For Milacron LLC, 2015 was a whirlwind year, as the plastics machinery manufacturer went public on the New York Stock Exchange, moved its headquarters as part of a 10-year tax credit package from Ohio, and bought Canterbury Engineering and Genca, makers of screws and barrels and crosshead dies.
All that action after a 2013 in which Milacron plunked down $968 million for Mold-Masters Ltd., the major hot runner company, followed the next year by picking up Kortec Inc., a supplier of coinjection molding technology for making barrier packaging.
What's next? CEO Tom Goeke, interviewed after Milacron released its third-quarter 2015 results in November, said company officials are always looking as deals become available.
“I don't expect that we will be doing anything as transformational as Mold-Masters. And really our focus will be on bolt-on acquisitions,” he said.
Goeke said examples of these type of “tuck-in” deals include Canterbury and Genca (a combined business named CanGen) and other smaller purchases in recent years such as Texas manufacturers' representative Industrial Machine Sales Inc. and its sister company, Precise Plastics Machinery Inc., and American Extrusion Services Inc., an Ohio provider of aftermarket services for extruders.
Milacron opened a technical center at Industrial Machine Sales in Southlake, Texas — dubbed a Milacron High Impact Technical Center, or HITS, with parts and service to serve the Southeastern United States. Goeke said the officials are considering adding extrusion equipment at the Texas operation, and at the CanGen locations.
Goeke said potential acquisitions come along regularly. “It's one of things — we weren't planning [to buy] CanGen either — but as they come available you take a look at that and see if they meet the strategy and offer opportunities.”
Meanwhile, Milacron got beat by Sonoco Products Co. on the plastic food can to replace metal cans, the ubiquitous “tin can” of the grocery shelf. Sonoco announced Dec. 7 that its TruVue can should be in stores — at least regionally — by the end of the first quarter of 2016.
Milacron has developed the Klear Can, with help from its Kortec unit, but as of late December had not yet announced a commercial application.
Sonoco did not say which equipment maker it has teamed up with to make the multilayer plastic can, or give information on any customers.
In the Nov. 6 interview, Goeke said major food processors are looking at Klear Can, but he declined to identify them. Klear Can, he said, is “undergoing additional testing with a number of select prospects.” Milacron announced Oct. 26 that its plastic can has passed a key food safety test to show that Klear Can gives a safe seal without leakage.
Milacron's new life as a public company began with an initial public offering on the NYSE June 25. Milacron is not turning a net profit, but company leaders have spelled out future plans to create One Milacron, an integrated global manufacturer, balanced between machinery and “consumables” like hot runners, mold bases, parts and services and metal-cutting fluids.
Milacron lost $54.3 million through the first nine months of 2015 on sales of $873.2 million. Its IPO was priced at $20 per share, then fell to about $15 by early August before climbing back to $20 in mid-September. But then a steady decline hit, and the stock closed at $16.34 on the day Milacron released its third-quarter results, and Goeke spoke with Plastics News.
The stock slumped to under $13 by Christmas.
Can Milacron be considered a public company success, so far?
“The only thing I can really say about it is, the money that we raised at the IPO, we were able to direct to reduce our debt,” Goeke said. Milacron's IPO raised about $265 million, which the company used to pay down debt to its term loan and an asset-based lending facility.
After the IPO, CCMP Capital Advisors LLC continues to own 75 percent of the common stock. Goeke said that means the stock does not have a great deal of trading volume, so the price can be impacted by relatively small trades.
Goeke called paying down debt “a great thing for the company” that positions Milacron for long-term growth.
Goeke, Ron Krisanda, the chief operating officer for advanced plastic processing technologies, and some other executives have purchased Milacron stock. Were the stock-buys compensation? Or was CCMP directing the executives to buy shares to support the price? Goeke would not say.
“We believe in the company and in the end of the day we want our shareholders to have a return, and we want to make money too,” he said.
John J. Gallagher III, chief operating officer for Milacron's melt delivery and control systems and fluid technologies, said Goeke's team has created a solid strategy. “It's a tremendous company and strategy. So we have to have the opportunity to put our money where our mouth is,” he said.
Milacron executives moved into a new headquarters this year, in the Cincinnati suburb of Blue Ash, Ohio, moving from the nearby Oakley neighborhood.
Financial analysts will be watching to see if management's moves pay off in 2016, with a return to profitability at Milacron.
In its third-quarter report, Milacron said long-term goals include at least 5 percent organic sales growth, 20 percent-plus EBITDA margins and 20 percent or more sales coming from new products.
Milacron officials are on schedule to take out $35 million in costs by 2017, in an initiative that began in 2015.