Q EARNINGS CALL JULY 26, 2018

Transcription

1 Q EARNINGS CALL JULY 26, 2018

2 IMPORTANT INFORMATION Forward Looking Statements These slides contain (and the accompanying oral discussion will contain) forward looking statements. All statements other than statements of historical fact or relating to present facts or current conditions are forward looking statements. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company s customers and suppliers, competitor responses to the Company s products and services, the overall market acceptance of such products and services, increases in the Company s cost structure, the rate of economic development and growth in emerging markets, the Company s exposure to fluctuations in currencies, the Company s ability to successfully implement its strategic initiatives to increase cost savings and improve operating margins, the integration of acquisitions and other factors disclosed in the Company s periodic reports. Such risks and other factors that may impact management s beliefs and assumptions are more particularly described in the Company s Form 10 K filed with the Securities and Exchange Commission (the SEC ) on February 28, 2018 under the caption Risk Factors. Consequently such forward looking statements should be regarded as the Company s current plans, estimates and beliefs. The forward looking statements in these slides are made only as of the date hereof. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent required by law. All of the Company s forward looking statements should be considered in light of these factors. Non GAAP Financial Measures These slides contain financial measures which have not been calculated in accordance with generally accepted accounting principles in the United States ( U.S. GAAP ), including Adjusted EBITDA, Adjusted Net Income and Free Cash Flow. These non GAAP financial measures should be considered only as supplemental to, and not as an alternative to, financial measures prepared in accordance with U.S. GAAP. Please refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA, Adjusted Net Income and Free Cash Flow to the most directly comparable U.S. GAAP financial measures. 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. We believe the presentation of Adjusted Net Income enhances our investors overall understanding of the financial performance and cash flow of our business. We believe the presentation of 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. Our use of the terms Adjusted EBITDA, Adjusted Net Income and Free Cash Flow may vary from that of others in our industry. This presentation should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements presented within our Form 10 K filed with the SEC on February 28,

3 Q FINANCIAL RESULTS Sales of $328.1 million increased +6% vs prior year; +4% on a constant currency basis Operating earnings (GAAP) increased 22% to $35.2 million; Adjusted EBITDA (non GAAP) increased +5% to $62.8 million Diluted EPS (GAAP) increased to $0.21, up from $0.14 in Q2 17; Diluted adjusted EPS (non GAAP) increased +4% to $0.48 Free Cash Flow of $6.4 million, versus $5.9 million prior year Orders increased 2% versus the prior year; flat constant currency Total Backlog of $304 million, versus $299 million prior year Q2 Financial Highlights Sales (1) EBITDA Net Income EPS Free Cash Flow $ % $328.1 $310.4 $ % 19.3% 19.1% $59.6 $ % $32.6 $34.2 $ % +8% $0.48 $8.3 $6.4 $5.9 $285.4 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q (1) Q sales of $320.5 million are on a constant currency basis. Note: See Non GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non GAAP measure to its most directly comparable US GAAP measure

4 FY 2018 FINANCIAL RESULTS Sales of $638.5 million increased +7% vs prior year; +3% on a constant currency basis Operating earnings (GAAP) increased 19% to $58.3 million; Adjusted EBITDA (non GAAP) increased +8% to $118.2 million Diluted EPS (GAAP) increased to $0.29, up from $(0.21); Diluted adjusted EPS (non GAAP) increased +12% to $0.87 Free Cash Flow of $14.7 million, versus $(12.0) million prior year Orders increased 1% versus the prior year; (2%) constant currency Voluntary debt payments totaling $50 million through Q Financial Highlights Sales (1) EBITDA Net Income EPS Free Cash Flow +3% +8% $ % 18.5% $310.4 $118.2 $615.4 $285.4 $109.6 $55.2 $ % $62.6 $ % $0.87 $(12.0) +$27 $8.3 $14.7 YTD 17 YTD 18 YTD 17 YTD 18 YTD 17 YTD 18 YTD 17 YTD 18 YTD 17 YTD 18 4 (1) Q sales of $615.4 million are on a constant currency basis. Note: See Non GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non GAAP measure to its most directly comparable US GAAP measure

