Milacron posts a profit even as quarterly sales are flat

Photo by Milacron Holdings Corp. Goeke

First quarter sales were flat at Milacron Holdings, but the company made a profit after losing money in the first quarter a year ago.

Milacron, which went public on the New York Stock Exchange in June 2015, released its first quarter financial information on 5 May.

CEO Tom Goeke said the performance also looks solid because the economy is “relatively flat.

“Our results are a significant accomplishment in light of the uncertain economic conditions we encountered during the first quarter,” he told financial analysts.

Milacron Chief Financial Officer Bruce Chalmers said: “Our balance sheet continues to strengthen, as free cash flow generation of $16.5m (€14.5m) represents an increase of over $30m (€26.3m) versus the prior year. This improvement in working capital and our disciplined approach to capital allocation led to the year-over-year increase.”

First quarter 2016 sales were $277.3m (€243.4m), down less than one percent from $279.2m (€245.1m) in the first quarter of 2015.

Milacron reported a net profit of $9.8m (€8.6m). The company lost $15.9m (€13.9m) in the year-ago first quarter.

Milacron’s stock gained about 9% after the earnings release, closing at $15.85 on 5 May, up from $14.56 on 4 May. The stock had been around $17 in late April.

Milacron makes a wide range of plastics processing machinery, melt delivery systems like hot runners and mold components, and metal-cutting fluids. The company has production sites in North America, Europe, India and China. Goeke said Milacron has manufacturing in areas where it sells the equipment.

Milacron’s Advanced Plastic Processing Technologies segment turned in the first quarter’s best sales performance, growing to $156.1m (€137m), from $154m (€135.1m) a year earlier. Melt Delivery and Control Systems declined. Fluid Technologies was flat.

Goeke said that diversity of products and geography gives the Blue Ash, Ohio-based industrial company strength and staying power.

“I’m pleased with our performance out of the gate,” Goeke told financial analysts. “The diversity of our businesses helps us drive solid performance, even when the economic picture is mixed. This is what differentiates Milacron as an investment.”

For example, India is a strong market for machinery and hot runners, he said. Growth fluctuates in regions of the world. “Not every region is always hitting on all cylinders, so when you look at the blend of where things have gone, we have been very fortunate,” Goeke said.

The same growth pattern trend goes for end-markets.

“So if you look at our market mix and then our geographical mix, some of that acts is a hedge against each other,” Goeke said in an interview with Plastics News.

Milacron officials want to cut costs of $35m (€30.7m) by 2017. One big cost reduction will come in Germany, as Milacron announced 10 March that it is moving the long-time assembly of Ferromatik Milacron injection moulding presses to the Czech Republic.

On the addition side, Milacron last November bought the CanGen business-of Canterbury Engineering, the screw and barrel manufacturer, crosshead extrusion dies maker Genca. The company also is investing in the PET market, with equipment systems for preforms.

Executives will continue to look at cost cuts this year, Chalmers said.

Free cash flow generation hit $16.5m (€14.5m) in the first quarter; it was in negative territory in the year-earlier period.