Myers Industries Reports 2020 Second Quarter Results

Solid operational execution drove improved gross margin in the quarter

Company provides slightly improved 2020 revenue outlook

Myers Industries, Inc. MYE, a manufacturer of polymer products and distributor for the tire, wheel and under-vehicle service industry, today announced results for the second quarter ended June 30, 2020.

Second Quarter 2020 Financial Highlights

• GAAP income per diluted share from continuing operations was $0.23, compared with $0.18 for the second quarter of 2019
• Adjusted income per diluted share from continuing operations was $0.23, compared with $0.27 for the second quarter of 2019
• Net sales were $118.4 million, down 11.8% compared with $134.3 million for the second quarter of 2019
• Gross margin increased to 36%, compared with 35% for the second quarter of 2019
• Cash flow from continuing operations was $6.8 million and free cash flow was $3.7 million, compared with $10.9 million and $9.4 million, respectively, for the second quarter of 2019

"I am proud of how our teams performed during the second quarter, despite the challenges resulting from the COVID-19 crisis. Due to their focus and dedication, we were able to meet our customers' needs and deliver sales and operational results that were better than we had expected going into the quarter. Demand in our auto aftermarket improved during the quarter as vehicles returned to the road after stay-at-home restrictions were lifted. Additionally, sales in our consumer end market increased significantly year-over-year due to increased demand compared with a weak spring season last year," said Mike McGaugh, President and Chief Executive Officer of Myers Industries. "We continue to have sufficient liquidity to support our operations and execute our strategic plans, which include continued execution of growth and transformation initiatives."

Second Quarter 2020 Financial Summary

Net sales for the second quarter of 2020 were $118.4 million, a decrease of $15.9 million, or 11.8%, compared with $134.3 million for the second quarter of 2019. The decrease was primarily the result of anticipated sales declines across several markets in the Material Handling Segment, which were due to the challenging business environment. Gross profit decreased to $42.6 million, compared with $46.9 million for the second quarter of 2019. However, gross profit margin increased to 36% compared with 35% last year as favorable price-cost margin more than offset the lower sales volume during the quarter. Lower selling, general and administrative (SG&A) expenses of $30.3 million compared favorably with $36.8 million for the second quarter of 2019, due partly to lower variable compensation costs and the Company's continued emphasis on cost discipline. Additionally, 2019 second quarter SG&A expenses included a $4 million charge for estimated environmental liabilities related to the New Idria Mercury Mine. GAAP income per diluted share from continuing operations was $0.23, compared with $0.18 for the second quarter of 2019. Adjusted income per diluted share from continuing operations was $0.23, compared with $0.27 for the second quarter of 2019.

Segment Results

Net sales in the Material Handling Segment (consumer, food and beverage, industrial and vehicle end markets) for the second quarter of 2020 were $80.9 million, a decrease of $15.0 million or 15.7%, compared with $95.9 million for the second quarter of 2019. Sales declines in the Company's food and beverage, vehicle and industrial end markets were partially offset by a sales increase in the Company's consumer end market. For the second quarter of 2020, operating income for this segment declined 10.2% to $15.8 million, compared with $17.6 million in 2019. The lower volume was partially offset by favorable price-cost margin, a positive sales mix and lower costs. As a result, the Material Handling Segment's operating income margin increased to 19.5%, compared with 18.3% for the second quarter of 2019.

Net sales in the Distribution Segment (auto aftermarket end market) for the second quarter of 2020 were $37.5 million, a decrease of $0.9 million, or 2.2%, compared with $38.4 million for the second quarter of 2019. Incremental sales from the August 2019 acquisition of Tuffy Manufacturing Industries, Inc. mostly offset the impact of sales declines in the rest of the segment. Second quarter operating income for this segment decreased to $1.6 million, compared with $3.3 million in 2019. The decrease in adjusted operating income was due primarily to an unfavorable sales mix. The Distribution Segment's operating income margin was 4.4%, compared with 8.7% for the second quarter of 2019.

2020 Outlook

The Company has revised its outlook for 2020 revenue. For full-year total revenue, the Company now expects a percentage decline in the mid-to-high single digits, which is a slight improvement from its previous guidance of a 10% decline. The Company is maintaining its previous guidance that depreciation and amortization will be approximately $21 million, net interest expense will be approximately $4 million and capital expenditures will be approximately $15 million. The Company is updating its guidance for the effective tax rate to be approximately 26%, compared with a previous estimate of approximately 27%.

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Thursday, July 30, 2020, at 8:30 a.m. EDT. The call is anticipated to last less than one hour and may be accessed using the following online participation registration link: http://www.directeventreg.com/registration/event/1570929. Upon registering, each participant will be provided with call details and a registrant ID that will be used to track call attendance. Reminders will also be sent to registered participants via email. The live webcast of the conference call can be accessed from the Investor Relations section of the Company's website at www.myersindustries.com. Click on the Investor Relations tab to access the webcast. Webcast attendees will be in a listen-only mode. An archived replay of the call will also be available on the site shortly after the event. To listen to the telephone replay, callers should dial: (US) 855-859-2056 or (Int'l) 404-537-3406. The Conference ID # is 1570929.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted income per diluted share from continuing operations, operating income as adjusted, income from continuing operations as adjusted, EBITDA as adjusted, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, 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 polymer products for industrial, agricultural, automotive, and 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 "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that is not of historical fact may be deemed "forward-looking". Words such as "expect", "believe", "project", "plan", "anticipate", "intend", "objective", "outlook", "target", "goal", "view" and similar expressions identify forward-looking statements. These statements are based on management's current views and assumptions of future events and financial performance and involve a number of risks and uncertainties, many outside of the Company's control that could cause actual results to materially differ from those expressed or implied. Risks and uncertainties include: disease outbreaks such as COVID-19 and the impacts stemming from any such outbreaks including supply chain disruptions, operational disruptions, full or partial facility closures, and other similar impacts, 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; and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q. Such reports are available on the Securities and Exchange Commission's public reference facilities and its website at www.sec.gov and on the Company's Investor Relations section of its website at www.myersindustries.com. Myers Industries undertakes no obligation to publicly update or revise any forward-looking statements contained herein. These statements speak only as of the date made.