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Milacron (MCRN) Q3 Earnings Top on Strong Orders, Markets

Milacron Holdings Corp.MCRN reported third-quarter fiscal 2017 adjusted earnings per share of 44 cents, a 22% increase year over year. It also surpassed the Zacks Consensus Estimate of 42 cents. The improved performance was aided by continued orders and sales momentum along with strength in global markets, particularly in Asia and Europe. Further, strong performance in Melt Delivery and Control Systems, Fluids businesses and Advanced Plastic Processing Technologies' aftermarket business helped deliver the performance.

Including one-time items, the company reported earnings per share of 17 cents in the quarter compared with 10 cents per share in the year-ago quarter.

Operational Update

Milacron's revenues went up 7.7% to $315 million from the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $301 million. Excluding the unfavorable impact of foreign currency, sales for the quarter increased 6.1% from the prior-year quarter.

Cost of sales during the quarter went up 12% year over year to $216 million from the prior-year quarter. Gross profit declined 1% year over year to $98.7 million with gross margin contracting 270 basis points (bps) to 31.4%.

Milacron Holdings Corp. Price, Consensus and EPS Surprise

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

Selling, general and administrative expenses increased 2% year over year to $61.5 million. Milacron reported adjusted operating profit of $29.9 million, decreasing 5% from $31.6 million in the year-ago quarter. Adjusted EBITDA went up 6% to $57.3 million for the quarter from $54.3 million in the prior-year quarter. Adjusted EBITDA margin however contracted 40 bps to 18.2% in the quarter.

Segment Results

Advanced Plastic Processing Technologies: Net sales went up 4.3% year over year to $176 million. Excluding $2.6 million of unfavorable effects of currency movements, sales increased 2.7% in the prior-year quarter. Adjusted EBITDA increased 7% year over year to $23.1 million.

Melt Delivery and Control Systems: Net sales surged 13% year over year to $108 million. Excluding unfavorable influence of currency movements of $1.4 million, sales advanced 11.8% in the prior-year period. Adjusted EBITDA improved 8% to $33.1 million.

Fluid Technologies: Net sales rose 9% year over year to $30.7 million. Sales improved 6.4% in the prior-year period, excluding $0.8 million of unfavorable effects of currency movements. Adjusted EBITDA increased 14% to $6.7 million.

Financial Update

As of Sep 30, 2017, Milacron had cash and cash equivalents of $93.4 million compared with $130.2 million as of Dec 31, 2016. The company used $7.4 million of cash in operating activities in the first nine-month period of 2017 compared with $60.8 million in the prior-year comparable period. Long-term debt was $919.1 million as of Sep 30, 2017, compared with $934 million as of Dec 31, 2016.

Outlook

Given its performance in the third quarter, Milacron raised organic sales growth guidance to 3.0-3.5% from the previous range of 0-2%. Adjusted EBITDA is forecasted to be between $222 million and $224 million compared with the prior range of $219 million to $225 million. Free cash flow (before restructuring) is expected to lie between $80 million and $90 million.

In the past year, the company has underperformed the industry it belongs to. Its shares rose 20.0%, falling behind the industry's rise of 49.6%.

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

Some better-ranked stocks worth considering in the sector include Briggs & Stratton Corporation BGG , Sun Hydraulics Corporation SNHY and Lakeland Industries, Inc. LAKE . All three stocks boast a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Briggs & Stratton Corporation has an earnings ESP of 8.62% in the trailing four quarters. Sun Hydraulics has an average earnings surprise of 3.47% in the last four quarters, while Lakeland Industries has an average earnings surprise of 18.01%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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