Gross Margin Expansion Through Effective Cost
Management
Reiterates Full Year Fiscal 2023 Revenue and
Earnings Outlook
Myers Industries, Inc. (NYSE: MYE), a leading manufacturer of a
wide range of polymer and metal products and distributor for the
tire, wheel, and under-vehicle service industry, today announced
results for the first quarter ended March 31, 2023.
First Quarter 2023 Financial
Highlights
- Net sales of $215.7 million compared to $225.5 million in the
prior year period
- Gross margin of 32.9%, up 100 basis points versus the prior
year period
- GAAP net income per diluted share of $0.35 compared to $0.47 in
the prior year period
- Adjusted earnings per diluted share of $0.38 compared to $0.50
in the prior year period
- Cash flow provided by operations was $25.8 million and free
cash flow was $16.7 million
Myers Industries' President and CEO Mike McGaugh said, "We are
pleased with our gross margin expansion and increased cash flow
generation in the first quarter. These results demonstrate the
strength of our ongoing self-help initiatives and cost savings
measures, which are a cornerstone of Horizon 1 of our Strategy.
Countering those great results, though, was continued and
anticipated reduced demand for our products that serve the
Recreational Vehicle end market and our products that are high
quality, high dollar discretionary purchases for the Consumer.
Inflationary trends are impacting overall consumption and
performance in those two markets year-over-year. To help offset
these demand headwinds, we are laser focused on pursuing growth and
winning new business in our other end markets.
"In the Distribution segment, I continue to be optimistic about
the strategic move of acquiring Mohawk Rubber; we are stronger
together, we have more channel power, and we can serve our
customers better than ever. As we continue to integrate Mohawk, I
expect our Distribution segment to deliver breakthrough
performance.”
McGaugh continued, "We are keenly focused on operational
excellence, by way of the "Myers Business System" which serves as
the foundation for sustainable and scalable improvements throughout
our organization. The System is an integral part of our
transformation into a world-class organization that generates
significant value for all our stakeholders."
McGaugh concluded, “We believe our Strategy to drive commercial
and operational excellence, our leading positions in the strong
markets in which we play, and our culture of continuous improvement
will serve as a solid defense against these near-term macroeconomic
headwinds and will propel our long-term growth as we progress
through our 3-horizon strategy."
First Quarter 2023 Financial
Summary
Quarter Ended March
31,
(Dollars in thousands, except per share
data)
2023
2022
% Inc (Dec)
Net sales
$215,739
$225,486
(4.3)%
Gross profit
$71,065
$71,928
(1.2)%
Gross margin
32.9%
31.9%
Operating income
$18,957
$24,405
(22.3)%
Net income
$12,976
$17,337
(25.2)%
Net income per diluted share
$0.35
$0.47
(25.5)%
Adjusted operating income
$20,302
$25,831
(21.4)%
Adjusted net income
$13,992
$18,266
(23.4)%
Adjusted earnings per diluted share
$0.38
$0.50
(24.0)%
Adjusted EBITDA
$25,920
$31,031
(16.5)%
Net sales were $215.7 million, a decrease of $9.7 million, or
4.3%, compared with $225.5 million for the first quarter of 2022.
The decrease was the result of lower sales in the Material Handling
segment, partially offset by higher sales in the Distribution
segment largely from incremental sales of $13.9 million from the
Mohawk Rubber acquisition. On an organic basis, the contribution
from higher pricing was more than offset by lower volume/mix.
Gross profit decreased $0.9 million, or 1.2% to $71.1 million,
as the contribution from pricing actions, lower raw material costs
and the Mohawk Rubber acquisition was not enough to offset lower
volume and a change in sales mix. Gross margin expanded to 32.9%
compared with 31.9% for the first quarter of 2022. Selling, general
and administrative expenses increased $4.1 million, or 8.5% to
$52.1 million due to the Mohawk Rubber acquisition and higher legal
fees, which were primarily due to $1.4 million of success fees
payable in conjunction with a favorable patent trial result.
SG&A as a percentage of sales increased to 24.1%, compared with
21.3% in the same period last year. Net income per diluted share
was $0.35, compared with $0.47 for the first quarter of 2022.
Adjusted earnings per diluted share were $0.38, compared with $0.50
for the first quarter of 2022.
