Milacron (NYSE: MCRN) Houlihan Lokey 11th Annual Global Industrials Conference Waldorf Astoria, New York May 19, 2016 1
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 March 2, 2016 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. 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 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. Our use of the term Adjusted EBITDA 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 March 2, 2016. 2
Milacron Overview GLOBAL TECHNOLOGY LEADER Manufacture, distribution and service of highly engineered and customized systems. OUR PROFILE Consumables 62 PERCENT (1) LIFECYCLE APPROACH Delivers equipment and service to customers throughout the entire lifecycle of their systems. FULL-LINE PLASTICS PORTFOLIO Hot Runners Injection Molding Extrusion and Blow Molding Equipment Controllers, Mold Bases Premium Fluids Sales 18 PERCENT Aftermarket Fluids 11% Adj EBITDA MD&CS 52% TRUSTED FOR OVER 150 YEARS APPT 37% Note: Advanced Plastic Processing Technologies = APPT; Melt Delivery and Control Systems = MDCS; Fluid Technologies = Fluids. (1) Represents sales on a constant currency basis. 3
Milacron s Transformation Positioned for growth and margin expansion OLD MILACRON Capital Equipment Provider Cyclical Revenue Profile North America and Europe Focused Blue Chip Customer Relationship INITIATIVES & INVESTMENTS Over $1.3 Billion Invested Recruited High-Caliber Executive Team One Milacron Initiative Revitalized Product Line Manufacturing Efficiency/Best Cost Sourcing Global Back-Office/Engineering Shared Service Center in India MILACRON TODAY Global Plastics Technology Systems & Solutions Provider 1Market Positions - Injection Molding (2) (North # America, India) - Supplier to installed base - Hot Runners (2) (Americas, Europe & India) 62% Consumables Portfolio (1) 18.1% Adj. EBITDA % INVESTMENT THESIS GROWTH > CONSUMABLES > MARGIN EXPANSION > TECHNOLOGY > GEOGRAPHY (1) Represents sales on a constant currency basis. (2) Based on management estimates. 4
Milacron s Diversified Portfolio Global leader in the manufacture, distribution and service of highly engineered and customized systems within the $27 billion plastic technology and processing market Advanced Plastics Processing Technologies (APPT) - $674 Sales (1) Melt Delivery & Control Systems (MDCS) - $390 Sales (1) Fluid Technology (Fluids) - $115 Sales (1) Geographic Sales (1) Geographic Sales (1) Geographic Sales (1) North America 68% Europe 11% Asia 15% North America 36% Europe 27% Asia 36% North America 42% Europe 39% Asia 16% Rest of World 6% Rest of World 1% Rest of World 3% (1) 2015 sales 5
Delivering on our promises Sales ($M) Organic CAGR 9% $1,211 $1,246 (1) CAGR 10% Go Forward Plan $1,029 Grow Share Profitably 5%+ organic revenue growth Adj. EBITDA $162 $199 $213 15% Fund the Future 20%+ EBITDA margin Adj. EBITDA % 2013 2014 2015 15.7% 16.4% 18.1% Make Possibilities a Reality 20%+ of revenue from new products R&D as % of sales 1.8% 2.0% 1.8% % Sales from New Products 13% 18% 19% Win Together Great place to work (1) Represents sales on a constant currency basis. Figure excludes $66.2 million of unfavorable foreign exchange impact. 6
Attractive Global End Markets Key Macro Themes Light-weighting Reduced Product Lifecycles Improving Lifestyle in Emerging Markets Reduced Energy Consumption Population Growth Convenience Sustainability Medical Glass to plastic conversion syringes and medical instruments Consumer Goods Shortening product life cycles; innovationin multi-materialproducts Automotive Vehicle light-weighting through transition from metal to plastic Electronics Superior quality and shorter life-cycles Packaging Increased freshness & shelf life withhigher quality materials 7
Manufacturing & Engineering Optimization Manufacturing Footprint Czech Republic China India Ahmedabad Policka Sasovice Jiangyin Kunshan Coimbatore Global Engineering & Design Center 24-hour service 220 Engineers 8
Cost Out Progression 2015 2016 Cumulative Realized Savings $10M $14-18M Costs to Achieve $35M Q1 16 $12M $3M Q2 16 Q3 16 Q4 16 $30-35M 2016 Scope of Initiatives Manufacturing Footprint Optimization Continue manufacturing consolidation in the Czech Republic Initiated consultations with local Works Council and Union about the proposed reorganization of major production facility in Germany 2017 $28-31M $28-33M Substantial investment in China and India in order to cost effectively increase capability to serve our global customer base Continue global SG&A cost reduction initiative 2015 Actions Completed 2018 $35M SG&A cost realignment Czech capacity expansion and transfer of blow molding facility Major Initiatives SG&A Cost Realignment & Manufacturing Footprint Optimization 9
