Milacron — Merger or Acquisition (September 2019)
43 slides from Milacron's merger presentation, Sep 18, 2019
Slide 1: Cautionary Statements
Cautionary Statements 2 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 the Private Securities Litigation Reform Act o
Slide 2: Cautionary Statements: Additional Information and Where to Find It
Cautionary Statements 3 Additional Information and Where to Find It In connection with the proposed acquisition by Hillenbrand of Milacron (the “Proposed Transaction”), Hillenbrand has filed with the SEC a registration statement on Form S-4 to register the shares of Hillenbrand's common stock to be
Slide 3: Key Messages
Key Messages 4 Significant strides transforming Hillenbrand into a global diversified industrial company 1 Focused on building platforms to develop scale and enhance leadership positions to drive profitable growth; integrating Milacron is a key priority 4 Market leadership driven by highly-engineere
Slide 4: Company Overview & Strategy
Company Overview & Strategy 5
Slide 5: Hillenbrand at a Glance
Hillenbrand at a Glance 6 REVENUE BY GEOGRAPHY2 REVENUE BY SEGMENT REVENUE $1.8B ADJUSTED EBITDA MARGIN1 16.6% DIVIDEND YIELD 2.7% Global Diversified Industrial that Engineers, Manufactures, and Sells Products and Services into a Variety of End Markets LOCATIONS3 40 EMPLOYEES ~6,500 MARKET CAP $2.0B
Slide 6: Journey to Become a Global Diversified Industrial
Where We Were (2012)1 Journey to Become a Global Diversified Industrial Three businesses in 10+ countries ~3,900 employees $1.1B market cap Adj. EBITDA $207M FCF $117M Completed Coperion acquisition December 2012 Six businesses in 40+ countries ~6,500 employees $2.0B market cap2 Adj. EBITDA $294M3 F
Slide 7: Passionate Management Team Executing Strategy for Sustained Profitable Growth
8 Passionate Management Team Executing Strategy for Sustained Profitable Growth Hillenbrand Profitable Growth Strategy Strengthen & Build Platforms Organically and Through M&A Leverage Batesville for Cash Build Scalable Foundation Utilizing Hillenbrand Operating Model (HOM) Effectively Deploy Strong
Slide 8: Hillenbrand Operating Model: A Competitive Advantage
9 Have Realized Benefits but Significant Opportunity Ahead of Us Hillenbrand Operating Model: A Competitive Advantage UNDERSTAND THE BUSINESS FOCUS ON THE CRITICAL FEW GROW: GET BIGGER AND BETTER Consistent and Repeatable Framework Designed to Produce Efficient Processes and Drive Profitable Growth
Slide 9: Hillenbrand Operating Model: A Competitive Advantage
Hillenbrand Operating Model: A Competitive Advantage Consistent and Repeatable Framework Designed to Produce Efficient Processes and Drive Profitable Growth and Superior Value UNDERSTAND THE BUSINESS FOCUS ON THE CRITICAL FEW GROW: GET BIGGER AND BETTER Have Realized Benefits but Significant Opportu
Slide 10: Process Equipment Group at a Glance
11 HOM Drives Strong Profit Margin and Free Cash Flow Process Equipment Group at a Glance 1 Based on FY 2018 sales and Company estimates 2 Adjusted EBITDA Margin is a Non-GAAP measure. See appendix for reconciliation. REVENUE BY END MARKET1 REVENUE BY GEOGRAPHY1 PERFORMANCE ($M) ORDER BACKLOG ($M) $
Slide 11: Product Portfolio
12 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 12: Individual Components to Integrated Systems in Plastics
13 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 13: PEG Strategy
14 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 14: PEG Strategy
PEG Strategy Strengthen Leadership Positions and Build Targeted Platforms Drive Innovation and New Product Development Leverage HOM to Drive Margin Expansion and Profitable Growth Hu NBRAND | Investor Presentation Leverage core technologies and applications expertise to further penetrate current mar
Slide 15: Batesville at a Glance
16 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 16: Sizable Market Impacted by Changing Consumer Preferences
Sizable Market Impacted by Changing Consumer Preferences 17 ~$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 17: Batesville Strategy
18 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 18: Batesville Strategy
