Market Overview

Milacron Holdings Corp. Reports Second Quarter 2018 Results

Share:

Record sales driven by 9% consumables growth highlights solid
second quarter

2018 Second Quarter Overview

  • Sales of $328.1 million increased 6.1% on an as-reported basis and
    3.7% on a constant currency basis
  • Orders of $342.3 million increased 2.2% on an as-reported basis and
    0.3% on a constant currency basis
  • Operating earnings (GAAP) increased 21.8% to $35.2 million; Adjusted
    EBITDA (non-GAAP) increased 5.4% to $62.8 million
  • Diluted EPS (GAAP) of $0.21; Diluted adjusted EPS (non-GAAP) increased
    4.3% to $0.48
  • Cash flow from operations of $14.5 million increased $7.2 million,
    driving free cash flow of $6.4 million, a $0.5 million increase versus
    $5.9 million from 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 second quarter ended June 30, 2018.

  Three Months Ended June 30,

In millions (except per share data)

     

% Change

 

2018 2017 Change

(Constant Currency)

New orders $ 342.3 $ 334.9 2.2 % 0.3

%

Sales $ 328.1 $ 309.2 6.1 % 3.7

%

Operating earnings $ 35.2 $ 28.9 21.8 %
Adjusted EBITDA (1) $ 62.8 $ 59.6 5.4 %
% of sales 19.1 % 19.3 % -20 bps
Diluted EPS $ 0.21 $ 0.14 50.0 %
Diluted adjusted EPS (1) $ 0.48 $ 0.46 4.3 %
Cash flow from operations $ 14.5 $ 7.3 $ 7.2
Free cash flow (1) $ 6.4 $ 5.9 8.5 %
 
Six Months Ended June 30,

In millions (except per share data)

% Change

 

2018 2017 Change (Constant Currency)
New orders $ 667.4 $ 661.3 0.9 % (2.3

)%

Sales $ 638.5 $ 594.6 7.4 % 3.5

%

Operating earnings $ 58.3 $ 48.9 19.2 %
Adjusted EBITDA (1) $ 118.2 $ 109.6 7.8 %
% of sales 18.5 % 18.4 % +10 bps
Diluted EPS $ 0.29 $ (0.21 ) NMF
Diluted adjusted EPS (1) $ 0.87 $ 0.78 11.5 %
Cash flow from operations $ 22.1 $ (1.4 ) $ 23.5
Free cash flow (1) $ 14.7 $ (12.0 ) $ 26.7

(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.

 

NMF - Not Meaningful

 

"Milacron delivered another solid quarter with 4% constant currency
sales growth and Adjusted EBITDA growth of 5%" said Milacron Chief
Executive Officer, Tom Goeke. "Our growth continues to be driven by our
consumables businesses as well as our high growth regions, China and
India. Year-to-date, we have realized Adjusted EBITDA growth of 8%,
adjusted diluted EPS growth of 12% and free cash flow improvement of $27
million."

Milacron Chief Financial Officer, Bruce Chalmers, added, "We continue to
strengthen our balance sheet by making voluntary debt payments on our
term loan. Through the second quarter, we have paid down $50 million of
debt and we expect to pay down an additional $50 million during the
remainder of 2018. With regard to full year guidance and the impact of
enacted tariffs, we are tightening our original Adjusted EBITDA range to
$237 million to $240 million, which represents approximately 5% growth
over the prior year. We are also raising our full year tax provision to
$38 million, reflecting our continued strong performance in China and
India."

2018 Revised Outlook

In line with current market conditions, Milacron forecasts 2.0% to 4.0%
organic 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 $240 million. Free Cash Flow is forecasted to be
between $80 million and $90 million.

 

Supplemental Guidance Information

Capital Expenditures   ~$45 million
Interest Expense (P&L) ~$45 million
Cash Interest (Cash Flow) ~$45 million
Non-GAAP Tax Provision (P&L) ~$38 million
Cash Taxes (Cash Flow) ~$34 million
Diluted Shares Outstanding ~72.5 million shares
 

