A month has gone by since the last earnings report for Milacron Holdings Corp. . Shares have added about 2.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is MCRN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Milacron Q4 Earnings in Line, Revenues Top on Strong Orders
Milacron Holdings delivered fourth-quarter fiscal 2017 adjusted earnings per share of 47 cents, flat year over year (adjusted for stock-based compensation). It also surpassed the Zacks Consensus Estimate of 39 cents. The improved performance can be attributed to continued orders and sales momentum as well as strong performance in Fluids Technologies and Advanced Plastic Processing Technologies segments.
Including one-time items, the company reported earnings per share of 5 cents in the quarter compared with 2 cents per share in the year-ago quarter.
Operational Update
Milacron’s revenues went up 12.4% to $325 million from the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $303 million. Excluding favorable effects of currency movements, sales increased 9% from the prior-year quarter. New orders in the quarter grew 8.7% year over year to $316.3 million in the quarter.
Cost of sales during the quarter went up 22% year over year to $239 million from the prior-year quarter. Gross profit declined 8% year over year to $86 million with gross margin contracting 580 basis points (bps) to 26.3%.
Selling, general and administrative expenses decreased 3% year over year to $63 million. Adjusted EBITDA went up 13% to $60.4 million for the quarter from $53.6 million in the prior-year quarter. Adjusted EBITDA margin expanded 10 bps to 18.6% in the quarter.
Segment Results
Advanced Plastic Processing Technologies: Net sales advanced 19% year over year to $190 million. Excluding $4.6 million of favorable effects of currency movements, sales increased 16% from the prior-year quarter. Adjusted EBITDA surged 28% year over year to $25.8 million.
Melt Delivery and Control Systems: Net sales went up 2.6% year over year to $104 million. Excluding favorable influence of currency movements of $3.7 million, sales dipped 1.1% from the prior-year period. Adjusted EBITDA declined 1% to $32.2 million.
Fluid Technologies: Net sales rose 11% year over year to $31 million. Sales improved 5.4% from the prior-year period, excluding $1.5 million of favorable effects of currency movements. Adjusted EBITDA increased 25% to $7.4 million.
Financial Update
As of Dec 31, 2017, Milacron had cash and cash equivalents of $188 million compared with $130 million as of Dec 31, 2016. The company generated $110 million of cash from operating activities in 2017 compared with $116 million in the prior year. Long-term debt was $916 million as of Dec 31, 2017, compared with $934 million as of Dec 31, 2016.
2017 Performance
Milacron reported adjusted earnings per share of $1.81 in 2017, up 20% year over year. Earnings beat the Zacks Consensus Estimate of $1.62. On a reported basis, the company posted earnings of 2 cents per share compared with 43 cents recorded in 2016.
Revenues improved 6% year over year to $1.23 billion from $1.17 billion recorded in 2016. Revenues also beat the Zacks Consensus Estimate of $1.21 billion.
Outlook
Milacron has begun the year with a strong backlog position of $287 million. The company projects sales growth guidance of 2-4% in 2018. Adjusted EBITDA is forecasted to come in between $237 million and $243 million. The mid-point of the guidance range depicts 6% year-over-year growth. Free cash flow (before restructuring) is expected to lie between $80 million and $90 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
VGM Scores
At this time, MCRN has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, MCRN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Milacron (MCRN) Up 2.4% Since Its Last Earnings Report?
A month has gone by since the last earnings report for Milacron Holdings Corp. . Shares have added about 2.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is MCRN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Milacron Holdings Corp. Price and Consensus
Milacron Holdings Corp. Price and Consensus | Milacron Holdings Corp. Quote
VGM Scores
At this time, MCRN has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, MCRN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.