Strong order performance and solid operating
cash flow progression
2016 Third Quarter Overview
- Sales of $292.2 million increased 0.8%,
on a constant currency basis (-1.1% organic, 1.9% acquisition)
- Operating earnings (GAAP) were $29.1
million; Adjusted EBITDA (non-GAAP) increased 0.6% to $54.3
million
- Diluted EPS (GAAP) of $0.10; Diluted
adjusted EPS (non-GAAP) of $0.36
- Cash flow from operations of $11.4
million drove free cash flow of $1.5 million, a $10.2 million
increase versus $(8.7) million in the prior year
Milacron Holdings Corp. (“Milacron”) (NYSE:MCRN), a leading
industrial technology company serving the plastic processing
industry, today announced financial results for the third quarter
ended September 30, 2016.
Three Months Ended September 30, In millions (except per
share data) 3Q'16 3Q'15 Change
% Change(Constant Currency)
New orders $ 284.3 $ 275.2 3.3 % 4.3% Sales $ 292.2 $
292.7 (0.2 )% 0.8% Operating earnings $ 29.1 $ 11.0 164.5 %
Adjusted EBITDA (1) $ 54.3 $ 54.0 0.6 % % of sales 18.6 % 18.4 %
+20 bps Diluted EPS $ 0.10 $ (0.17 ) NMF Diluted adjusted EPS (1)
(2) $ 0.36 $ 0.37 (2.7 )% Cash flow from operations $ 11.4 $ 4.0
185.0 % Free cash flow $ 1.5 $ (8.7 ) $ 10.2 Nine Months
Ended September 30, In millions (except per share data) 2016 2015
Change
% Change(Constant Currency)
New orders $ 900.2 $ 875.7 2.8 % 4.3% Sales $ 877.6 $ 873.2 0.5 %
2.0% Operating earnings $ 96.8 $ 38.0 154.7 % Adjusted EBITDA (1) $
159.2 $ 154.5 3.0 % % of sales 18.1 % 17.7 % +40 bps Diluted EPS $
0.42 $ (0.94 ) NMF Diluted adjusted EPS (1) (2) $ 1.04 $ 0.92 13.0
% Cash flow from operations $ 60.8 $ (5.7 ) NMF Free cash flow $
30.6 $ (30.6 ) $ 61.2
(1) See non-GAAP reconciliations included in the
accompanying financial tables for the reconciliation of each non-
GAAP measure to its most directly comparable GAAP measure.
(2) Represents fully diluted earnings per share for the three and
nine month periods ended September 30, 2015 on a pro-forma basis;
calculation uses the total diluted shares used for the three and
nine month periods September 30, 2016 (70.2 and 70.0 million
shares, respectively). NMF - Not Meaningful
“Despite sales and earnings results that fell below our
expectations in the third quarter, our 2016 strategic objectives to
create sustainable long-term shareholder value remain on track said
Milacron Chief Executive Officer, Tom Goeke. "Our order trends
continued to grow at a solid pace, up 4.3% on a constant currency
basis, primarily driven by solid commercial execution in key end
markets within our MDCS segment, where our hot runner business
recorded double digit order growth and high single digit sales
growth for the quarter. Our free cash flow performance continued
its strong turnaround from the prior year and our manufacturing
footprint optimization plan passed a critical step late in the
quarter as we entered into a restructuring plan agreement with
local works council, related to the consolidation of our
manufacturing facility in Malterdingen, Germany into our expanded
APPT facility in the Czech Republic.
The sluggish macroeconomic conditions that have limited growth
during the first nine months of 2016 will continue to impact the
fourth quarter. However, we remain confident that the strength and
balance of our plastics processing portfolio is a key
differentiator and positions us to capture growth as we continue to
execute on our "Go Forward" plan."
Milacron Chief Financial Officer, Bruce Chalmers, added, "Our
adjusted EBITDA for the quarter was below our expectations due to
operational inefficiencies, as we manage through the multi year,
multi site reorganization and transition to our Czech manufacturing
facility, which provided headwinds during the quarter. We also
continue to invest ahead of sales through the build out of our APPT
aftermarket field service organization and Systems business, which
are two key elements of our "Go Forward" plan. These investments
are critical for additional sales growth in future periods."
2016 Outlook
Milacron expects its 2016 full-year sales to be between $1,170
to $1,175 million and adjusted EBITDA guidance range to be $209 to
$212. Additionally, the Company expects capital expenditures of
approximately $45 to $50 million, interest expense to be
approximately $60 million, cash taxes to be between $30 to $35
million, an effective tax rate of approximately 30% and shares
outstanding to be approximately 70 million.
