(19.5

)%

 

 

% of sales

17.5

%

 

19.2

%

 

-170 bps

 

 

Diluted EPS

$

0.26

 

 

$

0.50

 

 

(48.0

)%

 

 

Diluted adjusted EPS (1)

$

0.95

 

 

$

1.24

 

 

(23.4

)%

 

 

Cash flow from operations

$

12.1

 

 

$

69.1

 

 

$

(57.0

)

 

 

Free cash flow (1)

$

(8.8

)

 

$

52.8

 

 

$

(61.6

)

 

 

(1) See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non- GAAP measure to its most directly comparable GAAP measure.

Third Quarter Results

For the third quarter of 2019, sales of $250.3 million decreased 11.5% from sales of $282.8 million in the same period a year ago. Excluding the unfavorable effects of currency movements, sales for the third quarter of 2019 decreased 10.2% versus the prior year period. Operating earnings for the third quarter of 2019 decreased 39.5% to $19.3 million compared to operating earnings of $31.9 million in the prior year period. Adjusted EBITDA for the third quarter of 2019 decreased 16.0% to $45.1 million, or 18.0% of sales, compared to Adjusted EBITDA of $53.7 million, or 19.0% of sales, in the prior year period. Net earnings from continuing operations totaled $4.3 million, or $0.06 per basic and diluted share, in the third quarter of 2019 compared to net earnings from continuing operations of $13.8 million, or $0.20 per basic share and $0.19 per diluted share, in the prior year period. Adjusted Net Income (non-GAAP) totaled $24.6 million, or $0.34 per diluted share, in the third quarter of 2019 compared to Adjusted Net Income of $28.5 million, or $0.40 per diluted share, in the prior year period.

Year-to-Date Results

For the first nine months of 2019, sales of $770.4 million decreased 12.0% from sales of $875.2 million in the same period a year ago. Excluding the unfavorable effects of currency movements, sales for the first nine months of 2019 decreased 9.6% versus the prior year period. Operating earnings for the first nine months of 2019 decreased 24.0% to $69.0 million compared to operating earnings of $90.8 million in the prior year period. Adjusted EBITDA for the first nine months of 2019 decreased 19.5% to $135.2 million, or 17.5% of sales, compared to Adjusted EBITDA of $167.9 million, or 19.2% of sales, in the prior year period. Net earnings from continuing operations totaled $18.5 million, or $0.26 per basic share and diluted share, in the first nine months of 2019 compared to net earnings from continuing operations of $36.2 million, or $0.52 per basic share and $0.50 per diluted share, in the prior year period. Adjusted Net Income totaled $68.0 million, or $0.95 per diluted share, in the first nine months of 2019 compared to Adjusted Net Income of $89.3 million, or $1.24 per diluted share, in the prior year period.

Segment Results

Melt Delivery & Control Systems (MDCS)

Sales for the third quarter of 2019 were $98.9 million compared to $108.8 million in the same period a year ago. Excluding $2.2 million of unfavorable effects of currency movements, sales decreased 7.1% over the prior year period. Operating earnings for the third quarter of 2019 decreased 34.6% to $16.6 million compared to operating earnings of $25.4 million in the prior year period. Adjusted EBITDA for the third quarter of 2019 decreased 19.0% to $26.8 million, or 27.1% of sales, from Adjusted EBITDA of $33.1 million, or 30.4% of sales, in the prior year period.

For the first nine months of 2019, sales were $302.8 million compared to sales of $349.4 million in the same period a year ago. Excluding $11.1 million of unfavorable effects of currency movements, sales decreased 10.2% over the prior year period. Operating earnings for the first nine months of 2019 decreased 33.3% to $55.0 million compared to operating earnings of $82.4 million in the prior year period. Adjusted EBITDA for the first nine months of 2019 decreased 26.7% to $82.0 million, or 27.1% of sales, from Adjusted EBITDA of $111.8 million, or 32.0% of sales, in the prior year period.

