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2005-11-05 News Headlines ->
Plastics
Milacron Plastics Processing
Technologies 3Q Results Up
Sales and new orders for Milacron, a leading global supplier of plastics
processing technologies, are up from a year ago.
Milacron Inc., a leading global supplier of plastics-processing technologies
and industrial fluids, reported third-quarter sales of $191 million, up
6% over sales of $181 million in the same period last year. New orders
of $191 million were up 4% from a year ago. The net loss in the third
quarter of 2005 was $6.9 million, or $0.18 per share. This compared to
a net loss of $5.5 million, or $0.18 per share, in the third quarter of
2004. The year-ago loss included $2.7 million in restructuring and refinancing
costs.
Operating results in the most recent quarter were held back by higher
material costs - attributable in large part to rising oil and gas prices
- as well as by increased pension, insurance and Sarbanes-Oxley compliance
expenses.
Despite the negative impact of higher resin prices, Milacron's North American
plastics
machinery
segment continued to recover, posting double-digit growth in sales and
orders over the third quarter last year. Offsetting this to some degree
was a 6% decline in orders in the company's European machinery segment.
Working capital reductions led to $15 million in net cash provided by
operations in the third quarter. Primary working capital (see calculation
table) was cut to 23.2% of sales, down from 24.1% in the second quarter.
Cash at the end of the quarter grew to $48 million, and the company had
approximately $35 million available for borrowing under its asset-based
revolving credit facility, which remains essentially undrawn.
Company Focus
"Our global customers face many challenges on a macro-economic level,
and we believe that our success is directly tied to our ability to provide
these customers with what they value most from Milacron, namely: innovative
technology and superior service at a fair price," said Ronald D. Brown,
chairman, president and chief executive officer. "To this end, our plan
to return Milacron to profitability focuses on three key areas: enhancing
the servicing of our large installed customer base in North America and
Europe, expanding our presence in the developing markets of Asia, Eastern
Europe and Latin America, and continuously improving our cost structure
and competitiveness through Lean initiatives and strategic sourcing."
Consolidation Measures
As previously announced, Milacron plans to further reduce its cost structure
by consolidating certain operations in both North America and Europe.
The objective is to focus the company's manufacturing on the production
of products and components with high technological, proprietary or strategic
value.
Implementing this consolidation will result in charges of approximately
$20 million, of which about $13 million will be cash. Most of the charges
should occur throughout 2006. Annualized cost savings generated by the
consolidation are estimated at $15 million, with about $3 million realizable
in 2006 and substantially the full benefit in 2007.
"In addition to the significant cost savings for Milacron, this consolidation
will allow us to concentrate our energies on providing our customers with
the innovative technologies and support services they need to compete
effectively," Brown said.
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) New orders
in the quarter increased 11% to $89 million, up from $80 million in the
third quarter of 2004, reflecting ongoing strength in the U.S. economy
across several end markets. Sales climbed to $87 million, 13% over the
same period last year. Rising material and pension costs tempered segment
earnings, which came in at $4.3 million versus $4.1 million in the year-ago
quarter.
Machinery Technologies - Europe (machinery and related parts and services
for injection
molding
and blow molding supplied from Europe) Demand in Western Europe remained
soft, as third quarter new orders declined to $34 million, from $36 million
a year ago. Sales of $37 million were essentially flat with the year-ago
period. The inability to pass through material cost increases negatively
impacted earnings, as the segment lost $1.5 million compared to a $0.3
million loss in the third quarter of 2004.
Mold Technologies (mold bases and related parts and services, as well
as maintenance, repair and operating supplies for injection molding worldwide)
Sales in the third quarter of $41 million improved slightly from $40 million
a year ago. The segment had an operating loss of $0.7 million compared
to earnings of $1.1 million in the third quarter of 2004. Pricing pressures
in Western European markets, higher steel costs and increased product
liability expense were the primary factors causing the drop in earnings.
Industrial
Fluids
(water-based and oil-based coolants, lubricants and cleaners for metalcutting
and metalforming operations worldwide) Sales of $27 million were essentially
flat with the third quarter a year ago. Higher-than-projected material
costs, along with increased insurance costs for product liability, held
back earnings to $1.8 million, a decline from $2.8 million a year ago.
Outlook
"For planning purposes we are assuming relatively modest overall growth
- 4% to 5% - in our markets next year. With the incremental margin on
higher sales, the initial cost-savings from our consolidation and lower
regulatory compliance costs, we believe Milacron will achieve significant
improvement in operating earnings in 2006. Longer term, by growing our
customer support services, expanding in emerging markets and improving
our cost structure, we will further strengthen Milacron's position as
the supplier of choice in plastics technologies and industrial fluids,"
Brown said.
You can hear the open investors repeat conference call through midnight
November 11 on the company's website or by phone: (719) 457-0820, access
code 5643158.
Find
information about Milacron.
or for the complete reported financials please visit; Milacron a leading
global supplier of plastics-processing technologies and industrial fluids,
with major manufacturing facilities in North America, Europe and Asia.
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