August 11, 2015 fa Q2 2015 Earnings Presentation
Disclaimer These slides contain (and the accompanying oral discussion will contain) forward looking statements. All statements other than statements of historical fact or relating to present facts or current conditions are forward- looking statements. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company s customers and suppliers, competitor responses to the Company s products and services, the overall market acceptance of such products and services, increases in the Company s cost structure, the rate of economic development and growth in emerging markets, the Company s exposure to fluctuations in currencies, the Company s ability to successfully implement its strategic initiatives to increase cost savings and improve operating margins, the integration of acquisitions and other factors disclosed in the Company s periodic reports. Such risks and other factors that may impact management s beliefs and assumptions are more particularly described in the prospectus contained in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the SEC ) under the caption Risk Factors. Consequently such forward-looking statements should be regarded as the Company s current plans, estimates and beliefs. The forward looking statements in these slides are made only as of the date hereof. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All of the Company s forward-looking statements should be considered in light of these factors. These slides contain financial measures which have not been calculated in accordance with generally accepted accounting principles in the United States ( U.S. GAAP ), including Adjusted EBITDA and Adjusted Net Income. These non-gaap financial measures should be considered only as supplemental to, and not as an alternative to, financial measures prepared in accordance with U.S. GAAP. Please refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA and Adjusted Net Income to the most directly comparable U.S. GAAP financial measures. We believe that the presentation of Adjusted EBITDA is useful to provide additional information to investors about certain material non-cash items. We believe the presentation of Adjusted Net Income enhances our investors overall understanding of the financial performance and cash flow of our business. Our use of the terms Adjusted EBITDA and Adjusted Net Income may vary from that of others in our industry. This presentation should be read in conjunction with Management s Discussion and Analysis and Condensed Consolidated Financial Statements presented within Form 10-Q filed with the SEC on August 11, 2015. 1
Milacron Company Overview Milacron is a global leader in the manufacture, distribution and service of highly engineered and customized systems within the $27 billion plastic technology and processing market Delivers equipment and service to customers throughout the entire lifecycle of their systems Over 60% of sales from consumable products providing high margin recurring revenue stream Only global company with a full-line product portfolio of highly customized equipment, components and services including: Hot Runners, Injection Molding, Extrusion and Blow Molding equipment, as well as Controllers, Mold Bases and premium Fluids Strong brands cultivated over 150 years 2014 Revenue Fluids 11% After Market 17% Advanced Plastic Processing Technologies 56% Melt Delivery and Control Systems 33% Equipment Systems 39% 2014 Adj. EBITDA Consumables 61% Fluids 11% Advanced Plastic Processing Technologies 37% Melt Delivery and Control Systems 52% Note: Advanced Plastic Processing Technologies = APPT; Melt Delivery and Control Systems = MDCS; Fluid Technologies = Fluids. 2
Go Forward Plan Long-term Goals Grow Share Profitably 5%+ organic revenue growth Fund the Future 20%+ EBITDA margin Make Possibilities a Reality 20%+ of revenue from new products Win Together Great place to work 3
Investment Highlights Milacron is a Leading Industrial Technology Company 1 2 3 4 Leading Market Positions & Portfolio of Brands Recurring Revenue Stream with a Focus on Consumables Large Installed Base & Blue Chip Customers Diverse End-Markets & Geography 5 6 7 8 Representing a Differentiated Investment Opportunity Positioned to Benefit from GDP+ Global Plastics Market Growth Growing Share with Disruptive Technology and Innovation Actionable Cost Reductions & Margin Expansion Experienced & Highly Skilled Management Team 5%+ Organic Revenue Growth & Path to 20%+ EBITDA Margins 4
