2019 Third Quarter Overview
- Sales of $250.3 million decreased 11.5% on an as-reported
basis, 10.2% on a constant currency basis
- Orders of $220.2 million decreased 14.0% on an as-reported
basis and 12.7% on a constant currency basis
- Operating earnings (GAAP) decreased 39.5% to $19.3 million;
Adjusted EBITDA (non-GAAP) decreased 16.0% to $45.1 million
- Diluted EPS (GAAP) decreased 68.4% to $0.06; Diluted adjusted
EPS (non-GAAP) decreased 15.0% to $0.34
- Cash flow from operations of $11.0 million decreased $27.0
million, driving free cash flow of $12.1 million, a $16.9 million
decrease versus $29.0 million from the prior year period
- We continue to face, and our results this quarter were impacted
by, industry-wide headwinds, the effect of the global slowdown and
the ongoing effects of the trade tension between the United States
and China
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:
- 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
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/
Investor Relations Contact: Andy Kitzmiller Vice President -
Finance and Corporate Controller Andrew_Kitzmiller@milacron.com
Media Contact: Lacy Wise Manager, Corporate Communications
Lacy_Wise@milacron.com
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