Q EARNINGS CALL

Transcription

1 Tom Goeke Chief Executive Officer Q EARNINGS CALL JULY 27, 2017

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, 2017 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 and Adjusted Net Income. 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 Q2 17 & YTD FINANCIAL RESULTS Second Quarter Sales of $309.2 million increased +0.4% vs prior year; 1.4% on a constant currency basis Operating earnings (GAAP) were $28.6 million; Adjusted EBITDA (non-gaap) increased 3.1% to $59.6 million Diluted EPS (GAAP) of $0.14; Diluted adjusted EPS (non-gaap) of $0.46 Free Cash Flow of $5.9 million, versus $12.6 million prior year Orders up 4.4% versus the prior year (constant currency) Total Backlog of $299.3 million, versus $249.9 million prior year Year-to-Date Sales of $594.6 million increased +1.6% vs prior year; 2.8% on a constant currency basis Operating earnings (GAAP) were $48.3 million; Adjusted EBITDA (non-gaap) increased 4.5% to $109.6 million Diluted EPS (GAAP) of $(0.21); Diluted adjusted EPS (non-gaap) of $0.78 Free Cash Flow of $(12.0) million, versus $29.1 million prior year Orders up 8.7% versus the prior year (constant currency) Financial Highlights Sales (1) EBITDA (2) Net Income (2) EPS (2) Free Cash Flow (2) +1.4% +3.1% 19.3% $ % $308.1 $309.2 $57.8 $59.6 $ % $32.6 $ % $0.46 $12.6 $(6.7) $5.9 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q (1) Q sales of $312.5 million are on a constant currency basis. (2) 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 Q2 17 SALES LANDSCAPE Lower vpy Flat to Modest vpy End Markets Higher vpy Geographies Total Business Price -1.1% Volume 2.5% (organic) Fx -1.0% % Constant Currency

5 COST OUT PROGRESSION & MARGIN EXPANSION Timeline 2015 On Track for 20%+ EBITDA margin run rate by Q Q2 17 Actions Completed Manufacturing consolidation in the Czech Republic 2016 Realized $25M Cash Costs to Achieve $73M Substantial investment in China and India in order to cost effectively increase capability to serve our global customer base Global SG&A cost reduction and cost realignment Czech capacity expansion and transfer of blow molding facility 1H 17 LTM ADJ EBITDA% 2017 Playbook basis points improvement to date 150 basis points to go Where we are going Announced consolidation of US manufacturing sites in the MDCS segment Continue global SG&A cost reduction Current LTM Additional warehouse consolidation to the Czech Republic 2018 $35M Where we started Run rate end Q Major Initiatives SG&A Cost Realignment & Manufacturing Footprint Optimization

6 ORDERS Q2' 17 Results YTD Results Orders (Fx Adj) $338.4 vpy% +4.4% Orders (Fx Adj) $669.3 vpy% +8.7% $324.1 $ % $615.9 $ % Q2'16 Q2'17 Q2'16 Q2'17 Commentary: Strong orders driven by double digit growth in Europe and Asia, slightly offset by North American market Growth in Auto, Electronics, Custom Molders and Industrial machinery Commentary: Growth across all major regions with particular strength in China and India Robust YTD growth across all end markets partially offset by decrease in Medical 6

7 CONSOLIDATED RESULTS Q2' 17 Results YTD Results Sales ($M) (Fx Adj) $308.1 $312.5 $309.2 vpy% +1.4% +0.4% Sales ($M) (Fx Adj) $585.4 $601.8 $594.6 vpy% +2.8% +1.6% $57.8 $ % $104.9 $ % EBITDA EBITDA Q2'16 Q2'17 EBITDA% 18.8% 19.3% +50 bps Q2 Sales mix: Organic Acquisition Fx As-reported +1.4% % +0.4% Commentary 15% sales growth in MDCS and 9% Fluids segments in Q2, partially offset by -7% decline in APPT Continued incremental margin improvement driven by growth in consumables Q2'16 Q2'17 EBITDA% 17.9% 18.4% +50 bps YTD Sales mix: Organic Acquisition Fx As-reported +2.8% % +1.6% 7 Note: Sales growth rate commentary is on a constant currency basis.