Free Cash Deployment Free cash flow generation expected to increase financial flexibility Delevering Leverage Ratio 2015 Pre-IPO 2015 Post IPO Q1 2016 4.8x 4.2x 4.0x M&A and Portfolio Investments 1 2 Lifecycle / consumables expansion Geographic expansion into emerging markets M&A Criteria 3 4 Complementary plastic technology Accretive margin profile 10
A Platform for Future Growth Drive Life Cycle Sales Continue to Penetrate Emerging Markets Customer Focused Market Approach New Product and Technology Innovation Leverage Capability and Reach of Sales Force Broaden Portfolio with Acquisitions China: 8.3% CAGR 14A to 17E (1) India: 11.8% CAGR 14A to 17E (1) Consumable Revenue: Up to 4x Machine Cost New hot runner required for each new part design Investment in additional sales, service and manufacturing in India and China Tailored solutions Fleet assessments Service both Milacron and competitors equipment Multi-layer blow molding Co-injection solutions Hybrid machine technologies M-PET preform molding 400+ sales professionals Local sales force in emerging markets New centers in Texas, California and Mexico Lifecycle / consumables expansion Geographic expansion into emerging markets Complementary plastic technology Through Innovation, Operational Excellence and Organizational Focus (1) Represents estimated growth in hot runner market per Interconnection Consulting. 20 11
2016 Outlook No change in annual guidance Guidance 2016 Long Term Goals Organic Sales Growth 0.0% to 2.0% 5% Adjusted EBITDA margin Supplemental Guidance Information: 18.5% to 19.0% (vs 18.1% in 2015) 20%+ Capex $50 to $55 million Interest ~$60 million Cash Taxes $30 to $35 million Effective Tax Rate ~30% Shares Outstanding ~70 million shares 12
Wrap up Grow share profitably with consumables and aftermarket Margin expansion driven by cost out initiatives Disruptive technology and innovation at our core Free cash flow focused to lower debt and fund tuck-in M&A 13
Investor Relations Contact: Mac Jones 513.487.5057 mac_jones@milacron.com 14
Appendix 15
Adj. EBITDA to Net Income Reconciliation Three Months Ended March 31, 2016 2015 (in millions) Net earnings (loss) $ 9.8 $ (15.9) Amortization expense 7.7 9.4 Currency effect on intercompany advances (a) (7.0 ) 11.4 Organizational redesign costs (b) 3.1 5.3 Long-term equity awards and shareholder fees (c) 2.3 1.3 Acquisition integration costs (d) 2.3 Professional services (e) 1.1 0.7 Fair market value adjustments (f) 0.3 Annual effective tax rate adjustment (g) 1.0 Other (h) 0.5 (0.1) Adjusted Net Income $ 18.8 $ 14.4 Income tax expense (g) 5.9 4.9 Interest expense, net 15.3 18.4 Depreciation expense 7.1 6.8 Adjusted EBITDA $ 47.1 $ 44.5 16
Adj. 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 within the MDCS segment. (b) Organizational redesign costs in the three months ended March 31, 2016 primarily included $1.2 million for termination costs as a result of eliminated positions, $0.7 million of costs related to the shutdown of facilities and $0.3 million of costs related to relocating our facility in Belgium to the Czech Republic. Organizational redesign costs in the three months ended March 31, 2015 primarily included $2.6 million of severance and $0.5 million of project costs related to relocating our warehouse in Belgium to the Czech Republic, $1.5 million for termination costs as a result of eliminated positions, and $0.3 million of costs related to the transition of positions to low-cost countries. (c) (d) (e) (f) (g) (h) 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 months ended March 31, 2016 and 2015. The cash advisory payment to CCMP ceased as of the effective date of our IPO. In the three months ended March 31, 2015, we incurred $0.8 million of costs to introduce the integration and new branding of all Milacron companies. In addition, acquisition integration costs in the three months ended March 31, 2015 included $1.4 million of costs related to the Kortec, Inc. ("Kortec") and TIRAD s.r.o. ("TIRAD") acquisitions for product line integration and other strategic alignment initiatives. Professional fees in the three months ended March 31, 2016 included $1.1 million of costs for strategic organizational initiatives. Professional fees in the three months ended March 31, 2015 included $0.4 million of fees for readiness initiatives associated with our IPO and $0.3 million of costs for strategic organizational initiatives. Non-cash fair market value adjustments relate to acquisition accounting for the fair market value of inventory as part of our acquisition of CanGen Holdings, Inc. in the fourth quarter of 2015. The annual effective tax rate adjustment reflects the impact to the quarterly 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. Other costs for the three months ended March 31, 2016 includes the write-off of a $0.5 million non-trade receivable. 17
