Market Overview

Myers Industries Reports 2018 Second Quarter Results

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Operational improvements drive significant gross margin expansion and
cash flow generation

Myers Industries, Inc. (NYSE:MYE) today announced results for the
second quarter ended June 30, 2018.

Second Quarter 2018 Business Highlights

  • GAAP net income per diluted share from continuing operations of $0.26,
    compared to $0.08 in the second quarter of 2017
  • Adjusted net income per diluted share from continuing operations of
    $0.27, compared to $0.18 in the second quarter of 2017
  • Net sales increased 3.9% (or 3.6% excluding currency fluctuation)
    compared to the second quarter of 2017
  • Gross profit margin of 34.1% compared to 28.3% in the second quarter
    of 2017
  • Generated cash from continuing operations of $14.4 million and free
    cash flow of $13.3 million
  • Raised net proceeds of $79.5M through sale of common stock, improving
    financial flexibility to make strategic investments
  • Company re-affirms its 2018 outlook

The Company reported net sales of $140.6 million, compared to $135.3
million in the second quarter of 2017, with the increase primarily
driven by increased sales in the Company's consumer, vehicle, and food
and beverage end markets. Gross profit margin increased 580 basis points
to 34.1% as compared to the prior year, primarily due to pricing actions
and savings from last year's manufacturing footprint realignment and
restructuring initiatives. Selling, general and administrative expenses
increased $2.4 million year-over-year to $34.5 million, with the
increase in expenses primarily attributable to higher incentive
compensation costs.

President and Chief Executive Officer Dave Banyard commented, "We are
pleased with the continued improvement in our business during the second
quarter, which demonstrated another consecutive quarter of
year-over-year growth in both sales and earnings. Our focus on niche
market strategies drove double-digit sales growth across three of our
key end markets, including consumer, vehicle, and food and beverage.
Continued strength of demand, combined with the impacts of recent
pricing and operational improvement initiatives, resulted in strong
gross margin expansion, operating income growth, and free cash flow
generation during the quarter."

Banyard continued, "As we look to the second half of 2018, we expect
year-over-year sales growth to temper somewhat as a result of the
non-recurrence of certain prior-year order activity. However, continued
strong operating and cash flow performance should enable us to
capitalize on both organic and acquisitive growth opportunities,
especially considering our improved leverage profile following the
secondary equity offering and reduction of debt during the second
quarter."

   
Quarter Ended June 30, Six Months Ended June 30,

 

    % Inc     % Inc

(Dollars in thousands, except per share data)

2018 2017 (Dec) 2018 2017 (Dec)
Net sales $ 140,560 $ 135,252   3.9 % $ 293,128 $ 271,824   7.8 %
Gross profit $ 47,991 $ 38,292 25.3 % $ 95,106 $ 80,053 18.8 %
Gross profit margin 34.1 % 28.3 % 32.4 % 29.5 %
Operating income $ 13,111 $ 5,968 119.7 % $ 25,133 $ 14,084 78.5 %
Income from continuing operations:
Income $ 8,608 $ 2,482 246.8 % $ 16,363 $ 5,940 175.5 %
Income per diluted share $ 0.26 $ 0.08 225.0 % $ 0.51 $ 0.20 155.0 %
 
Operating income as adjusted(1) $ 13,381 $ 10,278 30.2 % $ 24,880 $ 19,140 30.0 %
Income from continuing operations as adjusted(1):
Income $ 9,051 $ 5,388 68.0 % $ 16,446 $ 9,696 69.6 %
Income per diluted share $ 0.27 $ 0.18 50.0 % $ 0.51 $ 0.32 59.4 %
EBITDA as adjusted $ 19,931 $ 17,576 13.4 % $ 37,978 $ 34,392 10.4 %
(1)  

Details regarding the adjusted charges are provided on the Reconciliations
of Non-GAAP Financial Measures
included in this release.

 

Segment Results

Net sales in the Material Handling Segment increased 7.4% (or
6.9% excluding currency fluctuation) compared to the second quarter of
2017. The increase in net sales was primarily due to increased volume in
the Company's consumer, vehicle, and food and beverage end markets. The
segment's adjusted EBITDA margin was 22.7% compared to 19.7% in the
second quarter of 2017. The increase in adjusted EBITDA margin was
primarily the result of pricing actions and the benefit of restructuring
actions taken in 2017.