Second Quarter Results

For the second quarter of 2018, sales of $328.1 million increased 6.1%
from sales of $309.2 million in the same period a year ago. Excluding
the favorable effects of currency movements, organic sales for the
second quarter of 2018 increased 3.7% versus the prior year period.
Operating earnings for the second quarter of 2018 increased 21.8% to
$35.2 million compared to operating earnings of $28.9 million in the
prior year period. Adjusted EBITDA for the second quarter of 2018
increased 5.4% to $62.8 million, or 19.1% of sales, compared to Adjusted
EBITDA of $59.6 million, or 19.3% of sales, in the prior year period.
Net earnings totaled $14.9 million, or $0.21 per basic and diluted
share, in the second quarter of 2018 compared to net earnings of $10.1
million, or $0.15 per basic share and $0.14 per diluted share, in the
prior year period. Adjusted Net Income totaled $34.2 million, or $0.48
per diluted share, in the second quarter of 2018 compared to Adjusted
Net Income of $32.6 million, or $0.46 per diluted share, in the prior
year period.

Year-to-Date Results

For the first six months of 2018, sales of $638.5 million increased 7.4%
from sales of $594.6 million in the same period a year ago. Excluding
the favorable effects of currency movements, organic sales for the first
six months of 2018 increased 3.5% versus the prior year period.
Operating earnings for the first six months of 2018 increased 19.2% to
$58.3 million compared to operating earnings of $48.9 million in the
prior year period. Adjusted EBITDA for the first six months of 2018
increased 7.8% to $118.2 million, or 18.5% of sales, compared to
Adjusted EBITDA of $109.6 million, or 18.4% of sales, in the prior year
period. Net earnings totaled $20.8 million, or $0.30 per basic share and
$0.29 per diluted share, in the first six months of 2018 compared to a
net loss of $14.5 million, or $0.21 per basic and diluted share, in the
prior year period. Adjusted Net Income totaled $62.6 million, or $0.87
per diluted share, in the first six months of 2018 compared to Adjusted
Net Income of $55.2 million, or $0.78 per diluted share, in the prior
year period.

Segment Results

Melt Delivery & Control Systems (MDCS)

Sales for the second quarter of 2018 were $124.1 million compared to
$112.4 million in the same period a year ago. Excluding $5.8 million of
favorable effects of currency movements, sales increased 5.2% over the
prior year period. Operating earnings for the second quarter of 2018
increased 0.7% to $30.3 million compared to operating earnings of $30.1
million in the prior year period. Adjusted EBITDA in the second quarter
of 2018 increased 1.0% to $40.5 million, or 32.6% of sales, from
Adjusted EBITDA of $40.1 million, or 35.7% of sales, in the prior year
period.

For the first six months of 2018, sales were $240.6 million compared to
sales of $212.2 million in the same period a year ago. Excluding $13.8
million of favorable effects of currency movements, sales increased 6.9%
over the prior year period. Operating earnings for the first six months
of 2018 increased 2.5% to $57.0 million compared to operating earnings
of $55.6 million in the prior year period. Adjusted EBITDA for the first
six months of 2018 increased 8.0% to $78.7 million, or 32.7% of sales,
from Adjusted EBITDA of $72.9 million, or 34.4% of sales, in the prior
year period.

Fluid Technologies

Sales for the second quarter of 2018 were $33.6 million compared to
$30.5 million in the same period a year ago. Excluding $1.3 million of
favorable effects of currency movements, sales increased 5.9% over the
prior year period. Operating earnings for the second quarter of 2018
increased 16.4% to $6.4 million compared to operating earnings of $5.5
million in the prior year period. Adjusted EBITDA in the second quarter
of 2018 increased 10.1% to $7.6 million, or 22.6% of sales, from
Adjusted EBITDA of $6.9 million, or 22.6% of sales, in the prior year
period.

For the first six months of 2018, sales were $65.6 million compared to
sales of $59.5 million in the same period a year ago. Excluding $3.7
million of favorable effects of currency movements, sales increased 4.0%
over the prior year period. Operating earnings for the first six months
of 2018 increased 22.8% to $12.4 million compared to operating earnings
of $10.1 million in the prior year period. Adjusted EBITDA for the first
six months of 2018 increased 14.8% to $14.7 million, or 22.4% of sales,
from Adjusted EBITDA of $12.8 million, or 21.5% of sales, in the prior
year period.

