Milacron — Debt Investor Presentation (September 2019)
42 slides from Milacron's debt investor presentation, Sep 11, 2019
Slide 1: Bond Investor Presentation
Bond Investor Presentation Joe Raver – President and Chief Executive Officer Kristina Cerniglia – Senior Vice President and Chief Financial Officer
Slide 2: Cautionary Statements
Cautionary Statements This presentation contains statements, including statements regarding the proposed acquisition of Milacron Holdings Corp. (“Milacron”) by Hillenbrand, Inc. (“Hillenbrand”) that are forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as am
Slide 3: Cautionary Statements: Market Data and Additional Information
Cautionary Statements Market and Industry Data This presentation also includes market and industry data that Hillenbrand has obtained from market research, publicly available information and industry publications. The accuracy and completeness of such information are not guaranteed. Such data is oft
Slide 4: Cautionary Statements: No Offer or Solicitation
Cautionary Statements 4 No Offer or Solicitation This presentation is confidential and is for your information only and is not intended to be used by anyone other than you. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there
Slide 5: Agenda
Hillenbrand Overview and Strategy 1 Financial Overview 5 Appendix 6 Milacron Acquisition 4 Agenda 5 7 24 36 28 - Process Equipment Group 2 - Batesville 3 12 20
Slide 6: Key Takeaways
Key Takeaways 6 Significant strides made transforming Hillenbrand into a global diversified industrial company 1 Flexible balance sheet supported by strong cash flow and appropriate debt level; committed to investment grade ratings and path to de-lever to target levels 4 Market leadership driven by
Slide 7: Hillenbrand Overview & Strategy
Hillenbrand Overview & Strategy 7
Slide 8: Hillenbrand at a Glance
Hillenbrand at a Glance 8 REVENUE BY GEOGRAPHY2 REVENUE BY SEGMENT REVENUE $1.8B ADJUSTED EBITDA MARGIN1 16.6% Global Diversified Industrial Company that Engineers, Manufactures, and Sells Products and Services into a Variety of End Markets LOCATIONS3 40 EMPLOYEES ~6,500 All data as of 9/30/18 1 Adj
Slide 9: Transformed Portfolio; Now Focused on Leveraging Industrial Platform for Profitable Growth
9 Transformed Portfolio; Now Focused on Leveraging Industrial Platform for Profitable Growth We Have Made Significant Strides Over the Past Six Years Where We Were: 20121 Where We Are: 20182 IMPACT Portfolio Two Segments – Batesville & Process Equipment Group Two Segments – Batesville & Process Equi
Slide 10: Strategic Priorities
Strategic Priorities 10 Grow Organically through Four Key Imperatives Leverage core technologies and applications expertise to build leadership positions Deepen customer engagement and revenue potential Target broad installed base and pursue new opportunities to grow recurring revenue Take advantage
Slide 11: Hillenbrand Operating Model: A Competitive Advantage
11 Have Realized Benefits but Significant Opportunity Ahead of Us Hillenbrand Operating Model: A Competitive Advantage UNDERSTAND THE BUSINESS FOCUS ON THE CRITICAL FEW GROW: GET BIGGER AND BETTER Consistent and Repeatable Framework Designed to Produce Efficient Processes and Drive Profitable Growth
Slide 12: Hillenbrand: Process Equipment Group
Hillenbrand: Process Equipment Group 12
Slide 13: Process Equipment Group at a Glance
13 HOM Drives Strong Profit Margin and Free Cash Flow Process Equipment Group at a Glance 1 Based on FY 2018 sales and Company estimates 2 Adjusted EBITDA Margin is a Non-GAAP measure. See Appendix for reconciliation. REVENUE BY END MARKET1 REVENUE BY GEOGRAPHY1 PERFORMANCE ($M) ORDER BACKLOG ($M) $
Slide 14: Deep, Long-standing Customer Relationships
14 Deep, Long-standing Customer Relationships Recognized by Customers in High Value Applications Designing systems and value-added subsystems creates simplified customer solutions Applications development helps customers with new, innovative processes and products Product design enables lower custom
Slide 15: Product Portfolio
15 PRODUCT PORTFOLIO Products: Compounders and extruders Material handling equipment Feeders, components, and system solutions Parts & service Separation Products: Screening equipment Sizing equipment Parts & service Flow Control Products: Pumping solutions Highly-engineered valves Parts & service S
