CINCINNATI, OHIO, October 31, 2000...Milacron Inc. (NYSE: MZ) today reported third quarter sales of $394 million, up 4% from ongoing businesses, and earnings of $.53 per share, a 13% increase over the third quarter of 1999 and in line with expectations. The company said fourth quarter earnings would likely approximate those of the same period a year ago, $.61 per share, and is targeting a 10% to 12% increase in earnings per share in 2001 on sales growth of 5% to 6%.
For the quarter ended September 30, 2000, Milacron earned $18.5 million, or $.53 per share (diluted), a 13% EPS increase over the third quarter of 1999. Net earnings included after-tax restructuring costs of $0.4 million, or $.01 per share, but were aided by the third quarter sale of the company’s European industrial magnet business, which resulted in an after-tax gain of $0.8 million, or $.02 per share. In the third quarter of 1999, Milacron reported net earnings of $17.4 million, or $.47 per share.
Sales of $394 million were up 4% after adjusting for the divestiture of the company’s European extrusion systems business sold at year-end 1999. Adverse currency translation reduced reported sales by 4% in relation to the year-ago quarter. In the third quarter of 1999, Milacron reported sales of $393 million, including $15 million in revenues from the divested business. New orders in the 2000 third quarter were $380 million, down from $406 million a year ago but even with last year when adjusting for currency and the divestiture. Operating cash flow or EBITDA (earnings before interest, taxes, depreciation, and amortization) was $51.6 million, up 4.5% from $49.4 million in the year-ago quarter.
“Milacron showed good improvement in sales, earnings and operating cash flow in the quarter despite negative impacts of the weakening euro and higher oil prices,” said Ronald D. Brown, president and chief operating officer. “Strong performances by most of our operations more than offset softer demand for grinding wheels and blow molding systems. With increasing cash flow, we bought back common stock and still reduced debt by over $40 million, improving our debt-to-capital ratio.
“The execution of previously announced efficiency measures throughout our operations also helped us to meet expectations for the quarter,” Brown added. “We are on or ahead of schedule in all major areas. We have closed five manufacturing facilities, eliminated over 400 administrative or indirect positions, and we are on track with the consolidation of our blow molding systems operations, which will be completed in Europe in early 2001. Furthermore, we continue to benefit from our investment in new products, which is running 10% ahead of last year, and we remain committed to generating more cash through better working capital management,” he said.
Year to date in 2000, Milacron’s net earnings totaled $50.3 million, up 5% from $47.8 million in 1999. Earnings per share for the first three quarters of 2000 were $1.41, up 10% from $1.28, thanks in part to the company’s share repurchase program. Sales in the first three quarters were $1.195 billion compared to $1.186 billion in 1999, representing a 5% increase after adjusting for the divestiture of the European extrusion systems business. New orders year to date were $1.181 billion, down from $1.191 billion in 1999 but up 3% after adjusting for the divestiture. Adverse currency translation reduced reported sales and orders by 4% and 3% respectively. So far in 2000, Milacron has generated operating cash flow (EBITDA) of $149 million, up 6% from $141 million last year.
Following the board of directors’ authorization in February to buy back up to four million shares, or about 11%, of the outstanding common stock, Milacron repurchased over 500,000 shares in the third quarter and an additional 700,000 shares so far in the fourth quarter, bringing the total for the year to approximately three million shares. Even with this action, cash generated from operations and proceeds from the sale of the magnet business allowed the company to reduce debt in the quarter, bringing the debt-to-capital ratio down to 49% from 52% at the end of the second quarter.
Plastics Technologies - The group’s sales in the quarter were $213 million, up 6% over the third quarter of 1999 excluding sales of the divested European extrusion systems business. Despite continued solid increases in the injection molding machine business, the group’s new orders declined to $199 million from $236 million, largely as a result of the divestiture and softer demand for container blow molding systems due to the ongoing consolidation of the dairy industry. Currency translation also reduced sales and orders by about 4% and 3%, respectively, compared to the third quarter of 1999.
Excluding restructuring costs, the group’s operating earnings rose 25% to $26.2 million from $21.0 million in the year-ago quarter. As a percent of sales, operating earnings increased more than two and one-half points to 12.3% from 9.7%. Operating earnings were aided by extensive efficiency measures, $4 million in royalty income from the licensing of patented technology, and improved profitability in all plastics businesses except blow molding systems, whose operations are currently being restructured.
Year to date in 2000, the plastics group’s sales were $652 million, about even with $654 million in 1999 but up 7% when adjusted for the divestiture. New orders for the first three quarters were $632 million down from $666 million, but up 2% excluding the divestiture. Currency translation reduced reported sales and orders by more than 3% and 2% respectively in relation to 1999. Operating earnings before restructuring costs were $74.2 million, up 20% from $61.6 million in the first three quarters of 1999 and included $5.8 million in royalty income.