Advanced Plastic Processing Technologies (APPT)

Sales for the second quarter of 2018 were $170.4 million compared to
$166.3 million in the same period a year ago. Excluding $0.5 million of
favorable effects of currency movements, sales increased 2.2% over the
prior year period. Operating earnings for the second quarter of 2018
increased 103.8% to $10.6 million compared to operating earnings of $5.2
million in the prior year period. Adjusted EBITDA in the second quarter
of 2018 increased 7.0% to $21.4 million, or 12.6% of sales, from
Adjusted EBITDA of $20.0 million, or 12.0% of sales, in the prior year
period.

For the first six months of 2018, sales were $332.3 million compared to
$322.9 million in the same period a year ago. Excluding $5.6 million of
favorable effects of currency movements, sales increased 1.2% over the
prior year period. Operating earnings for the first six months of 2018
increased 73.7% to $13.2 million compared to operating earnings of $7.6
million in the prior year period. Adjusted EBITDA for the first six
months of 2018 increased 5.3% to $39.4 million, or 11.9% of sales, from
Adjusted EBITDA of $37.4 million, or 11.6% of sales, in the prior year
period.

Additional Financial Information

Milacron ended the second quarter of 2018 with cash and cash equivalents
of $150.8 million and total debt, excluding unamortized discount and
debt issuance costs, of $894.6 million, resulting in net debt of $743.8
million and a net total leverage ratio of 3.1x.

Conference Call

Milacron will host a conference call to discuss its second quarter 2018
financial results at 8 a.m. Eastern Time on July 26, 2018. 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 August 9, 2018 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 13681491.

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, mold components and extrusion equipment
plus a wide market range of advanced fluid technologies.

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, 2017, as filed with
the SEC on February 28, 2018, 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, Adjusted Net Income, Adjusted Diluted Earnings Per
Share and Free Cash Flow. 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, 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 Diluted Earnings Per Share

Adjusted Diluted Earnings Per Share is defined as Adjusted Net Income
divided by diluted weighted-average shares outstanding. We believe
Adjusted Diluted 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, acquisition integration costs,
professional services and certain other non-recurring items. We believe
the presentation of Adjusted Diluted Earnings Per Share enhances our
investors' overall understanding of the financial performance and cash
flow of our business. You should not consider Adjusted Diluted Earnings
Per Share as an alternative to earnings per share, determined in
accordance with U.S. GAAP, as an indicator of operating performance.

Free Cash Flow

Free Cash Flow is defined as cash provided by operating activities, plus
proceeds from disposals of property and equipment, plus proceeds from
sale-leaseback financing less cash used in additions to property and
equipment. We believe Free Cash Flow is useful to investors because it
measures the operating cash flow of the Company, excluding the capital
that is spent to continue and improve business operations, such as
investment in the Company's existing business. Further, Free Cash Flow
provides an indication of the ongoing cash that is available for debt
repayment, returning capital to shareholders and other opportunities. We
also believe the presentation of this measure enhances investors'
ability to analyze trends in the business and evaluate the Company's
underlying performance relative to other companies in the industry.
Limitations associated with the use of Free Cash Flow include that it
does not represent the residual cash flow available for discretionary
expenditures as it does not incorporate certain cash payments including
payments made on the Company's indebtedness or cash payments for
business acquisitions. You should not consider Free Cash Flow as an
alternative to similar metrics, determined in accordance with U.S. GAAP,
as an indicator of operating performance.

 
MILACRON HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
   
June 30, 2018
(Unaudited) December 31, 2017
(in millions)
Assets
Current assets:
Cash and cash equivalents $ 150.8 $ 187.9
Accounts receivable, net 191.3 186.3
Inventories, net:
Raw materials 93.5 90.2
Work-in-process 60.9 56.0

Finished products

137.8   121.7  
Total inventories 292.2 267.9
Prepaid and other current assets 56.4   62.8  
Total current assets 690.7 704.9
Property and equipment, net 253.9 260.8
Goodwill 527.8 535.1
Intangible assets, net 313.4 332.4
Other noncurrent assets 32.7   25.6  
Total assets $ 1,818.5   $ 1,858.8  
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 6.9 $ 7.4
Long-term debt and capital lease obligations due within one year 0.1 9.4
Accounts payable 123.9 121.6
Advanced billings and deposits 62.9 62.8
Accrued salaries, wages and other compensation 23.6 29.7
Other current liabilities 78.6   75.7  
Total current liabilities 296.0 306.6
Long-term debt and capital lease obligations 877.4 916.4
Deferred income tax liabilities 60.3 60.4
Accrued pension liabilities 29.9 30.9
Other noncurrent accrued liabilities 22.4   23.8  
Total liabilities 1,286.0 1,338.1
Shareholders' equity:
Preferred stock
Common stock 0.7 0.7
Capital in excess of par value 685.7 675.9
Retained deficit (49.7 ) (70.5 )
Accumulated other comprehensive loss (104.2 ) (85.4 )
Total shareholders' equity 532.5   520.7  
Total liabilities and shareholders' equity $ 1,818.5   $ 1,858.8  
 