First Quarter 2023 Segment
Results
(Dollar amounts in the segment tables below are reported in
millions)
Material Handling
Net Sales
Op Income
Op Income Margin
Adj EBITDA
Adj EBITDA Margin
Q1 2023 Results
$152.6
$25.4
16.6%
$30.4
19.9%
Q1 2022 Results
$176.6
$31.2
17.7%
$36.4
20.6%
$ Increase (decrease) vs prior year
($24.0)
($5.8)
($6.0)
% Increase (decrease) vs prior year
(13.6)%
(18.8)%
-110 bps
(16.5)%
-70 bps
Items in this table may not recalculate
due to rounding
Net sales for the Material Handling segment were $152.6 million,
a decrease of $24.0 million, or 13.6%, compared with $176.6 million
for the first quarter of 2022. Net sales increases in the food and
beverage end market were more than offset by decreases in the
consumer, vehicle, and specific demand from industrial end markets.
Operating income decreased 18.8% to $25.4 million, compared with
$31.2 million in the first quarter of 2022. Adjusted EBITDA
decreased 16.5% to $30.4 million, compared with $36.4 million in
the first quarter of 2022. Lower sales volume and a change in sales
mix more than offset lower raw material costs. SG&A expenses
were higher year-over-year, primarily due to higher legal fees
resulting from $1.4 million of success fees payable in conjunction
with a patent infringement matter. The Material Handling segment's
GAAP operating income margin was 16.6% compared with 17.7% for the
first quarter of 2022. The Material Handling segment’s adjusted
EBITDA margin was 19.9% compared with 20.6% for the first quarter
of 2022.
Distribution
Net Sales
Op Income
Op Income Margin
Adj EBITDA
Adj EBITDA Margin
Q1 2023 Results
$63.2
$2.2
3.5%
$3.4
5.4%
Q1 2022 Results
$48.9
$3.3
6.8%
$3.9
7.9%
$ Increase (decrease) vs prior year
$14.3
($1.1)
($0.5)
% Increase (decrease) vs prior year
29.3%
(32.2)%
-330 bps
(11.9)%
-250 bps
Items in this table may not recalculate
due to rounding
Net sales for the Distribution segment were $63.2 million, an
increase of $14.3 million, or 29.3%, compared with $48.9 million
for the first quarter of 2022. Excluding the incremental $13.9
million of net sales from the Mohawk Rubber acquisition, organic
net sales increased 0.9%. Operating income decreased $1.1 million
to $2.2 million, compared with $3.3 million for the first quarter
of 2022. Adjusted EBITDA decreased 11.9% to $3.4 million, compared
with $3.9 million in the first quarter of 2022. The decrease in
operating income and adjusted EBITDA was due primarily to an
unfavorable sales mix and higher freight costs. Additionally,
SG&A was higher year-over-year. The increase in SG&A
expenses was primarily the result of the Mohawk Rubber acquisition
and higher labor costs at distribution centers. The Distribution
segment's GAAP operating income margin was 3.5% compared with 6.8%
for the first quarter of 2022. The Distribution segment’s adjusted
EBITDA margin was 5.4%, compared with 7.9% for the first quarter of
2022. The Distribution Segment continues to integrate the Mohawk
Rubber acquisition and is implementing price increases to offset
cost inflation and expand margins.
Balance Sheet & Cash
Flow
As of March 31, 2023, the Company’s cash on hand totaled $28.2
million. Total debt as of March 31, 2023 was $98.1 million.
For the first quarter of 2023, cash flow provided by operations
was $25.8 million and free cash flow was $16.7 million, compared
with cash flow provided by operations of $7.3 million and free cash
flow of $2.2 million for the first quarter of 2022. The increase in
cash flow was driven primarily by a decrease in working capital.
Capital expenditures for the first quarter of 2023 were $9.1
million, compared with $5.1 million for the first quarter of
2022.
2023 Outlook
Based on current exchange rates, market outlook, and business
forecast, the Company reiterated its outlook for fiscal 2023, and
currently forecasts:
- Net sales growth in the low-to-mid single digit range
- Net income per diluted share in the range of $1.50 to $1.80;
adjusted earnings per diluted share in the range of $1.55 to
$1.85
- Capital expenditures to be in the range of $25 to $30
million
- Effective tax rate to approximate 25%
We will continue to monitor market conditions and provide
updates as we progress throughout the year.
Conference Call Details
The Company will host an earnings conference call and webcast
for investors and analysts on Tuesday, May 4, 2023, at 8:00 a.m.