8 ADVANCED PLASTICS PROCESSING TECHNOLOGIES Q2' 17 Results YTD Results Sales ($M) (Fx Adj) $179.0 $166.3 vpy% -7.1% Sales ($M) (Fx Adj) $335.1 $323.6 $322.9 vpy% -3.4% -3.6% $ % EBITDA $23.3 $ % EBITDA $39.9 $ % Q2'16 Q2'17 EBITDA% 13.0% 12.0% -100 bps Q2'16 Q2'17 EBITDA% 11.9% 11.6% -30 bps Commentary Aftermarket flat year over year with a tough comp historically, Q2 16 was highest aftermarket quarter as a public company Strong Q2 and YTD end market performance in industrial machinery, offset by declines across most other end markets 8

9 MELT DELIVERY & CONTROL SYSTEMS Q2' 17 Results YTD Results Sales ($M) (Fx Adj) $115.3 $100.5 $112.4 vpy% +14.7% +11.8% Sales ($M) (Fx Adj) $217.3 $193.5 $212.2 vpy% +12.3% +9.7% EBITDA $33.0 $ % $64.0 EBITDA $ % Q2'16 Q2'17 EBITDA% 32.8% 35.7% +290 bps Q2'16 Q2'17 EBITDA% 33.1% 34.4% +130 bps Commentary Continued sales strength in China and Europe for Q2 and YTD. North America flat China order momentum continuing through Q2. NA, Europe and India up Strong end market performance in Consumer goods and Custom molders 9

10 FLUID TECHNOLOGIES Q2' 17 Results YTD Results vpy% vpy% Sales ($M) (Fx Adj) $28.6 $31.1 $ % +6.6% Sales ($M) (Fx Adj) $56.8 $60.9 $ % +4.8% EBITDA $6.5 $ % EBITDA $12.6 $ % Q2'16 Q2'17 EBITDA% 22.7% 22.6% -10 bps Q2'16 Q2'17 EBITDA% 22.2% 21.5% -70 bps Commentary Solid growth in all major geographies led by North America, Europe and China Strong end market performance in Automotive and Industrial machinery Geographic price/mix impacting margins in Q2 and YTD 10

11 FREE CASH FLOW Dollars in millions Q2 16 Q2 17 Adjusted EBITDA $57.8 $59.6 Less (Non-discretionary items): Maintenance/Growth Capex (net) (11.5) (8.4) YTD 16 YTD 17 $104.9 $109.6 (16.2) (18.5) +/- Net Working Capital (12.4) (31.0) 3.8 (34.4) All Other (1.6) 20.7 (6.9) 8.9 Interest (5.1) (9.6) (28.5) (34.7) Cash Taxes (6.4) (6.9) (12.4) (13.3) FCF Before Restructuring (1) (2) $20.8 $24.4 % of EBITDA 36.0% 40.9% Less (Discretionary Restructuring Expenditures): Capex (net of disposals) (1.4) (3.9) $44.7 $ % 16.1% (4.1) (3.0) One time costs (6.8) (14.6) (11.5) (26.6) Free Cash Flow (1) $12.6 $5.9 $29.1 $(12.0) Credit Metrics: 11 Net Debt / EBITDA Interest Coverage (1) Excludes cash from financing activities including $27.6 million of refinancing costs (2) Includes proceeds of $10.9M from the sale leaseback transaction of our Canadian properties in 2Q x 3.9x 3.8x 3.4x

12 DRIVING FREE CASH FLOW 17 Guidance Dollars in millions Low High Adjusted EBITDA $219.0 Less (Non-discretionary items): $225.0 Normalized assumptions Maintenance/Growth Capex (net) (36.0) (36.0) Normalized ~3% of sales +/- Net Working Capital Normalized NWC% of sales is ~23% All Other (7.0) (7.0) - Interest (57.0) (57.0) $45M annual expense pro forma debt restructuring Cash Taxes (34.0) (30.0) Geographic profit mix dependent FCF Before Restructuring (1)(2) $90.0 % of EBITDA 42.0% $ % > $100M Free Cash Flow Discretionary Restructuring Expenditures (excl. Capex) $28.0 $33.0 Level of restructuring investment winding down after (1) Excludes cash from financing activities including $27.6 million of refinancing costs (2) Includes proceeds of $10.9M from the sale leaseback transaction of our Canadian properties in 2Q 17 $28-$33