   
MILACRON HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(in millions, except share and per share data)
Net sales $ 328.1 $ 309.2 $ 638.5 $ 594.6
Cost of sales 215.9 205.4   422.4 397.0  
Manufacturing margins 112.2 103.8 216.1 197.6
Operating expenses:
Selling, general and administrative expenses 65.2 64.2 131.3 128.5
Amortization expense 6.7 7.1 13.5 14.1
Loss (gain) on currency translation 2.4 (2.8 ) 2.6 (4.1 )
Other expense, net 2.7 6.4   10.4 10.2  
Total operating expenses 77.0 74.9   157.8 148.7  
Operating earnings 35.2 28.9 58.3 48.9
Interest expense, net 11.3 10.4 22.0 22.8
Loss on debt extinguishment 0.4 0.7 25.2
Other non-operating expenses 0.2 0.3   0.5 0.6  
Earnings before income taxes 23.3 18.2 35.1 0.3
Income tax expense 8.4 8.1   14.3 14.8  
Net earnings (loss) $ 14.9 $ 10.1   $ 20.8 $ (14.5 )
 
Weighted-average shares outstanding:
Basic 69,646,435 68,500,028   69,432,137 68,380,684  
Diluted 71,703,720 70,938,518   71,625,463 68,380,684  
 
Earnings (loss) per share:
Basic $ 0.21 $ 0.15   $ 0.30 $ (0.21 )
Diluted $ 0.21 $ 0.14   $ 0.29 $ (0.21 )
 
 
MILACRON HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
2018   2017
( in millions)
Operating activities
Net earnings (loss) $ 20.8 $ (14.5 )
Adjustments to reconcile net earnings (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 28.7 28.8
Unrealized loss (gain) on currency translation of intercompany
advances
3.2 (5.0 )
Amortization of deferred financing costs 1.7 1.6
Loss on debt extinguishment 0.7 25.2
Non-cash stock-based compensation expense 5.9 4.3
Deferred income taxes 1.5 2.0
Changes in assets and liabilities:
Accounts receivable (8.5 ) (16.2 )
Inventories (29.9 ) (34.8 )
Prepaid and other current assets (1.5 ) (0.5 )
Accounts payable 5.7 7.3
Advanced billings and deposits 1.2 9.3
Other current liabilities (6.5 ) (11.6 )
Other noncurrent assets (0.3 ) 1.0
Other noncurrent accrued liabilities (0.6 ) 1.7  
Net cash provided by (used in) operating activities 22.1 (1.4 )
Investing activities
Purchases of property and equipment (15.9 ) (25.0 )
Proceeds from disposals of property and equipment 8.5   3.5  
Net cash used in investing activities (7.4 ) (21.5 )
Financing activities
Proceeds from issuance of long-term debt (original maturities longer
than 90 days)
1,010.4
Payments on long-term debt and capital lease obligations (original
maturities longer than 90 days)
(50.0 ) (1,014.7 )
Net decrease in short-term borrowings (original maturities of 90
days or less)
(0.4 ) (0.3 )
Debt extinguishment costs (18.0 )
Proceeds from exercise of stock options 3.9 3.2
Proceeds from lease financing transaction 10.9
Debt issuance costs (0.7 ) (9.6 )
Net cash used in financing activities (47.2 ) (18.1 )
Effect of exchange rate changes on cash (4.6 ) 4.9  
Decrease in cash and cash equivalents (37.1 ) (36.1 )
Cash and cash equivalents at beginning of period 187.9   130.2  
Cash and cash equivalents at end of period $ 150.8   $ 94.1  
 
   
MILACRON HOLDINGS CORP.
SALES BY BUSINESS SEGMENT
(Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(in millions)
Sales by segment:
Advanced Plastic Processing Technologies $ 170.4 $ 166.3 $ 332.3 $ 322.9
Melt Delivery and Control Systems 124.1 112.4 240.6 212.2
Fluid Technologies 33.6   30.5   65.6   59.5
Total $ 328.1   $ 309.2   $ 638.5   $ 594.6
 