Fluid Technologies

Sales for the third quarter of 2019 were $29.9 million compared to $32.6 million in the same period a year ago. Excluding $0.8 million of unfavorable effects of currency movements, sales decreased 5.8% over the prior year period. Operating earnings for the third quarter of 2019 decreased 3.3% to $5.9 million compared to operating earnings of $6.1 million in the prior year period. Adjusted EBITDA for the third quarter of 2019 decreased 8.1% to $6.8 million, or 22.7% of sales, from Adjusted EBITDA of $7.4 million, or 22.7% of sales, in the prior year period.

For the first nine months of 2019, sales were $88.8 million compared to sales of $98.2 million in the same period a year ago. Excluding $3.5 million of unfavorable effects of currency movements, sales decreased 6.0% over the prior year period. Operating earnings for the first nine months of 2019 decreased 8.6% to $16.9 million compared to operating earnings of $18.5 million in the prior year period. Adjusted EBITDA for the first nine months of 2019 decreased 11.3% to $19.6 million, or 22.1% of sales, from Adjusted EBITDA of $22.1 million, or 22.5% of sales, in the prior year period.

Advanced Plastic Processing Technologies (APPT)

On July 1, 2019, the Company completed the sale of substantially all of its blow molding business. The operating results and cash flows related to the blow molding business have been reflected as discontinued operations in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for all periods presented, while the assets and liabilities that were sold have been reflected as assets and liabilities held for sale for the current and prior periods in the Company’s Condensed Consolidated Balance Sheets.

Sales for the third quarter of 2019 were $121.5 million compared to $141.4 million in the same period a year ago. Excluding $0.6 million of unfavorable effects of currency movements, sales decreased 13.6% over the prior year period. Operating earnings for the third quarter of 2019 decreased 19.8% to $9.3 million compared to operating earnings of $11.6 million in the prior year period. Adjusted EBITDA for the third quarter of 2019 decreased 17.3% to $16.3 million, or 13.4% of sales, from Adjusted EBITDA of $19.7 million, or 13.9% of sales, in the prior year period.

For the first nine months of 2019, sales were $378.8 million compared to sales of $427.6 million in the same period a year ago. Excluding $6.0 million of unfavorable effects of currency movements, sales decreased 10.0% over the prior year period. Operating earnings for the first nine months of 2019 increased 37.4% to $34.9 million compared to operating earnings of $25.4 million in the prior year period. Adjusted EBITDA for the first nine months of 2019 decreased 8.0% to $50.7 million, or 13.4% of sales, from Adjusted EBITDA of $55.1 million, or 12.9% of sales, in the prior year period.

Additional Financial Information

Milacron ended the third quarter of 2019 with cash and cash equivalents of $147.8 million and total debt, excluding unamortized discount and debt issuance costs, of $772.6 million, resulting in net debt of $624.8 million and a net total leverage ratio of 3.3x.

Merger Transaction

As previously announced on July 12, 2019, Milacron entered into a definitive agreement under which Hillenbrand, Inc. (NYSE: HI) (“Hillenbrand”) will acquire Milacron in a cash and stock transaction. The transaction is expected to close by the end of 2019 and Milacron is holding a special meeting of its stockholders on November 20, 2019 to vote on the proposals necessary to complete the merger.

Due to the pending acquisition by Hillenbrand, Milacron will not host a conference call to discuss its third quarter 2019 financial results. Milacron’s financial results will be available in full detail on http://investors.milacron.com and filed publicly with the SEC.

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, 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, 2018, as filed with the SEC on February 28, 2019, Definitive Proxy Statement, as filed with the SEC on October 18, 2019 and other SEC filings, copies of which are available free of charge on our website at investors.milacron.com.

