Milacron Holdings Corp. reports 2017 results

Milacron Holdings Corp., a leading industrial technology company serving the plastic processing industry, announced financial results for the fourth quarter ended December 31, 2017.

“We delivered a strong fourth quarter and exceeded our full-year sales, adjusted EBITDA and free cash flow guidance ranges” said Milacron President and Chief Executive Officer, Tom Goeke. “We delivered nearly double digit constant currency sales growth in the quarter, driven by our APPT segment with 16 percent sales growth and our Fluid Technologies segment grew five percent on a constant currency basis.

For the full year, we achieved nine percent order and five percent sales growth, on a constant currency basis, and despite numerous inflationary headwinds, continued to expand EBITDA margins with a 20 basis point improvement. We also delivered significant free cash flow improvement as our focus on lowering working capital provided exceptional results to the quarter and full year.

Looking ahead to 2018, we begin the year with a strong backlog position of $287.0 million, are focused on concluding our three year restructuring initiatives and will continue to take the necessary actions to meaningfully strengthen our balance sheet. Our guidance for 2018 reflects the continued execution of our strategic fundamentals, which includes driving increased sales from consumables, expanding margins in all of our businesses and increasing free cash flow conversion to position our company for growth."

Fourth Quarter Results

For the fourth quarter of 2017, sales of $324.9 million increased 12.4% from sales of $289.1 million in the same period a year ago. Excluding the favorable effects of currency movements, sales for the fourth quarter increased 9.0% versus the prior year period. Operating earnings for the fourth quarter of 2017 increased 14.8% to $10.1 million compared to operating earnings of $8.8 million in the prior year period. Adjusted EBITDA for the fourth quarter of 2017 increased 12.7% to $60.4 million, or 18.6% of sales, compared to Adjusted EBITDA of $53.6 million, or 18.5% of sales, in the prior year period. Net earnings totaled $3.3 million, or $0.05 per basic and diluted share, in the fourth quarter of 2017 compared to a net earnings of $1.1 million, or $0.02 per basic and diluted share, in the prior year period. Adjusted Net Income totaled $42.0 million in the fourth quarter of 2017 compared to Adjusted Net Income of $32.8 million in the prior year period.

Full Year Results

For the year ended December 31, 2017, sales of $1,234.2 million increased 5.8% from sales of $1,166.7 million in the prior year. Excluding the favorable effects of currency movements, sales for the year ended December 31, 2017 rose 5.2% over the prior year. Operating earnings for the year ended December 31, 2017 decreased 16.7% to $88.0 million compared to operating earnings of $105.6 million in the prior year. Operating earnings for the year ended December 31, 2017 were negatively impacted by $9.7 million of incremental restructuring costs when compared to the prior year. Adjusted EBITDA for the year ended December 31, 2017 increased 6.8% to $227.3 million, or 18.4% of sales, compared to Adjusted EBITDA of $212.8 million, or 18.2% of sales, in the prior year. Net earnings totaled $1.1 million, or $0.02 per basic and diluted share for the year ended December 31, 2017 compared to a net earnings of $30.5 million, or $0.45 and $0.43 per basic and diluted share, respectively, in the prior year. Adjusted Net Income totaled $128.2 million for the year ended December 31, 2017 compared to Adjusted Net Income of $105.7 million in the prior year.

Impact of the Tax Cuts and Jobs Act

In the fourth quarter of 2017, Milacron recorded a net income tax benefit of $8.9 million, or $0.12 diluted adjusted earnings per share, relating to the enactment of the Tax Cuts and Jobs Act. This benefit was primarily driven by the release of valuation allowances on our AMT credits and the revaluation of net deferred tax liabilities, partially offset by the recognition of withholding tax liabilities on planned cash repatriation from non-U.S. subsidiaries.

Segment Results

Advanced Plastic Processing Technologies (APPT)

Sales for the fourth quarter of 2017 were $190.3 million compared to $160.1 million in the same period a year ago. Excluding $4.6 million of favorable effects of currency movements, sales increased 16.0% compared to the prior year period. The operating loss for the fourth quarter of 2017 increased 168.8% to $4.3 million compared to an operating loss of $1.6 million in the prior year period. Adjusted EBITDA in the fourth quarter of 2017 increased 27.7% to $25.8 million, or 13.6% of sales, from Adjusted EBITDA of $20.2 million, or 12.6% of sales, in the prior year period.

