Milacron Holdings Corp. reported a small sales decline for 2016, but made a profit for the year, as executives said the aftermarket business is growing — but the key U.S. plastics machinery market remains “essentially flat.”
CEO Tom Goeke said some other regions of the world are experiencing investment in capital equipment.
“The missing component in the whole thing is really the confidence in the U.S. on continuing or sustained cap-ex spending. That really drives the equipment business,” he told financial analysts.
In other news, Goeke said Milacron soon will announce the commercial launch of its see-through Klear Can, aimed at the metal food can market. “That actually, by the end of Q1, will be sitting in the shelf,” he said, in response to an analyst's question.
Milacron announced the 2016 results on Feb. 23.
The company reported annual sales of $1.166 billion in 2016, a decline of 1.1 percent from $1.179 billion in 2015. That equals a 0.4 percent increase when measured on a constant-currency basis, to take out unfavorable effects of currency movements.
New orders grew by 1.4 percent (2.9 percent by constant currency), to $1.19 billion, from $1.174 billion in 2015.
For 2017, Milacron officials are forecasting organic growth ranging between zero and 2 percent, which they said is in line with current market conditions.
Milacron is a global machinery manufacturer, but its home U.S. market remains very important. Goeke said the U.S. accounts for 52 to 53 percent of total sales.
The company's largest unit, Advanced Plastic Processing Technologies, which includes plastics machinery, reported $664 million in 2016 sales, a decline of 2.5 percent from the year-before level.
Melt Control & Deliver Systems grew by 1.7 percent for the year, to $390 million. Goeke said that segment delivered a nearly double-digit sales growth when measured by constant currency.
Goeke said the company grew its backlog, and “closed the fourth quarter on a strong note at the upper end of our adjusted EBITDA guidance range,” which he called “a great achievement considering the mixed industrial dynamics that persisted throughout the year.”
“Despite these challenging economic conditions, we remained committed to solid operating execution and increased our backlog by nearly 7 percent vs. the prior year,” Goeke said.
Bruce Chalmers, vice president of financial and chief financial officer, said Milacron leaders see some optimism by plastics processors in the North American market, but he said the improved business should hit near the end of the year, and therefore be reflected in 2018.
“We feel now that we're going to have a repeat — essentially a flat North American market for 2017,” Chalmers said.
Goeke said there are signs of increased U.S. capital spending. “We already are starting to see releases for retrofit and rebuild, and that's all part of a bit of confidence in capacity, to start to expand capacity,” he said.
And he said that, although equipment sales are down, the number of machines has increased — indicating sales of smaller machines, for more of an incremental capacity expansion.
Milacron, based in Blue Ash, Ohio, a suburb of Cincinnati, is traded on the New York Stock Exchange.