EDT. The call is anticipated to last less than one hour and may be
accessed using the following telephone numbers: toll free at
1-833-630-1956 or International at 1-412-317-1837. Participants
should ask to be joined into the Myers Industries call. The live
webcast of the conference call can be accessed at
https://edge.media-server.com/mmc/p/tonzkk76 or from the Investor
Relations section of the Company's website at
www.myersindustries.com. Webcast attendees will be in a listen-only
mode.
Use of Non-GAAP Financial
Measures
The Company uses certain non-GAAP measures in this release.
Adjusted operating income (loss), adjusted operating income margin,
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA), adjusted EBITDA margin, adjusted net income,
adjusted earnings per diluted share (adjusted EPS), and free cash
flow are non-GAAP financial measures and are intended to serve as a
supplement to results provided in accordance with accounting
principles generally accepted in the United States. Myers
Industries believes that such information provides an additional
measurement and consistent historical comparison of the Company’s
performance. A reconciliation of the non-GAAP financial measures to
the most directly comparable GAAP measures is available in this
news release.
About Myers Industries
Myers Industries, Inc. is a manufacturer of sustainable plastic
and metal products for industrial, agricultural, automotive,
commercial, and consumer markets. The Company is also the largest
distributor of tools, equipment and supplies for the tire, wheel,
and under-vehicle service industry in the United States. Visit
www.myersindustries.com to learn more.
Caution on Forward-Looking
Statements
Statements in this release include contains “forward-looking
statements” within the meaning of the safe harbor provisions of the
U.S. Private Securities Litigation Reform Act of 1995, including
information regarding the Company’s financial outlook, future
plans, objectives, business prospects and anticipated financial
performance. Forward-looking statements can be identified by words
such as “will,” “believe,” “anticipate,” “expect,” “estimate,”
“intend,” “plan,” or variations of these words, or similar
expressions. These forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on the Company’s current beliefs, expectations
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and trends, the
economy and other future conditions. Because forward-looking
statements relate to the future, these statements inherently
involve a wide range of inherent uncertainties, risks and changes
in circumstances that are difficult to predict and many of which
are outside of our control. The Company’s actual actions, results,
and financial condition may differ materially from what is
expressed or implied by the forward-looking statements.
Specific factors that could cause such a difference on our
business, financial position, results of operations and/or
liquidity include, without limitation, raw material availability,
increases in raw material costs, or other production costs; risks
associated with our strategic growth initiatives or the failure to
achieve the anticipated benefits of such initiatives; unanticipated
downturn in business relationships with customers or their
purchases; competitive pressures on sales and pricing; changes in
the markets for the Company’s business segments; changes in trends
and demands in the markets in which the Company competes;
operational problems at our manufacturing facilities or unexpected
failures at those facilities; future economic and financial
conditions in the United States and around the world; inability of
the Company to meet future capital requirements; claims, litigation
and regulatory actions against the Company; changes in laws and
regulations affecting the Company; impacts from the novel
coronavirus (“COVID-19”) pandemic; and other risks and
uncertainties detailed from time to time in the Company’s filings
with the SEC, including without limitation, the risk factors
disclosed in Item 1A, “Risk Factors,” in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2022. Given
these factors, as well as other variables that may affect our
operating results, readers should not rely on forward-looking
statements, assume that past financial performance will be a
reliable indicator of future performance, nor use historical trends
to anticipate results or trends in future periods. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date thereof. The Company
expressly disclaims any obligation or intention to provide updates
to the forward-looking statements and the estimates and assumptions
associated with them.
