Milacron (MCRN) Misses Q3 Earnings, Revenues; Shares Fall

Milacron Holdings Corp (NYSE:MCRN) reported third-quarter fiscal 2016 adjusted earnings per share of 36 cents, a 3% decline from 37 cents in the year-ago quarter. Further, earnings fell short of the Zacks Consensus Estimate of 38 cents.

Including one-time items, the company reported earnings per share of 10 cents in the quarter as against a loss of 17 cents per share in the year-ago quarter.

Milacron’s share price has plunged 12% since the earnings announcement.

Operational Update

Milacron reported revenues of $292 million, a 0.2% dip year over year. Revenues missed the Zacks Consensus Estimate of $302 million. Excluding the impact of the CanGen acquisition and unfavorable impact of foreign currency, organic sales for the quarter slipped 1.1% from the prior-year period.

Cost of sales during the quarter inched up 1% year over year to $193 million compared with the prior-year quarter. Gross profit declined 2% year over year to $99.7 million with gross margin contracting 50 basis points to 34.1%.

Selling, general and administrative expenses slumped 13% year over year to $60 million. Milacron reported adjusted operating profit of $31.6 million, which surged 35% from $23 million in the year-ago quarter. Adjusted EBITDA edged up 0.6% to $54.3 million for the quarter from $54 million in the prior-year quarter.

Segment Results

Advanced Plastic Processing Technologies: Net sales dipped 1% year over year to $168.7 million. Excluding $1.2 million of unfavorable effects of currency movements, sales decreased 0.5% over the prior-year quarter. Adjusted EBITDA remained flat year over year at $21.5 million.

Melt Delivery and Control Systems: Net sales went up 4% year over year to $95.4 million. Excluding $0.9 million of unfavorable influence of currency movements, sales advanced 4.7% over the prior-year period. Adjusted EBITDA improved 5% to $30.6 million.

Fluid Technologies: Net sales declined 6% year over year to $28 million. Excluding $0.6 million of unfavorable effects of currency movements, sales slipped 4% over the prior-year period. Adjusted EBITDA decreased 12% to $5.9 million.

Financial Update

As of Sep 30, 2016, Milacron had cash and cash equivalents of $102.7 million compared with $67 million as of Dec 31, 2015. The company generated $61 million in cash from operating activities in the first nine month period of 2016 versus a cash usage of $5.7 million in the prior-year comparable period. Long-term debt was $933.6 million as of Sep 30, 2016, compared with $932 million as of Dec 31, 2015.

Outlook

Milacron projects 2016 sales to be between $1,170 to $1,175 million and adjusted EBITDA to lie in the range of $209 to $212 million. Capital expenditures are projected in a range of approximately $45 to $50 million, interest expense are likely to be approximately $60 million, and cash taxes are expected between $30 and $35 million. Effective tax rate will be approximately 30% and shares outstanding will be approximately 70 million.

MILACRON HLDGS Price, Consensus and EPS Surprise

Zacks Rank

Milacron currently carries a Zacks Rank #4 (Sell). Some better-ranked industrial product stocks are ACCO Brands Corporation (NYSE:ACCO) , Casella Waste Systems Inc. (NASDAQ:CWST) and NN Inc. (NASDAQ:NNBR) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ACCO Brands has witnessed a 4% increase in its earnings estimate to 85 cents for 2016. Casella Waste Systems has seen upward estimate revisions of 133% over the past 30 days and the Zacks Consensus Estimate is pegged at 7 cents. The Zacks Consensus Estimate for NN Inc. has also moved up 1% over the last 30 days to $1.69 per share.

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