Cautionary Statement

This release contains statements, including statements regarding the proposed acquisition of Milacron by Hillenbrand that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, financings, share repurchases and other measures of financial performance or potential future plans or events, strategies, objectives, expectations, beliefs, prospects, assumptions, projected costs or savings or transactions of Parent, the Company or the combined company following Parent’s proposed acquisition of the Company (the “ Proposed Transaction ”), the anticipated benefits of the Proposed Transaction, including estimated synergies, the expected timing of completion of the transaction and other statements that are not strictly historical in nature. In some cases, forward-looking statements can be identified by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “outlook,” “guidance” and similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are not guarantees of future performance or events, and actual results or events could differ materially from those set forth in any forward-looking statement due to any number of factors. These factors include, but are not limited to: the impact of the 2017 Tax Cuts and Jobs Act, enacted by the U.S. government on December 22, 2017, on Parent’s or the Company’s financial position, results of operations, and cash flows; the outcome of any legal proceedings that may be instituted against Parent, the Company or any companies each may acquire; global market and economic conditions, including those related to the credit and equity markets and international trade related matters, tariffs and other trade matters; volatility of our respective investment portfolios; adverse foreign currency fluctuations; involvement in claims, lawsuits and governmental proceedings related to operations; labor disruptions; the dependence of Parent’s business units on relationships with several large providers; demand for our respective products being significantly affected by general economic conditions; increased costs or unavailability of raw materials; continued fluctuations in mortality rates and increased cremations; competition from nontraditional sources in the death care industry; any decline in the use of plastic; cyclical demand for industrial capital goods; the competitiveness of the industries in which we operate and the financial resources of our competitors; certain tax-related matters; changes to legislation, regulation, treaties or government policy, including any resulting from the current political environment; the ability of the Company to receive the approval of the Company’s stockholders and the ability of the Company and Parent to satisfy the other conditions to the closing of the Proposed Transaction on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of Parent and the Company to terminate the merger agreement; negative effects of the announcement or the consummation of the Proposed Transaction on the market price of Parent’s and/or the Company’s common stock and/or on their respective businesses, financial conditions, results of operations and financial performance (including the ability of the Company to maintain relationships with its customers, suppliers and others with whom it does business); uncertainties as to access to available financing of the Proposed Transaction (including financing for the Proposed Transaction) on a timely basis and on reasonable terms; uncertainties as to the long-term value of the common stock of Parent following the merger, including the dilution caused by Parent’s issuance of additional shares of its common stock in connection with the Proposed Transaction; the impact of the additional indebtedness Parent will incur in connection with the Proposed Transaction; risks relating to the value of the Parent shares to be issued in the Proposed Transaction; significant transaction costs and/or unknown liabilities of the Proposed Transaction; the possibility that the anticipated benefits from the Proposed Transaction cannot be realized by Parent in full or at all or may take longer to realize than expected; risks related to disruption of the Company’s management’s attention from the Company’s ongoing business operations due to the Proposed Transaction; risks associated with contracts containing consent and/or other provisions that may be triggered by the Proposed Transaction; risks associated with transaction-related litigation; the possibility that costs or difficulties related to the integration of the Company’s operations with those of Parent will be greater than expected; the ability of the Company and the combined company to retain and hire key personnel; the impact of new or changes in current laws, regulatory or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond Parent’s and the Company’s control, such as acts of terrorism. There can be no assurance that the Proposed Transaction or any other transaction described above will in fact be consummated in the manner described or at all. Stockholders, potential investors and other readers are urged to consider these risks and uncertainties in evaluating forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, please see Parent’s and the Company’s reports on Forms S-4, 10-K, 10-Q and 8-K filed with or furnished to the U.S. Securities and Exchange Commission (the “ SEC ”) and other written statements made by Parent and/or the Company from time to time. The forward-looking information herein is given as of this date only, and neither Parent nor the Company undertakes any obligation to revise or update it.

