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

Milacron Holdings Corp. MCRN 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

Milacron Holdings Corp. Price, Consensus and EPS Surprise

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

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, 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 SMED and Tennant Company TNC, 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.

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