Milacron has good second quarter in 'soft macro environment'

In announcing results from its second quarter, which ended on June 30, 2016, Milacron Holdings Corp. (Cincinnati, OH) reported sales of $308.1 million, an increase of 3.4% on a constant currency basis (1.6% organic, 1.8% acquisition). Operating earnings (GAAP) were $35.7 million, and adjusted EBITDA (non-GAAP) increased 3.2% to $57.8 million. Milacron Holdings Corp is an industrial technology company serving the plastic processing industry.

“Milacron delivered excellent organic sales growth in the second quarter versus a tough year-over-year comparable and a soft macro environment,” said Milacron CEO Tom Goeke. “The second quarter developed in line with our expectations, as end market and geographic stabilization led to organic sales growth within our Advanced Plastic Processing Technologies (APPT) and Melt Delivery & Control Systems (MDCS) segments. Orders were robust at 8.5% constant currency growth, driven by our APPT and MDCS segments.

“We also continue to make great progress in bringing new technology to the market, as we shipped the first Klear Can system, a revolutionary innovation that delivers the benefits of plastic in a striking, proven durable can design, as well as gained additional commercial traction with our co-injection recyclable coffee pods. We remain on track to deliver our full year commitment in line with our previously stated guidance.”

For the second quarter of 2016, sales of $308.1 million increased 2.3% from sales of $301.3 million in the same period a year ago. Excluding unfavorable effects of currency movements and the impact of the CanGen acquisition, organic sales for the second quarter of 2016 increased 1.6% versus the prior year period. Operating earnings for the second quarter of 2016 increased 82.1% to $35.7 million compared to operating earnings of $19.6 million in the prior period. Adjusted EBITDA for the second quarter of 2016 increased 3.2% to $57.8 million, or 18.8% of sales, compared to adjusted EBITDA of $56 million, or 18.6% of sales, in the prior year period. Net earnings totaled $12.9 million, or $0.18 per basic and $0.18 per diluted share, in the second quarter of 2016 compared to a net loss of $27.2 million, or a loss of $0.51 per basic and diluted share, in the prior year period. Adjusted net income totaled $29 million, or $0.41 per diluted share, in the second quarter of 2016 compared to adjusted net income of $24.6 million in the prior year period.

Sales for the first six months of 2016 totaled $585.4 million, increasing 0.8% from sales of $580.5 million in the same period a year ago. Operating earnings for the first six months of 2016 increased 150.7% to $67.7 million compared to operating earnings of $27 million in the prior year period.

Sales for the APPT segment for Q2 2016 were $179 million compared to $171.2 million in the same period a year ago. Excluding $1.5 million of unfavorable effects of currency movements, sales increased 5.4% over the prior year period. Operating earnings for the second quarter of 2016 increased 20.2% to $15.5 million compared to operating earnings of $12.9 million in the prior year period. Adjusted EBITDA in the second quarter increased 2.6% to $23.3 million, or 13% of sales, from adjusted EBITDA of $22.7 million, or 13.3% of sales, in the prior year period.

Melt Delivery & Control Systems (MDCS) saw second quarter 2016 sales of $100.5 million compared to $100.5 million in the same period a year ago. Excluding $1.2 million of unfavorable effects of currency movements, sales increased 1.2% over the prior year period. Operating earnings for the second quarter of 2016 increased 14.6% to $24.3 million compared to operating earnings of $21.2 million in the prior year period. Adjusted EBITDA in the second quarter increased 2.2% to $33 million, or 32.8% of sales, from adjusted EBITDA of $32.3 million, or 32.1% of sales, in the year ago quarter.

The Fluid Technologies business segment saw sales for the second quarter of 2016 of $28.6 million compared to $29.6 million in the same period a year ago. Excluding $0.6 million of unfavorable effects of currency movements, sales decreased 1.4% over the prior year period. Operating earnings for the second quarter increased 31.6% to $5 million compared to operating earnings of $3.8 million in the prior year period. Adjusted EBITDA in the second quarter increased 3.2% to $6.5 million, or 22.7% of sales, from adjusted EBITDA of $11.4 million, or 19.7% of sales, in the prior year period.

Milacron reaffirmed fiscal 2016 guidance of 0% to 2% organic sales growth and adjusted EBITDA margins to be between 18.5% and 19%. Additionally, the company expects capital expenditures of approximately $50 million to $55 million, interest expense to be approximately $60 million, cash taxes to be between $30 million and $35 million, an effective tax rate of approximately 30% and shares outstanding to remain flat in 2016.

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