Third Quarter Results
For the third quarter of 2016, sales of $292.2 million decreased
0.2% from sales of $292.7 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 third
quarter of 2016 decreased 1.1% versus the prior year period.
Operating earnings for the third quarter of 2016 increased 164.5%
to $29.1 million compared to operating earnings of $11.0 million in
the prior year period. Adjusted EBITDA for the third quarter of
2016 increased 0.6% to $54.3 million, or 18.6% of sales, compared
to Adjusted EBITDA of $54.0 million, or 18.4% of sales, in the
prior year period. Net earnings totaled $6.7 million, or $0.10 per
basic and diluted share, in the third quarter of 2016 compared to a
net loss of $11.2 million, or a loss of $0.17 per basic and diluted
share, in the prior year period. Adjusted net income totaled $25.1
million, or $0.36 per diluted share, in the third quarter of 2016
compared to adjusted net income of $25.7 million in the prior year
period.
Year-to-Date Results
For the first nine months of 2016, sales of $877.6 million
increased 0.5% from sales of $873.2 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 nine months of 2016 increased 0.1% versus the prior year
period. Operating earnings for the first nine months of 2016
increased 154.7% to $96.8 million compared to operating earnings of
$38.0 million in the prior year period. Adjusted EBITDA for the
first nine months of 2016 increased 3.0% to $159.2 million, or
18.1% of sales, compared to Adjusted EBITDA of $154.5 million, or
17.7% of sales, in the prior year period. Net earnings totaled
$29.4 million, or $0.44 per basic and $0.42 per diluted share, in
the first nine months of 2016 compared to a net loss of $54.3
million, or a loss of $0.94 per basic and diluted share, in the
prior year period. Adjusted net income totaled $72.9 million, or
$1.04 per diluted share, in the first nine months of 2016 compared
to adjusted net income of $64.7 million in the prior year
period.
Segment Results
Advanced Plastic Processing Technologies (APPT)
Sales for the third quarter of 2016 were $168.7 million compared
to $170.8 million in the same period a year ago. Excluding $1.2
million of unfavorable effects of currency movements, sales
decreased 0.5% over the prior year period. Operating earnings for
the third quarter of 2016 decreased 30.4% to $11.2 million compared
to operating earnings of $16.1 million in the prior year period.
Adjusted EBITDA in the third quarter decreased 0.5% to $21.5
million, or 12.7% of sales, from Adjusted EBITDA of $21.6 million,
or 12.6% of sales, in the prior year period.
For the first nine months of 2016, sales were $503.8 million
compared to $496.0 million in the same period a year ago. Excluding
$5.8 million of unfavorable effects of currency movements, sales
increased 2.7% over the prior year period. Operating earnings for
the first nine months of 2016 decreased 7.1% to $36.5 million
compared to operating earnings of $39.3 million in the prior year
period. Adjusted EBITDA for the first nine months was flat at $61.4
million, or 12.2% of sales, versus Adjusted EBITDA of $61.5
million, or 12.4% of sales, in the prior year period.
Melt Delivery & Control Systems (MDCS)
Sales for the third quarter of 2016 were $95.4 million compared
to $92.0 million in the same period a year ago. Excluding $0.9
million of unfavorable effects of currency movements, sales
increased 4.7% over the prior year period. Operating earnings for
the third quarter of 2016 increased 105.0% to $20.5 million
compared to operating earnings of $10.0 million in the prior year
period. Adjusted EBITDA in the third quarter increased 4.8% to
$30.6 million, or 32.1% of sales, from Adjusted EBITDA of $29.2
million, or 31.7% of sales, in the year ago quarter.
For the first nine months of 2016, sales were $288.9 million
compared to sales of $289.3 million in the same period a year ago.
Excluding $4.6 million of unfavorable effects of currency
movements, sales increased 1.5% over the prior year period.
Operating earnings for the first nine months of 2016 increased
114.1% to $73.0 million compared to operating earnings of $34.1
million in the prior year period. Adjusted EBITDA for the first
nine months increased 5.7% to $94.6 million, or 32.7% of sales,
from Adjusted EBITDA of $89.5 million, or 30.9% of sales, in the
prior year period.
Fluid Technologies
Sales for the third quarter of 2016 were $28.1 million compared
to $29.9 million in the same period a year ago. Excluding $0.6
million of unfavorable effects of currency movements, sales
decreased 4.0% over the prior year period. Operating earnings for
the third quarter of 2016 increased 51.9% to $4.1 million compared
to operating earnings of $2.7 million in the prior year period.
