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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. (NYSE: 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.

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, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Net sales

 

$

118,394

 

 

$

134,285

 

 

$

240,644

 

 

$

273,400

 

Cost of sales

 

 

75,821

 

 

 

87,349

 

 

 

155,588

 

 

 

180,905

 

Gross profit

 

 

42,573

 

 

 

46,936

 

 

 

85,056

 

 

 

92,495

 

Selling, general and administrative expenses

 

 

30,317

 

 

 

36,809

 

 

 

61,433

 

 

 

71,277

 

Gain on disposal of fixed assets

 

 

 

 

 

(55

)

 

 

(7

)

 

 

(98

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

916

 

Gain on sale of notes receivable

 

 

 

 

 

 

 

 

(11,924

)

 

 

 

Operating income (loss)

 

 

12,256

 

 

 

10,182

 

 

 

35,554

 

 

 

20,400

 

Interest expense, net

 

 

1,194

 

 

 

1,017

 

 

 

2,263

 

 

 

2,066

 

Income (loss) from continuing operations before income taxes

 

 

11,062

 

 

 

9,165

 

 

 

33,291

 

 

 

18,334

 

Income tax expense (benefit)

 

 

2,694

 

 

 

2,559

 

 

 

8,197

 

 

 

5,085

 

Income (loss) from continuing operations

 

 

8,368

 

 

 

6,606

 

 

 

25,094

 

 

 

13,249

 

Income (loss) from discontinued operations, net of income tax

 

 

 

 

 

 

 

 

 

 

 

127

 

Net income (loss)

 

$

8,368

 

 

$

6,606

 

 

$

25,094

 

 

$

13,376

 

Income (loss) per common share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.23

 

 

$

0.19

 

 

$

0.70

 

 

$

0.37

 

Diluted

 

$

0.23

 

 

$

0.18

 

 

$

0.70

 

 

$

0.37

 

Income (loss) per common share from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

 

$

 

 

$

 

 

$

 

Diluted

 

$

 

 

$

 

 

$

 

 

$

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.23

 

 

$

0.19

 

 

$

0.70

 

 

$

0.37

 

Diluted

 

$

0.23

 

 

$

0.18

 

 

$

0.70

 

 

$

0.37

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,774,241

 

 

 

35,471,795

 

 

 

35,749,110

 

 

 

35,430,392

 

Diluted

 

 

35,920,465

 

 

 

35,743,563

 

 

 

35,899,521

 

 

 

35,753,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MYERS INDUSTRIES, INC.

SALES AND EARNINGS BY SEGMENT (UNAUDITED)

(Dollars in thousands)

 

 

 

Quarter Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

$

80,855

 

 

$

95,902

 

 

 

(15.7

)%

 

$

164,931

 

 

$

198,853

 

 

 

(17.1

)%

Distribution

 

 

37,541

 

 

 

38,395

 

 

 

(2.2

)%

 

 

75,736

 

 

 

74,569

 

 

 

1.6

%

Inter-company Sales

 

 

(2

)

 

 

(12

)

 

 

-

 

 

 

(23

)

 

 

(22

)

 

 

-

 

Total

 

$

118,394

 

 

$

134,285

 

 

 

(11.8

)%

 

$

240,644

 

 

$

273,400

 

 

 

(12.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

$

15,796

 

 

$

17,589

 

 

 

(10.2

)%

 

$

30,963

 

 

$

33,796

 

 

 

(8.4

)%

Distribution

 

 

1,636

 

 

 

3,328

 

 

 

(50.8

)%

 

 

3,486

 

 

 

3,541

 

 

 

(1.6

)%

Corporate

 

 

(5,176

)

 

 

(10,735

)

 

 

-

 

 

 

1,105

 

 

 

(16,937

)

 

 

-

 

Total

 

$

12,256

 

 

$

10,182

 

 

 

20.4

%

 

$

35,554

 

 

$

20,400

 

 

 

