Milacron Holdings Corp. delivered second-quarter 2018 adjusted earnings per share of 48 cents, which increased 4.3% year over year (adjusted for stock-based compensation). Adjusted earnings came in line with the Zacks Consensus Estimate.
Including one-time items, the company reported earnings per share of 21 cents in the quarter, which surged significantly around 50% from 14 cents per share in the year-ago quarter.
Operational Update
Milacron’s revenues went up 6% to $328 million from the year-ago quarter, driven by 9% consumables sales growth. Revenues beat the Zacks Consensus Estimate of $322 million. Excluding favorable effects of currency movements, organic sales increased 3.7% from the prior-year quarter. New orders in the quarter improved 2.2% year over year to $342 million in the quarter.
Cost of sales during the quarter went up 5% year over year to $216 million from the prior-year quarter. Gross profit increased 8% year over year to $112 million, with gross margin expanding 60 basis points (bps) to 34.2%.
Selling, general and administrative expenses flared up 1.6% year over year to $65 million. Adjusted EBITDA went up 5.4% to $63 million for the reported quarter from $60 million in the prior-year quarter. Adjusted EBITDA margin shrunk 20 bps to 19.1% in the quarter.
Segment Results
Advanced Plastic Processing Technologies: Net sales advanced 2.5% year over year to $170 million. Excluding $0.5 million of favorable effects of currency movements, sales increased 2.2% from the prior-year quarter. Adjusted EBITDA grew 7% year over year to $21 million.
Melt Delivery and Control Systems: Net sales went up 10.7% year over year to $124 million. Excluding favorable influence of currency movements of $5.8 million, sales increased 5% from the prior-year period. Adjusted EBITDA inched up 1% year over year to $40.5 million.
Fluid Technologies: Net sales rose 10% year over year to $33.6 million. Sales improved 6% from the year-earlier period, excluding $1.3 million of favorable effects of currency movements. Adjusted EBITDA increased 10% year over year to $7.6 million.
Financial Update
Milacron reported cash and cash equivalents of $150.8 million at the end of the reported quarter, down from $187.9 million at the end of 2017. The company generated $22 million of cash from operating activities during the six-month period ended Jun 30, 2018, compared with cash usage of $1.4 million reported in the comparable period last year. Long-term debt was $878 million as of Jun 30, 2018, compared with $926 million as of Dec 31, 2017.
Outlook
Milacron maintained its organic sales growth guidance at 2-4% for 2018, which included an anticipated benefit of 1% from foreign currency translation. The company revised its adjusted EBITDA guidance to $237-$240 million for the full year from the prior outlook of $237-$243 million due to the impact of tariffs.
During Q2, Milacron paid down $50 million of debt and expects to pay down an additional $50 million during the remainder of 2018. The company raised full-year tax provision to $38 million, reflecting its continued strong performance in China and India. Further, it expects free cash flow to be $80-$90 million.
Share Price Performance
Milacron has outperformed its industry with respect to price performance over the past year. The stock has gained around 18% compared with 12% growth recorded by the industry during the same time frame.
Zacks Rank & Key Picks
Milacron currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include Actuant Corporation , Chart Industries, Inc. (GTLS - Free Report) and W.W. Grainger, Inc. (GWW - Free Report) . All three stocks sport a Zacks Rank #1 (Strong buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Actuant has a long-term earnings growth rate of 15.6%. The stock has gained around 19% in a year’s time.
Chart Industries has a long-term earnings growth rate of 26.9%. The company’s shares have appreciated 132% over the past year.
Grainger has a long-term earnings growth rate of 12.5%. Its shares have rallied 104% in the past year.
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Milacron Holdings Corp. delivered second-quarter 2018 adjusted earnings per share of 48 cents, which increased 4.3% year over year (adjusted for stock-based compensation). Adjusted earnings came in line with the Zacks Consensus Estimate.
Including one-time items, the company reported earnings per share of 21 cents in the quarter, which surged significantly around 50% from 14 cents per share in the year-ago quarter.
Operational Update
Milacron’s revenues went up 6% to $328 million from the year-ago quarter, driven by 9% consumables sales growth. Revenues beat the Zacks Consensus Estimate of $322 million. Excluding favorable effects of currency movements, organic sales increased 3.7% from the prior-year quarter. New orders in the quarter improved 2.2% year over year to $342 million in the quarter.
Cost of sales during the quarter went up 5% year over year to $216 million from the prior-year quarter. Gross profit increased 8% year over year to $112 million, with gross margin expanding 60 basis points (bps) to 34.2%.
Selling, general and administrative expenses flared up 1.6% year over year to $65 million. Adjusted EBITDA went up 5.4% to $63 million for the reported quarter from $60 million in the prior-year quarter. Adjusted EBITDA margin shrunk 20 bps to 19.1% in the quarter.
Segment Results
Advanced Plastic Processing Technologies: Net sales advanced 2.5% year over year to $170 million. Excluding $0.5 million of favorable effects of currency movements, sales increased 2.2% from the prior-year quarter. Adjusted EBITDA grew 7% year over year to $21 million.
Melt Delivery and Control Systems: Net sales went up 10.7% year over year to $124 million. Excluding favorable influence of currency movements of $5.8 million, sales increased 5% from the prior-year period. Adjusted EBITDA inched up 1% year over year to $40.5 million.
Fluid Technologies: Net sales rose 10% year over year to $33.6 million. Sales improved 6% from the year-earlier period, excluding $1.3 million of favorable effects of currency movements. Adjusted EBITDA increased 10% year over year to $7.6 million.
Financial Update
Milacron reported cash and cash equivalents of $150.8 million at the end of the reported quarter, down from $187.9 million at the end of 2017. The company generated $22 million of cash from operating activities during the six-month period ended Jun 30, 2018, compared with cash usage of $1.4 million reported in the comparable period last year. Long-term debt was $878 million as of Jun 30, 2018, compared with $926 million as of Dec 31, 2017.
Outlook
Milacron maintained its organic sales growth guidance at 2-4% for 2018, which included an anticipated benefit of 1% from foreign currency translation. The company revised its adjusted EBITDA guidance to $237-$240 million for the full year from the prior outlook of $237-$243 million due to the impact of tariffs.
During Q2, Milacron paid down $50 million of debt and expects to pay down an additional $50 million during the remainder of 2018. The company raised full-year tax provision to $38 million, reflecting its continued strong performance in China and India. Further, it expects free cash flow to be $80-$90 million.
Share Price Performance
Milacron has outperformed its industry with respect to price performance over the past year. The stock has gained around 18% compared with 12% growth recorded by the industry during the same time frame.
Zacks Rank & Key Picks
Milacron currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include Actuant Corporation , Chart Industries, Inc. (GTLS - Free Report) and W.W. Grainger, Inc. (GWW - Free Report) . All three stocks sport a Zacks Rank #1 (Strong buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Actuant has a long-term earnings growth rate of 15.6%. The stock has gained around 19% in a year’s time.
Chart Industries has a long-term earnings growth rate of 26.9%. The company’s shares have appreciated 132% over the past year.
Grainger has a long-term earnings growth rate of 12.5%. Its shares have rallied 104% in the past year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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