Q Earnings Presentation. November 6, 2015

Transcription

1 Q Earnings Presentation November 6,

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 prospectus dated June 25, 2015 filed with the Securities and Exchange Commission (the SEC ) 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 forwardlooking 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 and Adjusted Net Income to the most directly comparable U.S. GAAP financial measures. We believe that the presentation of Adjusted EBITDA is useful to provide additional information to investors about certain material non-cash items. We believe the presentation of Adjusted Net Income enhances our investors overall understanding of the financial performance and cash flow of our business. Our use of the terms Adjusted EBITDA and Adjusted Net Income 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 Condensed Consolidated Financial Statements presented within the Form 10-Q filed with the SEC on November 6,

3 Q3 15 & YTD Financial Highlights Adjusted EBITDA (non-gaap) increased 4.0% to $54.0 million in 3Q'15, versus $51.9 million in 3Q'14 Adjusted EBITDA (non-gaap) margins rose 190 basis points to 18.4% in 3Q'15 versus 16.5% in 3Q'14 Adjusted Net Income (non-gaap) increased 26.6% to $25.7 million in 3Q'15, versus $20.3 million in 3Q'14 Cost structure realignment now expected to deliver $35M of annualized savings by end of 2017, up $5M from previous estimate Financial Highlights $ in millions Q3 '15 v Prior Year Period Constant As reported Currency YTD v Prior Year Period As reported Constant Currency REVENUE $ % -1.5% $ % 3.9% ADJ EBITDA (1) $ % $ % ADJ EBITDA margin (1) 18.4% +190 bps 17.7% +220 bps ADJ NET INCOME (1) $ % $ % (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 3

4 Key Events Since the Last Earnings Call Long-term Goals 4

5 Cost Out Overview Cost Out ahead of schedule... $8M realized YTD, $5M incremental identified ~$8.0M realized YTD 2015 $13-15M $8-10M $2M Major Initiatives One Milacron Integration / Functional Cost realignment Sales Office and Call Center consolidation Shared Service Center in India Manufacturing Footprint optimization 5

6 Acquisition Overview Business Summary CanGen designs and manufactures highly-engineered, custom-designed consumables for plastic and rubber processors Primarily serves the building products, rubber & tire, packaging and medical markets >98% of sales directly to end-users Proprietary rights to over 185,000 designs and drawings Facilities in Atlanta, GA and St Petersburg, FL Will be reported within the APPT business segment Products Strategic Rationale Lifecycle/Consumables Expansion 100% consumables Substantial recurring revenues from regular repair and replacement cycle within large installed base Complementary Plastics Technology Expands Milacron s technology portfolio including broadening offering in downstream value map of the extrusion line Similarity of business minimizes integration complexity Addressable Market Expansion Complementary end markets and customer base Milacron Parts and Service center for the SE, USA Financial Overview Screws Tips & Dies Purchase Price of $22.5M Annual Sales ~$20M Barrels Heads Immediately accretive to Adjusted EPS Expected to close by the end of

7 Milacron Orders Third Quarter Year-to-Date V% $928.5 * V% +0.3% $926.1 $312.8 $293.9 * -6.0% $ % Orders $ % Orders Q3 '14 Q3 ' Commentary Q3 15 order rates impacted by industry headwinds and foreign exchange Improving order dynamics through course of Q3 into Q4 * Represents sales for the Three and Nine months ended September 30 th, on a constant currency basis 7

8 Milacron Q3 15 Results YTD Results Rev ($M) $314.6 V% $310.0 * -1.5% Rev ($M) $890.8 $925.9* V% +3.9% $ % $873.2 $ % EBITDA $51.9 $ % EBITDA $ % Q3 '14 Q3 '15 EBITDA% 16.5% 18.4% +190 bps Q3 '14 Q3 '15 EBITDA% 15.5% 17.7% +220 bps Commentary Solid Aftermarket performance bolstering Q3 15 and YTD EBITDA Automotive market revenues up across all business segments Q3 15 and YTD, offset by declines in packaging, electronics and construction Adjusted Net Income up 26.6% for Q3 15 and up 41.3% YTD Cost out initiatives on track; select initiatives accelerated to offset demand pressure * Represents sales for the Three and Nine months ended September 30 th, on a constant currency basis 8