Adj. EBITDA to Net Income Reconciliation Three Months Ended March 31, 2016 2015 (in millions) Operating earnings: APPT $ 9.8 $ 10.3 MDCS 28.2 2.9 Fluids 4.1 2.8 Corporate (10.1) (8.6) Total operating earnings 32.0 7.4 Adjustments to operating earnings: APPT Adjustments: Depreciation and amortization 5.1 5.3 Organizational redesign costs (b) 1.4 1.0 Acquisition integration costs (d) 0.6 Fair market value adjustments (f) 0.3 Total APPT Adjustments 6.8 6.9 MDCS Adjustments: Depreciation and amortization 8.2 9.1 Currency effect on intercompany advances (a) (6.3) 11.1 Organizational redesign costs (b) 1.0 3.6 Acquisition integration costs (d) 1.4 Other (g) (0.1) (0.1) Total MDCS Adjustments 2.8 25.1 Fluids Adjustments: Depreciation and amortization 1.4 1.7 Organizational redesign costs (b) 0.1 0.5 Professional services (e) 0.1 Other (g) 0.5 Total Fluids Adjustments 2.0 2.3 Corporate Adjustments: Depreciation and amortization 0.1 0.1 Currency effect on intercompany advances (a) (0.7) 0.3 Organizational redesign costs (b) 0.6 0.2 Long-term equity awards and shareholder fees (c) 2.3 1.3 Acquisition integration costs (d) 0.3 Professional services (e) 1.1 0.6 Other (g) 0.1 Total Corporate Adjustments 3.5 2.8 Adjusted EBITDA: APPT 16.6 17.2 MDCS 31.0 28.0 Fluids 6.1 5.1 Corporate (6.6) (5.8) Total Adjusted EBITDA $ 47.1 $ 44.5 18
Adj. EBITDA to Net Income Reconciliation (a) (b) (c) (d) (e) (f) (g) 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. Organizational redesign costs in the three months ended March 31, 2016 included $0.7 million of costs related to the shutdown of facilities in APPT and $0.3 million of costs related to relocating our facility on Belgium to the Czech Republic in MDCS. In the three months ended March 31, 2016, organizational redesign costs across all segments included $1.2 million for termination costs as a result of eliminated positions. Organizational redesign costs for MDCS in the three months ended March 31, 2015 included $2.6 million of severance and $0.5 million of project costs related to relocating our Belgium warehouse to the Czech Republic. In the three months ended March 31, 2015, organizational redesign costs across all segments included $1.5 million for termination costs as a result of eliminated positions and $0.3 million of costs related to the transition of positions to low-cost countries Long-term equity awards and shareholder fees in Corporate included 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 months ended March 31, 2016 and 2015. The cash advisory payment to CCMP ceased as of the effective date of our IPO. Acquisition integration costs across all segments in the three months ended March 31, 2015 include $1.4 million related to the Kortec and TIRAD acquisitions for product line integration and other strategic alignment initiatives. In addition, APPT and Corporate's acquisition integration costs include $0.8 million of one-time costs to introduce the integration and new branding of all Milacron companies at an industry trade show. Professional fees incurred by Corporate in the three months ended March 31, 2016 included $1.1 million of costs for strategic organizational initiatives. Professional fees incurred by Corporate in the three months ended March 31, 2015 included $0.4 million for readiness initiatives related to our IPO. In addition, professional fees incurred by Corporate and Fluids in the three months ended March 31, 2015 included $0.3 million of costs for strategic organizational initiatives, respectively. Non-cash fair market value adjustments relate to acquisition accounting for the fair market value of inventory as part of our acquisition of CanGen Holdings, Inc. in the fourth quarter of 2015. Other costs for the three months ended March 31, 2016 includes the write-off of a $0.5 million non-trade receivable. 19