5 ORDERS Q2 18 Results YTD Results Orders (Fx) $ % Orders (Fx) $ % $334.9 $335.9 flat $661.3 $645.8 (2)% Q2 '17 Q2 '18 YTD '17 YTD '18 Commentary: Commentary: Order growth lead by continued strength in India, offset by softness across other regions Backlog up 9% in constant currency versus year end +3% versus prior year Electronics and Custom Molders up double digits, offset by declines Packaging and Construction end markets Solid orders growth in India offset by softness across other regions Tough prior year comparable in MDCS and APPT large equipment Medical and Custom Molders up double digits, offset by declines in Packaging and Consumer Goods 5

6 U.S. SECTION 232 & 301 TARIFFS Q2 UPDATE U.S. Section 232 (enacted) Overall impact anticipated to be ~$3 million on an annual basis ($1.5M in 2018) U.S. Section 301 (enacted) Impacts ~0.8% of sales Overall impact anticipated from List 1 to be ~$7 million on an annual basis ($3.5M in 2018) U.S. Section 232 tariffs on steel and aluminum enacted March 2018 Limited exposure on direct purchases mostly indirect Largest exposure within APPT segment Risk mitigation strategies being implemented in all impacted businesses U.S. Section 301 imposes 25% tariffs on products with country of origin China (based on annual trade value harm caused to US economy of $50B) Product lists subject to tariff includes machinery, aerospace and information/communication technology List 1 includes 818 HTS product codes effective 7/6/18 List 2 includes 284 HTS product codes under review, effective date TBD Modification announced 7/10/18 and covers an additional 6,031 HTS product codes across a variety of products Largest exposure within APPT segment risk mitigation strategies being implemented in impacted businesses Mitigating actions: 1 Price Increases 2 Negotiations 3 Exemptions 4 Supply Chain Modifications 6

7 CONSOLIDATED RESULTS Q2 '18 Results YTD Results Sales ($M) (Fx Adj) $309.2 $328.1 $ % +4% Sales ($M) (Fx Adj) $594.6 $638.5 $ % +3% $59.6 $ % $109.6 $ % EBITDA EBITDA 7 Q2'17 Q2'18 YTD '17 YTD '18 EBITDA% 19.3% 19.1% (20) bps EBITDA% 18.4% 18.5% +10 bps Q2 Sales mix: Commentary YTD Sales mix: Organic Q2 and year to date sales growth driven by double digit growth in China and India +4% Organic +3% Strong consumables performance both Q2 and year to date Acquisition Acquisition Electronics, Packaging and Medical end markets up double digits both year to date Fx +2% and in Q2 Fx +4% As reported +6% Q2 and YTD margins unfavorably impacted by NPE costs of ~$3.3M (occurs every 3 As reported +7% years) Note: Sales growth rate commentary is on a constant currency basis.

8 MELT DELIVERY & CONTROL SYSTEMS Q2 '18 Results YTD Results Sales ($M) (Fx Adj) $112.4 $124.1 $ % +5% Sales ($M) (Fx Adj) $212.2 $240.6 $ % +7% $40.1 $ % $72.9 $ % EBITDA EBITDA Q2'17 Q2'18 EBITDA% 35.7% 32.6% (290) bps Q2'17 Q2'18 EBITDA% 34.4% 32.7% (170) bps Commentary Q2 and year to date sales growth driven primarily by growth in China and Europe Margin compression driven by NPE costs, mold base manufacturing consolidation and unfavorable mix of high complexity hot runner projects Strong end market performance in Electronics and Medical 8

9 FLUID TECHNOLOGIES Q2 '18 Results YTD Results Sales ($M) (Fx Adj) $30.5 $33.6 $ % +6% Sales ($M) (Fx Adj) $59.5 $12.8 $65.6 $61.9 $ % +4% +15% EBITDA $6.9 $ % EBITDA Q2'17 Q2'18 EBITDA% 22.6% 22.6% flat Q2'17 Q2'18 EBITDA% 21.5% 22.4% +90 bps Commentary Solid growth in all major geographies (North America, Europe and China) Year to date margin expansion driven by increased volumes Automotive, Consumer Goods and Electronics all posted strong Q2 and year to date growth versus the prior year 9