Net sales in the Distribution Segment declined 4.5% compared to
the second quarter of 2017. The segment's adjusted EBITDA margin was
8.2% compared to 8.3% in the second quarter of 2017. The impact of the
lower sales volume year-over-year was mostly offset by operational
efficiencies and the benefit of the change in pricing structure
completed last year.

2018 Outlook

For fiscal year 2018, the Company continues to anticipate that total
revenue will be up low-to-mid-single digits on a constant currency basis
compared to the prior year based on strong backlog, tempered by the
non-recurrence of some large, one-time orders delivered in the second
half of 2017. The Company expects capital expenditures to be in the
range of $10 to $12 million. Net interest expense is now forecasted to
be between $4 and $6 million (vs. between $7 and $8 million previously)
as a result of the reduction in debt due to the secondary equity
offering completed during the second quarter of 2018. Depreciation and
amortization are forecasted to be between $26 and $28 million. The Tax
Cuts and Jobs Act will benefit the Company through a decrease in its
effective tax rate, which is expected to be approximately 25%, compared
to approximately 36% previously.

Conference Call Details

The Company will host an earnings conference call and webcast for
investors and analysts on Monday, July 30, at 10:00 a.m. EDT. The call
is anticipated to last approximately one hour and may be accessed by
dialing: (US) 866-393-4306 or (Int'l) 734-385-2616. The Conference ID #
is 3058689. Callers are asked to sign on at least five minutes in
advance. 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 3058689.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted net
income per diluted share from continuing operations, income from
continuing operations as adjusted, adjusted income per diluted share
from continuing operations, operating income as adjusted, adjusted
operating income, adjusted EPS, adjusted EBITDA 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 an international manufacturer of polymer
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 may 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", "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: 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; unexpected failures at our manufacturing 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 risks as
detailed in the Company's 10-K and other reports filed with the
Securities and Exchange Commission. 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.

   
 
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except share and per share data)
 
Quarter Ended Six Months Ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
Net sales $ 140,560 $ 135,252 $ 293,128 $ 271,824
Cost of sales   92,569   96,960   198,022   191,771
Gross profit 47,991 38,292 95,106 80,053
Selling, general and administrative expenses 34,506 32,133 69,979 66,672
(Gain) loss on disposal of fixed assets 66 (353 ) (314 ) (1,247 )
Impairment charges   308   544   308   544
Operating income 13,111 5,968 25,133 14,084
Interest expense, net   1,313   1,860   2,952   3,990
Income (loss) from continuing operations before income taxes 11,798 4,108 22,181 10,094
Income tax expense (benefit)   3,190   1,626   5,818   4,154
Income (loss) from continuing operations 8,608 2,482 16,363 5,940
Income (loss) from discontinued operations, net of income taxes   -   (489 )   (911 )   (833 )
Net income (loss) $ 8,608 $ 1,993 $ 15,452 $ 5,107
Income (loss) per common share from continuing operations:
Basic $ 0.26 $ 0.08 $ 0.52 $ 0.20
Diluted $ 0.26 $ 0.08 $ 0.51 $ 0.20
Income (loss) per common share from discontinued operations:
Basic $ - $ (0.01 ) $ (0.03 ) $ (0.03 )
Diluted $ - $ (0.01 ) $ (0.03 ) $ (0.03 )
Net income (loss) per common share:
Basic $ 0.26 $ 0.07 $ 0.49 $ 0.17
Diluted $ 0.26 $ 0.07 $ 0.48 $ 0.17
Weighted average common shares outstanding:
Basic 32,606,838 30,154,965 31,561,194 30,097,638
Diluted 33,084,540 30,472,636 32,081,350 30,395,417
 
   
MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)
 
Quarter Ended June 30, Six Months Ended June 30,
2018   2017   % Change 2018   2017   % Change
Net sales    
Material Handling $ 103,130 $ 96,026 7.4 % $ 219,939 $ 194,508 13.1 %
Distribution 37,477 39,258 (4.5 )% 73,258 77,832 (5.9 )%
Inter-company Sales   (47 )   (32 )   -   (69 )   (516 )   -
Total $ 140,560 $ 135,252   3.9 % $ 293,128 $ 271,824   7.8 %
 