9 Advanced Plastic Processing Technologies Q3 15 Results YTD Results Rev ($M) $179.2 V% $175.1 * -2.3% Rev ($M) $509.5 * V% +4.1% $489.5 $ % EBITDA $22.5 $168.8 $ % -5.3% EBITDA $52.1 $ % Q3 '14 Q3 '15 EBITDA% 12.6% 12.6% EBITDA% 10.6% 12.7% 210 bps Commentary Double digit Aftermarket revenue performance steadying equipment shortfall Organic YTD revenue growth coupled with cost out initiatives driving +19.0% Adjusted EBITDA growth * Represents sales for the Three and Nine months ended September 30 th, on a constant currency basis 9

10 Melt Delivery and Control Systems Q3 15 Results YTD Results Rev ($M) $102.2 V% $101.5 * -0.7% Rev ($M) $304.0 V% $318.4 * +4.7% $ % $ % EBITDA $28.6 $ % EBITDA $83.4 $ % Q3 '14 Q3 '15 EBITDA% 28.0% 31.4% +340 bps EBITDA% 27.4% 30.1% +270 bps Commentary European and India revenue growth in Q3 15 mitigating unfavorable performance in North America and China EBITDA margin expansion despite unfavorable global headwinds * Represents sales for the Three and Nine months ended September 30 th, on a constant currency basis 10

11 Fluid Technologies Q3 15 Results YTD Results Rev ($M) $33.2 $33.4 * V% +0.6% Rev ($M) $97.3 $98.0 * V% +0.7% $ % $ % EBITDA $6.5 $ % EBITDA $17.1 $ % Q3 '14 Q3 '15 EBITDA% 19.6% 22.4% +280 bps EBITDA% 17.6% 20.6% +300 bps Commentary Stable top-line in light of industrial slowdown; new product introduction gaining momentum Organizational streamlining and sales office consolidation boosting both Q3 15 and YTD EBITDA * Represents sales for the Three and Nine months ended September 30 th, on a constant currency basis 11

12 Free Cash Flow In millions Q3 15 FCF Reconciliation Adjusted EBITDA $54.0 Less: Capital Expenditures +/- Net Working Capital (12.9) (11.4) Credit Metrics Net Debt / Adj EBITDA 4.1x Unlevered Free Cash Flow $29.7 % of EBITDA 55.0% Interest Coverage 3.2x Less: Interest (23.7) PF Interest Coverage (1) 3.6x Taxes (8.8) One-Time costs: Restructuring / Cost out initiatives / Other (6.1) Free Cash Flow $(8.9) (1) Adjusted for lower interest following IPO de-levering 12

13 2015 Estimates Milacron 2015 Long Term Goals Organic Revenue Growth 2.0% to 3.0% 5% Reported Revenue Growth -3.5% to -2.5% Adjusted EBITDA margin ~18.0% (vs 16.4% in 2014) 20%+ 13

14 Appendix 14

15 EBITDA to Net Income Reconciliation Three Months Ended September 30, Nine Months Ended September 30, (in millions) Net loss attributable to Milacron Holdings $ (11.2) $ (3.9) $ (54.3) $ (14.2) Amortization expense Currency effect on intercompany advances (a) Organizational redesign costs (b) Long-term equity options and shareholder fees Debt costs (d) Acquisition integration costs (e) (0.3) Professional services (f) Business combination costs (g) 1.1 Other (h) Adjusted Net Income $ 25.7 $ 20.3 $ 64.7 $ 45.8 Income tax expense Interest expense, net Depreciation expense Adjusted EBITDA $ 54.0 $ 51.9 $ $