Additional Information and Where to Find It

In connection with the Proposed Transaction, Parent has filed with the SEC a registration statement on Form S-4 to register the shares of Parent’s common stock to be issued in connection with the Proposed Transaction. The registration statement includes a document that serves as a prospectus of Parent and a proxy statement of the Company (the “ proxy statement/prospectus ”), and each party will file other documents regarding the Proposed Transaction with the SEC. The registration statement became effective on October 18, 2019. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, BECAUSE THEY DO AND THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. A definitive proxy statement/prospectus has been sent to the Company’s stockholders. Investors and security holders may obtain the registration statement and the proxy statement/prospectus free of charge from the SEC’s website or from Parent or the Company. The documents filed by Parent with the SEC may be obtained free of charge at Parent’s website at www.hillenbrand.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Parent by requesting them by mail at Hillenbrand, Inc., One Batesville Boulevard, Batesville, IN 47006, or by telephone at (812) 931-6000. The documents filed by the Company with the SEC may be obtained free of charge at the Company’s website at www.milacron.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from the Company by requesting them by mail at Milacron Holdings Corp., 10200 Alliance Road, Suite 200, Cincinnati, OH, 45242, or by telephone at (513) 487-5000.

Participants in the Solicitation

Parent and Milacron and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the Company’s stockholders with respect to the Proposed Transaction. Information about Parent’s directors and executive officers is available in Parent’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on November 13, 2018 and its definitive proxy statement for the 2019 annual meeting of shareholders filed with the SEC on January 2, 2019. Information concerning the ownership of the Company’s securities by the Company’s directors and executive officers is included in their SEC filings on Forms 3, 4 and 5, and additional information regarding the names, affiliations and interests of such individuals is available in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 28, 2019 and its definitive proxy statement for the 2019 annual meeting of stockholders filed with the SEC on March 15, 2019. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement, the proxy statement/prospectus and other relevant materials filed with the SEC regarding the Proposed Transaction. Stockholders, potential investors and other readers should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Parent or the Company as indicated above.

No Offer or Solicitation

This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, or pursuant to another available exemption.

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:

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

MILACRON HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

September 30, 2019
(Unaudited)

 

December 31, 2018

 

(in millions)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

147.8

 

 

$

184.0

 

Accounts receivable, net

146.3

 

 

146.3

 

Inventories, net:

 

 

 

Raw materials

80.1

 

 

73.2

 

Work-in-process

45.4

 

 

46.7

 

Finished products

126.1

 

 

118.6

 

Total inventories

251.6

 

 

238.5

 

Prepaid and other current assets

38.1

 

 

49.1

 

Current assets held for sale

16.2

 

 

36.9

 

Total current assets

600.0

 

 

654.8

 

Property and equipment, net

202.3

 

 

215.7

 

Operating lease assets

38.7

 

 

 

Goodwill

502.5

 

 

513.2

 

Intangible assets, net

275.0

 

 

292.7

 

Other noncurrent assets

25.1

 

 

29.1

 

Held for sale

 

 

27.0

 

Total assets

$

1,643.6

 

 

$

1,732.5

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Short-term borrowings

$

1.4

 

 

$

5.8

 

Accounts payable

98.8

 

 

116.8

 

Advanced billings and deposits

31.3

 

 

38.9

 

Accrued salaries, wages and other compensation

21.3

 

 

24.0

 

Other current liabilities

70.3

 

 

66.0

 

Current liabilities held for sale

 

 

14.9

 

Total current liabilities

223.1

 

 

266.4

 

Long-term debt and capital lease obligations

764.5

 

 

829.0

 

Deferred income tax liabilities

53.6

 

 

57.5

 

Accrued pension liabilities

25.3

 

 

27.6

 

Operating lease liabilities

30.7

 

 

 

Other noncurrent accrued liabilities

17.2

 

 

25.2

 

Total liabilities

1,114.4

 

 

1,205.7

 

Shareholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

0.7

 

 

0.7

 

Capital in excess of par value

707.1

 

 

693.5

 

Treasury stock

(7.2

)

 

(3.5

)

Retained earnings (deficit)

0.9

 

 

(29.0

)

Accumulated other comprehensive loss

(172.3

)

 

(134.9

)

Total shareholders’ equity

529.2

 

 

526.8

 

Total liabilities and shareholders’ equity

$

1,643.6

 

 

$

1,732.5

 

MILACRON HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions, except share and per share data)

Net sales

$

250.3

 

 

$

282.8

 

 

$

770.4

 

 

$

875.2

 

Cost of sales

174.3

 

 

185.5

 

 

522.6

 

 

571.0

 

Manufacturing margins

76.0

 

