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NASDAQ FUTURES POP, TESLA STOCK SURGES AFTER EARNINGS

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Milacron (MCRN) Q2 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

Milacron Holdings Corp. MCRN delivered adjusted earnings per share of 34 cents in second-quarter 2019, surpassing the Zacks Consensus Estimate of 32 cents. However, the bottom line declined 26% on a year-over-year basis.

Including one-time items, the company reported earnings per share of 7 cents in the second quarter, down 68% from the year-ago quarter’s figure of 22 cents.

Operational Update

Milacron’s revenues fell 10.6% year over year to $271.40 million during the second quarter. The top line missed the Zacks Consensus Estimate of $283 million. Excluding unfavorable impact of currency movements, revenues decreased 8.3% from the prior-year quarter figure. New orders in the reported quarter declined 26.4% year over year to $235.7 million.

Milacron Holdings Corp. Price, Consensus and EPS Surprise

Milacron Holdings Corp. Price, Consensus and EPS Surprise
Milacron Holdings Corp. Price, Consensus and EPS Surprise

Milacron Holdings Corp. price-consensus-eps-surprise-chart | Milacron Holdings Corp. Quote

Cost of sales during the April-June quarter went down 6% year over year to $184 million. Gross profit declined 19% year over year to $87 million. Gross margin came in at 32.1% during the second quarter compared with the year-ago quarter’s 35.2%.

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Selling, general and administrative expenses fell 5% year over year to $58 million. Adjusted EBITDA went down 19% to $49.1 million in the reported quarter from $60.6 million in the prior-year quarter. Adjusted EBITDA margin contracted 190 bps to 18.1% in the quarter.

Segmental Results

Advanced Plastic Processing Technologies: Net sales declined 6% year over year to $138 million. Excluding $1.6 million of unfavorable impact of currency movements, sales declined 4.4% from the prior-year quarter. Adjusted EBITDA was up 2.6% year over year to $20 million.

Melt Delivery and Control Systems: Net sales declined 16% year over year to $104 million. Excluding unfavorable impact of currency movements of $4.3 million, sales decreased 12.8% from the prior-year period. Adjusted EBITDA slumped 27.4% year over year to $29 million.
 
Fluid Technologies: Sales for the reported quarter fell 11.9% year over year to $30 million. Sales dropped 8.3% from the year-ago period, excluding $1.2 million of unfavorable currency-movement impact. Adjusted EBITDA was $6 million, down from the prior year’s $8 million.

Financial Update

Milacron reported cash and cash equivalents of $152 million at the end of the second quarter, down from $184 million reported at the end of 2018. Net cash provided from operating activities were $1.1 million during the six-month period ended Jun 30, 2019, compared with $31.1 million reported in the comparable period last year.  Long-term debt was $825 million as of Jun 30, 2019, compared with $829 million as of Dec 31, 2018.

Merger Update

As announced on Jul 12, 2019, Milacron entered into an agreement with Hillenbrand, Inc. HI, per which Hillenbrand will acquire Milacron in a cash-and-stock transaction, valued at $2 billion. The deal includes Milacron’s net debt of $686 million as of Mar 31, 2019. The transaction is expected to close in the first calendar quarter of 2020.

Shares of Milacron have fallen 15.8% in the past year compared with the industry’s decline of 10.3%.

Zacks Rank and Key Picks

Milacron currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are CECO Environmental Corp. CECE and UFP Technologies, Inc. UFPT, both of which carry a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

CECO Environmental has a projected earnings growth rate of 82.8% for the ongoing year. The company’s shares have rallied 35% over the past year.

UFP Technologies has a projected earnings growth rate of 5.71% for the ongoing year. The company’s shares have rallied 33% over the past year.

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