Slide 16: Individual Components to Integrated Systems in Plastics
16 Value-Added Services Include: Maintenance, Parts, Modernization, and Field Service Individual Components to Integrated Systems in Plastics COMPOUNDING & EXTRUSION SYSTEMS Highly-engineered conversion systems used in high volume polyolefin production (polyethylene and polypropylene) Smaller conver
Slide 17: Strong Secular Trends Support Global Growth
17 Strong Secular Trends Support Global Growth Growing Global Population and Rapidly Expanding Middle Class Driving Secular Growth Trends Energy consumption Products that require more and highly technical plastics and petrochemicals Safe, convenient processed food Minerals and fertilizers for agricu
Slide 18: Building Leadership Positions in Core Markets and Near Adjacencies
18 Building Leadership Positions in Core Markets and Near Adjacencies Large Addressable Markets and Areas of Focus Plastics & Chemicals Food & Pharma Separation Flow Control $12B $16B $11B $38B Source: Addressable Markets are estimated using a combination of data from trade reports and Company inter
Slide 19: PEG Strategy
19 PEG Strategy Strengthen Leadership Positions and Build Targeted Platforms Leverage core technologies and applications expertise to further penetrate current markets Grow platforms to critical mass in plastics & chemicals, food & pharma, separation, and flow control to achieve benefits of market l
Slide 20: Hillenbrand: Batesville
Hillenbrand: Batesville 20
Slide 21: Batesville at a Glance
21 Leadership Drives Strong Profit Margins and Free Cash Flow Batesville at a Glance PERFORMANCE ($M) REVENUE BY PRODUCT Customers Licensed funeral directors Geography U.S. & Canada Employees 3,000+ Sales Channel ~200 sales professionals selling direct to funeral homes Manufacturing Operations 4 wor
Slide 22: Sizable Market Impacted by Changing Consumer Preferences
Sizable Market Impacted by Changing Consumer Preferences 22 ~$3B Death Care Products Industry in U.S. and Canada Burials vs. Cremations (000s)1 Deaths Cremations Burials Demand for caskets driven by long-term, predictable demographics, and consumer trends Consumer spending on caskets has not kept pa
Slide 23: Batesville Strategy
23 Batesville Strategy Strengthen Leadership Position in Death Care Leverage HOM to provide comprehensive offering and customized solutions Introduce new products in response to consumer trends Create personalization options aligned with consumer preferences Leverage technology connectivity to enhan
Slide 24: A Transformative Deal that Generates Strong Free Cash Flow
25 A Transformative Deal that Generates Strong Free Cash Flow A pivotal step in Hillenbrand's vision to become a world-class global diversified industrial company Enhances Growth Opportunities with Leading Brands and New Technologies Adds Complementary Businesses; Increases Scale and Diversification
Slide 25: Milacron Businesses at a Glance
Milacron Businesses at a Glance¹ 26 1 2018 financial metrics excluding Blow Molding business. 2 Adjusted EBITDA is a Non-GAAP measure. See Appendix for reconciliation. $584M 2018 Revenue 14% Adj. EBITDA Margin2 Industrial Machinery / Custom Molders / Other 31% Construction 16% Automotive 15% Packagi
Slide 26: Milacron Serves the Plastic Processing Technologies Value Chain
Milacron Serves the Plastic Processing Technologies Value Chain 27 Mold maker Molder OEM Direct sales force coverage Equipment & aftermarket Hot runners and controllers Mold bases, components, fluids Milacron’s exposure Plastic processing technologies value chain High quality & diversified customer
Slide 27: Better Positioned to Serve Customers and Cross-Sell Products
28 Better Positioned to Serve Customers and Cross-Sell Products Silos Feeder Conveyor piping Vacuum pump Hopper blender Mixer Material handling Extruder Dies Cutting Mold Material handling robot Cutting and pulling machine Printing machine Labeling machine Case packer Palletizing equipment Grinder M
Slide 28: Financial Overview
Financial Overview 29
Slide 29: Hillenbrand Capital Allocation Framework
Hillenbrand Capital Allocation Framework 30 Balanced Capital Allocation Strategy to Drive Shareholder Value Liquidity target: >$350m Capital structure targets: 1.6x-2.8x gross debt/EBITDA 20% net debt2/total capital 55%-75% fixed/float interest Share re-purchases Dividend policy Meet investor expect