Operating income
Material Handling $ 17,323 $ 7,814 121.7 % $ 34,053 $ 20,660 64.8 %
Distribution 2,786 3,025 (7.9 )% 4,524 4,563 (0.9 )%
Corporate   (6,998 )   (4,871 )   -   (13,444 )   (11,139 )   -
Total $ 13,111 $ 5,968   119.7 % $ 25,133 $ 14,084   78.5 %
 
Operating income as adjusted
Material Handling $ 17,285 $ 12,124 42.6 % $ 34,157 $ 25,716 32.8 %
Distribution 2,786 3,025 (7.9 )% 3,859 4,563 (15.4 )%
Corporate   (6,690 )   (4,871 )   -   (13,136 )   (11,139 )   -
Total $ 13,381 $ 10,278   30.2 % $ 24,880 $ 19,140   30.0 %
 
EBITDA as adjusted
Material Handling $ 23,407 $ 18,872 24.0 % $ 46,391 $ 39,716 16.8 %
Distribution 3,087 $ 3,278 (5.8 )% 4,469 5,118 (12.7 )%
Corporate   (6,563 ) $ (4,574 )   -   (12,882 )   (10,442 )   -
Total $ 19,931 $ 17,576   13.4 % $ 37,978 $ 34,392   10.4 %
 
   
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
(Dollars in thousands)
 
June 30, 2018 December 31, 2017
Assets
Current Assets
Cash $ 38,940 $ 2,520
Restricted cash - 8,659
Accounts receivable, net 67,911 76,509
Income tax receivable 7,832 12,954
Inventories 49,362 47,166
Other   3,988   2,204
Total Current Assets 168,033 150,012
Other assets 118,866 122,026
Property, plant, & equipment, net   73,790   83,904
Total Assets $ 360,689 $ 355,942
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable $ 56,141 $ 63,581
Accrued expenses   32,171   35,072
Total Current Liabilities 88,312 98,653
Long-term debt, net 78,654 151,036
Other liabilities 8,970 8,236
Deferred income taxes 3,492 4,265
Total Shareholders' Equity   181,261   93,752
Total Liabilities & Shareholders' Equity $ 360,689 $ 355,942
 
 
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
 
Six Months Ended June 30,
2018   2017
Cash Flows From Operating Activities
Net income $ 15,452 $ 5,107
Income (loss) from discontinued operations, net of income taxes   (911 )   (833 )
Income from continuing operations 16,363 5,940

Adjustments to reconcile income from continuing operations to net
cash provided by (used for) operating activities

Depreciation 9,042 10,708
Amortization 4,315 4,544
Accelerated depreciation associated with restructuring activities 16 1,929
Non-cash stock-based compensation expense 2,305 1,817
(Gain) loss on disposal of fixed assets (314 ) (1,247 )
Impairment charges 308 544
Deferred taxes 217
Interest income received (accrued) on note receivable (14 ) (662 )
Other (201 ) 188
Payments on performance based compensation (1,249 ) (992 )
Other long-term liabilities (63 ) (264 )
Cash flows provided by (used for) working capital
Accounts receivable 9,106 (979 )
Inventories (2,454 ) (1,236 )
Prepaid expenses and other current assets (1,807 ) 797
Accounts payable and accrued expenses   (8,130 )   5,039
Net cash provided by (used for) operating activities - continuing
operations
27,223 26,343
Net cash provided by (used for) operating activities - discontinued
operations
  981   (2,702 )
Net cash provided by (used for) operating activities   28,204   23,641
Cash Flows From Investing Activities
Capital expenditures (2,318 ) (2,326 )
Proceeds from sale of property, plant and equipment   2,633   1,822
Net cash provided by (used for) investing activities - continuing
operations
315 (504 )
Net cash provided by (used for) investing activities - discontinued
operations
    79
Net cash provided by (used for) investing activities   315   (425 )
Cash Flows From Financing Activities
Net borrowing (repayments) on credit facility (72,491 ) (18,942 )
Cash dividends paid (8,287 ) (8,147 )
Proceeds from issuance of common stock 875 2,001
Proceeds from public offering of common stock, net of equity
issuance costs
79,522
Shares withheld for employee taxes on equity awards (371 ) (273 )
Deferred financing costs     (1,030 )
Net cash provided by (used for) financing activities - continuing
operations
(752 ) (26,391 )
Net cash provided by (used for) financing activities - discontinued
operations
   