   
MILACRON HOLDINGS CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(in millions)
Net earnings (loss) $ 14.9 $ 10.1 $ 20.8 $ (14.5 )
Amortization expense 6.7 7.1 13.5 14.1
Currency effect on intercompany advances (a) 3.0 (3.1 ) 3.2 (5.0 )
Organizational redesign costs (b) 5.7 15.9 18.6 27.1
Long-term equity awards (c) 3.1 2.2 5.9 4.5
Debt costs (d) 0.4 0.7 26.8
Professional services (e) 1.9 1.5 3.7 3.7
Tax adjustments (f) (1.3 ) (1.3 ) (4.1 ) (2.1 )

Other

(0.2 ) 0.2   0.3   0.6  
Adjusted Net Income $ 34.2 $ 32.6 $ 62.6 $ 55.2
Income tax expense (f) 9.7 9.4 18.4 16.9
Interest expense, net 11.3 10.4 22.0 22.8
Depreciation expense 7.6   7.2   15.2   14.7  
Adjusted EBITDA $ 62.8   $ 59.6   $ 118.2   $ 109.6  
 
(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 and the Czech koruna
pursuant to intercompany advances within the MDCS and Corporate
segments, respectively.
(b) Organizational redesign costs in the three months ended June 30,
2018 primarily included $4.4 million for termination costs as a
result of eliminated positions. Organizational redesign costs in the
six months ended June 30, 2018 primarily included $12.7 million for
termination costs as a result of eliminated positions.
Organizational redesign costs in the three months ended June 30,
2017 primarily included $6.9 million for termination costs as a
result of eliminated positions and $4.0 million of costs related to
relocating our facilities in Belgium, Italy and Germany to the Czech
Republic. Organizational redesign costs in the six months ended June
30, 2017 primarily included $11.1 million for termination costs as a
result of eliminated positions and $9.1 million of costs related to
relocating our facilities in Belgium, Italy and Germany to the Czech
Republic.
(c) Long-term equity awards include the charges associated with
stock-based compensation awards granted to certain members of
management and independent directors in the three and six months
ended June 30, 2018 and 2017.
(d) Debt costs incurred during the six months ended June 30, 2017
included $25.2 million of debt extinguishment costs and $1.6 million
of fees related to the senior secured term loan facility due
September 2023 ("2017 Term Loan Facility").
(e) Professional fees in the three months ended June 30, 2018 and 2017
included $1.9 million and $1.5 million, respectively, of costs for
strategic organizational initiatives. Professional fees in the six
months ended June 30, 2018 and 2017 included $3.7 million and $3.7
million, respectively, of costs for strategic organizational
initiatives.
(f) Tax adjustments primarily include the tax benefit associated with
reconciling net earnings (loss) to Adjusted Net Income.
 
   
MILACRON HOLDINGS CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017

2018

  2017
(in millions)
Operating earnings (loss):
APPT $ 10.6 $ 5.2 $ 13.2 $ 7.6
MDCS 30.3 30.1 57.0 55.6
Fluids 6.4 5.5 12.4 10.1
Corporate (12.1 ) (11.9 ) (24.3 ) (24.4 )
Total operating earnings 35.2 28.9 58.3 48.9
Other non-operating expenses (0.2 ) (0.3 ) (0.5 ) (0.6 )
Adjustments to operating earnings:
APPT Adjustments:
Depreciation and amortization 4.5 4.9 9.0 9.7
Currency effect on intercompany advances (a) 1.0 (0.9 ) 0.7 (0.9 )
Organizational redesign costs (b) 5.9 10.9 16.7 20.8
Professional services (e) 0.2 0.2 0.5
Other (0.4 )   0.1   0.3  
Total APPT Adjustments 11.0 15.1 26.7 30.4
MDCS Adjustments:
Depreciation and amortization 8.4 8.0 16.9 16.2
Currency effect on intercompany advances (a) 2.0 (0.9 ) 3.7 (2.7 )
Organizational redesign costs (b) (0.4 ) 2.8 0.9 3.4
Professional services (e) 0.1 0.1 0.2
Other 0.1   0.1   0.1   0.2  
Total MDCS Adjustments 10.2 10.0 21.7 17.3
Fluids Adjustments:
Depreciation and amortization 1.1 1.2 2.2 2.4
Organizational redesign costs (b) 0.4 0.5