Adjusted EBITDA in the third quarter decreased 11.9% to $5.9
million, or 21.0% of sales, from Adjusted EBITDA of $6.7 million,
or 22.4% of sales, in the year ago quarter.
For the first nine months of 2016, sales were $84.9 million
compared to sales of $87.9 million in the same period a year ago.
Excluding $2.3 million of unfavorable effects of currency
movements, sales decreased 0.8% over the prior year period.
Operating earnings for the first nine months of 2016 increased
41.9% to $13.2 million compared to operating earnings of $9.3
million in the prior year period. Adjusted EBITDA for the first
nine months increased 2.2% to $18.5 million, or 21.8% of sales,
from Adjusted EBITDA of $18.1 million, or 20.6% of sales, in the
prior year period.
Additional Financial Information
Milacron ended the third quarter of 2016 with cash and cash
equivalents of $102.7 million and total debt of $953.8 million at
September 30, 2016, resulting in net debt of $851.1 million and a
net total leverage ratio of 3.9x.
Conference Call
Milacron will host a conference call to discuss its third
quarter 2016 financial results at 8 a.m. Eastern Time on
November 1, 2016. The live webcast of the call can be accessed at
the Milacron Investor Relations website at http://investors.milacron.com, along with the
company's earnings press release and related presentation
materials. The U.S. dial-in for the call is 1-877-407-8037
(1-201-689-8037 for non-U.S. callers). A replay of the conference
call will be available until November 15, 2016 at 11:59 p.m.
Eastern Time, while an archived version of the webcast will be
available on the Milacron Investor Relations website for 90 days.
The U.S. dial-in for the conference call replay is 1-877-660-6853
(1-201-612-7415). The replay access code is 13635788.
About Milacron
Milacron is a global leader in the manufacture, distribution and
service of highly engineered and customized systems within the
plastic technology and processing industry. Milacron is the only
global company with a full-line product portfolio that includes hot
runner systems, injection molding, blow molding and extrusion
equipment.
Forward-Looking
Statements
This press release contains forward-looking statements. The
words “believe,” “expect,” “anticipate,” "plan," “intend,”
"should," “estimate” and other expressions that are predictions of
or indicate future events and trends and that do not relate to
historical matters identify forward-looking statements. You should
not place undue reliance on these forward-looking statements.
Although forward-looking statements reflect management’s good faith
beliefs, reliance should not be placed on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements to differ materially from anticipated
future results, performance or achievements expressed or implied by
such forward-looking statements. Forward-looking statements speak
only as of the date the statements are made. Except as required by
law, Milacron undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise.
These forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to demand for our
products being significantly affected by general economic
conditions, any decline in the use of plastic, the competitiveness
of the industries in which we operate and the financial resources
of our competitors, our ability to successfully develop and
implement strategic initiatives to increase cost savings and
improve operating margins and the other risk factors set forth in
our Annual Report on Form 10-K for the year ended December 31,
2015, as filed with the SEC on March 2, 2016, and other SEC
filings, copies of which are available free of charge on our
website at investors.milacron.com.
Non-GAAP Financial Measures
We prepare our financial statements in conformity with United
States generally accepted accounting principles ("U.S. GAAP"). To
supplement this information, we also use the following non-GAAP
financial measures: Adjusted EBITDA and Adjusted Net Income.
Because not all companies use identical calculations, these
presentations may not be comparable to other similarly titled
measures of other companies.
Adjusted EBITDA
Adjusted EBITDA represents net income before interest expense,
taxes, depreciation and amortization, as further adjusted for the
other items reflected in the reconciliation table set forth below.
Adjusted EBITDA is a measure used by management to measure
operating performance. Adjusted EBITDA is not a presentation made
in accordance with U.S. GAAP, is not a measure of financial
condition or profitability, and should not be considered as an
alternative to net earnings (loss) determined in accordance with
U.S. GAAP or operating cash flows determined in accordance with
U.S. GAAP or any other performance measure derived in accordance
with U.S. GAAP and should not be construed as an inference that our
future results will be unaffected by unusual non-recurring items.
Additionally, Adjusted EBITDA is not intended to be a measure of
free cash flow for management’s discretionary use, as it does not
include certain cash requirements such as interest payments, tax
payments, debt service requirements and certain other cash costs
that may recur in the future.
