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Milacron (MCRN) Q3 Earnings & Revenues Lag Estimates, Down Y/Y

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Milacron Holdings Corp. delivered adjusted earnings per share of 34 cents in third-quarter 2019, missing the Zacks Consensus Estimate of 35 cents. The bottom-line figure also declined 15% on a year-over-year basis.

Including one-time items, the company delivered earnings per share of 6 cents in the reported quarter, significantly down 68.4% from the year-ago quarter’s figure of 19 cents.

The quarterly results reflect the impact of industry-wide headwinds, global slowdown and trade-war tensions.

Operational Update

Milacron’s revenues fell 11.5% year over year to $250.3 million during the September-end quarter. Also, the top line missed the Zacks Consensus Estimate of $289 million. Excluding the unfavorable impact of currency movements, revenues decreased 10.2% from the prior-year quarter figure. New orders in the reported quarter declined 14% year over year to $220.2 million.

Cost of sales during the July-September quarter went down 6% year over year to $174.3 million. Gross profit declined 21.8% year over year to $76 million. Gross margin came in at 30.3% during the third quarter compared with the year-ago quarter’s 34.4%.

Selling, general and administrative expenses fell 2.5% year over year to $55.2 million. Adjusted EBITDA went down 16% to $45.1 million in the reported quarter from the prior-year quarter’s $53.7 million. Adjusted EBITDA margin contracted to 18% from the year-earlier quarter’s 19%.

Milacron Holdings Corp. Price, Consensus and EPS Surprise

Segmental Results

Advanced Plastic Processing Technologies: Net sales declined 14% year over year to $121.5 million. Excluding $0.6 million of unfavorable impact of currency movements, sales declined 13.6% from the prior-year quarter. Adjusted EBITDA decreased 17.3% year over year to $16.3 million.

Melt Delivery and Control Systems: Net sales dipped 9% year over year to $98.9 million. Excluding unfavorable impact of currency movements of $2.2 million, sales decreased 7.1% from the prior-year period. Adjusted EBITDA slipped 19% year over year to $26.8 million.
Fluid Technologies: Sales for the reported quarter fell 8.3% year over year to $29.9 million. Sales dropped 5.8% from the year-ago period, excluding $0.8 million of unfavorable currency-movement impact. Adjusted EBITDA was $6.8 million, down from the prior year’s $7.4 million.

Financial Update

Milacron reported cash and cash equivalents of $147.8 million at the end of the third quarter, down from the $150.3 million at the prior-year quarter end. Net cash provided from operating activities were $12.1 million during the nine-month period ended Sep 30, 2019, compared with $69.1 million reported in the comparable period last year.  Long-term debt was $765 million as of Sep 30, 2019, compared with $829 million as of Dec 31, 2018.

Merger Update

As announced on Jul 12, Milacron entered into an agreement with Hillenbrand, Inc. (HI - Free Report) , per which the latter will acquire the former in a cash-and-stock transaction, valued at $2 billion. The transaction is expected to close by the end of this year.

Share Price Performance

Shares of Milacron have appreciated 18.1% in the past year outperforming the industry’s growth of 8%.

Zacks Rank and Key Picks

Milacron currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp and Tennant Company (TNC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sharps Compliance has an expected earnings growth rate of a whopping 500% for the current year. The stock has gained 2.8% in a year’s time.

Tennant has a projected earnings growth rate of 29.82% for 2019. The company’s shares have rallied 32.6% over the past year.

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