Milacron Holdings Corp. MCRN 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.
Milacron Holdings Corp. Price, Consensus and EPS Surprise
Milacron Holdings Corp. Price, Consensus and EPS Surprise | Milacron Holdings Corp. Quote
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 ATU, Chart Industries, Inc. GTLS and W.W. Grainger, Inc. GWW. 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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