We view Adjusted EBITDA as a key measure of our performance. We
present Adjusted EBITDA not only due to its importance for
purposes of our credit agreements but also because it assists us in
comparing our performance across reporting periods on a consistent
basis as it excludes items that we do not believe are indicative of
our core operating performance. Our management uses Adjusted
EBITDA:
- as a measurement used in evaluating our
consolidated and segment-level operating performance on a
consistent basis;
- to calculate incentive compensation for
our employees
- for planning purposes, including the
preparation of our internal annual operating budget;
- to evaluate the performance and
effectiveness of our operational strategies; and
- to assess compliance with various
metrics associated with our debt agreements.
We believe that the inclusion of Adjusted EBITDA is useful to
provide additional information to investors about certain material
non-cash items as well as items considered to be one-time or
non-recurring to the operations of the business. While we believe
these financial measures are commonly used by investors to evaluate
our performance and that of our competitors, because not all
companies use identical calculations, this presentation of Adjusted
EBITDA may not be comparable to other similarly titled measures of
other companies and should not be considered as an alternative to
performance measures derived in accordance with U.S. GAAP. Adjusted
EBITDA is calculated as net earnings (loss) before income tax
expense, interest expense, net, depreciation and amortization
further adjusted to exclude other items as reflected in the
reconciliation table below.
In evaluating Adjusted EBITDA, you should be aware that in the
future we will incur expenses such as those used in calculating
Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be
construed as an inference that our future results will be
unaffected by usual or non-recurring items. Because of these
limitations, Adjusted EBITDA should not be considered as a measure
of discretionary cash available to us to invest in the growth of
our business. We compensate for these limitations by relying
primarily on our U.S. GAAP results and using Adjusted EBITDA only
supplementary.
Adjusted Net Income
Adjusted Net Income measures our operating performance by
adjusting net earnings (loss) to exclude amortization expense,
non-cash currency effect on intercompany loans, organizational
redesign costs, long-term equity awards and shareholder fees,
acquisition integration costs, professional services and certain
other non-recurring items. Management uses this measure to evaluate
our core operating results as it excludes certain items whose
fluctuations from period-to-period do not necessarily correspond to
changes in the core operations of the business, but includes
certain items such as depreciation, interest expense and interest
tax expense, which are otherwise excluded from Adjusted EBITDA. We
believe the presentation of Adjusted Net Income enhances our
investors’ overall understanding of the financial performance and
cash flow of our business. You should not consider Adjusted Net
Income as an alternative to net earnings (loss), determined in
accordance with U.S. GAAP, as an indicator of operating
performance.
Adjusted Earnings Per Share
Adjusted Earnings Per Share is defined as Adjusted Net Income
divided by diluted weighted average shares outstanding. We believe
Adjusted Earnings Per Share is useful to investors because it
measures our operating performance, on a per share basis, by
adjusting net earnings (loss), on a per share basis, to exclude
amortization expense, non-cash currency effect on intercompany
loans, organizational redesign costs, long-term equity awards and
shareholder fees, acquisition integration costs, professional
services and certain other non-recurring items. We believe the
presentation of Adjusted Earnings Per Share enhances our investors’
overall understanding of the financial performance and cash flow of
our business. You should not consider Adjusted Earnings Per Share
as an alternative to earnings per share, determined in accordance
with U.S. GAAP, as an indicator of operating performance.
MILACRON HOLDINGS CORP. CONDENSED
CONSOLIDATED BALANCE SHEETS
September 30, 2016
(Unaudited)
December 31, 2015 (in millions) Assets
Current assets: Cash and cash equivalents $ 102.7 $ 67.5 Accounts
receivable, net 199.1 204.4 Inventories, net: Raw materials 82.1
81.1 Work-in-process 51.1 48.3 Finished products 118.9 109.5
Total inventories 252.1 238.9 Prepaid and other current
assets 53.9 38.6 Total current assets 607.8 549.4
Property and equipment, net 223.3 221.8 Goodwill 527.2 530.1
Intangible assets, net 362.0 380.1 Other noncurrent assets 11.2
14.9 Total assets $ 1,731.5 $ 1,696.3
Liabilities and shareholders’ equity Current liabilities:
Short-term borrowings $ 7.4 $ 7.4 Long-term debt and capital lease