10 ADVANCED PLASTICS PROCESSING TECHNOLOGIES Q2' '18 17 Results YTD Results Sales ($M) (Fx Adj) EBITDA $166.3 $20.0 $170.4 $169.9 $ % +2% Sales ($M) (Fx Adj) $ % $37.4 $39.4 EBITDA $332.3 $ % +1% +5% Q2'17 Q2'18 EBITDA% 12.0% 12.6% +60 bps Q2'17 Q2'18 EBITDA% 11.6% 11.9% +30 bps Commentary Q2 and year to date sales growth driven primarily by double digit growth in India, partially offset by a decline in Europe 7% Aftermarket growth in Q2 5% YTD 10 End market performance led by Packaging and Electronics, partially offset by continued Automotive end market management

11 FREE CASH FLOW Dollars in millions Q2 17 Q2 18 Adjusted EBITDA $59.6 $62.8 Less (Non discretionary items): Maintenance/Growth Capex (net) (8.4) (8.1) YTD 17 YTD 18 $109.6 $118.2 (18.5) (7.4) +/ Net Working Capital (31.0) (26.8) (34.4) (31.6) All Other 20.7 (0.3) 8.9 (12.0) Interest (9.6) (10.4) (34.7) (20.4) Cash Taxes (6.9) (6.3) (13.3) (13.2) FCF Before Restructuring (1)(2) $24.4 % of EBITDA 40.9% $ % $ % $ % Less (Discretionary Restructuring Expenditures): Capex (net of disposals) (3.9) Severance payments (4.1) One time costs (10.5) (2.6) (1.9) (3.0) (6.8) (19.8) (10.7) (8.2) 11 Free Cash Flow (1)(2) $5.9 Credit Metrics: Net Debt / EBITDA Interest Coverage (1) YTD 17 excludes cash from financing activities including $27.6 million of refinancing costs (2) Includes proceeds of $10.9 from the sale leaseback transaction of our Canadian property in Q2 17 $ x 3.1x 3.4x 5.8x $(12.0) $14.7

12 2018 GUIDANCE 12 Annual Guidance Sales Growth Fx tailwind Adjusted EBITDA Free Cash Flow Restructuring Costs (included in FCF) Net Debt Leverage Supplemental Guidance Information: Capex Interest Expense (P&L) Cash Interest (Cash Flow) Non GAAP Tax Provision (P&L) Cash Taxes (Cash Flow) Diluted Shares Outstanding Changes to previous guidance % to 4.0% ~1.0% $237M $240M (vs $227M in 2017) $80M $90M ~$55M Under 3.0x EBITDA % of Sales 20% in Q4 18 ~$45M ~$45M ~$45M ~$38M ~$34M ~72.5 million shares

13 Q WRAP UP Consumables momentum continues Tariffs to be vigilantly mitigated Highest recorded sales and adjusted EBITDA as a public company Q2 Consumables up 9% and continues at 68% of total sales APPT Aftermarket up 7% High growth regions (China, India) continue to drive growth investment will continue European restructuring wind down on track last machines expected to ship Q4 On track for $100M of voluntary debt payments in 2018 $25M made on 2/28/18 and 4/30/18 $25M payment scheduled for 7/31/18 ($75M YTD) 13 Key Metrics Sales growth 5% 20%+ EBITDA margin $100M+ Free Cash Flow Under 3x leverage

14 APPENDIX 14

15 ADJ. EBITDA & ADJ. NET INCOME RECONCILIATIONS 15

16 ADJ. EBITDA & ADJ. NET INCOME RECONCILIATIONS (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 relatedtorelocatingour 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 (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 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. Professionalfees in the six monthsended 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. 16

17 OPERATING EARNINGS TO ADJ. EBITDA RECONCILIATION 17

18 OPERATING EARNINGS TO ADJ. EBITDA RECONCILIATION (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 (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. 18

19 ADJ. DILUTED EPS & FREE CASH FLOW RECONCILIATIONS Reconciliation of Adjusted Diluted Earnings Per Share: Reconciliation of Free Cash Flow: 19