Net cash provided by (used for) financing activities   (752 )   (26,391 )
Foreign exchange rate effect on cash (6 ) (33 )
Less: Net increase (decrease) in cash classified within discontinued
operations
    (2,590 )
Net increase (decrease) in cash, cash equivalents, and restricted
cash
27,761 (618 )
Cash, cash equivalents, and restricted cash at January 1   11,179   11,039
Cash, cash equivalents, and restricted cash at June 30 $ 38,940 $ 10,421
 
 
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED)
(Dollars in thousands)
 

Quarter Ended June 30, 2018

Material     Segment   Corporate  
Handling Distribution Total & Other Total
GAAP Net sales $ 103,130 $ 37,477 $ 140,607 $ (47 ) $ 140,560
 
GAAP Gross profit 47,991 47,991
Add: Restructuring expenses and other adjustments   170     170
Gross profit as adjusted 48,161 48,161
Gross profit margin as adjusted 34.3 % n/a 34.3 %
 
GAAP Operating income 17,323 2,786 20,109 (6,998 ) 13,111
Add: Restructuring expenses and other adjustments(1) 170 170 170
Add: Asset impairments 308 308
Less: Gain on sale of assets   (208 )     (208 )     (208 )
Operating income as adjusted 17,285 2,786 20,071 (6,690 ) 13,381
Operating income margin as adjusted 16.8 % 7.4 % 14.3 % n/a 9.5 %
 
Add: Depreciation and amortization 6,188 301 6,489 127 6,616
Less: Depreciation adjustments   (66 )     (66 )     (66 )
EBITDA as adjusted $ 23,407 $ 3,087 $ 26,494 $ (6,563 ) $ 19,931
EBITDA margin 22.7 % 8.2 % 18.8 % n/a 14.2 %
 
(1) Includes gross profit adjustments of $170
 

Quarter Ended June 30, 2017

Material Segment Corporate
Handling Distribution Total & Other Total
GAAP Net sales $ 96,026 $ 39,258 $ 135,284 $ (32 ) $ 135,252
 
GAAP Gross profit 38,292 38,292
Add: Restructuring expenses and other adjustments   4,093     4,093
Gross profit as adjusted 42,385 42,385
Gross profit margin as adjusted 31.3 % n/a 31.3 %
 
GAAP Operating income 7,814 3,025 10,839 (4,871 ) 5,968
Add: Restructuring expenses and other adjustments(1) 4,344 4,344 4,344
Add: Asset impairments 544 544 544
Less: Gain on sale of assets   (578 )     (578 )     (578 )
Operating income as adjusted 12,124 3,025 15,149 (4,871 ) 10,278
Operating income margin as adjusted 12.6 % 7.7 % 11.2 % n/a 7.6 %
 
Add: Depreciation and amortization

 

8,060 253 8,313 297 8,610
Less: Depreciation adjustments   (1,312 )     (1,312 )     (1,312 )
EBITDA as adjusted $ 18,872 $ 3,278 $ 22,150 $ (4,574 ) $ 17,576
EBITDA margin 19.7 % 8.3 % 16.4 % n/a 13.0 %
 
(1) Includes gross profit adjustments of $4,093 and SG&A adjustments
of $251
 
 

MYERS INDUSTRIES, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED)
(Dollars in thousands)
 
Six Months Ended June 30, 2018
Material     Segment   Corporate  
Handling Distribution Total & Other Total
GAAP Net sales $ 219,939 $ 73,258 $ 293,197 $ (69 ) $ 293,128
 
GAAP Gross profit 95,106 95,106
Add: Restructuring expenses and other adjustments   289     289
Gross profit as adjusted 95,395 95,395
Gross profit margin as adjusted 32.5 % n/a 32.5 %
 