obligations due within one year 0.1 0.4 Accounts payable 78.2 79.2
Advanced billings and deposits 48.8 39.7 Accrued salaries, wages
and other compensation 24.3 30.8 Accrued interest 4.9 13.9 Other
current liabilities 59.1 52.5 Total current
liabilities 222.8 223.9 Long-term debt and capital lease
obligations 933.6 931.9 Deferred income tax liabilities 64.4 66.2
Accrued pension liabilities 25.7 25.2 Other noncurrent accrued
liabilities 9.1 8.2 Total liabilities 1,255.6 1,255.4
Shareholders’ equity: Preferred stock — — Common stock 0.7 0.7
Capital in excess of par value 656.9 648.7 Retained deficit (70.0 )
(99.4 ) Accumulated other comprehensive loss (111.7 ) (109.1 )
Total shareholders’ equity 475.9 440.9 Total
liabilities and shareholders’ equity $ 1,731.5 $ 1,696.3
MILACRON HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 (in millions,
except share and per share data) Net sales $ 292.2 $
292.7 $ 877.6 $ 873.2 Cost of sales 192.5 191.4 574.5
569.8 Manufacturing margins 99.7 101.3 303.1 303.4
Operating expenses: Selling, general and administrative expenses
60.3 69.2 187.0 207.5 Amortization expense 7.8 8.7 23.5 27.3 (Gain)
loss on currency translation (0.3 ) 8.7 (8.3 ) 18.6 Other expense,
net 2.8 3.7 4.1 12.0 Total operating
expenses 70.6 90.3 206.3 265.4
Operating earnings 29.1 11.0 96.8 38.0 Interest expense, net 15.2
15.6 45.6 52.4 Loss on debt extinguishment — — —
22.2 Earnings (loss) before income taxes 13.9 (4.6 )
51.2 (36.6 ) Income tax expense 7.2 6.6 21.8
17.7 Net earnings (loss) $ 6.7 $ (11.2 ) $ 29.4
$ (54.3 ) Weighted average shares outstanding: Basic
67,567,671 66,900,081 67,389,370 57,529,038
Diluted 70,228,702 66,900,081 70,019,487
57,529,038 Earnings (loss) per share: Basic $
0.10 $ (0.17 ) $ 0.44 $ (0.94 ) Diluted $ 0.10
$ (0.17 ) $ 0.42 $ (0.94 )
MILACRON
HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Nine Months Ended
September 30, 2016 2015 ( in
millions) Operating activities Net earnings (loss) $
29.4 $ (54.3 ) Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities: Depreciation and
amortization 44.8 47.0 Unrealized (gain) loss on currency
translation of intercompany advances (7.3 ) 19.6 Amortization of
deferred financing costs 2.8 3.1 Loss on debt extinguishment — 8.4
Asset impairments
1.4 2.2 Non-cash stock-based compensation
expense 4.0 19.7 Deferred income taxes (0.4 ) 0.8 Changes in assets
and liabilities: Accounts receivable 6.3 (18.6 ) Inventories (12.0
) (21.2 ) Prepaid and other current assets (8.5 ) 2.2 Accounts
payable 0.2 1.3 Advanced billings and deposits 8.6 (12.7 ) Other
current liabilities (12.7 ) (0.6 ) Other noncurrent assets 3.4 (1.5
) Other noncurrent accrued liabilities 0.8 (1.1 ) Net cash
provided by (used in) operating activities 60.8 (5.7 )
Investing
activities Purchases of property and equipment (31.0 ) (39.7 )
Proceeds from disposals of property and equipment 0.8 1.0
Net cash used in investing activities (30.2 ) (38.7 )
Financing activities Proceeds from issuance of long-term
debt (original maturities longer than 90 days) — 795.3 Payments on
long-term debt and capital lease obligations (original maturities
longer than 90 days) (0.7 ) (874.0 ) Net increase (decrease) in
short-term borrowings (original maturities of 90 days or less) 0.1
(1.4 ) Dividends paid — (144.6 ) Proceeds from issuance of common
stock — 294.0 Initial public offering issuance costs — (21.1 )
Proceeds from exercise of stock options 4.2 0.4 Debt issuance costs
— (7.0 ) Net cash provided by financing activities 3.6 41.6
Effect of exchange rate changes on cash 1.0 (4.2 ) Increase
(decrease) in cash and cash equivalents 35.2 (7.0 ) Cash and cash
equivalents at beginning of period 67.5 81.5 Cash and
cash equivalents at end of period $ 102.7 $ 74.5
MILACRON HOLDINGS CORP. SALES BY
BUSINESS SEGMENT (Unaudited) Three
Months Ended September 30, Nine Months Ended
September 30, 2016 2015 2016
2015 ( in millions) Sales by segment: Advanced
Plastic Processing Technologies $ 168.7 $ 170.8 $ 503.8 $ 496.0
Melt Delivery and Control Systems 95.4 92.0 288.9 289.3 Fluid
Technologies 28.1 29.9 84.9 87.9 Total $ 292.2
$ 292.7 $ 877.6 $ 873.2
MILACRON HOLDINGS CORP. RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (Unaudited) Three
Months Ended September 30, Nine Months Ended
September 30, 2016 2015 2016
2015 (in millions) Net earnings (loss) $ 6.7 $ (11.2
) $ 29.4 $ (54.3 ) Amortization expense 7.8 8.7 23.5 27.3 Currency
effect on intercompany advances (a) — 9.4 (7.3 ) 19.6
Organizational redesign costs (b) 5.8 4.9 14.7 15.8 Long-term
equity awards and shareholder fees (c) 2.2 12.3 5.2 23.4 Debt costs
(d) — 0.1 — 23.2 Acquisition integration costs (e) — (0.3 ) — 3.2
Professional services (f) 0.4 1.6 2.5 4.3 Fair market value
adjustments (g) — — 0.3 — Annual effective tax rate adjustment (h)
0.4 — 2.4 — Other (i) 1.8 0.2 2.2 2.2
Adjusted Net Income $ 25.1 $ 25.7 $ 72.9 $ 64.7 Income tax
expense (h) 6.8 6.6 19.4 17.7 Interest expense, net 15.2 15.6 45.6
52.4 Depreciation expense 7.2 6.1 21.3 19.7
