Investor Presentation. November, 2015

Transcription

1 Investor Presentation November,

2 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 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, except to the extent required by law. 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 GAAP. Please refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA and Adjusted Net Income to the most directly comparable 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. 2

3 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 LTM 9/30/15 Sales and Adj. EBITDA of $1,194 million and $215 million, respectively Delivers equipment and service to customers throughout the entire lifecycle of their systems ~61% of sales from consumable products provides high margin recurring revenue stream Only global company with a full-line product portfolio of highly customized equipment, components and services Offers 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 2014 Adj. EBITDA Advanced Plastic Processing Technologies 56% Fluids 11% After Market 17% Melt Delivery and Control Systems 33% Equipment Systems 39% 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. 3

4 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 4

5 Investment Highlights Milacron is a Leading Industrial Technology Company Leading Market Positions & Portfolio of Brands Recurring Revenue Stream with a Focus on Consumables Large Installed Base & Blue Chip Customers Diverse End-Markets & Geography 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 5

6 1 Leading Market Positions & Portfolio of Brands Melt Delivery and Control Systems #1 in hot runner systems in Americas and in Europe #2 in hot runner systems in Asia Advanced Plastic Processing Technologies #1 in North America (1) #1 in Injection Molding in India (1) #1 supplier to installed base (2) Fluid Technologies Leader in niche specialty synthetics and semi-synthetics Leader in synthetic metalworking fluids in the U.S. (1) (1) Based on management estimates. (2) Certain other companies provide aftermarket services on, and sales of parts relating to, our machines. 6

7 2 Recurring Revenue Stream with a Focus on Consumables Melt Delivery & Control Systems Advanced Plastics Processing Technologies (33% of Revenue & 52% of Adj. EBITDA) (1) (56% of Revenue & 37% of Adj. EBITDA) (1) Hot Runners, Controllers, Mold- Bases and Components Milacron Injection Molding Machine (39% of Revenue) (1) Lifecycle Aftermarket Parts and Services (17% of Revenue) (1) Hot Runner System Hot Runner Mold Heated Manifold Mold Base & Components Replaced every time a plastic part is designed / redesigned 1-5 years on average year replacement cycle Large global installed base 40,000+ machines 140,000+ hot runner systems Significant repair and replacement aftermarket revenue stream Milacron s Consumables Strategy Maximizes Revenue Across the Life of the Equipment Market Opportunity of up to 4x Machine Cost (1) Based on fiscal year ended 12/31/14. 39% of revenue refers to total machinery sales (including injection molding, blow molding and extrusion). Adj. EBITDA excludes Corporate Adj. EBITDA of $(21) million. 7

8 3 Large Installed Base & Blue-Chip Customers Large Installed Base of 40,000+ Machines and 140,000+ Hot Runner Systems Globally Milacron Serves the Entire Value Chain and No Customer Accounts for More than 1.6% of Revenue (1) (1) Based on sales for the fiscal year ended 12/31/14. 8

9 4 Diverse End Markets & Geography Diversified End Markets Diversified Geography Appliances/ Housewares Industrial 6% Components / Machinery 6% Medical 7% Job Shops/Custom Molders 7% Consumer Goods 8% Construction 8% Others 5% Automotive 23% Electronics 9% Packaging 21% Europe 21% Rest of Asia 6% India 7% China 9% RoW 5% North America 52% Asia 22% Diverse Customer Base whose Products Serve a Wide Array of End Markets Highly Exposed to Fast Growing Developing Asian Economies Such as India and China with Capacity to Service Growing Demand Our Products and Systems Serve a Broad and Diverse Range of End Markets and Blue-Chip Customers Note: Based on sales for the fiscal year ended 12/31/14. 9

10 5 Positioned to Benefit from GDP+ Global Plastics Market Growth Fragmented and Growing $27B Market Top 15 Companies (Including Milacron) (1) 33% Plastic Consumption (2) (Metric tons in millions) Rest of Market 67% (1) A 2011A 2012A 2013A 2014E 2015E Historical Expansion Key Drivers Lifecycle / Consumables Expansion Complementary Plastics Technology Geographic Expansion (Emerging Markets / LCCs) Growing global demand for plastic products Conversion opportunities from other materials Processing Equipment (3) Global Hot Runner Market (4) (Sales in $bn) $32 $28 $25.3 $24 $27.0 $28.9 $31.1 (Sales in $bn) $2.7 $2.4 $2.1 $2.1 $1.8 $2.3 $2.4 $2.6 $ E 2015E 2016E 2017E Demand Drivers $ E 2015E 2016E 2017E Demand Drivers Processing technology driving materials conversion Automation / upgrading in emerging markets Upgrading of aging fleets in developed markets (1) Management Estimates. (2) Source: Global Industry Analysts, Inc. (3) Source: Global Industry Analysts, Inc. (4) Source: Interconnection Consulting. Product cost, quality and shortening product lifecycles Increasing penetration rates in emerging markets (~30% vs % in developed) (1) Conversion of older cold runner technology to hot runners 10

11 5 End Markets Supported by Positive Market Trends Macro Themes Automotive Medical Vehicle lightweighting through transition from metal to plastic Glass to plastic conversion for devices such as syringes and medical instruments Light-weighting Reduced Product Lifecycles Convenience Reduced Energy Consumption Consumer Products Shortening product life cycles; innovation in multi-material products Food & Beverage Increased freshness and shelf life with higher quality materials Population Growth Increased Purchasing Power Improving Lifestyle in Emerging Markets Electronics & Telecom Superior quality and shorter life-cycles Sustainability Source: Management. 11