 

97.3

 

 

247.8

 

 

304.2

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative expenses

55.2

 

 

56.6

 

 

167.6

 

 

180.0

 

Amortization expense

5.1

 

 

6.2

 

 

16.1

 

 

18.8

 

(Gain) loss on currency translation

(1.6

)

 

(1.1

)

 

(2.6

)

 

1.1

 

Other (income) expense, net

(2.0

)

 

3.7

 

 

(2.3

)

 

13.5

 

Total operating expenses

56.7

 

 

65.4

 

 

178.8

 

 

213.4

 

Operating earnings

19.3

 

 

31.9

 

 

69.0

 

 

90.8

 

Interest expense, net

9.2

 

 

10.6

 

 

28.7

 

 

32.6

 

Loss on debt extinguishment

0.7

 

 

0.3

 

 

0.7

 

 

1.0

 

Other non-operating expenses

0.1

 

 

0.3

 

 

0.5

 

 

0.7

 

Earnings from continuing operations before income taxes

9.3

 

 

20.7

 

 

39.1

 

 

56.5

 

Income tax expense

5.0

 

 

6.9

 

 

20.6

 

 

20.3

 

Net earnings from continuing operations

4.3

 

 

13.8

 

 

18.5

 

 

36.2

 

Earnings (loss) from discontinued operations (net of income taxes)

21.8

 

 

1.1

 

 

10.9

 

 

(0.5

)

Net earnings

$

26.1

 

 

$

14.9

 

 

$

29.4

 

 

$

35.7

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

70,352,461

 

 

69,968,794

 

 

70,161,998

 

 

69,612,986

 

Diluted

71,936,051

 

 

71,992,289

 

 

71,477,754

 

 

71,793,776

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

0.06

 

 

$

0.20

 

 

$

0.26

 

 

$

0.52

 

Earnings (loss) from discontinued operations

0.31

 

 

0.02

 

 

0.16

 

 

(0.01

)

Net earnings

$

0.37

 

 

$

0.22

 

 

$

0.42

 

 

$

0.51

 

Diluted:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

0.06

 

 

$

0.19

 

 

$

0.26

 

 

$

0.50

 

Earnings (loss) from discontinued operations

0.30

 

 

0.02

 

 

0.15

 

 

(0.01

)

Net earnings

$

0.36

 

 

$

0.21

 

 

$

0.41

 

 

$

0.49

 

MILACRON HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended September 30,

 

2019

 

2018

 

( in millions)

Operating activities from continuing operations

 

 

 

Net earnings

$

29.4

 

 

$

35.7

 

(Earnings) loss from discontinued operations (net of income taxes)

(10.9

)

 

0.5

 

Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations:

 

 

 

Depreciation and amortization

35.3

 

 

39.0

 

Unrealized (gain) loss on currency translation of intercompany advances

(2.2

)

 

1.9

 

Amortization of deferred financing costs

1.6

 

 

2.3

 

Loss on debt extinguishment

0.7

 

 

1.0

 

Inventory write-down

3.0

 

 

 

Property and equipment impairment

0.2

 

 

 

Non-cash stock-based compensation expense

10.8

 

 

8.7

 

Deferred income taxes

1.5

 

 

1.7

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

(4.9

)

 

1.7

 

Inventories

(22.1

)

 

(26.7

)

Prepaid and other current assets

8.0

 

 

(2.9

)

Accounts payable

(14.6

)

 

(2.1

)

Advanced billings and deposits

(4.5

)

 

5.3

 

Other current liabilities

(18.8

)

 

2.8

 

Other noncurrent assets

1.4

 

 

0.6

 

Other noncurrent accrued liabilities

(1.8

)

 

(0.4

)

Net cash provided by operating activities from continuing operations

12.1

 

 

69.1

 

Investing activities from continuing operations

 

 

 

Purchases of property and equipment

(31.4

)

 

(25.0

)

Proceeds from disposals of property and equipment

10.5

 

 

8.7

 

Proceeds from divestitures

51.1

 

 

 