Positioned to Benefit from GDP + Global Plastics Market Growth Fragmented and Growing $27B Market Top 15 Companies (Including Milacron) (1) 33% (Metric tons in millions) 400 Global Plastic Consumption (2) '10A-'15E CAGR: 5.4% 229 240 253 267 282 297 300 200 Rest of Market 67% (1) 100 0 2010A 2011A 2012A 2013A 2014E 2015E Historical Expansion Lifecycle / Consumables Expansion Complementary Plastics Technology Geographic Expansion (Emerging Markets / LCCs) Key Drivers Growing global demand for plastic products Conversion opportunities from other materials Global Plastic Processing Equipment (3) Global Hot Runner Market (4) (Sales in $bn) $32 $28.9 $28 $27.0 $25.3 $24 '14E-'17E CAGR: 7.1% (Sales in $bn) $31.1 $2.7 $2.4 $2.1 $2.1 $1.8 '14E-'17E CAGR: 8.0% $2.3 $2.4 $2.6 $20 2014E 2015E 2016E 2017E Demand Drivers $1.5 2014E 2015E 2016E 2017E Demand Drivers Processing technology driving materials conversion Automation / upgrading in emerging markets Upgrading of aging fleets in developed markets Product cost, quality and shortening product lifecycles Increasing penetration rates in emerging markets (~30% vs. 65-70% in developed) (1) Conversion of older cold runner technology to hot runners (1) Management Estimates. (2) Source: Global Industry Analysts, Inc. (3) Source: Global Industry Analysts, Inc. (4) Source: Interconnection Consulting. 5
Q2 Highlights Sales of $301.3 million in Q2 15 represented an increase of 8.2% on a constant currency basis Adjusted EBITDA increased 32% to $56 million in Q2 15 Adjusted EBITDA margins increased to 18.6% in Q2 15 from 14.3% in Q2 14 Completed IPO in Q2 15 raising approximately $265 million of net (1) (2) proceeds, net leverage declined to 4.1x Note: All comparisons are vs. Q2 14 (1) Excludes the underwriter s partial exercise of their over-allotment option of 415,600 shares in July 2015 (2) Defined as Net Debt/ LTM Adj. EBITDA 6
Milacron Q2 15 and YTD Results Q2 Highlights Q2 2015 Q2 2014 YTD 2015 YTD 2014 Revenue $301.3M $295.9M $580.5M $576.2M Adjusted EBITDA Organic Growth: 2% FX Adjusted Growth: 8.2% $56.0M $42.4M $100.5M $85.8M % Revenue 18.6% 14.3% 17.3% 14.9% Year on Year Growth Q2 2015 YTD 2015 Organic 8.2% 5.6% Acquisition - 1.3% FX (6.4%) (6.1%) Total 1.8% 0.7% Achieved constant currency revenue growth of 8.2% in Q2:15 and 6.9% YTD EBITDA margin improved 430 basis points in Q2:15 and 240 basis points YTD. The increase was primarily driven by cost out initiatives and leverage on incremental volume Completed the transition of the MDCS warehouse from Belgium to the Czech Republic and began transitioning the APPT blow molding systems manufacturing operations from Italy to the Czech Republic 7
Advanced Plastic Processing Technologies Revenue Q2 15 and YTD Results Q2 2015 Q2 2014 YTD 2015 YTD 2014 Revenue $169.9M $158.3M $321.3M $310.3M Adjusted EBITDA $23.0M $13.1M $40.7M $29.6M % Revenue 13.5% 8.3% 12.7% 9.5% Year on Year Growth Q2 2015 YTD 2015 Organic 11.7% 6.1% Acquisition - 1.7% FX -4.4% -4.2% Total 7.3% 3.5% APPT Q2 15 as a % of Total Milacron Adjusted EBITDA (1) 38% Q2 Highlights Achieved constant currency revenue growth of 11.7% in Q2:15 and 7.8% YTD EBITDA margin improved 520 basis points in Q2:15 and 320 basis points YTD. Strong leverage was benefited by cost out initiatives and a higher mix of Aftermarket sales Equipment sales were strong in North America, Europe and India. Aftermarket parts and service also exhibited solid growth 56% (1) Excludes Corporate Adjusted EBITDA of $(5.3) million 8
Melt Delivery and Control Systems Revenue Q2 15 and YTD Results Q2 2015 Q2 2014 YTD 2015 YTD 2014 Revenue $101.8M $105.2M $201.2M $201.8M Adjusted EBITDA $32.0M $28.6M $59.5M $54.8M % Revenue 31.4% 27.2% 29.6% 27.2% Year on Year Growth Q2 2015 YTD 2015 Organic 4.6% 6.3% Acquisition - 1.1% FX -7.8% -7.8% Total -3.2% -0.3% MDCS Q2 15 as a % of Total Milacron Adjusted EBITDA (1) Highlights Achieved year over year constant currency revenue growth of 4.6% in Q2:15 and 7.5% YTD Adjusted EBITDA margin improved 420 basis points in Q2:15 and 240 basis points YTD Sales were driven by growth in hot runner systems, mold assemblies and spare parts across all regions with particular strength in automotive, consumer goods and medical sectors 34% 52% (1) Excludes Corporate Adjusted EBITDA of $(5.3) million 9
Fluid Technologies Q2 15 and YTD Results Q2 2015 Q2 2014 YTD 2015 YTD 2014 Revenue $29.6M $32.4M $58.0M $64.1M Adjusted EBITDA $6.3M $5.5M $11.4M $10.6M % Revenue 21.3% 17.0% 19.7% 16.5% Year on Year Growth Q2 2015 YTD 2015 Organic 2.5% 0.8% Acquisition - - FX -11.1% -10.3% Total -8.6% -9.5% Highlights Achieved year over year constant currency revenue growth of 2.5% in Q2:15 and 0.8% YTD Adjusted EBITDA margin improved 430 basis points in Q2:15 and 320 basis points YTD Sales were driven by growth in Europe and Mexico and the automotive sector Fluid Technologies Q2 15 as a % of Total Revenue 10% Adjusted EBITDA (1) 10% (1) Excludes Corporate Adjusted EBITDA of $(5.3) million 10
YTD Free Cash Flow and Capital Structure Q2 Free Cash Flow June 30 th 2015 Capital Structure Capitalization & Debt Ratios % of Total Capitalization Debt Term Loan 482 Secured Notes IN 465 Other 8 CN Total Debt 955 42% Market Capitalization 1,310 58% Total Capitalization 2,265 Net Debt 877 Credit Metrics Net Debt / Adj. EBITDA Interest Coverage PF Interest Coverage (1) 4.1 x 3.1 x 3.5 x (1) Adjusted for lower interest following IPO de-levering 11