12 5 Opportunity to Recapitalize Aging Customer Fleet with New Technology Aging Plastics Processing Equipment Fleet (1) Strong ROI for replacement / upgrade Hot runners and aftermarket demand endure through lifecycle ($ in bn) $16 $12 $8 $4 Average Age Fixed Asset Age Equipment Investment (Age in yrs) 15 $ Case Study #1: Machine Upgrade Re-shoring consumer products manufacturing from offshore to U.S. Average age of existing fleet exceeds 20 years Recapitalization was business critical Significant customer savings from reduced energy consumption / higher output from current technology Milacron won by providing machinery plus new product development capabilities and industry leading aftermarket support Case Study #2: Fleet Refurbishment Large user of Milacron Blow Molding Machines (300+) for packaging applications Average age of existing fleet exceeds 25 years Productivity, efficiency, consistency, machine-to-machine and safety were an issue of growing concern Time phased rebuilding program that anticipates machines per annum over next 4-5 years New control systems and other critical components drive ROI Before: After: (1) Represents United States equipment fleet. Source: U.S. Department of Commerce Bureau of Economic Analysis. 12

13 (Penetration) 5 Hot Runner Market Growth Driven by Penetration and Innovation Unique Hot Runner Systems Technological advancements driving adoption and penetration Cold runner technology displaced by increased need for productivity, efficiency, automation and higher part quality Replaced each time a plastic part is designed / redesigned Represents up to 2x+ revenue opportunity vs. original machinery Case Study: CR to HR Conversion Drives ROI & Quality ($ in mm) 90% 80% 70% 60% 50% 40% 30% 20% Hot Runner Penetration and Market Size $554 $711 $303 $408 $692 $1,041 10% Multi-Material Technologies Europe North America Asia Reduced cycle time 26% shorter cycle Increased production 1.3x output on similar machines Improved resin efficiency 21% reduction in scrap Reduced labor costs - no manual degating required Improved product quality ~30% savings per part and <8 month payback Cold Runner Part: Hot Runner Part: Allows conversion into higher-value multi-materials Source: 2011 and 2015 share projections based on customer surveys in 2011 and management s knowledge of the market. 13

14 6 Growing Share with Disruptive Technology & Innovation Industry Leading Technology & Extensive R&D Capabilities ~1,000 active and pending patents 750+ engineers and product designers Significant product development capabilities Global engineering and design center in India to reduce costs and offer 24-hour service Technology Value Proposition Milacron technology drives value across the lifecycle of plastics systems: Typical Part Cost (1) Uptime Yield Energy Reduced Part Weight Machine Depreciation Mold Depreciation Energy Innovation Other Resin 75% Multi-layer Blow Molding Co-injection Molding E-Multi: An all electric, fully mobile injection unit Hot Runners: A leading innovator in the plastic industry Hybrid Machine Technologies M-PET Preform Molding Source: Management Estimates. (1) Typical cost breakdown to produce a closure for packaging applications. 14

15 6 Lifecycle Sales and Aftermarket Growth Supported by Technology Innovation How Milacron Wins For Our Customers Top global supplier of parts and service with significant opportunity to increase share Add value to customers through lifecycle sales approach and capabilities Large installed base of 40,000+ machines and 140,000+ hot runner systems globally #1 supplier to our installed base (1) Integrated service lifecycle model leads to significant advantages in aftermarket opportunities Improving Customer Experience & Driving Aftermarket Sales with Technology Customer Challenge Milacron Solution Outcome Machinery complexity (1,000+ components in an injection molding system) Shrinking skill base of technical and maintenance teams Developed streamlined and simple maintenance diagnostics and online ordering tools 3D tool for fleet Bill of Material Real time parts availability Launched with first 7,200 machines online February 2014, nearly 12,000 machines online as of April 2015 (~30% of installed base) Substantial growth at attractive margins from customers adopting the technology (1) Certain other companies provide aftermarket services on, and sales of parts relating to, our machines. 15

16 7 Actionable Cost Reduction & Margin Expansion Facilities Consolidation Footprint optimization China India CZ Czech Republic Substantial investment in China and India IN Manufacturing consolidation in Czech Republic enabled by TIRAD acquisition CN Back Office Integration & Operating Efficiency One Milacron integration initiative Sales office and call center consolidation Shared service center in India Estimated $35 million of Incremental Run-Rate Cost Savings by the End of 2017 from Initiatives Currently in Place Continue Lean Initiatives Continuous improvement program Operational efficiency and cost reduction In 2014, realized ~$11 million in savings from improvements in global sourcing 16

17 8 Experienced & Highly Skilled Management Team Executive Title Industry Experience Selected Experience Milacron (President & CEO): 2012-Present Tom Goeke President & Chief Executive Officer 32 years Klöckner Pentaplast (CEO): Klöckner Pentaplast (Divisional Manager, COO): Milacron (CFO): 2014-Present Chief Financial Officer 26 years MetoKote (CFO): PwC (Managing Director): Bruce Chalmers Millennium Chemicals (Director Corp. Dev.): Milacron (COO APPT): 2014-Present Chief Operating Officer APPT 32 years Mold-Masters (President): Edwards (COO): Ron Krisanda Tyco (President Fire & Safety EMEA, VP): Milacron (COO MDCS & Fluids): 2014-Present Chief Operating Officer MDCS and Fluids 30 years Milacron (Board Member): Celanese (EVP): John Gallagher Great Lakes (CEO, CFO & SVP): Milacron (Chairman): 2012-Present Chairman 40+ years Berry Plastics (Chairman & CEO): Ira Boots Berry Plastics (COO, VP & Manager):

18 Action Steps 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 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 $35 million run-rate savings by 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 18

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