GAAP Operating income 34,053 4,524 38,577 (13,444 ) 25,133
Add: Restructuring expenses and other adjustments(1) 312 312 312
Add: Asset impairment 308 308
Less: Gain on sale of assets   (208 )   (665 )   (873 )     (873 )
Operating income as adjusted 34,157 3,859 38,016 (13,136 ) 24,880
Operating income margin as adjusted 15.5 % 5.3 % 13.0 % n/a 8.5 %
 
Add: Depreciation and amortization 12,316 610 12,926 254 13,180
Less: Depreciation adjustments   (82 )     (82 )     (82 )
EBITDA as adjusted $ 46,391 $ 4,469 $ 50,860 $ (12,882 ) $ 37,978
EBITDA margin 21.1 % 6.1 % 17.3 % n/a 13.0 %
 
(1) Includes gross profit adjustments of $289 and SG&A adjustments
of $23
 
Six Months Ended June 30, 2017
Material Segment Corporate
Handling Distribution Total & Other Total
GAAP Net sales $ 194,508 $ 77,832 $ 272,340 $ (516 ) $ 271,824
 
GAAP Gross profit 80,053 80,053
Add: Restructuring expenses and other adjustments   5,114     5,114
Gross profit as adjusted 85,167 85,167
Gross profit margin as adjusted 31.3 % n/a 31.3 %
 
GAAP Operating income 20,660 4,563 25,223 (11,139 ) 14,084
Add: Restructuring expenses and other adjustments(1) 5,754 5,754 5,754
Add: Asset impairment 544 544 544
Less: Gain on sale of assets   (1,242 )     (1,242 )     (1,242 )
Operating income as adjusted 25,716 4,563 30,279 (11,139 ) 19,140
Operating income margin as adjusted 13.2 % 5.9 % 11.1 % n/a 7.0 %
 
Add: Depreciation and amortization 15,929 555 16,484 697 17,181
Less: Depreciation adjustments   (1,929 )     (1,929 )     (1,929 )
EBITDA as adjusted $ 39,716 $ 5,118 $ 44,834 $ (10,442 ) $ 34,392
EBITDA margin 20.4 % 6.6 % 16.5 % n/a 12.7 %
 
(1) Includes gross profit adjustments of $5,114 and SG&A adjustments
of $640
 
   
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
INCOME AND EARNINGS PER DILUTED SHARE (UNAUDITED)
(Dollars in thousands, except per share data)
 
Quarter Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
GAAP Operating income $ 13,111 $ 5,968 $ 25,133 $ 14,084
Add: Restructuring expenses and other adjustments 170 4,344 312 5,754
Add: Asset impairments 308 544 308 544
Less: Gain on sale of assets   (208 )   (578 )   (873 )   (1,242 )
Operating income as adjusted 13,381 10,278 24,880 19,140
Less: Interest expense, net   (1,313 )   (1,860 )   (2,952 )   (3,990 )
Income (loss) before taxes as adjusted 12,068 8,418 21,928 15,150
Less: Income tax expense(1)   (3,017 )   (3,030 )   (5,482 )     (5,454 )
Income (loss) from continuing operations as adjusted $ 9,051 $ 5,388 $ 16,446 $ 9,696
Adjusted earnings (loss) per diluted share from continuing operations $ 0.27 $ 0.18 $ 0.51 $ 0.32
 
(1) Income taxes are calculated using the normalized effective tax
rate for each year.
The rate used in 2018 was 25% and in 2017 was 36%.
 
MYERS INDUSTRIES, INC.
RECONCILIATION OF FREE CASH FLOW TO GAAP NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES – CONTINUING OPERATIONS
(UNAUDITED)
(Dollars in thousands)
 
YTD YTD QTD
June 30, 2018 March 31, 2018 June 30, 2018
Net cash provided by (used for) operating activities - continuing
operations
$ 27,223 - $ 12,838 = $ 14,385
Capital expenditures   (2,318 ) -   (1,206 ) =   (1,112 )
Free cash flow $ 24,905 - $ 11,632 = $ 13,273
 

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