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Milacron’s Sales, Margins and Operating Earnings Continue to Improve
CINCINNATI, OHIO, July 31, 2008...Milacron Inc. (MZIA.PK), a leading global supplier of plastics-processing technologies and industrial fluids, today reported a net loss for the second quarter ending June 30 of $3.1 million, or $1.04 per share, compared to a net loss of $0.1 million, or $0.50 per share, in the second quarter of 2007. The net loss in the second quarter of 2008 included restructuring and other non-recurring charges of $4.3 million, while the loss a year ago included $1.5 million in restructuring charges as well as a tax benefit of $4.9 million. Thanks to aggressive restructuring and other cost-cutting actions implemented over the past year, manufacturing margins in the second quarter rose sharply to 22.3% from 19.6% a year ago, and operating earnings more than doubled to $6.5 million from $2.6 million. Most of the profitability improvement came from the company’s North American plastics machinery and mold technologies businesses, reflecting the success of measures taken to offset the ongoing weakness in the automotive and construction sectors. Sales in the second quarter were $216 million, up from $197 million last year. Favorable currency translation effects – primarily the weak dollar and the strong euro – accounted for about two-thirds of the increase. New orders in the quarter declined, however, to $194 million, from $202 million in the second quarter last year, despite favorable currency effects. The order decline was primarily in the machinery businesses in both North America and Western Europe. Net cash used by operations during the quarter was $6.4 million, up from $3.9 million a year ago, primarily the result of $4.6 million in pension contributions made during the quarter. At the end of the quarter, cash on hand was close to $40 million, about $8 million higher than a year ago, and the company had approximately $48 million available for borrowing under its main revolving credit facilities, up from $33 million last year. “Our ongoing efforts to reduce product costs and our overall cost structure are paying off,” said Ronald D. Brown, chairman, president and chief executive officer. “This is showing up in significantly improved operating margins despite rising material costs and difficult market conditions in North America. Our push to increase our presence outside the U.S., Canada and Western Europe continues to show results. Sales to these non-traditional markets in the second quarter were up 25% from a year ago and now account for close to 25% of our total sales.” Segment Results Machinery Technologies-North America (machinery and related parts and services for injection molding, blow molding and extrusion supplied from North America, India and China) Segment sales grew to $95 million compared to $92 million in the second quarter last year, despite ongoing weakness in the automotive and construction sectors of the plastics machinery market in North America. Sales of equipment and supplies for extrusion and blow molding posted modest declines from year-ago levels, while injection molding machinery sales, helped by continued strong growth in India and China, showed solid gains. Benefiting from cost-cutting and other efficiency improvements over the past several quarters, segment earnings rose sharply to $8.0 million, up from $2.8 million in the first quarter of this year and from $4.9 million in the year-ago quarter. Despite good increases from Asia, segment new orders fell to $83 million from $90 million in the second quarter last year. Machinery Technologies-Europe (machinery and related parts and services for injection molding and blow molding supplied from Europe) Boosted by increases in shipments of blow molding systems, sales rose to $50 million, up from $40 million in the second quarter last year. Favorable currency translation effects accounted for more than half the gain. Held back by rising material costs, segment operating earnings of $0.4 million still showed an improvement over a $0.4 million loss in the first quarter but were essentially flat compared to the second quarter a year ago. Despite favorable currency translation effects, new orders fell to $41 million from $45 million in the second quarter of 2007. Mold Technologies (mold bases and related parts and services, as well as maintenance, repair and operating supplies for injection molding worldwide) Sales in the second quarter of $38 million were up from $36 million a year ago. Restructuring actions to eliminate fixed costs and increased global sourcing initiatives helped improve segment earnings to $1.0 million compared to $0.5 million in the first quarter and a loss of $0.8 million a year ago.
Industrial Fluids (water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide) Favorable currency translation effects helped offset declines in the North American market, as sales reached a record quarterly high for this segment of $35 million, up from $32 million a year ago. Segment earnings improved to $4.6 million over $3.2 million in the year-ago quarter primarily due to better pricing and cost-reduction initiatives, which combined were able to offset material cost increases.
Outlook “Our outlook for the year, which we presented back in May, remains the same,” Brown said. “We expect year-over-year improvement in our operating results throughout 2008 despite the ongoing weakness in our North American markets. The significant cost-reduction measures we are executing, combined with strategic sourcing initiatives and price increases of our own, are more than offsetting rising energy and material costs. So, even with the economic headwinds we’re currently facing, we expect 2008 to be a better year for Milacron.”
Dividends and Stock No dividends were declared this quarter on Milacron common or preferred stock. Milacron is withdrawing its common stock from listing on the NSX (National Stock Exchange, formerly the Cincinnati Stock Exchange) as it no longer meets a listing standard that requires net earnings of $200,000 annually before taxes for two prior years excluding non-recurring income. Milacron was one of only two remaining companies still listed on NSX. Withdrawal from the NSX is expected to have no material impact on the company’s stock or related trading. 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.
Investor Conference Call Today at 1:00 p.m. EDT, Milacron will hold an open investor conference call, which can be accessed live at www.milacron.com. For analysts and investors wishing to ask questions, the dial-in number will be 719-325-4883 or toll-free 877-545-1491. A recording of the conference call will be available starting 4:00 p.m. on July 31 through midnight August 13 on the company’s website or by phone: 719-457-0820 or toll-free 888-203-1112 and providing the access code: 4287367. ______________________ 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 www.milacron.com or call Milacron’s toll-free investor line: (800) 909-6452.
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