For the year ended December 31, 2017, sales were $689.1 million compared to $663.9 million in the same period a year ago. Excluding $6.5 million of favorable effects of currency movements, sales increased 2.8% over the prior year. Operating earnings for the year ended December 31, 2017 decreased 69.6% to $10.6 million compared to operating earnings of $34.9 million in the prior year. Adjusted EBITDA for the full year increased 5.8% to $86.3 million, or 12.5% of sales, from Adjusted EBITDA of $81.6 million, or 12.3% of sales, in the prior year.

Melt Delivery & Control Systems (MDCS)

Sales for the fourth quarter of 2017 were $103.6 million compared to $101.0 million in the same period a year ago. Excluding $3.7 million of favorable effects of currency movements, sales decreased 1.1% compared to the prior year period. Operating earnings for the fourth quarter of 2017 increased 8.7% to $20.0 million compared to operating earnings of $18.4 million in the prior year period. Adjusted EBITDA in the fourth quarter of 2017 decreased 1.2% to $32.2 million, or 31.1% of sales, from Adjusted EBITDA of $32.6 million, or 32.3% of sales, in the prior year period.

For the year ended December 31, 2017, sales were $423.9 million, an increase of 8.7% compared to sales of $389.9 million in the same period a year ago. Operating earnings for the year ended December 31, 2017 increased 12.1% to $102.5 million compared to operating earnings of $91.4 million in the prior year. Adjusted EBITDA for the full year increased 8.6% to $138.2 million, or 32.6% of sales, from Adjusted EBITDA of $127.2 million, or 32.6% of sales, in the prior year.

Fluid Technologies (Fluids)

Sales for the fourth quarter of 2017 were $31.0 million compared to $28.0 million in the same period a year ago. Excluding $1.5 million of favorable effects of currency movements, sales increased 5.4% compared to the prior year period. Operating earnings for the fourth quarter of 2017 increased 40.5% to $5.9 million compared to operating earnings of $4.2 million in the prior year period. Adjusted EBITDA in the fourth quarter of 2017 increased 25.4% to $7.4 million, or 23.9% of sales, from Adjusted EBITDA of $5.9 million, or 21.1% of sales, in the prior year period.

For the year ended December 31, 2017, sales were $121.2 million compared to $112.9 million in the same period a year ago. Excluding $0.9 million of favorable effects of currency movements, sales increased 6.6% compared to the prior year. Operating earnings for the year ended December 31, 2017 increased 19.0% to $20.7 million compared to operating earnings of $17.4 million in the prior year. Adjusted EBITDA for the full year increased 10.2% to $26.9 million, or 22.2% of sales, from Adjusted EBITDA of $24.4 million, or 21.6% of sales, in the prior year.

2018 Outlook

In line with current market conditions, Milacron forecasts 2.0% to 4.0% sales growth in 2018, which is inclusive of an anticipated 1.0% foreign currency tailwind. Adjusted EBITDA is forecasted to be between $237 million and $243 million. Free cash flow is forecasted to be between $80 million and $90 million.

Fourth Quarter 2017:

• Sales of $324.9 million increased 12.4% on an as-reported basis and 9.0% on a constant currency basis
• Orders of $316.3 million increased 8.7% on an as-reported basis and 5.3% on a constant currency basis
• Operating earnings (GAAP) increased 14.8% to $10.1 million; Adjusted EBITDA (non-GAAP) increased 12.7% to $60.4 million, or 18.6% of sales
• Diluted EPS (GAAP) of $0.05; Diluted adjusted EPS (non-GAAP) of $0.59
• Cash flow from operations of $103.0 million increased $47.6 million, driving free cash flow of $95.5 million, a $66.3 million increase versus $29.2 million in the prior year period

Full Year 2017:

• Sales of $1,234.2 million increased 5.8% on an as-reported basis and 5.2% on a constant currency basis
• Orders of $1,299.9 million increased 9.1% on an as-reported basis and 8.5% on a constant currency basis
• Operating earnings (GAAP) decreased 16.7% to $88.0 million; Adjusted EBITDA (non-GAAP) increased 6.8% to $227.3 million, or 18.4% of sales
• Diluted EPS (GAAP) of $0.02; Diluted adjusted EPS (non-GAAP) of $1.81
• Cash flow from operations of $110.4 million decreased $5.8 million, driving free cash flow of $83.2 million, a $23.4 million increase versus $59.8 million in the prior year

Source: Milacron