Milacron's New Orders Up 8%; First Quarter Results In Line With Guidance

CINCINNATI, OHIO, May 5, 2005...Milacron Inc. (NYSE: MZ) today reported a first quarter 2005 net loss of $9.1 million, or $0.22 per share, an improvement over the net loss of $16.6 million, or $0.45 per share, incurred in the first quarter of 2004. The loss from the year-ago quarter included $6.4 million in refinancing costs and $1.1 million in restructuring charges; the loss in the most recent quarter included restructuring charges of $0.4 million.

Sales in the first quarter of 2005 were $192 million, up $3 million from a year ago. Both sales and the net loss were near the midpoint of the range of guidance provided by the company in February.

New orders in the quarter increased 8% from year-ago levels, to $202 million, the highest in four years, and exceeded sales by $10 million.

"The plastics machinery market in North America continues to gain strength, and we are maximizing our participation in this recovery," said Ronald D. Brown, chairman, president and chief executive officer. "We are also expanding our presence in non-traditional markets such as Asia and Eastern Europe, which helped to offset the softness we experienced in Western European markets during the first two months of the quarter. We remain committed to improving our results on a quarter-to-quarter basis despite the challenges we face from increased material, energy and regulatory compliance costs," he said.

Before interest, taxes and restructuring and refinancing charges, Milacron had a loss of $0.3 million in the first quarter of 2005, compared to earnings of $0.5 million in the first quarter of 2004. (See reconciliation table.) Profitability in the most recent quarter was held back by rising material, energy and transportation costs, which were partially offset by price increases, as well as by higher pension and regulatory compliance expenses. Incremental costs incurred by the company to comply with Section 404 of the Sarbanes-Oxley Act of 2002 were $1.5 million in the first quarter and are projected to be about $4 million for the year.

Cash used by operating activities in the quarter was $6 million, compared to $42 million in the first quarter of 2004, which included $33 million to retire a sale-of-receivables program. The primary cause of cash usage was a build up of inventory during the quarter because of higher planned shipments in the second quarter.

First Quarter Segment Results

Machinery Technologies-North America (machinery and related parts and services for injection molding, blow molding and extrusion supplied from North America and India) Driven primarily by increased, broad-based demand for injection molding equipment in automotive, packaging and consumer goods sectors, new orders in the first quarter of 2005 grew 20% to $95 million from $79 million last year, while sales rose 13% to $87 million from $77 million. Segment operating earnings improved to $1.9 million compared to a loss of $0.6 million in the first quarter of 2004. Further improvement in profitability is expected as the year progresses.

Machinery Technologies-Europe (machinery and related parts and services for injection molding and blow molding supplied from Europe) Slow economic growth (GDP) in Western European countries, combined with the dampening effect of the strong euro on exports, caused a drop in demand in the first two months of the quarter. As a result, despite favorable currency translation effects, first quarter 2005 new orders declined from the year-ago quarter to $35 million from $40 million, and sales fell to $34 million from $43 million. This segment had an operating loss of $2.2 million compared to earnings of $1.1 million in the year-ago period. In March, however, we saw a pickup in new orders, which continued into April, and, assuming a continuation of orders at these levels, we expect operating results in this segment to improve.

Mold Technologies (mold bases and related parts and services, as well as maintenance, repair and operating (MRO) supplies for injection molding worldwide) Sales in the first quarter grew to $44 million from $43 million a year ago, reflecting modest gains in North America. Despite higher material costs, segment earnings improved to $2.3 million from $1.4 million in the year-ago quarter, largely as a result of benefits from recent restructuring actions in Europe. Operating earnings should continue to improve in 2005, as selective price increases begin to offset higher material costs and we realize further benefits of recent cost reductions.

Industrial Fluids (water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide) Sales of $27 million were up $1 million over the first quarter a year ago primarily due to favorable currency translation effects. Segment earnings, however, declined to $1.4 million from $2.5 million a year ago, primarily due to higher material, energy and transportation costs. During the quarter, we benefited from a one-time litigation settlement, which was largely offset by increased insurance expenses. As our recently introduced price increases take hold, this segment is expected to return to double-digit operating margins beginning in the second quarter.

Outlook

"Our outlook for 2005 remains positive," Brown said. "U.S. plastics processors' capacity utilization reached 84.8% in March, the highest level in five years. And in Western Europe, based on the upturn in March and April orders, demand for our products made there appears to be improving. Furthermore, we continue to make good inroads in Eastern Europe and Asia. With the successful introduction of price increases and further cost reduction measures, we are finding ways to compensate for higher costs of materials, energy and regulatory compliance. We are committed to improving our results throughout 2005 and returning to profitability in the second half of the year."

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 the company's most recent Form 10-Q on file with the Securities and Exchange Commission.

First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with 3,500 employees and major manufacturing facilities in North America, Europe and Asia. For further information, visit www.milacron.com or call the toll-free investor line: (800-909-6452).

Note: At 1 p.m. EDT today Milacron will hold an open investor conference call, which can be accessed live at www.milacron.com. The dial-in number for those interested in asking questions is (913) 981-4900. A replay of the call will be made available from 4 p.m. today through midnight on May 12 at www.milacron.com or dial-in at (719) 457-0820, access code: 4446423.