Adjusted EBITDA $ 54.3 $ 54.0 $ 159.2
$ 154.5 (a) Non-cash currency effect on
intercompany advances primarily relates to advances denominated in
foreign currencies. The most significant exposure relates to the
Canadian dollar pursuant to intercompany advances within the MDCS
segment. (b) Organizational redesign costs in the three
months ended September 30, 2016 primarily included $1.4 million for
termination costs as a result of eliminated positions, $2.0 million
of costs related to the shutdown of facilities and $0.3 million of
costs related to the restructuring of Fluids in Europe.
Organizational redesign costs in the nine months ended September
30, 2016 primarily included $4.7 million for termination costs as a
result of eliminated positions, $4.4 million of costs related to
the shutdown of facilities, $0.5 million of costs related to
relocating our facility in Belgium to the Czech Republic and $0.3
million of costs related to the restructuring of Fluids in Europe.
Organizational redesign costs in the three months ended September
30, 2015 primarily included $1.5 million of severance and $0.8
million of one-time project costs related to the restructuring of
Fluids in Europe, $1.0 million for termination costs as a result of
eliminated positions, $0.5 million of costs related to the
restructuring of the procurement organization, and $0.4 million of
costs related to relocating our facility in Italy to the Czech
Republic. Organizational redesign costs in the nine months ended
September 30, 2015 primarily included $3.8 million of severance and
$2.9 million of one-time project costs related to relocating our
facilities in Belgium and Italy to the Czech Republic, $3.3 million
for termination costs as a result of eliminated positions, $2.8
million of costs related to the restructuring of Fluids in Europe,
and $0.7 million of costs related to the restructuring of the
procurement organization. (c) Long-term equity awards and
shareholder fees include the charges associated with stock-based
compensation awards granted to certain executives and independent
directors and a cash advisory fee paid to CCMP in the three and
nine months ended September 30, 2016 and 2015. The cash advisory
payment to CCMP ceased as of the effective date of our IPO.
(d) Debt costs incurred during the nine months ended September 30,
2015 included $22.2 million of debt extinguishment costs and $0.9
million of fees related to the new senior secured term loan
facility due September 2020 ("New Term Loan Facility"). (e)
Acquisition integration costs in the three months ended September
30, 2015 included a $0.4 million gain for the adjustment to an
accrued incentive payment. In the nine months ended September 30,
2015, we incurred $1.5 million of costs to introduce the
integration and new branding of all Milacron companies. In
addition, acquisition integration costs in the nine months ended
September 30, 2015 included $1.5 million of costs related to the
Kortec, Inc. ("Kortec"), TIRAD s.r.o. ("TIRAD") and Mold-Masters
acquisitions for product line integration and other strategic
alignment initiatives. (f) Professional fees in the three
and nine months ended September 30, 2016 included $0.4 million and
$2.5 million, respectively, of costs for strategic organizational
initiatives. Professional fees related to operational efficiency,
business development, and other one-time advisory projects in the
three and nine months ended September 30, 2015 included $0.4
million and $2.6 million of fees for readiness initiatives
associated with our IPO and $0.7 million and $1.0 million of costs
for strategic organizational initiatives, respectively. (g)
Non-cash fair market value adjustments relate to acquisition
accounting for the fair market value of inventory as part of our
acquisition of CanGen in the fourth quarter of 2015. (h) The
annual effective tax rate adjustment primarily includes the impact
to the tax provision utilizing the annual effective tax rate
recomputed with anticipated tax rate reductions that have not been
recognized for U.S. GAAP purposes as the Company is awaiting
regulatory approval. The reductions have historically been
approved, or are expected to be approved, although there are no
guarantees that the regulatory authorities will accept the
Company’s applications. In addition, the adjustment includes the
impact of interim and intra-period tax expense and benefits that
are expected to reverse in subsequent periods as well as the tax
benefit associated with reconciling net earnings (loss) to Adjusted
Net Income. (i) Other costs for the three and nine months
ended September 30, 2016 includes $1.4 million related to the
impairment of certain software licenses. Other costs for the nine
months ended September 30, 2016 includes the write-off of a $0.5
million non-trade receivable. Other costs for the nine months ended
September 30, 2015 include a non-cash charge of $2.2 million
related to the impairment of certain trademarks.
