With many of the company’s strategies being completed in 2018, including lower cost manufacturing facilities in the United States and China, and despite geopolitical disruptions, Milacron (Cincinnati, OH) is “pleased with the results of Q3,” said Tom Goeke, CEO, during the company’s webcast reporting on third quarter 2018 results. “Milacron continued to execute on its long-term growth initiatives and delivered another solid quarter, including solid sales, continued margin expansion and free cash flow generation. These results are in spite of the continued geopolitical uncertainty the U.S. tariff initiatives have introduced to our global end markets,” said Goeke.
Chief Financial Officer Bruce Chalmers added, “We continue to strengthen our balance sheet by making voluntary debt payments on our term loan. Through the third quarter, we have paid down $75 million of debt and we expect to pay down an additional $25 million during the fourth quarter of 2018.”
In line with current market conditions, Milacron forecasts 2% sales growth in 2018, which is inclusive of an anticipated 1% foreign currency tailwind. Adjusted EBITDA is forecast to be between $229 million and $231 million. Free cash flow is forecast to be between $80 million and $90 million.
Milacron saw Q3 order weakness in every region with the exception of North America. New orders fell 16.4% (15.2% in constant currency) to $269.6 million in Q3 2018 from $322.3 during the same period in 2017. However, said Goeke, orders have since resumed in the beginning of the new quarter. Backlog was down 6% in constant currency. Medical orders grew by double digits, but that was offset by softness in other end markets.
Year-to-date (YTD) orders fell by 4.7% (6.5% constant currency) to $937.0 million in Q3 2018 from $983.6 million in the same period in 2017. YTD sales grew 4.1% (2.2% constant currency) to $946.8 million from $909.3 million during the same period a year earlier. Year-to-date sales was driven by double-digit growth in China and India. Milacron also saw strong YTD consumables performance. Q3 sales were impacted by single-digit declines in North America. Electronic and medical end markets, which were down single digits in Q3, remain up by double digits for the year.
Sales in the Melt Delivery & Control segment for the third quarter of 2018 were $108.8 million compared to $108.1 million for the same period a year ago. Excluding $1.5 million of unfavorable effects of currency movements, sales increased 2.0% over the prior year period. YTD sales were $349.4 million compared to $320.3 million in the same period a year ago. Excluding $12.3 million of unfavorable effects of currency movements, sales increased 5.2% over the prior year period.
Sales in the Fluid Technologies segment for the third quarter of 2018 were $32.6 million, an increase of 8.1% over the prior year’s period. YTD, sales for the segment were $98.2 million compared to sales of $90.2 million in the same period a year ago. That represents an increase of 5.4% excluding $3.1 million of favorable effects of currency movements.
Sales in the Advanced Plastic Processing Technologies (APPT) segment decreased 3.2% in Q3—$166.9 million compared to $175.9 million in Q3 of 2017. YTD sales were $499.2 million compared to $498.8 million in the same period a year ago. Excluding $2.3 million of favorable effects of currency movements, sales decreased 0.4% over the prior year period.
Coming out of NPE there was a delay to ramp-up; however, September orders ramped back up to normal levels, with October looking strong, commented Chalmers, noting that the company hasn’t “seen a rebound in China.”
Chalmers also commented that many of the mold builders in China are building molds for the U.S. markets and other regions, not in China for China. “A number of customers have decided to relocate molds to the U.S. and other regions,” he said.
Goeke noted that Milacron has seen a recovery in every market except China and the automotive sector.