Hillenbrand Inc. decided to sell a majority stake in its Milacron plastics machinery business rather than a full divestiture following a portfolio review, President and CEO Kim Ryan said.
"We still see opportunities. We like the Milacron business. It was certainly one of the more cyclical businesses in the portfolio and so that is one of the more strategic reasons that we investigated the alternative," Ryan said during a Feb. 6 quarterly call with investment bankers.
Batesville, Ind.-based Hillenbrand is selling the majority of its Milacron injection molding and extrusion business to an affiliate of Bain Capital for $287 million.
The sale of 51 percent of the Milacron machine business, which is within Hillenbrand's Molding Technology Solutions (MTS) segment, is expected to generate about $250 million after taxes that will be used to pay down debt.
Hillenbrand has owned Milacron since 2019, when it paid $1.9 billion for all of the company, which had been publicly traded and included other business units in addition to injection molding and extrusion machinery.
The 2019 move increased Hillenbrand's stake in the plastics machinery market — it was already the parent company of compounding extruder maker Coperion and auxiliary equipment firms K-Tron and Rotex.
At the time, Hillenbrand was diversifying into industrial machinery to reduce its dependence on its traditional business, manufacturing burial caskets.
When Hillenbrand bought Milacron the deal included more than injection and extrusion machinery. The 2019 acquisition also included Melt Delivery and Control Systems, which make hot runner and process control systems, mold bases and components under the Mold-Masters, DME and Tirad brands; and Fluid Technologies, which makes the Cimcool line of fluids for metalworking.
Hillenbrand sold the Cimcool business to Dubois Chemical Inc. for $224 million in 2020. Hillenbrand still owns the Mold-Masters, DME and Tirad brands, which are now its Molding Technology Solutions segment, which is not included in the Bain Capital deal.
Hillenbrand announced the sale to Bain Capital on Feb. 5, the same day it reported fiscal first quarter results, which still include Milacron.
Sales of $707 million were down 9 percent compared to the prior year primarily due to lower volume, which was partially offset by favorable pricing.
Founded in 1860 in Cincinnati, Ohio, Milacron builds injection molding and extrusion equipment for the construction, automotive, packaging, consumer goods, and medical markets. The company started making plastics machinery in 1968.
With the sale of the majority ownership stake in the Milacron machinery business, Hillenbrand creates return and future opportunity for its shareholders and Milacron will see some investments to drive growth, Ryan said.
"So, we believe this structure and this partnership is a great match for the Milacron company, for Hillenbrand and for Bain Capital," Ryan said.
So do Bain officials.
"We are excited to partner with Mac Jones, the president of Milacron, and the entire Milacron team to support the next chapter of growth of one of the world's premier plastics processing solutions businesses," Chris Sun, a principal at Bain Capital Special Situations, said in a news release.
Matt Evans, another partner, described Milacron as an iconic American manufacturing business with a 50-year legacy of driving innovation in plastics.
"With manufacturers increasingly focused on supply-chain resilience and domestic production, we believe the U.S. is entering a manufacturing renaissance that will create significant opportunities for industry leaders like Milacron," Evans said. "With its advanced engineering capabilities, global reach, and deep customer relationships, Milacron is well-positioned to build on its strong foundation."
The transaction reflects the continued execution of Hillenbrand's portfolio transformation and profitable growth strategy, according to a Hillenbrand news release about the deal and first quarter results.
"Bain Capital has a proven track record of successful corporate partnerships and will provide greater resources to Milacron, which we believe will drive future growth and success for Milacron's associates and customers, as well as for Hillenbrand's shareholders," Ryan said in the release.
The deal is expected to be completed at the end of March or in early April.
In fiscal year 2024, Milacron generated sales of $526 million and earnings before interest, taxes, depreciation and amortization of $64 million.
For the first quarter of fiscal year 2025, Hillenbrand posted a profit of $6 million, or $0.09 per share, which was a decrease from $0.24 per share in the prior year. The company points to an increase in business acquisition and integration costs, lower volume and cost inflation, which was partially offset by productivity, favorable pricing, synergies, and the MTS restructuring completed in the prior year.
Hillenbrand's total backlog of $1.82 billion also is down 15 percent compared to the prior year and that is primarily driven by lower order intake in the Advanced Process Solutions (APS) segment. The MTS backlog increased 1 percent to $233 million.
In the MTS segment, sales of $196 million were down 5 percent compared to the prior year because of lower volume.
Still, demand was in line with expectations taking into account seasonality and ongoing market slowness.
"We continue to see softness in North America particularly in automotive as tariff uncertainty has significantly slowed new investments in that sector," Ryan said during the conference call.
"Europe also remains relatively sluggish across most areas but we are observing a trend of improving stability in Asia with solid momentum in India especially for packaging and consumer goods projects. Looking ahead we expect the North America and European markets to remain fairly tepid in the near term as customers wait for more clarity regarding tariffs and inflation," she said.