MILACRON HOLDINGS CORP.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2016
2015 2016 2015 (in millions)
Operating earnings (loss): APPT $ 11.2 $ 16.1 $ 36.5 $ 39.3 MDCS
20.5 10.0 73.0 34.1 Fluids 4.1 2.7 13.2 9.3 Corporate (6.7 ) (17.8
) (25.9 ) (44.7 ) Total operating earnings 29.1 11.0 96.8 38.0
Adjustments to operating earnings: APPT Adjustments: Depreciation
and amortization 5.0 4.5 15.0 14.9 Currency effect on intercompany
advances (a) (0.1 ) — (0.1 ) — Organizational redesign costs (b)
4.0 1.0 8.2 4.0 Acquisition integration costs (e) — — — 0.9
Professional services (f) — — 0.1 0.2 Fair market value adjustments
(g) — — 0.3 — Other (h) 1.4 — 1.4 2.2
Total APPT Adjustments 10.3 5.5 24.9 22.2 MDCS Adjustments:
Depreciation and amortization 8.4 8.6 25.1 26.8 Currency effect on
intercompany advances (a) 0.4 9.4 (6.7 ) 19.4 Organizational
redesign costs (b) 1.1 1.1 3.0 7.2 Acquisition integration costs
(e) — (0.4 ) — 1.7 Professional services (f) — 0.3 0.1 0.3 Other
(h) 0.2 0.2 0.1 — Total MDCS
Adjustments 10.1 19.2 21.6 55.4 Fluids Adjustments: Depreciation
and amortization 1.4 1.6 4.1 5.0 Organizational redesign costs (b)
0.3 2.4 0.6 3.7 Professional services (f) — — — 0.1 Other (h) 0.1
— 0.6 — Total Fluids Adjustments 1.8
4.0 5.3 8.8 Corporate Adjustments: Depreciation and amortization
0.2 0.1 0.6 0.3 Currency effect on intercompany advances (a) (0.3 )
— (0.5 ) 0.2 Organizational redesign costs (b) 0.4 0.4 2.9 0.9
Long-term equity awards and shareholder fees (c) 2.2 12.3 5.2 23.4
Debt costs (d) — 0.1 — 1.0 Acquisition integration costs (e) — 0.1
— 0.6 Professional services (f) 0.4 1.3 2.3 3.7 Other (h) 0.1
— 0.1 — Total Corporate Adjustments 3.0
14.3 10.6 30.1 Adjusted EBITDA: APPT 21.5 21.6 61.4 61.5 MDCS 30.6
29.2 94.6 89.5 Fluids 5.9 6.7 18.5 18.1 Corporate (3.7 ) (3.5 )
(15.3 ) (14.6 )
Total Adjusted EBITDA $ 54.3 $ 54.0
$ 159.2 $ 154.5 (a) Non-cash
currency effect on intercompany advances primarily relates to
advances denominated in foreign currencies. The most significant
exposure relates to the Canadian dollar pursuant to intercompany
advances within the MDCS segment. (b) Organizational
redesign costs in the three months ended September 30, 2016
primarily included $2.0 million of costs related to the shutdown of
facilities in APPT, $1.4 million for termination costs as a result
of eliminated positions across all segments and $0.3 million of
costs related to the restructuring of Fluids in Europe.