13 2017 GUIDANCE Annual Guidance Organic Sales Growth Anticipated Fx headwind Adjusted EBITDA % to 2.0% (~$0M) $219M - $225M (vs $212.8M in 2016) Free Cash Flow (before restructuring and refinancing costs) $90M - $100M Supplemental Guidance Information: Capex Interest Expense (P&L) Cash Interest (Cash Flow) Tax Provision (P&L) Cash Taxes (Cash Flow) Diluted Shares Outstanding ~$50M ~$46M ~$57M $32 to $36 million $30 to $34 million ~72 million shares 13 Changes to 2017 guidance previously communicated on Q1 17 earnings call

14 Q WRAP UP Strong Q2 and 1H performance Solid consumables topline growth +9% MDCS +15% Fluids +9% Highest aftermarket performance quarter Margin expansion +50 basis points Cost out progression and margin expansion on track Confidence in upper end of guidance Adj EBITDA growth of 3%, up 50 basis points versus Q2 16 Robust orders growth in MDCS & Fluids segments 14

15 APPENDIX 15

16 ADJ. EBITDA & ADJ. NET INCOME RECONCILIATIONS 16

17 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 pursuant to intercompany advances within the MDCS segment. (b) 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. Organizational redesign costs in the three months ended June 30, 2016 primarily include $2.1 million for termination costs as a result of eliminated positions, $1.7 million of costs related to the shutdown of facilities and $0.2 million related to relocating our facility in Belgium to the Czech Republic. Organizational redesign costs in the six months ended June 30, 2016 primarily included $3.3 million for termination costs as a result of eliminated positions, $2.4 million of costs related to the shutdown of facilities and $0.5 million of costs related to relocating our facility in Belgium 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, 2017 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 new senior secured term loan facility due September 2023 ("2017 Term Loan Facility"). (e) Professional fees in the three months ended June 30, 2017 and 2016 included $1.5 million and $1.0 million, respectively, of costs for strategic organizational initiatives. Professional fees in the six months ended June 30, 2017 and 2016 included $3.7 million and $2.1 million, respectively, of costs for strategic organizational initiatives. (f) 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 (g) The annual effective tax rate adjustment primarily includes the tax benefit associated with reconciling net (loss) earnings to Adjusted Net Income. (h) Other costs for the six months ended June 30, 2016 includes the write-off of a $0.5 million non-trade receivable. 17

18 OPERATING EARNINGS TO ADJ. EBITDA RECONCILIATION 18

19 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 pursuant to intercompany advances within the MDCS segment. (b) 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. Organizational redesign costs in the three months ended June 30, 2016 primarily included $1.7 million of costs related to the shutdown of facilities in APPT and $2.1 million for termination costs as a result of eliminated positions across all segments. Organizational redesign costs in the six months ended June 30, 2016 included $2.4 million of costs related to the shutdown of facilities in APPT and $0.5 million of costs related to relocating our facility in Belgium to the Czech Republic in MDCS. In the six months ended June 30, 2016, organizational redesign costs across all segments included $3.3 million for termination costs as a result of eliminated positions. (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, 2017 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, 2017 and 2016 included $1.3 million and $0.8 million, respectively, of costs for strategic organizational initiatives. Professional fees incurred by Corporate in the six months ended June 30, 2017 and 2016 included $3.0 million and $1.9 million of costs for strategic organizational initiatives, respectively. (f) 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 (g) Other costs for Fluids for the six months ended June 30, 2016 includes the write-off of a $0.5 million non-trade receivable. 19

20 ADJ. DILUTED EPS & FREE CASH FLOW RECONCILIATIONS (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. 20