Milacron's (Cincinnati) Q2 results are “in line with our expectations,” said Tom Goeke, President and CEO, during the recent earnings call. Net sales for the quarter reached $271 million, a 9% sequential increase and 11% decrease versus the previous year. On these sales, the company generated 18.1% adjusted EBITDA margins, or $46.1 million.
Because the second quarter of 2018 was a record quarter for Milacron, it created a tough year-over-year comparison, noted Goeke. “As previously discussed, 2018 was best characterized as a tale of two halves, with very solid growth in the global economy during the first half of the year and headwinds in the second half that have carried into 2019,” he said. “We are pleased with the sequential improvements during Q2 2019 and are optimistic that the second half of 2019 will be in line with our expectations.”
From a regional perspective, orders in China increased in all three of Milacron’s business segments in Q2 2019, up 16% from Q1 2019 and up 9% from Q4 2018. Sales activity is strong in Asia “and we are ready to meet customer demand as more projects are released,” said Goeke.
Within the company’s Melt Delivery and Control Systems (MDCS) segment, Mold Masters saw increases in orders from Q1 2019 and Q4 2018 in nearly all of its end markets. Increases in electronics, medical and packaging were the most significant. MDCS’s second quarter sales were down 16%, and 13% on a constant currency basis, driven primarily by China, which is down versus the prior year, but up double digits sequentially, reported Milacron’s Bruce Chalmers. Automotive was strong, both versus prior year and sequentially, with electronics up over 50% sequentially and over 30% versus Q4 2018. MDCS generated adjusted EBITDA of $29 million in the quarter, a 28.3% margin.
The Advanced Plastic Processing Technologies (APPT) segment has a backlog of $145 million with “exceptional orders for our min-tonnage products through the end of 2019, and strong activity in the sales pipeline for small tonnage product, as well as in the aftermarket with retrofits and rebuilds. Sales were $138 million in the second quarter; constant currency revenue growth was negative 4%, but the company had 1% sales growth on a pro forma basis.
Chalmers reminded attendees that Milacron closed its European injection molding facility in Q4 2018, and divested its blowmolding business during Q1 2019. “North America continues to trend well with 30% sequential growth and 2% versus the prior year,” said Chalmers. “Adjusted EBITDA was $20 million or 14.3% of sales in the quarter. The team is diligently marching toward the 15% full year margin goal for APPT.”
While not taking any questions on the Hillenbrand transaction during the earnings call, Goeke mentioned that it "represents a unique opportunity for Milacron and provides our shareholders significant and immediate value as well as the ability to participate in the upside potential of the combination.” Milacron shareholders will receive $11.80 in cash and a fixed exchanged ratio of 0.1612 shares of Hillenbrand common stock for each share of Milacron common stock they own.