Organizational redesign costs in the nine months ended September
30, 2016 included $4.4 million of costs related to the shutdown of
facilities in APPT, $0.5 million of costs related to relocating our
facility in Belgium to the Czech Republic in MDCS and $0.3 million
of costs related to the restructuring of Fluids in Europe. In the
nine months ended September 30, 2016, organizational redesign costs
across all segments included $4.7 million for termination costs as
a result of eliminated positions. Organizational redesign costs in
APPT in the three months ended September 30, 2015 included $0.4
million of costs related to relocating our facility in Italy to the
Czech Republic and $0.2 million of costs related to the
restructuring of the procurement organization. Organizational
redesign costs incurred in MDCS in the three months ended September
30, 2015 included $0.8 million for termination costs as a result of
eliminated positions. Organizational redesign costs incurred in
Fluids during the three months ended September 30, 2015 included
$1.5 million of severance and $0.8 million of one-time project
costs related to restructuring in Europe. In the nine months ended
September 30, 2015, organizational redesign costs in the APPT and
MDCS segments included $2.0 million and $4.7 million for costs
related to relocating our facilities in Italy and Belgium to the
Czech Republic, respectively. As incurred at the respective
segments, organizational redesign costs in the nine months
September 30, 2015 included $3.3 million for termination costs as a
result of eliminated positions. Organizational redesign costs for
Fluids during the nine months ended September 30, 2015 included
$2.8 million of severance and one-time project costs related to
restructuring in Europe. (c) Long-term equity awards and
shareholder fees in Corporate include the charges associated with
stock-based compensation awards granted to certain executives and
independent directors and a cash advisory fee paid to CCMP during
the three and nine months ended September 30, 2016 and 2015. The
cash advisory payment to CCMP ceased as of the effective date of
our IPO. (d) Debt costs incurred during the nine months
ended September 30, 2015 included $0.9 million of fees related to
the New Term Loan Facility. (e) Acquisition integration
costs for MDCS in the three months ended September 30, 2015
included a $0.4 million gain for an adjustment to an accrued
incentive payment. Acquisition integration costs for MDCS in the
nine months ended September 30, 2015 include $1.5 million related
to the Kortec, TIRAD and Mold-Masters acquisitions for product line
integration and other strategic alignment initiatives. In addition,
APPT and Corporate acquisition integration costs for the nine
months ended September 30, 2015 include $0.7 million and $0.6
million of one-time costs to introduce the integration and new
branding of all Milacron companies, respectively. (f)
Professional fees incurred by Corporate in the three and nine
months ended September 30, 2016 included $0.4 million and $2.5
million of costs for strategic organizational initiatives,
respectively. Professional fees incurred by Corporate in the three
and nine months ended September 30, 2015 included $0.3 million and
$2.4 million for readiness initiatives related to our IPO,
respectively. In addition, professional fees incurred by Corporate
in the three and nine months ended September 30, 2015 included $0.6
million and $0.9 million of costs for strategic organizational
initiatives, respectively. (g) Non-cash fair market value
adjustments relate to acquisition accounting for the fair market
value of inventory as part of our acquisition of CanGen in the
fourth quarter of 2015. (h) Other costs for APPT for the
three and nine months ended September 30, 2016 includes $1.4
million related to the impairment of certain software licenses.
Other costs for Fluids for the nine months ended September 30, 2016
includes the write-off of a $0.5 million non-trade receivable.
Other costs for APPT for the nine months ended September 30, 2015
included a non-cash charge of $2.2 million related to the
impairment of certain trademarks.
MILACRON
HOLDINGS CORP. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited) Three Months Ended
September 30, Nine Months Ended September 30,
2016 2015 2016 2015
(in millions, except per share data) GAAP diluted earnings
(loss) per share (a) $ 0.10 $ (0.16 ) $ 0.42 $ (0.78 ) Amortization
expense 0.11 0.12 0.34 0.39 Currency effect on intercompany
advances — 0.13 (0.10 ) 0.28 Organizational redesign costs 0.08
0.07 0.21 0.23 Long-term equity awards and shareholder fees 0.03
0.18 0.07 0.33 Debt costs — — — 0.33 Acquisition integration costs
— — — 0.05 Professional services 0.01 0.02 0.04 0.06 Annual
effective tax rate adjustment 0.01 — 0.03 — Other 0.02 0.01
0.03 0.03 Adjusted diluted earnings per share
(a) $ 0.36 $ 0.37 $ 1.04 $ 0.92
(a) Represents fully diluted earnings (loss) per share for
the three and nine month periods ended September 30, 2015 on a
pro-forma basis; calculation uses the total diluted shares used for
the three and nine month periods ended September 30, 2016 (70.2 and
70.0 million shares, respectively).
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161101005846/en/
MilacronInvestor Relations:Mac Jones,
513-487-5057Mac_Jones@milacron.comorMedia:Michael Ellis,
905-877-0185 ext. 354Michael_Ellis@milacron.com
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