Milacron's Q4 Results Improve on Higher Sales; Outlook for 2005 Remains Positive

CINCINNATI, OHIO, February 14, 2005...Milacron Inc. (NYSE: MZ) today reported a net loss in the fourth quarter of 2004 of $1.2 million, or $0.07 per share, on sales of $213 million. This compares to a net loss of $24.2 million, or $0.66 per share, on sales of $198 million, in the fourth quarter of 2003.

In the fourth quarter of 2004, restructuring charges of $8.5 million were greater than anticipated, as the company wrote down plant and equipment idled as a result of recent restructuring actions. The 2003 fourth quarter included restructuring charges of $8.1 million with no tax benefit and a goodwill impairment charge of $13.3 million.

The results in the most recent quarter came in at the high end of the guidance last issued by Milacron on November 3, 2004, as sales, segment earnings and income tax benefits exceeded the estimated ranges.

Operating earnings before interest, taxes, restructuring, goodwill impairment and refinancing charges were $9.9 million in the fourth quarter of 2004, compared to $7.9 million in the year-ago quarter (see reconciliation table), as cost-reduction benefits more than offset higher material costs.

Manufacturing margins continued to improve, reaching 21.7%, up from 20.6% in the year-ago quarter.

The $213 million in sales represented an 8% gain over the fourth quarter a year ago, reflecting a continued pickup in demand for injection molding machines in North America as well as favorable currency translation effects - primarily the stronger euro and the weaker dollar. Currency translation had little impact on earnings. New orders in the fourth quarter of 2004 were $197 million, $3 million higher than a year ago, as continued strong demand in Asia and recovering North American markets - as well as favorable currency effects - offset weakening demand in Western Europe.

"Our quarterly sales exceeded $200 million for the first time in almost four years," said Ronald D. Brown, chairman, president and chief executive officer. "As the North American market for plastics processing equipment continues to recover, the benefits of the cost reductions we've implemented over the past several years should become more evident with sales volume increases," he said.

Year 2004

Milacron's net loss for the year was $51.1 million, or $1.32 per share, and included $21.4 million in refinancing costs and $13.6 million in restructuring charges. 2004 results were aided by a fourth-quarter non-cash income tax benefit of $4.8 million, resulting from a year-end adjustment of valuation allowances for deferred taxes. In 2003, the company had a net loss of $190.9 million, or $5.21 per share, which included a $70.8 million non-cash writedown of deferred tax assets and a $65.6 million non-cash goodwill impairment charge, as well as $28.9 million in restructuring and refinancing charges and $7.2 million in losses from discontinued operations.

In 2004, earnings from continuing operations before interest, taxes, restructuring, refinancing and goodwill impairment charges were $19.8 million, up from $7.1 million in 2003 (see reconciliation table), as savings from restructuring and other cost-reduction measures more than compensated for increased costs of materials, pension, insurance and compliance with the Sarbanes-Oxley Act.

Sales in 2004 reached $774 million, up from $740 million in 2003, while new orders rose to $766 million from $747 million, reflecting 5% and 3% increases, respectively, as solid growth in North America and Asia, and favorable currency translation effects, offset weakness in Western Europe.

"In 2004, Milacron successfully met the challenge of refinancing our capital structure while taking advantage of a partial recovery in capital goods markets in North America and strong growth outside our traditional markets, particularly in China, India and Eastern Europe," Brown said. "We continued to find ways to reduce costs and improve efficiency while never losing focus on the number-one priority: delivering advanced technology and superior service to our customers."

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 by higher demand for our injection molding machines, new orders and sales in the fourth quarter of 2004 were up about 11% versus the fourth quarter of 2003. New orders were $91 million, up from $82 million a year ago, while sales increased to $97 million from $87 million. Cost-reduction benefits, sales volume increases and better pricing more than offset higher material costs, as segment operating earnings (earnings before interest, taxes and restructuring charges) in the quarter rose to $9.1 million, or 9.4% of sales, compared to $6.1 million, or 7.1% of sales, in the year-ago quarter. For the year 2004, new orders in this segment were $337 million, up from $325 million in 2003, and sales rose to $334 million, from $321 million. Cost reduction benefits were the primary factor leading to a near doubling of operating earnings to $16.0 million, or 4.8% of sales, from $8.1 million, or 2.5% of sales, in 2003.