Slide 30: Financial Policy
31 Financial Policy Near-term focus The Milacron acquisition represents a temporary deviation from well-established financial policies to complete a strategically compelling acquisition Capital deployment priority is to de-lever post close Anticipating gross Debt / EBITDA ~2.6x – 3.0x within 12 mont
Slide 31: Proven Track Record of Paying Down Debt
32 We have a proven track record of paying down debt and maintaining our investment grade profile while executing on M&A opportunities Prudent Use of Leverage ABEL & Red Valve Acquisitions Net Leverage1 Source: Company filings and credit agreement compliance certificates 1 Defined as (Total Debt – C
Slide 32: Well Positioned to Finance the Acquisition of Milacron
Well Positioned to Finance the Acquisition of Milacron 33 Sources $M New senior unsecured debt $1,100 $900mm Revolving Credit Facility drawn 635 Less: Capitalized deferred financing issuance costs (6) Total Sources $1,729 Hillenbrand has utilized a large portion of pre-payable debt for the Milacron
Slide 33: Pro Forma Debt Maturity Profile
Pro Forma Debt Maturity Profile 34 1 Total revolver size of $900 million; 2 Pre-payable Term Loan A assumes amortization of 5.0% / 5.0% / 7.5% / 7.5% / 10.0% / bullet 5.50% Bonds due 2020 Drawn revolver1 4.60% Series A Notes New Pre-payable Term Loan A2 Hillenbrand has a well diversified maturity pr
Slide 34: Together Hillenbrand and Milacron to Gain Significant Size and Scale
35 Together Hillenbrand and Milacron to Gain Significant Size and Scale Combined 3-Year Financial Performance REVENUE ($M) $2,624 $2,730 $2,935 ADJ. EBITDA ($) and ADJ. EBITDA MARGIN (%)1 1 Adjusted EBITDA Margin is a Non-GAAP measure. Excludes Blow Molding business. See Appendix for reconciliation.
Slide 35: Appendix
Appendix 36
Slide 36: Hillenbrand 3-Year Financial Performance
37 Strategy Execution Driving Strong Results Hillenbrand 3-Year Financial Performance REVENUE ($M) $1,538 $1,590 $1,770 FREE CASH FLOW1 1 Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are Non-GAAP measures. See Appendix for reconciliation. ADJ. EBITDA MARGIN1 ADJ. EBITDA1 ($M) $574 $562
Slide 37: Milacron 3-Year Financial Performance
38 Continued Growth from FY16 – FY18 Underpinned by Strong Sales Performance Milacron 3-Year Financial Performance Revenue1 ($M) ADJ. EBITDA1 ($M) FREE CASH FLOW1 ($M) 1 Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are Non-GAAP measures. Excludes Blow Molding business. See Appendix for
Slide 38: Disclosure Regarding Non-GAAP Measures
Disclosure Regarding Non-GAAP Measures While we report financial results in accordance with accounting principles generally accepted in the United States (GAAP), we also provide certain non-GAAP operating performance measures. These non-GAAP measures are referred to as “adjusted” and exclude impairm
Slide 39: Hillenbrand Adjusted EBITDA to Consolidated Net Income Reconciliation
Hillenbrand Adjusted EBITDA to Consolidated Net Income Reconciliation 40 (in millions) 2018 2017 2016 Adjusted EBITDA: Process Equipment Group 215.8 $ 177.7 $ 160.9 $ Batesville 120.8 141.9 143.5 Corporate (42.3) (38.6) (37.3) Less: Interest income (1.4) (0.9) (1.2) Interest expense 23.3 25.2 25.3 I
Slide 40: Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation
Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation1 41 1 Excludes Blow Molding business. Certain adjustments historically made by Milacron to arrive at Adjusted EBITDA were excluded for purposes of conforming to Hillenbrand’s methodology of calculating Adjusted EBITDA. ($ in millions
Slide 41: Hillenbrand Free Cash Flow Reconciliation
42 Hillenbrand Free Cash Flow to Net Cash Provided by Operating Activities Reconciliation ($ in millions) (in millions) 2018 2017 2016 Net cash provided by operating activities 248.3 $ 246.2 $ 238.2 $ Less: Capital expenditures (27.0) (22.0) (21.2) Free Cash Flow 221.3 $ 224.2 $ 217.0 $ Years Ended
Slide 42: Milacron Free Cash Flow Reconciliation
43 Milacron Free Cash Flow to Net Cash Provided by Operating Activities Reconciliation1 1 Excludes Blow Molding business. (in millions) 2018 2017 2016 Net cash provided by operating activities 135.6 $ 102.2 $ 118.3 $ Less: Capital expenditures (31.0) (38.6) (52.2) Free Cash Flow 104.6 $ 63.6 $ 66.1
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