Net cash provided by (used in) investing activities from continuing operations

30.2

 

 

(16.3

)

Financing activities from continuing operations

 

 

 

Payments on long-term debt and capital lease obligations (original maturities longer than 90 days)

(66.5

)

 

(75.1

)

Net decrease in short-term borrowings (original maturities of 90 days or less)

(4.4

)

 

(0.5

)

Proceeds from exercise of stock options

2.8

 

 

6.1

 

Purchase of treasury stock

(3.7

)

 

 

Debt issuance costs

 

 

(0.8

)

Net cash used in financing activities from continuing operations

(71.8

)

 

(70.3

)

Total cash and cash equivalents used in continuing operations

(29.5

)

 

(17.5

)

Cash and cash equivalents used in discontinued operations

 

 

 

Operating cash flows

(3.5

)

 

(13.7

)

Investing cash flows

(0.3

)

 

(0.2

)

Total cash and cash equivalents used in discontinued operations

(3.8

)

 

(13.9

)

Effect of exchange rate changes on cash and cash equivalents

(2.9

)

 

(6.2

)

Decrease in cash and cash equivalents

(36.2

)

 

(37.6

)

Cash and cash equivalents at beginning of period

184.0

 

 

187.9

 

Cash and cash equivalents at end of period

$

147.8

 

 

$

150.3

 

MILACRON HOLDINGS CORP.

SALES BY BUSINESS SEGMENT

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions)

Sales by segment:

 

 

 

 

 

 

 

Advanced Plastic Processing Technologies

$

121.5

 

 

$

141.4

 

 

$

378.8

 

 

$

427.6

 

Melt Delivery and Control Systems

98.9

 

 

108.8

 

 

302.8

 

 

349.4

 

Fluid Technologies

29.9

 

 

32.6

 

 

88.8

 

 

98.2

 

Total

$

250.3

 

 

$

282.8

 

 

$

770.4

 

 

$

875.2

 

MILACRON HOLDINGS CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions)

Net earnings

$

26.1

 

 

$

14.9

 

 

$

29.4

 

 

$

35.7

 

(Earnings) loss from discontinued operations (net of income taxes)

(21.8

)

 

(1.1

)

 

(10.9

)

 

0.5

 

Amortization expense

5.1

 

 

6.2

 

 

16.1

 

 

18.8

 

Currency effect on intercompany advances (a)

(1.1

)

 

(0.8

)

 

(3.4

)

 

1.8

 

Organizational redesign costs (b)

2.0

 

 

6.3

 

 

6.9

 

 

23.0

 

Long-term equity awards (c)

4.2

 

 

3.2

 

 

12.1

 

 

9.1

 

Debt costs

0.7

 

 

0.3

 

 

0.7

 

 

1.0

 

Professional services (d)

4.9

 

 

0.2

 

 

9.0

 

 

3.8

 

Tax adjustments (f)

0.2

 

 

(1.5

)

 

1.3

 

 

(5.5

)

Other (e)

4.3

 

 

0.8

 

 

6.8

 

 

1.1

 

Adjusted Net Income

$

24.6

 

 

$

28.5

 

 

$

68.0

 

 

$

89.3

 

Income tax expense (f)

4.8

 

 

8.4

 

 

19.3

 

 

25.8

 

Interest expense, net

9.2

 

 

10.6

 

 

28.7

 

 

32.6

 

Depreciation expense

6.5

 

 

6.2

 

 

19.2

 

 

20.2

 

Adjusted EBITDA

$

45.1

 

 

$

53.7

 

 

$

135.2

 

 

$

167.9

 

(a)

Non-cash currency effect on intercompany advances primarily relates to advances denominated in foreign currencies. The most significant exposure relates to the Canadian dollar and the Czech koruna pursuant to intercompany advances within the MDCS and Corporate segments, respectively.

 

(b)

Organizational redesign costs in the three and nine months ended September 30, 2019 primarily included $1.6 million and $3.7 million, respectively, for termination costs as a result of eliminated positions. Organizational redesign costs in the three and nine months ended September 30, 2018 primarily included $4.0 million and $16.2 million, respectively, for termination costs as a result of eliminated positions.