Other

0.1   (0.2 ) 0.1   (0.2 )
Total Fluids Adjustments 1.2 1.4 2.3 2.7
Corporate Adjustments:
Depreciation and amortization 0.3 0.2 0.6 0.5
Currency effect on intercompany advances (a) (1.3 ) (1.2 ) (1.4 )
Organizational redesign costs (b) 0.2 1.8 1.0 2.4
Long-term equity awards (c) 3.1 2.2 5.9 4.5
Debt costs (d) 1.6
Professional services (e) 1.8 1.3 3.4 3.0

Other

  0.3     0.3  
Total Corporate Adjustments 5.4 4.5 9.7 10.9
Adjusted EBITDA:
APPT 21.4 20.0 39.4 37.4
MDCS 40.5 40.1 78.7 72.9
Fluids 7.6 6.9 14.7 12.8
Corporate (6.7 ) (7.4 ) (14.6 ) (13.5 )
Total Adjusted EBITDA $ 62.8   $ 59.6   $ 118.2   $ 109.6  
 
(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 and the Czech koruna
pursuant to intercompany advances within the MDCS and Corporate
segments, respectively.
(b) Organizational redesign costs in the three months ended June 30,
2018 included $3.8 million for termination costs as a result of
eliminated positions in APPT. Organizational redesign costs in the
six months ended June 30, 2018 included $11.9 million for
termination costs as a result of eliminated positions in APPT.
Organizational redesign costs in the three months ended June 30,
2017 included $3.8 million for termination costs as a result of
eliminated positions in APPT and $3.9 million of costs related to
relocating our facilities in Italy and Germany to the Czech Republic
in APPT. Organizational redesign costs in the six months ended June
30, 2017 included $7.7 million for termination costs as a result of
eliminated positions in APPT and $8.7 million of costs related to
relocating our facilities in Italy and Germany to the Czech Republic
in APPT.
(c) Long-term equity awards in Corporate include the charges associated
with stock-based compensation awards granted to certain members of
management and independent directors during the three and six months
ended June 30, 2018 and 2017.
(d) Debt costs incurred during the six months ended June 30, 2017
included $1.6 million of fees related to the 2017 Term Loan Facility.
(e) Professional fees incurred by Corporate in the three months ended
June 30, 2018 and 2017 included $1.8 million and $1.3 million,
respectively, of costs for strategic organizational initiatives.
Professional fees incurred by Corporate in the six months ended June
30, 2018 and 2017 included $3.4 million and $3.0 million,
respectively, of costs for strategic organizational initiatives.
   
MILACRON HOLDINGS CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

 

Reconciliation of Adjusted Diluted Earnings Per Share:

Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(in millions, except per share data)
GAAP diluted earnings (loss) per share (a) $ 0.21 $ 0.14 $ 0.29 $ (0.20 )
Amortization expense 0.09 0.10 0.19 0.20
Currency effect on intercompany advances 0.04 (0.04 ) 0.04 (0.07 )
Organizational redesign costs 0.08 0.22 0.26 0.38
Long-term equity awards 0.04 0.03 0.08 0.06
Debt costs 0.01 0.01 0.38
Professional services 0.03 0.02 0.05 0.05
Tax adjustments (0.02 ) (0.02 ) (0.06 ) (0.03 )
Other   0.01   0.01   0.01  
Adjusted diluted earnings per share (a) $ 0.48   $ 0.46   $ 0.87   $ 0.78  

(a)

 

Represents fully diluted earnings (loss) per share for the six
months ended June 30, 2017 on a pro-forma basis; calculation uses
diluted shares of 70.9 million shares.

 

Reconciliation of Free Cash Flow:

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(in millions)
Cash provided by (used in) operating activities $ 14.5 $ 7.3 $ 22.1 $ (1.4 )
Proceeds from disposals of property and equipment 0.5 8.5 3.5
Purchases of property and equipment (8.6 ) (12.3 ) (15.9 ) (25.0 )
Proceeds from sale-leaseback financing transaction   10.9     10.9  
Free cash flow $ 6.4   $ 5.9   $ 14.7   $ (12.0 )

MCRN-IR

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