Go Forward Plan Grow Share Profitably Fund the Future Make Possibilities a Reality Win Together Long-term Goals 5%+ organic revenue growth 20%+ EBITDA margin 20%+ of revenue from new products Great place to work Action Steps Leverage full capabilities of the Company as "One Milacron" in the market Accelerate lifecycle revenue with consumables and service growth Increase share of wallet through account management Invest to gain share in 8% growing global hot runner market Next generation technology Emerging markets capacity Develop cost conscious culture across the Company Implement pricing tool to manage margins Add capacity in advance of market Aggressive management of working capital Cost reduction initiatives in place $30 million run-rate savings by the end of 2017 Manufacturing footprint consolidation to low cost countries G&A cost reduction through shared service centers and centralization Invest in game changing growth opportunities Optimize the Company s existing equipment portfolio to meet regional requirements Broaden hot runner platform and accelerate innovation Improve speed to market in all aspects of the business Identify and execute select bolt-on acquisitions Drive One Milacron across the Company Best-in-class quality and safety Build world-class leaders, account management and sales teams Deliver great service to every customer, every day Develop world class compensation system to share the wins 12
Appendix
Adj. EBITDA to Net Income Reconciliation 14
Adj. EBITDA to Net Income Reconciliation a) Non-cash currency effect on intercompany advances primarily relates to advances denominated in foreign currencies. The most significant exposure relates to the Canadian dollar pursuant to intercompany advances associated with the acquisition of Mold-Masters. b) Organizational redesign costs in the three months ended June 30, 2015 primarily included $1.3 million of severance and $2.0 million of one-time project costs related to relocating our facilities in Belgium and Italy to the Czech Republic, $0.8 million for termination costs as a result of eliminated positions, and $0.5 million of costs related to the restructuring of Fluids footprint in Europe. Organizational redesign costs in the six months ended June 30, 2015 primarily included $3.9 million of severance and $2.5 million of one-time project costs related to relocating our facilities in Belgium and Italy to the Czech Republic, $2.3 million for termination costs as a result of eliminated positions, $0.5 million of costs related to the restructuring of Fluids footprint in Europe, and $0.4 million of costs related to the transition of positions to lowcost countries. Organizational redesign costs during the three months ended June 30, 2014 included $0.5 million of costs for changes in the executive management team, $0.6 million of costs related to the shutdown of facilities, and $0.4 million of costs for the transition of positions to low-cost countries. Organizational redesign costs during the six months ended June 30, 2014 included $1.2 million of costs for changes in the executive management team, $0.8 million of costs for the transition of positions to low-cost countries and $0.6 million of costs related to the shutdown of facilities. c) Long-term equity options and shareholder fees include the non-cash charges associated with stock based compensation awards granted to certain executives and independent directors and a cash advisory fee paid to CCMP in the three and six months ended June 30, 2015 and 2014. The cash advisory payment to CCMP ceased as of the effective date of our IPO. d) Debt costs incurred during the three and six months ended June 30, 2015 included $22.2 million of debt extinguishment costs and $0.9 million of fees related to the new senior secured term loan facility. Debt costs incurred during the three and six months ended June 30, 2014 included a $2.9 million loss on the early extinguishment of a portion of our 8.375% senior secured notes due 2019. The loss consists of a $1.6 million premium paid for the early extinguishment and $1.3 million of previously deferred financing costs. We also expensed $0.5 million of previously deferred financing costs related to the senior secured term loan facility due March 2020. The six months ended June 30, 2014 also included $0.7 million of fees to increase the senior secured term loan facility due March 2020. e) Acquisition integration costs in the three and six months ended June 30, 2015 included $0.6 million and $2.0 million, respectively, of costs related to the TIRAD, s.r.o. ("TIRAD") and Mold-Masters acquisitions for product line integration and other strategic alignment initiatives. In addition, in the three and six months ended June 30, 2015 we incurred $0.5 million and $1.3 million, respectively, to introduce the integration and new branding of all Milacron companies. Acquisition integration costs in the three and six months ended June 30, 2014 primarily included travel and consulting services for the acquisition of Mold-Masters and certain other smaller acquisitions. f) Professional fees related to operational