 

(c)

Long-term equity awards include the charges associated with stock-based compensation awards granted to certain members of management and independent directors in the three and nine months ended September 30, 2019 and 2018.

 

(d)

Professional fees in the three months ended September 30, 2019 and 2018 included $4.9 million and $0.2 million, respectively, of costs for strategic organizational initiatives. Professional fees in the nine months ended September 30, 2019 and 2018 included $9.0 million and $3.8 million, respectively, of costs for strategic organizational initiatives.

 

(e)

Other costs in the three and nine months ended September 30, 2019 included costs associated with the Company's blow molding business which did not qualify for discontinued operations as well as costs associated with a discontinued product line.

 

(f)

Tax adjustments primarily include the tax expense (benefit) associated with reconciling net (loss) earnings to Adjusted Net Income and reflects the impact to the quarterly tax provision utilizing the annual effective tax recomputed with anticipated tax rate reductions that have not been recognized for U.S. GAAP purposes as the Company is awaiting regulatory approval. The reductions have historically been approved although there are no guarantees that the regulatory authorities will accept the Company's applications.

MILACRON HOLDINGS CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions)

Operating earnings:

 

 

 

 

 

 

 

APPT

$

9.3

 

 

$

11.6

 

 

$

34.9

 

 

$

25.4

 

MDCS

16.6

 

 

25.4

 

 

55.0

 

 

82.4

 

Fluids

5.9

 

 

6.1

 

 

16.9

 

 

18.5

 

Corporate

(12.5

)

 

(11.2

)

 

(37.8

)

 

(35.5

)

Total operating earnings

19.3

 

 

31.9

 

 

69.0

 

 

90.8

 

Other non-operating expenses

(0.1

)

 

(0.3

)

 

(0.5

)

 

(0.7

)

Adjustments to operating earnings:

 

 

 

 

 

 

 

APPT Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

2.7

 

 

3.0

 

 

8.2

 

 

9.9

 

Currency effect on intercompany advances (a)

 

 

0.1

 

 

 

 

0.2

 

Organizational redesign costs (b)

0.5

 

 

4.7

 

 

1.8

 

 

19.5

 

Professional services (d)

 

 

 

 

 

 

0.1

 

Other

3.9

 

 

0.6

 

 

6.3

 

 

0.7

 

Total APPT Adjustments

7.1

 

 

8.4

 

 

16.3

 

 

30.4

 

MDCS Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

7.8

 

 

7.9

 

 

23.4

 

 

24.8

 

Currency effect on intercompany advances (a)

0.8

 

 

(1.4

)

 

(1.3

)

 

2.3

 

Organizational redesign costs (b)

1.4

 

 

1.2

 

 

4.6

 

 

2.1

 

Professional services (d)

 

 

 

 

 

 

0.1

 

Other

0.2

 

 

 

 

0.3

 

 

0.1

 

Total MDCS Adjustments

10.2

 

 

7.7

 

 

27.0

 

 

29.4

 

Fluids Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

0.7

 

 

1.1

 

 

2.5

 

 

3.3

 

Other

0.2

 

 

0.2

 

 

0.2

 

 

0.3

 

Total Fluids Adjustments

0.9

 

 

1.3

 

 

2.7

 

 

3.6

 

Corporate Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

0.4

 

 

0.4

 

 

1.2

 

 

1.0

 

Currency effect on intercompany advances (a)

(1.9

)

 

0.5

 

 

(2.1

)

 

(0.7

)

Organizational redesign costs (b)

0.1

 

 

0.4

 

 

0.5

 

 

1.4

 

Long-term equity awards (c)

4.2

 

 

3.2

 

 

12.1

 

 

9.1

 

Professional services (d)

4.9

 

 

0.2

 

 

9.0

 

 

3.6

 

Total Corporate Adjustments

7.7

 

 

4.7

 

 

20.7

 

 

14.4

 

Adjusted EBITDA:

 

 

 

 

 

 

 

APPT

16.3

 

 

19.7

 

 

