Q2 2015 Investor Presentation - Investors

August 11, 2015
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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
Leading Market Positions & Portfolio of Brands
2
Recurring Revenue Stream with a Focus on Consumables
3
Large Installed Base & Blue Chip Customers
4
Diverse End-Markets & Geography
…Representing a Differentiated Investment Opportunity
5
Positioned to Benefit from GDP+ Global Plastics Market Growth
6
Growing Share with Disruptive Technology and Innovation
7
Actionable Cost Reductions & Margin Expansion
8
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%
Rest of
Market
(1)
67%
Global Plastic Consumption (2)
(Metric tons in millions)
300
229
240
2010A
2011A
100
0
• 
• 
'17E
'14E-
: 7.1
CAGR
%
2014E
2015E
Global Hot Runner Market (4)
(Sales in $bn)
$31.1
$28.9
$2.7
$27.0
7E CA
'14E-'1
$2.3
$2.4
0%
GR: 8.
$2.6
$2.4
$2.1
$25.3
$2.1
$24
$1.8
$20
$1.5
2014E
2015E
2016E
2017E
2014E
Demand Drivers
• 
• 
• 
2013A
Growing global demand for plastic products
Conversion opportunities from other materials
Global Plastic Processing Equipment (3)
(Sales in $bn)
2012A
Key Drivers
•  Lifecycle / Consumables Expansion
•  Complementary Plastics Technology
•  Geographic Expansion (Emerging Markets / LCCs)
$28
297
200
Historical Expansion
$32
5.4%
'10A-'15E CAGR:
282
267
253
400
Processing technology driving materials conversion
Automation / upgrading in emerging markets
Upgrading of aging fleets in developed markets
2016E
2017E
Demand Drivers
• 
• 
• 
____________________
(1)  Management Estimates.
(2)  Source: Global Industry Analysts, Inc.
(3)  Source: Global Industry Analysts, Inc.
(4)  Source: Interconnection Consulting.
2015E
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
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 2015
Revenue
Adjusted
EBITDA
Q2 2014
YTD 2015
YTD 2014
$295.9M
$580.5M
$576.2M
$56.0M
$42.4M
$100.5M
$85.8M
18.6%
14.3%
17.3%
14.9%
Organic$301.3M
Growth: 2%
FX Adjusted Growth:
8.2%
% Revenue
Year on Year Growth
Organic
Acquisition
FX
Total
Q2 Highlights
Q2 2015
YTD 2015
8.2%
5.6%
-
1.3%
(6.4%)
(6.1%)
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
Q2 15 and YTD Results
Q2 Highlights
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
13.5%
8.3%
12.7%
9.5%
% Revenue
Year on Year Growth
Q2 2015
YTD 2015
11.7%
6.1%
-
1.7%
FX
-4.4%
-4.2%
Total
7.3%
3.5%
Organic
Acquisition
APPT Q2 15 as a % of Total Milacron
(1)
Revenue
Adjusted EBITDA
38%
•  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
Q2 15 and YTD Results
Highlights
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
4.6%
6.3%
-
1.1%
FX
-7.8%
-7.8%
Total
-3.2%
-0.3%
Organic
Acquisition
MDCS Q2 15 as a % of Total Milacron
Adjusted EBITDA
Revenue
34%
(1)
•  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
52%
(1) Excludes Corporate Adjusted EBITDA of $(5.3) million
9
Fluid Technologies
Q2 15 and YTD Results
Highlights
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
2.5%
0.8%
-
-
FX
-11.1%
-10.3%
Total
-8.6%
-9.5%
Organic
Acquisition
•  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
10%
(1)
(1) Excludes Corporate Adjusted EBITDA of $(5.3) million
10
YTD Free Cash Flow and Capital Structure
Q2 Free Cash Flow
June 30th 2015 Capital Structure
% of Total
Capitalization
Capitalization & Debt Ratios
Debt
Term Loan
Secured Notes
Other
IN
482
465
8
955
42%
CN
Market Capitalization
1,310
58%
Total Capitalization
2,265
Total Debt
Net Debt
Credit Metrics
Net Debt / Adj. EBITDA
Interest Coverage
(1)
PF Interest Coverage
877
4.1 x
3.1 x
3.5 x
(1) Adjusted for lower interest following IPO de-levering
11
Long-term
Goals
Go Forward Plan
Grow Share Profitably
Fund the Future
Make Possibilities a Reality
Win Together
5%+ organic revenue
growth
20%+ EBITDA margin
20%+ of revenue from
new products
Great place to work
•  Leverage full capabilities
of the Company as "One
Milacron" in the market
•  Accelerate lifecycle
revenue with
consumables and service
growth
Action Steps
•  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
•  Invest in game changing
growth opportunities
•  Optimize the Company’s
existing equipment
portfolio to meet regional
requirements
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
•  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
•  G&A cost reduction
through shared service
centers and
centralization
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