16 EBITDA to Net Income 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 associated with the acquisition of Mold-Masters. b) 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. Organizational redesign costs during the three months ended September 30, 2014 included $0.8 million of costs related to the shutdown of facilities, $0.6 million of costs for the transition of positions to low-cost countries, and $0.3 million of costs for changes in the executive management team. Organizational redesign costs during the nine months ended September 30, 2014 included $1.4 million of costs for the transition of positions to low-cost countries, $1.4 million of costs related to the shutdown of facilities, and $1.3 million of costs for changes in the executive management team. c) Long-term equity options and shareholder fees include the non-cash 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, 2015 and 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 Debt costs incurred during the nine months ended September 30, 2014 included a $2.9 million loss on the early extinguishment of a portion of our 8.375% senior secured notes due The loss consists of a $1.6 million premium paid for the early extinguishment and $1.3 million of previously deferred financing costs. In the nine months ended September 30, 2014, we also expensed $0.5 million of previously deferred financing costs and incurred $0.7 million of fees to increase the senior secured term loan facility due March e) Acquisition integration costs in the three months ended September 30, 2015 included a $0.4 million gain for an 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 and Mold-Masters acquisitions for product line integration and other strategic alignment initiatives. Acquisition integration costs in the three and nine months ended September 30, 2014 primarily included travel, consulting services and severance costs for the acquisitions of Kortec, TIRAD and Mold-Masters. f) 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. Professional fees in the three months ended September 30, 2014, included $0.9 million of costs related to strategic organizational initiatives and $0.5 million of costs related to certain advisory services for readiness initiatives associated with our IPO. Professional fees in the nine months ended September 30, 2014, included $1.5 million of costs related to strategic organizational initiatives and $0.9 million of costs related to certain advisory services for readiness initiatives associated with our IPO. g) Business combination costs relate to certain professional, audit and other fees related to the acquisitions of Kortec, TIRAD, and certain other smaller acquisitions. h) 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. 16

17 EBITDA to Net Income Reconciliation Three Months Ended September 30, Nine Months Ended September 30, (in millions) Operating earnings: APPT $ 15.8 $ 15.5 $ 39.8 $ 33.5 MDCS Fluids Corporate (17.8) (9.7) (44.7) (25.9) Total operating earnings Adjustments to operating earnings: APPT Adjustments: Depreciation and amortization Net earnings attributable to 0.1 Organizational redesign costs (b) Acquisition integration costs (e) Professional services (f) 0.2 Other (h) Total APPT Adjustments MDCS Adjustments: Depreciation and amortization Currency effect on intercompany Organizational redesign costs (b) Acquisition integration costs (e) (0.4) Professional services (f) Other (h) 0.2 Total MDCS Adjustments Fluids Adjustments: Depreciation and amortization Organizational redesign costs (b) Professional services (f) 0.1 Total Fluids Adjustments Corporate Adjustments: Depreciation and amortization Currency effect on intercompany Organizational redesign costs (b) Long-term equity options and Debt costs (d) Acquisition integration costs (e) Professional services (f) Business combination costs (g) 1.1 Total Corporate Adjustments Adjusted EBITDA: APPT MDCS Fluids Corporate (3.5) (5.7) (14.6) (14.9) Total Adjusted EBITDA $ 54.0 $ 51.9 $ $

18 EBITDA to Net Income 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 associated with the acquisition of Mold-Masters within the MDCS segment. b) 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 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 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 ended 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. Organizational redesign costs in the three months ended September 30, 2014 for APPT included $0.7 million for costs due to the shutdown of facilities. Organization redesign costs in the three months ended September 30, 2014 for APPT and Corporate included $0.3 million of costs at each segment related to the transition of positions to low-cost countries. For the nine months ended September 30, 2014, organizational redesign costs for APPT included $1.1 million due to the shutdown of facilities. Organizational redesign costs for Fluids and Corporate in the nine months ended September 30, 2014 included $1.3 million of costs for changes in the executive management team. Across all segments, costs for the nine months ended September 30, 2014 included $1.4 million of costs for the transition of positions to lowcost countries. c) Long-term equity options and shareholder fees in Corporate included the non-cash charges associated with stock-based compensation awards granted to certain executives and independent directors and a cash advisory fee paid to CCMP during the nine months ended September 30, 2015 and 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 senior secured term loan facility due September Debt costs incurred during the nine months ended September 30, 2014 included $0.7 million of fees to increase the senior secured term loan facility due March 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 included $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 included $0.7 million and $0.6 million of one-time costs to introduce the integration and new branding of all Milacron companies, respectively. Acquisition integration costs for MDCS in the three and nine months ended September 30, 2014 primarily included $0.4 million and $1.4 million, respectively, for the Kortec, TIRAD and Mold-Masters acquisitions. f) 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. In the three months ended September 30, 2014, professional fees incurred by Corporate included $0.5 million for readiness initiatives associated with our IPO and $0.9 million for strategic organizational initiatives. In the nine months ended September 30, 2014, professional fees by Corporate included $0.9 million for readiness initiatives associated with our IPO and $1.2 million for strategic organizational initiatives. g) Business combination costs for Corporate during the nine months ended September 30, 2014 relate to certain professional, audit and other fees related to the acquisitions of Kortec, TIRAD, and certain other smaller acquisitions. h) Other costs in 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. 18