|Image courtesy Interphase Solutions/|
Milacron Holdings Corp. (Cincinnati, OH) announced its first quarter 2016 results during a press conference on May 5, with CEO Tom Goeke and CFO Bruce Chalmers. “We are off to a solid start in 2016, as constant currency sales increased 1.7% and our adjusted EBITDA increased 5.8% versus the prior year. Order rates were flat on a constant currency basis, free cash flow improved substantially from the prior year and we made progress on our cost structure realignment efforts,” Goeke said. “Our results are a significant accomplishment in light of the uncertain economic conditions we encountered during the first quarter. The first quarter is seasonally our lowest sales and adjusted EBITDA quarter of the year, and we remain confident in our ability to drive full year sales growth, expand margins and create shareholder value. We maintain our full year outlook of 0 to 2% organic sales growth and adjusted EBITDA margins between 18.5% and 19.0%.”
Milacron Chief Financial Officer Bruce Chalmers, added, “Our balance sheet continues to strengthen, as free cash flow generation of $16.5 million represents an increase of over $30 million versus the prior year, showing nice progress on free cash flow. The improvement in working capital and our disciplined approach to capital allocation led to the year over year increase.”
|Milacron will exhibit at PLASTEC East, co-located with MD&M East at the Jacob K. Javits Convention Center in New York City next month. Visit the company at booth 240.|
For the first quarter of 2016, sales of $277.3 million decreased 0.7% from sales of $279.2 million in the same period a year ago. Excluding the unfavorable effects of currency movements and the impact of the CanGen acquisition, organic sales for the first quarter of 2016 were flat versus the prior year period. Adjusted EBITDA for the first quarter of 2016 increased 5.8% to $47.1 million, or 17.0% of sales, compared to adjusted EBITDA of $44.5 million, or 15.9% of sales, in the prior year period. Net earnings totaled $9.8 million, or $0.15 per basic and $0.14 per diluted share, in the first quarter of 2016 compared to a net loss of $15.9 million, or a loss of $0.30 per basic and diluted share, in the prior year period. Adjusted net income totaled $18.8 million, or $0.27 per diluted share, which was “in line with expectations” in the first quarter of 2016 compared to adjusted net income of $14.4 million in the prior year period.
North America is trailing last year’s organic growth. U.S. markets were mixed with automotive, consumer products and construction showing higher sales, with much of “the automotive strength coming from new plants in Mexico. Investments by custom molders and medical manufacturers were down in North America. The European market is “trending positively” and in India “we saw record volume shipments and are well-positioned to benefit from growth,” Goeke commented.
Milacron’s business segments also reported Q1 2016 results. Milacron’s Advanced Plastic Processing Technologies (APPT) segment showed sales of $156.1 million compared to $154.0 million in the same period a year ago. Excluding $3.1 million of unfavorable effects of currency movements, sales increased 3.4% over the prior year period. Adjusted EBITDA for the first quarter decreased 3.5% to $16.6 million, with “co-injection shipments up,” or 10.6% of sales, from adjusted EBITDA of $17.2 million, or 11.2% of sales, in the prior year period. Milacron has seen “double-digit growth in Europe and India, but a decline in the U.S. and Asia.” India is the strongest geographic market for the APPT group,” noted Chalmers. The APPT group includes CanGen, a supplier of highly engineered aftermarket process control components for extrusion and injection molding applications including screws and barrels, tooling and cross-heads, and other machined metal components. Milacron Holdings completed the acquisition of CanGen (Canterbury Engineering Co. and Genca) on December 1, 2015.
The Melt Delivery & Control Systems (MDCS) segment saw sales of $93.0 million in Q1 of 2016, compared to $96.8 million in the same period a year ago. Excluding $2.5 million of unfavorable effects of currency movements, sales decreased 1.3% over the prior year period. Adjusted EBITDA for the first quarter increased 10.7% to $31.0 million, or 33.3% of sales, from adjusted EBITDA of $28.0 million, or 28.9% of sales in the prior year period. Chalmers commented that growth was strongest in Europe and China geographic markets and in the packaging and consumer goods market segment.
The company’s Fluid Technologies segment saw sales in the first quarter of 2016 at $28.2 million compared to sales of $28.4 million in the same period a year ago. Excluding $1.1 million of unfavorable effects of currency movements, sales increased 3.2% over the prior year period. Adjusted EBITDA for the first quarter increased 19.6% to $6.1 million, or 21.6% of sales, from adjusted EBITDA of $5.1 million, or 18.0% of sales, in the prior year.
Milacron invested $400,000 related to field service technicians, which drives aftermarket sales, and currently there is a backlog in aftermarket equipment from CanGen. Hot runner sales are strong with “some offset in mold base sales. Volumes are holding up in fluids,” noted Chalmers. In the North American market, the equipment is “pretty balanced” in Q1 and order RFQ is “pretty strong,” he added. “North America is a bit choppy but in line with guidance.”
All-in-all, Goeke expressed that he is “encouraged by Q1’s performance and the solid results in a mixed environment, including the company’s improved margins and reduced costs.”