Metalworking Technologies - The group’s sales and new orders in the quarter were $181 million, up from $177 million and $170 million, respectively, a year earlier. Excluding the effects of currency translation, sales and new orders rose by 8% and 11%, respectively, compared to the third quarter of 1999. Sales of carbide insert cutting tools and steel insert holders showed good gains in North America and were up slightly in Europe in local currencies. In North America, demand for high-speed steel drills was flat to down, while sales of solid carbide end mills and drills increased over the year-ago period. Sales of metalworking fluids showed good growth in both North America and Europe, as the group benefited from its expanded product offering.
The group’s operating earnings before restructuring costs were $17.2 million, or 9.5% of sales, down from $18.2 million, or 10.3% of sales, in the year-ago quarter. Despite improved earnings in inserts and round tools in North America, the segment’s profitability declined due to lower margins in grinding wheels and metalworking fluids, as the latter business was negatively impacted by higher oil prices. Currency translation further reduced operating earnings by approximately 3% in the quarter.
For the first three quarters of 2000, the metalworking group’s sales increased 2% to $543 million from $532 million, while operating earnings were off slightly at $49.6 million versus $50.6 million in 1999. Currency translation reduced year-to-date sales and operating profit by 5% and 3% respectively.
Milacron Inc. (NYSE: MZ) is a world leader in plastics processing and metalworking technologies with major manufacturing facilities in North America, Europe and India and 11,000 employees worldwide. Plastics technologies include injection molding machines, blow molding equipment, extrusion systems and wear items, mold bases, mold-making equipment and mold components, as well as aftermarket and MRO (maintenance, repair and operating) parts and services. Metalworking technologies include carbide metalcutting inserts, insert holders, carbide and high-speed steel round tools, metalworking fluids, chemical and tool management services, precision grinding wheels and carbide wear parts. For further information, visit the company’s web site, www.milacron.com, or call the toll-free investor hot line: 800-909-MILA (800-909-6452).
| Milacron Inc. and Subsidiaries (In millions) | Third Quarter 2000 | ||||||||||||
| Segment and Supplemental Information | |||||||||||||
| Quarter Ended | Year to Date | ||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||
| 2000 | 1999 | 2000 | 1999 | ||||||||||
| Plastics Technologies | |||||||||||||
| Sales | $ | 213.0 | $ | 215.6 | $ | 652.0 | $ | 654.2 | |||||
| Operating cash flow (a) | 33.6 | 29.9 | 97.7 | 87.2 | |||||||||
| Segment earnings | 26.2 | 21.0 | 74.2 | 61.6 | |||||||||
| Percent of sales | 12.3 | % | 9.7 | % | 11.4 | % | 9.4 | % | |||||
| New Orders | 199.4 | 236.2 | 632.2 | 665.5 | |||||||||
| Metalworking Technologies | |||||||||||||
| Sales | $ | 181.0 | $ | 177.4 | $ | 543.4 | $ | 531.8 | |||||
| Operating cash flow (a) | 24.1 | 24.4 | 70.3 | 69.3 | |||||||||
| Segment earnings | 17.2 | 18.2 | 49.6 | 50.6 | |||||||||
| Percent of sales | 9.5 | % | 10.3 | % | 9.1 | % | 9.5 | % | |||||
| New Orders | 180.5 | 169.9 | 548.7 | 525.2 | |||||||||
| Total Continuing Operations | |||||||||||||
| Sales | $ | 394.0 | $ | 393.0 | $ | 1,195.4 | $ | 1,186.0 | |||||
| Operating cash flow (a) | 51.6 | 49.4 | 149.4 | 140.8 | |||||||||
| Segment earnings | 43.4 | 39.2 | 123.8 | 112.2 | |||||||||
| Restructuring costs (b) | (0.6 | ) | — | (2.1 | ) | — | |||||||
| Gain on divestiture of business (c) | 1.5 | — | 1.5 | — | |||||||||
| Corporate expenses | (4.4 | ) | (3.4 | ) | (13.7 | ) | (11.2 | ) | |||||
| Other unallocated expenses (d) | (1.9 | ) | (1.3 | ) | (5.4 | ) | (3.9 | ) | |||||
| Operating earnings | 38.0 | 34.5 | 104.1 | 97.1 | |||||||||