Batesville Strategy Strengthen Leadership Position in Death [i Care Optimize Business Structure to Drive [i Continuing to Strengthen and Develop Talent . NBRAND | Investor Presentation Leverage HOM to provide comprehensive offering and customized solutions Introduce new products in response to consu
Slide 19: A Transformative Deal to Create Meaningful Shareholder Value
20 A Transformative Deal to Create Meaningful Shareholder Value 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 Diversificati
Slide 20: Delivering on Strategy Outlined at December 2017 Investor Day
$11B 21 Delivering on Strategy Outlined at December 2017 Investor Day Milacron Transaction Aligns with Strategic Focus and M&A Criteria Building Leadership Positions in Core Markets and Adjacencies Plastics & Chemicals Food & Pharma Separation Flow Control $12B $16B $38B Strengthen & Build Platforms
Slide 21: Macro Trends Support Long-Term Sustained Growth for Durable Plastics
22 Macro Trends Support Long-Term Sustained Growth for Durable Plastics Electronics Consumer Goods Automotive Packaging Eco-friendly Medical Construction Superior quality, shorter product lifecycles, and design flexibility Shortened product lifecycles, innovation in multi-material products, design f
Slide 22: Milacron Businesses at a Glance
Milacron Businesses at a Glance¹ 23 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 23: Stronger Position Across the Plastics Value Chain
24 Stronger Position Across the Plastics Value Chain to Capitalize on New Opportunities Milacron Strengthens Position Across Plastics Value Chain Innovation in Biodegradable Plastics and Recycling New Capabilities in Molding and Extrusion to Produce End Products Full System Provider for World’s Larg
Slide 24: Significant Catalysts and Opportunities of the Combined Company
25 Significant Catalysts and Opportunities of the Combined Company Large installed base of machines globally Close to the customer in every region Using installed base analytics to focus efforts on specific growth markets Driving life cycle approach; mix of reactive/proactive maintenance, targeted u
Slide 25: Leadership and Plan to Effectively and Efficiently Integrate Milacron
Phase 1 Set-up & Prioritize Phase 2 Design & Plan Phase 3 Implement Plan Focus Areas Integration program management Financial baseline & synergy planning Integrate operating model to support capture of synergy opportunities Define organizational structure & talent management initiatives Assess cultu
Slide 26: Effective Integration Process and Results: Coperion Case Study
27 Effective Integration Process and Results Coperion Case Study Integration Expertise BACKGROUND Acquired for ~$545M in cash; added ~$670M in revenue; immediately accretive to earnings, net of acquisition costs Provided leadership position in the plastics industry Expanded global engineering, sales
Slide 27: Targeting ~$20-25M of Cost Synergies within the First Months Post-close
28 Targeting ~$20-25M of Cost Synergies within the First 12 Months Post-close Significant Cost Synergies Identified; Additional Operational Efficiency and Revenue Opportunities Expected $50M Cost Synergies within 3 years post-close Reducing public company costs Realizing operating efficiencies Captu
Slide 28: Pro Forma Revenue Profile
Pro Forma Revenue Profile 29 HILLENBRAND MILACRON PRO FORMA REVENUE BY GEOGRAPHY REVENUE BY END MARKETS *Company estimates based on FY 2018 revenue 58% 22% 20% Americas EMEA Asia 50% 17% 13% 12% 6% 2% North America Europe China India Other Asia RoW 55% 20% 25% Americas EMEA Asia 42% 31% 8% 6% 4% 4%
Slide 29: Pro Forma Revenue Profile
Pro Forma Revenue Profile HILLENBRAND + MILACRON O- ¢ = = Medical “company estimates based on FY 2018 revenue REVENUE BY GEOGRAPHY REVENUE BY END MARKETS “Other HILLENBRAND | Investor Presentation 7
Slide 30: Working Capital Focus Driving FCF Generation
31 Working Capital Focus Driving FCF Generation and Fueling Investment for Future Growth 10-Year Cash Performance Overview FREE CASH FLOW ($M)1 WORKING CAPITAL TURNS3 FCF CONVERSION1 1 Free Cash Flow and Free Cash Flow Conversion are Non-GAAP measures. See appendix for reconciliation. 2 FY18 FCF Con