M-INV
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except
share and per share data)
Quarter Ended
March 31, 2023
March 31, 2022
Net sales
$
215,739
$
225,486
Cost of sales
144,674
153,558
Gross profit
71,065
71,928
Selling, general and administrative
expenses
52,081
47,990
(Gain) loss on disposal of fixed
assets
27
(467
)
Operating income (loss)
18,957
24,405
Interest expense, net
1,646
1,147
Income (loss) before income
taxes
17,311
23,258
Income tax expense (benefit)
4,335
5,921
Net income (loss)
$
12,976
$
17,337
Net income (loss) per common
share:
Basic
$
0.35
$
0.48
Diluted
$
0.35
$
0.47
Weighted average common shares
outstanding:
Basic
36,564,775
36,280,268
Diluted
36,815,956
36,511,034
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(Dollars in thousands)
March 31, 2023
December 31, 2022
Assets
Current Assets
Cash
$28,241
$23,139
Accounts receivable, net
130,616
133,716
Inventories, net
102,141
93,351
Prepaid expenses and other current
assets
5,781
7,001
Total Current Assets
266,779
257,207
Property, plant, & equipment, net
105,803
101,566
Right of use asset - operating leases
28,381
28,908
Deferred income taxes
130
129
Other assets
155,104
154,824
Total Assets
$556,197
$542,634
Liabilities & Shareholders'
Equity
Current Liabilities
Accounts payable
$93,477
$73,536
Accrued expenses
49,153
57,531
Operating lease liability - short-term
6,072
6,177
Finance lease liability - short-term
523
518
Long-term debt - current portion
25,984
—
Total Current Liabilities
175,209
137,762
Long-term debt
62,784
93,962
Operating lease liability - long-term
22,409
22,786
Finance lease liability - long-term
8,785
8,919
Other liabilities
13,681
15,270
Deferred income taxes
8,082
7,508
Total Shareholders' Equity
265,247
256,427
Total Liabilities & Shareholders'
Equity
$556,197
$542,634
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March
31,
2023
2022
Cash Flows From Operating
Activities
Net income
$12,976
$17,337
Adjustments to reconcile net income to net
cash provided by (used for) operating activities
Depreciation and amortization
5,618
5,200
Amortization of deferred financing
costs
78
121
Non-cash stock-based compensation
expense
1,904
1,727
Gain on disposal of fixed assets
27
(467)
Other
(827)
521
Cash flows provided by (used for) working
capital
Accounts receivable
3,181
(31,894)
Inventories
(8,778)
(5,980)
Prepaid expenses and other current
assets
1,220
614
Accounts payable and accrued expenses
10,387
20,113
Net cash provided by (used for) operating
activities
25,786
7,292
Cash Flows From Investing
Activities
Capital expenditures
(9,091)
(5,060)
Acquisition of business, net of cash
acquired
(160)
—
Proceeds from sale of property, plant, and
equipment
33
1,076
Net cash provided by (used for) investing
activities
(9,218)
(3,984)
Cash Flows From Financing
Activities
Net borrowings (repayments) from revolving
credit facility
(5,200)
1,500
Payments on finance lease
(129)
(124)
Cash dividends paid
(5,274)
(4,939)
Proceeds from issuance of common stock
1,132
471
Shares withheld for employee taxes on
equity awards
(1,999)
(344)
Net cash provided by (used for) financing
activities
(11,470)
(3,436)
Foreign exchange rate effect on cash
4
49
Net increase (decrease) in cash
5,102
(79)
Cash at January 1
23,139
17,655
Cash at March 31
$28,241
$17,576
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
GROSS PROFIT, OPERATING INCOME
AND EBITDA (UNAUDITED)
(Dollars in thousands)
Quarter Ended March 31,
2023
Material Handling
Distribution
Segment Total
Corporate & Other
Total
Net sales
$
152,562
$
63,185
$
215,747
$
(8
)
$
215,739
Gross profit
71,065
Add: Restructuring expenses and other
adjustments
102
Adjusted gross profit
71,167
Gross margin as adjusted
33.0
%
Operating income (loss)
25,351
2,237
27,588
(8,631
)
18,957
Operating income margin
16.6
%
3.5
%
12.8
%
n/a
8.8
%
Add: Acquisition and integration costs
—
109
109
126
235
Add: Restructuring expenses and other
adjustments
421
179
600
10
610
Add: Environmental reserves, net(2)
—
—
—
500
500
Adjusted operating income (loss)(1)
25,772
2,525
28,297
(7,995
)
20,302
Adjusted operating income margin
16.9
%
4.0
%
13.1
%
n/a
9.4
%
Add: Depreciation and amortization
4,599
873
5,472
146
5,618
Adjusted EBITDA
$
30,371
$
3,398
$