| Percent of sales | 9.6 | % | 8.8 | % | 8.7 | % | 8.2 | % | |||||
| New orders | 379.9 | 406.1 | 1,180.9 | 1,190.7 | |||||||||
| Ending backlog | 204.5 | 259.6 | 204.5 | 259.6 | |||||||||
| (a) | Represents EBITDA (earnings before interest, income taxes, depreciation and amortization). | |||||||||||||
| (b) | Represents costs to improve operating efficiency and strengthen synergies with recently acquired businesses. | |||||||||||||
| (c) | Represents a gain on the sale of the company's industrial magnets business. | |||||||||||||
| (d) | Other unallocated expenses include financing costs related to the sale of accounts receivable. | |||||||||||||
| Milacron Inc. and Subsidiaries (In millions) | Third Quarter 2000 | ||||||
| Consolidated Balance sheets | |||||||
| September 30, 2000 | September 30, 1999 | ||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 27.2 | $ | 41.2 | |||
| Notes and accounts receivable-net | 202.9 | 218.3 | |||||
| Inventories | 373.0 | 401.1 | |||||
| Other current assets | 51.7 | 48.0 | |||||
| Property, plant and equipment-net | 297.3 | 342.9 | |||||
| Other noncurrent assets | 499.2 | 491.3 | |||||
| Total assets | $ | 1,451.3 | $ | 1,542.8 | |||
| Liabilities and Shareholders' Equity | |||||||
| Bank borrowings and current portion of long-term debt | $ | 92.5 | $ | 228.9 | |||
| Trade accounts payable and advance billings and deposits | 144.8 | 157.3 | |||||
| Other current liabilities | 171.2 | 168.4 | |||||
| Long-term accrued liabilities | 188.1 | 185.3 | |||||
| Long-term debt | 374.5 | 320.1 | |||||
| Shareholders' equity | 480.2 | 482.8 | |||||
| Total liabilites and shareholders' equity | $ | 1,451.3 | $ | 1,542.8 | |||
| Consolidated Cash Flows | |||||||||||||
| Quarter Ended | Year to Date | ||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||
| 2000 | 1999 | 2000 | 1999 | ||||||||||
| Increase (decrease) in cash and cash equivalents Operating activities cash flows | |||||||||||||
| Net earnings | $ | 18.5 | $ | 17.4 | $ | 50.3 | $ | 47.8 | |||||
| Depreciation and amortization | 14.4 | 14.9 | 44.6 | 43.7 | |||||||||
| Gain on divestiture of business | (1.5 | ) | — | (1.5 | ) | — | |||||||
| Working capital changes | |||||||||||||
| Notes and accounts receivable | 14.0 | 6.3 | 0.7 | (3.5 | ) | ||||||||
| Inventories | (9.8 | ) | (2.7 | ) | (23.5 | ) | (19.4 | ) | |||||
| Other current assets | (1.4 | ) | (1.2 | ) | (7.2 | ) | (4.9 | ) | |||||
| Trade accounts payable and other current liabilities | (0.2 | ) | 2.1 | (7.6 | ) | (19.0 | ) | ||||||
| Deferred income taxes and other-net | (3.6 | ) | 0.8 | (6.4 | ) | 8.8 | |||||||
| Net cash provided by operating activities | 30.4 | 37.6 | 49.4 | 53.5 | |||||||||
| Investing activities cash flows | |||||||||||||
| Capital expenditures | (10.7 | ) | (7.3 | ) | (27.6 | ) | (36.1 | ) | |||||
| Divestitures | 14.2 | — | 11.2 | 9.6 | |||||||||
| Acquisitions | (0.5 | ) | (35.8 | ) | (4.1 | ) | (46.8 | ) | |||||
| Disposals of property, plant and equipment | 3.2 | 2.6 | 4.0 | 3.1 | |||||||||
| Net cash provided (used) by investing activities | 6.2 | (40.5 | ) | (16.5 | ) | (70.2 | ) | ||||||
| Financing activities cash flows | |||||||||||||
| Dividends paid | (4.2 | ) | (4.5 | ) | (12.9 | ) | (13.6 | ) | |||||
| Issuance of long-term debt | — | — | 110.1 | — | |||||||||
| Repayments of long-term debt | (12.3 | ) | — | (145.1 | ) | — | |||||||
| Increase (decrease) in bank borrowings | (18.1 | ) | 12.1 | (5.9 | ) | 42.7 | |||||||
| Net purchases of treasury and other common shares | (7.4 | ) | 0.1 | (31.3 | ) | (18.7 | ) | ||||||
| Net cash provided (used) by financing activities | (42.0 | ) | 7.7 | (85.1 | ) | 10.4 | |||||||
| Effect of exchange rate fluctuations on cash and cash equivalents | (0.8 | ) | .6 | (1.9 | ) | (1.4 | ) | ||||||
| Increase (decrease) in cash and cash equivalents | (6.2 | ) | 5.4 | (54.1 | ) | (7.7 | ) | ||||||
| Cash and cash equivalent at beginning of period | 33.4 | 35.8 | 81.3 | 48.9 | |||||||||