Slide 31: Backlog and Increased Aftermarket Sales Support More Stable Cash Generation
32 Backlog and Increased Aftermarket Sales Expected to Support More Stable Cash Generation Well-Positioned for Continued Cash Generation Aftermarket Sales Backlog1 Strong aftermarket content supports recurring revenue Significant number of large, long-dated projects xxx Average:35% of Sales 1See app
Slide 32: Large Installed Base Provides Long Tail for Revenue Generation
33 Large Installed Base Provides Long Tail for Revenue Generation NEW EQUIPMENT BUSINESS AFTERMARKET BUSINESS Extruders Material Handling Feeders Extruders Material Handling Feeders POLYOLEFIN ENGINEERED PLASTIC YEAR ILLUSTRATIVE LIFECYCLE OF AFTERMARKET SALES AND SERVICE 3 0 Order Intake - New Mach
Slide 33: Portfolio Diversity Expected to Provide Sufficient Liquidity
34 Portfolio Diversity Expected to Provide Sufficient Liquidity to Navigate through Different Macro Environments Ability to Generate Cash Flow through the Cycle Note: Chart is Illustrative Relatively immune to cyclical swings Provides relatively stable trend Enters cycle slowly; exits slowly Enters
Slide 34: Capital Allocation Framework
Capital Allocation: FY16 – FY18 Capital Allocation Framework 35 Committed to Rapidly Deleveraging to <2.75x by 12 Months Post-Close REINVEST IN THE BUSINESS Drive innovation and new product development Expand into new end markets and geographies Annual capex <2% of revenue STRATEGIC ACQUISITIONS Str
Slide 35: Proven Track Record of Paying Down Debt
36 Proven Track Record of Paying Down Debt and Maintaining Investment Grade Rating Successful Track Record of Deleveraging Post-Transaction Source: Company filings and credit agreement compliance certificates 1 Defined as (“Total Debt – Cash”) / Consolidated EBITDA. Calculated using Consolidated EBI
Slide 36: Key Messages
Key Messages 37 Significant strides transforming Hillenbrand into a global diversified industrial company 1 Focused on building platforms to develop scale and enhance leadership positions to drive profitable growth; integrating Milacron is a key priority 4 Market leadership driven by highly-engineer
Slide 37: Key Messages
Key Messages Significant strides transforming Hillenbrand into a global diversified industrial company Market leadership driven by highly-engineered products with core technologies differentiated by applications expertise The Hillenbrand Operating Model (HOM) is a competitive differentiator; histori
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: Adjusted EBITDA to Consolidated Net Income Reconciliation
Adjusted EBITDA to Consolidated Net Income Reconciliation 40 ($ in millions) Years Ended September 30, 2018 2017 2016 2015 2014 2013 2012 Adjusted EBITDA: Process Equipment Group $ 215.8 $ 177.7 $ 160.9 $ 160.5 $ 150.4 $ 116.4 $ 79.7 Batesville 120.8 141.9 143.5 145.5 150.8 161.0 152.8 Corporate (42
Slide 40: Cash Flow Information
41 Cash Flow Information ($ in millions) ($ in millions) 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Operating Activities Consolidated net income (A) 81.2 $ 128.4 $ 116.8 $ 113.2 $ 111.2 $ 65.4 $ 104.8 $ 106.1 $ 92.3 $ 102.3 $ Depreciation and amortization 56.5 56.6 60.4 54.3 58.4 89.4 40.4 36
Slide 41: FY18 Free Cash Flow to Net Income Conversion as Adjusted for Impairment
42 FY18 Free Cash Flow to Net Income Conversion as Adjusted for Impairment Twelve Months Ended September 30, 2018 Net cash provided by operating activities $ 248.3 Less: Capital expenditures 27.0 Free cash flow $ 221.3 Consolidated net income $ 81.2 Impairment charges (net of tax) 62.3 Consolidated
Slide 42: Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation
Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation1 43 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 43: Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation
Milacron Adjusted EBITDA to Consolidated Net Income Reconciliation’ (Sin mitions) Years Ended December 31 Eeey maim Consolidated net income $ M5 $ a 5 30.5 Loss from discontinued operations (net of income taxes) 54 67 65 Interest expense 429 445 608 Income tax expense 185 149 146 Depreciation and am
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