33,769
$
(7,849
)
$
25,920
Adjusted EBITDA margin
19.9
%
5.4
%
15.7
%
n/a
12.0
%
(1) Includes gross profit adjustments of
$102 and SG&A adjustments of $1,243
(2) Includes environmental charges of
$1,600 net of probable insurance recoveries of $1,100
Quarter Ended March 31,
2022
Material Handling
Distribution
Segment Total
Corporate & Other
Total
Net sales
$
176,636
$
48,861
$
225,497
$
(11
)
$
225,486
Gross profit
71,928
Add: Restructuring expenses and other
adjustments
390
Adjusted gross profit
72,318
Gross margin as adjusted
32.1
%
Operating income (loss)
31,220
3,301
34,521
(10,116
)
24,405
Operating income margin
17.7
%
6.8
%
15.3
%
n/a
10.8
%
Add: Acquisition and integration costs
—
—
—
75
75
Add: Restructuring expenses and other
adjustments
390
—
390
—
390
Add: Loss on sale of assets
261
—
261
—
261
Add: Environmental charges
—
—
—
700
700
Adjusted operating income (loss)(1)
31,871
3,301
35,172
(9,341
)
25,831
Adjusted operating income margin
18.0
%
6.8
%
15.6
%
n/a
11.5
%
Add: Depreciation and amortization
4,516
558
5,074
126
5,200
Adjusted EBITDA
$
36,387
$
3,859
$
40,246
$
(9,215
)
$
31,031
Adjusted EBITDA margin
20.6
%
7.9
%
17.8
%
n/a
13.8
%
(1) Includes gross profit adjustments of
$390 and SG&A adjustments of $1,036
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED OPERATING INCOME,
ADJUSTED EBITDA AND FREE CASH FLOW (UNAUDITED)
(Dollars in thousands, except
per share data)
Quarter Ended March
31,
2023
2022
Adjusted operating income (loss)
reconciliation:
Operating income (loss)
$18,957
$24,405
Restructuring expenses and other
adjustments
610
390
Acquisition and integration costs
235
75
Loss on sale of assets
—
261
Environmental charges
500
700
Adjusted operating income (loss)
$20,302
$25,831
Adjusted EBITDA reconciliation:
Net income (loss)
$12,976
$17,337
Income tax expense (benefit)
4,335
5,921
Interest expense, net
1,646
1,147
Operating income (loss)
18,957
24,405
Depreciation and amortization
5,618
5,200
Restructuring expenses and other
adjustments
610
390
Acquisition and integration costs
235
75
Loss on sale of assets
—
261
Environmental charges
500
700
Adjusted EBITDA
$25,920
$31,031
Free cash flow reconciliation:
Net cash provided by (used for) operating
activities
$25,786
$7,292
Capital expenditures
(9,091)
(5,060)
Free cash flow
$16,695
$2,232
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED NET INCOME AND
ADJUSTED EARNINGS PER DILUTED SHARE (UNAUDITED)
(Dollars in thousands, except
per share data)
Quarter Ended March
31,
2023
2022
Adjusted net income (loss)
reconciliation:
Net income (loss)
$12,976
$17,337
Income tax expense (benefit)
4,335
5,921
Income (loss) before income taxes
17,311
23,258
Restructuring expenses and other
adjustments
610
390
Acquisition and integration costs
235
75
Loss on sale of assets
—
261
Environmental charges
500
700
Adjusted income (loss) before income
taxes
18,656
24,684
Income tax expense, as adjusted (1)
(4,664)
(6,418)
Adjusted net income (loss)
$13,992
$18,266
Adjusted earnings per diluted share
reconciliation:
Net income (loss) per common diluted
share
$0.35
$0.47
Restructuring expenses and other
adjustments
0.02
0.01
Acquisition and integration costs
0.01
0.00
Loss on sale of assets
—
0.01
Environmental charges
0.01
0.02
Adjusted effective income tax rate
impact
(0.01)
(0.01)
Adjusted earnings per diluted share(2)
$0.38
$0.50
(1) Income taxes are calculated using the
normalized effective tax rate for each year. The rate used in 2023
is 25% and in 2022 is 26%.
(2) Adjusted earnings per diluted share is
calculated using the weighted average common shares outstanding for
the respective period.
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
GUIDANCE FOR FULL YEAR
ADJUSTED EARNINGS PER DILUTED SHARE
(UNAUDITED)
Full Year 2023
Guidance
Low
High
GAAP diluted net income per common
share
$
1.50
$
1.80
Add: Net restructuring expenses and other
adjustments
0.03
0.03
Add: Acquisition and integration costs
0.01
0.01
Add: Environmental charges
0.01
0.01
Adjusted earnings per diluted share
$
1.55
$
1.85
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005269/en/
Monica Vinay, Interim CFO and Vice President, Investor Relations
& Treasurer, (330) 761-6212
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