| Cash and cash equivalent at end of period | $ | 27.2 | $ | 41.2 | $ | 27.2 | $ | 41.2 | |||||
| Note: These statements are unaudited and subject to year-end adjustments. | |||||||||||||
| Milacron Inc. and Subsidiaries (In millions, except per-share data) | Third Quarter 2000 | ||||||||||||
| Consolidated Earnings | |||||||||||||
| Quarter Ended | Year to Date | ||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||
| 2000 | 1999 | 2000 | 1999 | ||||||||||
| Sales | $ | 394.0 | $ | 393.0 | $ | 1,195.4 | $ | 1,186.0 | |||||
| Cost of products sold | 292.0 | 290.5 | 885.1 | 877.6 | |||||||||
| Manufacturing margins | 102.0 | 102.5 | 310.3 | 308.4 | |||||||||
| Percent of Sales | 25.9 | % | 26.1 | % | 26.0 | % | 26.0 | % | |||||
| Other costs and expenses | |||||||||||||
| Selling and administrative | 65.8 | 64.3 | 199.3 | 203.1 | |||||||||
| Restructuring costs (a) | 0.6 | — | 2.1 | — | |||||||||
| Gain on divestiture of business (b) | (1.5 | ) | — | (1.5 | ) | — | |||||||
| Other-net | (0.9 | ) | 3.7 | 6.3 | 8.2 | ||||||||
| Total other costs and expenses | 64.0 | 68.0 | 206.2 | 211.3 | |||||||||
| Percent of Sales | 16.2 | % | 17.3 | % | 17.2 | % | 17.8 | % | |||||
| Operating earnings | 38.0 | 34.5 | 104.1 | 97.1 | |||||||||
| Percent of Sales | 9.6 | % | 8.8 | % | 8.7 | % | 8.2 | % | |||||
| Interest expense-net of interest income | (10.5 | ) | (9.5 | ) | (29.6 | ) | (28.1 | ) | |||||
| Earnings before income taxes and minority shareholders' interest | 27.5 | 25.0 | 74.5 | 69.0 | |||||||||
| Provision for income taxes | 8.5 | 6.8 | 23.1 | 19.8 | |||||||||
| Earnings before minority shareholders' interests | 19.0 | 18.2 | 51.4 | 49.2 | |||||||||
| Minority shareholders' interests | 0.5 | 0.8 | 1.1 | 1.4 | |||||||||
| Net earnings | $ | 18.5 | $ | 17.4 | $ | 50.3 | $ | 47.8 | |||||
| Earnings per common share | |||||||||||||
| Basic | $ | 0.53 | $ | 0.47 | $ | 1.42 | $ | 1.29 | |||||
| Diluted | $ | 0.53 | $ | 0.47 | $ | 1.41 | $ | 1.28 | |||||
| (a) | Represents additional costs ($.4 million after tax, or $.01 per share, for the third quarter and $1.4 million after tax, or $.04 per share, for the year to date) related to initiatives announced in 1999 to improve operating efficiency and strengthen synergies with recently acquired businesses and to consolidate Uniloy's European operations. | |||||||||||||
| (b) | Represents a gain ($.8 million after tax or $.02 per share) on the sale of the company's industrial magnets business. | |||||||||||||
| Note: These statements are unaudited and subject to year-end adjustments. | ||||||||||||||
| Milacron Inc. and Subsidiaries | Third Quarter 2000 | ||||||||||||
| Quarter Ended | Year to Date | ||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||
| 2000 | 1999 | 2000 | 1999 | ||||||||||
| Sales | $ | 393,955,000 | $ | 392,953,000 | $ | 1,195,401,000 | $ | 1,186,002,000 | |||||
| Net earnings | 18,518,000 | (a) | 17,360,000 | 50,345,000 | (a) | 47,775,000 | |||||||
| Per Share | |||||||||||||
| Basic | 0.53 | 0.47 | 1.42 | 1.29 | |||||||||
| Diluted | 0.53 | 0.47 | 1.41 | 1.28 | |||||||||
| Common Shares | |||||||||||||
| Weighted average outstanding for basic EPS | 34,588,000 | 36,727,000 | 35,379,000 | 36,918,000 | |||||||||
| Weighted average outstanding for diluted EPS | 34,678,000 | 36,994,000 | 35,487,000 | 37,157,000 | |||||||||
| Outstanding at quarter end | 34,348,000 | 37,013,000 | 34,348,000 | 37,013,000 | |||||||||
| (a) | Includes after tax restructuring costs of $.4 million, or $.01 per share, for the third quarter and $1.4 million, or $.04 per share, for the year to date. | |||||||||||||
The forward-looking statements above by their nature involve risks and uncertainties that could significantly impact operations, markets, products and expected results. For further information please refer to the Cautionary Statement included in Item 2 of the company’s most recent Form 10-Q, on file with the Securities and Exchange Commission.