efficiency, business development, and other one-time advisory projects in the three and six months ended June 30, 2015 included $1.8 million and $2.2 million of fees for readiness initiatives associated with our IPO and $0.1 million and $0.4 million of costs for strategic organizational initiatives, respectively. Professional fees in the three months ended June 30, 2014, included $0.3 million related to strategic organizational initiatives and $0.4 million related to certain advisory services for readiness initiatives associated with our IPO. Professional fees in the six months ended June 30, 2014, included $0.6 million related to strategic organizational initiatives and $0.4 million related to certain advisory services for readiness initiatives associated with our IPO. g) Business combination costs relate to certain professional, audit and other fees related to the acquisitions of Kortec, TIRAD, and certain other smaller acquisitions. h) Other costs for the three and six months ended June 30, 2015 include a non-cash charge of $2.2 million related to the impairment of certain trademarks. 15
Adj. EBITDA to Net Income Reconciliation 16
Adj. EBITDA to Net Income Reconciliation a) Non-cash currency effect on intercompany advances primarily relates to advances denominated in foreign currencies. The most significant exposure relates to the Canadian dollar pursuant to intercompany advances associated with the acquisition of Mold-Masters within the MDCS segment. b) Organizational redesign costs incurred in MDCS in the three months ended June 30, 2015 included $1.6 million of one-time project costs related to relocating our Belgium warehouse to the Czech Republic. Organizational redesign costs in APPT in the three months ended June 30, 2015 included $1.3 million of severance and $0.3 million of other one-time project costs related to relocating our operation in Italy to the Czech Republic. Organizational redesign costs incurred in the Fluids segment in the three months ended June 30, 2015 included $0.5 million of one-time project costs related to restructuring the segment s European footprint. In the three and six months ended June 30, 2015, organizational redesign costs across all segments included $0.8 million and $2.3 million for termination costs as a result of eliminated positions and $0.1 million and $0.4 million of costs related to the transition of positions to low-cost countries, respectively. As incurred at the respective segments, organizational redesign costs in the three months ended June 30, 2014 included $0.4 million for salary and severance costs as a result of eliminated positions and $0.6 million for costs due to the shutdown of facilities. Organizational redesign costs for Fluids and Corporate in the three and six months ended June 30, 2014 included $0.5 million and $1.2 million, respectively, included costs for changes in the executive management team. Costs in Corporate and MDCS for the three and six months ended June 30, 2014 included $0.4 million and $0.8 million of costs for the transition of positions to lowcost countries, respectively. c) Long-term equity options and shareholder fees in Corporate include the non-cash charges associated with stock-based compensation awards granted to certain executives and independent directors and a cash advisory fee paid to CCMP in the three and six months ended June 30, 2015 and 2014. The cash advisory payment to CCMP ceased as of the effective date of our IPO. d) Debt costs incurred during the three and six months ended June 30, 2015 included $0.9 million of fees related to the new senior secured term loan facility due September 2020. Debt costs incurred during the six months ended June 30, 2014 included $0.7 million of fees to increase the senior secured term loan facility due March 2020. e) Acquisition integration costs for MDCS in the three and six months ended June 30, 2015 included $0.6 million and $2.0 million related to the TIRAD and Mold-Masters acquisitions for product line integration and other strategic alignment initiatives, respectively. In addition, APPT and Corporate s acquisition integration costs for the three and six months ended June 30, 2015 included $0.4 million and $1.2 million of one-time costs to introduce the integration and new branding of all Milacron companies, respectively. f) Professional fees incurred by Corporate in the three and six months ended June 30, 2015 included $1.7 million and $2.1 million for readiness initiatives related to our IPO, respectively. In the three months ended June 30, 2014, professional fees incurred by Corporate included $0.4 million for readiness initiatives associated with our IPO. g) Business combination costs for Corporate in the three and six months ended June 30, 2014 relate to certain professional, audit and other fees related to the acquisitions of Kortec and TIRAD. h) Other costs in APPT for the three months ended June 30, 2015 included a non-cash charge of $2.2 million related to the impairment of certain trademarks. 17