50.7

 

 

55.1

 

MDCS

26.8

 

 

33.1

 

 

82.0

 

 

111.8

 

Fluids

6.8

 

 

7.4

 

 

19.6

 

 

22.1

 

Corporate

(4.8

)

 

(6.5

)

 

(17.1

)

 

(21.1

)

Total Adjusted EBITDA

$

45.1

 

 

$

53.7

 

 

$

135.2

 

 

$

167.9

 

(a)

Non-cash currency effect on intercompany advances primarily relates to advances denominated in foreign currencies. The most significant exposure relates to the Canadian dollar and the Czech koruna pursuant to intercompany advances within the MDCS and Corporate segments, respectively.

 

(b)

Organizational redesign costs in the three and nine months ended September 30, 2019 included $1.6 million and $3.4 million, respectively, for termination costs as a result of eliminated positions in APPT and MDCS. Organizational redesign costs in the three and nine months ended September 30, 2018 included $3.4 million and $14.8 million, respectively, for termination costs as a result of eliminated positions in APPT.

 

(c)

Long-term equity awards in Corporate include the charges associated with stock-based compensation awards granted to certain members of management and independent directors during the nine months ended September 30, 2019 and 2018.

 

(d)

Professional fees incurred by Corporate in the three months ended September 30, 2019 and 2018 included $4.9 million and $0.2 million, respectively, of costs for strategic organizational initiatives. Professional fees incurred by Corporate in the nine months ended September 30, 2019 and 2018 included $9.0 million and $3.6 million, respectively, of costs for strategic organizational initiatives.

MILACRON HOLDINGS CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

Reconciliation of Adjusted Diluted Earnings Per Share:


 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions, except per share data)

GAAP diluted earnings per share

$

0.36

 

 

$

0.21

 

 

$

0.41

 

 

$

0.49

 

(Earnings) loss from discontinued operations (net of income taxes)

(0.30

)

 

(0.02

)

 

(0.15

)

 

0.01

 

Amortization expense

0.07

 

 

0.09

 

 

0.22

 

 

0.26

 

Currency effect on intercompany advances

(0.02

)

 

(0.01

)

 

(0.05

)

 

0.03

 

Organizational redesign costs

0.03

 

 

0.09

 

 

0.10

 

 

0.32

 

Long-term equity awards

0.06

 

 

0.04

 

 

0.17

 

 

0.13

 

Debt costs

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

Professional services

0.07

 

 

 

 

0.13

 

 

0.05

 

Tax adjustments

 

 

(0.02

)

 

0.02

 

 

(0.08

)

Other

0.06

 

 

0.01

 

 

0.09

 

 

0.02

 

Adjusted diluted earnings per share

$

0.34

 

 

$

0.40

 

 

$

0.95

 

 

$

1.24

 

 

Reconciliation of Free Cash Flow:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in millions)

Cash provided by operating activities

$

11.0

 

 

$

38.0

 

 

$

12.1

 

 

$

69.1

 

Proceeds from disposals of property and equipment

7.6

 

 

0.2

 

 

10.5

 

 

8.7

 

Purchases of property and equipment

(6.5

)

 

(9.2

)

 

(31.4

)

 

(25.0

)

Free cash flow

$

12.1

 

 

$

29.0

 

 

$

(8.8

)

 

$

52.8

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191112005976/en/

CONTACT: Investor Relations Contact:

Andy Kitzmiller

Vice President - Finance and Corporate Controller

Andrew_Kitzmiller@milacron.comMedia Contact:

Lacy Wise

Manager, Corporate Communications

Lacy_Wise@milacron.com

KEYWORD: UNITED STATES NORTH AMERICA OHIO

INDUSTRY KEYWORD: MANUFACTURING OTHER MANUFACTURING PACKAGING ENGINEERING CHEMICALS/PLASTICS

SOURCE: Milacron Holdings Corp.

Copyright Business Wire 2019.

PUB: 11/12/2019 04:15 PM/DISC: 11/12/2019 04:15 PM

http://www.businesswire.com/news/home/20191112005976/en