Machinery Technologies-Europe [machinery and related parts and services for injection molding and blow molding supplied from Europe] As demand softened considerably in November and December, fourth quarter new orders declined to $33 million from $45 million in the same quarter of 2003. Sales of $45 million were comparable to the year-ago quarter in dollars but down in local currencies. Lower sales volumes and rising material costs led to a modest loss of $0.3 million compared to operating earnings of $1.5 million in the fourth quarter of 2003. For the year 2004, this segment's new orders were $155 million compared to $154 million in 2003, while sales rose to $167 million from $151 million. In local currencies, new orders declined while sales were about even with those of 2003. As a result of our focus on cost reduction over the past year, operating earnings improved to $1.8 million, up from an operating loss of $1.4 million a year ago.

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 fourth quarter of 2004 were $44 million, versus $42 million in 2003. Our emphasis on cost reductions in Europe caused operating earnings to improve to $2.1 million from $1.3 million in the year-ago quarter. Despite favorable currency translation effects, sales for the year of $167 million were down from $169 million in 2003. Operating earnings, however, improved to $4.5 million from $1.8 million a year ago, as significant benefits from our restructuring actions in Europe outweighed the effects of lower sales volumes there.

Industrial Fluids [water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide] Fourth quarter sales rose to $29 million from $26 million a year ago, aided in part by favorable currency translation effects. Operating earnings, however, declined to $2.4 million from $3.7 million due to increases in material costs, as well as higher pension and insurance expenses.

Industrial fluid sales for the year 2004 were $109 million, up from $104 million in 2003, as favorable currency translation accounted for virtually all of the increase. The segment's operating earnings fell to $11.1 million from $15.7 million, due to the aforementioned cost increases.

Outlook

"The outlook for 2005 is positive," said Ronald D. Brown, chairman, president and chief executive officer. "Energy and material costs, including resin prices, have begun to stabilize, which should be beneficial to plastics processors and help facilitate the ongoing recovery in our North American machinery business. Accordingly, we believe continued growth in North America - as well as in Eastern Europe and Asia - will more than offset softness in Western European markets in 2005. In this scenario, we are projecting an overall volume growth of 5% to 7%, excluding currency translation effects.

"In addition, we've been able to offset some of the higher material costs we saw in the second half of 2004 with aggressive cost reductions and selective price increases, depending on market conditions. This should have a favorable impact on margins going forward.

"While the first quarter is on track to show improvement over the first quarter a year ago, we still anticipate incurring a small loss, as this is typically our weakest quarter and this year it will include additional costs to comply with Sarbanes-Oxley. Looking further ahead, we believe our combination of sales growth initiatives and cost reduction measures will enable us to return to profitability in the second half of 2005," Brown said.

Revolving Credit Facility Amended

Milacron said it had reached an agreement with its bank group to amend a number of covenants and terms of its revolving credit facility, including a reduction of the minimum levels of EBITDA (earnings before interest, taxes, depreciation and amortization) required by the facility in 2005. The amendment will be filed in its entirety with the Securities and Exchange Commission later this week.

Conversion Price for Series B Preferred Stock Reset

As previously forecast in its November guidance, in 2004 Milacron generated less than $50 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a threshold in the terms of the transaction that created the company's Series B Convertible Preferred Stock. As a result, the conversion price of that stock into Milacron common stock will be automatically lowered to $1.75 per share from $2.00 per share, effective June 30, 2005.

Change in Method of Accounting

In the fourth quarter of 2004, Milacron changed its valuation method for certain inventories in its North American machinery technologies segment. Those operations previously using the "last in, first out" (LIFO) method were changed to the "first in, first out" (FIFO) method, retroactive to the beginning of the year. The FIFO method is considered preferable because it results in a balance sheet presentation more reflective of current costs and, as a result of the change, all Milacron operations now use FIFO.

This change in method of accounting had no impact on 2004 earnings, but prior periods have been restated for consistency. The primary effects of this change on the previous four years are: a slight increase in the cumulative operating earnings of the Plastics Technologies - North America segment, resulting in a slight decease in the company's cumulative net losses, and a $10.3 million increase in shareholders' equity as of year-end 2003.

Restatement of Earnings Per Share (EPS)

The execution of the rights offering in the fourth quarter of 2004 permitted certain shareholders to purchase common shares at less than market value. In such situations, accounting rules require restatement of the number of outstanding shares used in the calculation of EPS in prior periods. Accordingly, EPS amounts for prior quarters have been restated. The effect is to increase the outstanding shares by about 9%.

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 major manufacturing facilities in North America, Europe and Asia.  For further information, visit the company's web site or call the toll-free investor hot line: 800-909-MILA (800-909-6452).

Note: At 1 p.m. ET on 2/14, 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. ET on Monday, February 14, through midnight Monday, February 21, on Milacron's website or by phone: (719) 457-0820 or toll-free (888) 203-1112, access code: 584534.