74.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) as adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

$

15,796

 

 

$

17,589

 

 

 

(10.2

)%

 

$

30,963

 

 

$

34,884

 

 

 

(11.2

)%

Distribution

 

 

1,636

 

 

 

3,328

 

 

 

(50.8

)%

 

 

3,503

 

 

 

4,442

 

 

 

(21.1

)%

Corporate

 

 

(5,176

)

 

 

(6,735

)

 

 

-

 

 

 

(10,535

)

 

 

(12,937

)

 

 

-

 

Total

 

$

12,256

 

 

$

14,182

 

 

 

(13.6

)%

 

$

23,931

 

 

$

26,389

 

 

 

(9.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income margin as adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

 

19.5

%

 

 

18.3

%

 

 

 

 

 

 

18.8

%

 

 

17.5

%

 

 

 

 

Distribution

 

 

4.4

%

 

 

8.7

%

 

 

 

 

 

 

4.6

%

 

 

6.0

%

 

 

 

 

Corporate

 

n/a

 

 

n/a

 

 

 

 

 

 

n/a

 

 

n/a

 

 

 

 

 

Total

 

 

10.4

%

 

 

10.6

%

 

 

 

 

 

 

9.9

%

 

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

$

20,926

 

 

$

23,177

 

 

 

(9.7

)%

 

$

41,123

 

 

$

45,997

 

 

 

(10.6

)%

Distribution

 

 

2,244

 

 

 

3,591

 

 

 

(37.5

)%

 

 

4,706

 

 

 

4,967

 

 

 

(5.2

)%

Corporate

 

 

(5,077

)

 

 

(6,623

)

 

 

-

 

 

 

(10,336

)

 

 

(12,715

)

 

 

-

 

Total

 

$

18,093

 

 

$

20,145

 

 

 

(10.2

)%

 

$

35,493

 

 

$

38,249

 

 

 

(7.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin as adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material Handling

 

 

25.9

%

 

 

24.2

%

 

 

 

 

 

 

24.9

%

 

 

23.1

%

 

 

 

 

Distribution

 

 

6.0

%

 

 

9.4

%

 

 

 

 

 

 

6.2

%

 

 

6.7

%

 

 

 

 

Corporate

 

n/a

 

 

n/a

 

 

 

 

 

 

n/a

 

 

n/a

 

 

 

 

 

Total

 

 

15.3

%

 

 

15.0

%

 

 

 

 

 

 

14.7

%

 

 

14.0

%

 

 

 

 

 

MYERS INDUSTRIES, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED)

(Dollars in thousands)

 

 

 

Quarter Ended June 30, 2020

 

 

 

Material

Handling

 

 

Distribution

 

 

Segment

Total

 

 

Corporate

& Other

 

 

Total

 

GAAP Net sales

 

$

80,855

 

 

$

37,541

 

 

$

118,396

 

 

$

(2

)

 

$

118,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross profit

 

 

 

 

 

 

 

 

 

 

42,573

 

 

 

 

 

 

42,573

 

Gross profit margin

 

 

 

 

 

 

 

 

 

 

36.0

%

 

n/a

 

 

 

36.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating income (loss)

 

 

15,796

 

 

 

1,636

 

 

 

17,432

 

 

 

(5,176

)

 

 

12,256

 

Operating income margin

 

 

19.5

%

 

 

4.4

%

 

 

14.7

%

 

n/a

 

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add: Depreciation and amortization

 

 

5,130

 

 

 

608

 

 

 

5,738

 

 

 

99

 

 

 

5,837

 

EBITDA

 

$

20,926

 

 

$

2,244

 

 

$

23,170

 

 

$

(5,077

)

 

$

18,093

 

EBITDA margin

 

 

25.9

%

 

 

6.0

%

 

 

19.6

%

 

n/a

 

 

 

15.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30, 2019

 

 

 

Material

Handling

 

 

Distribution

 

 

Segment

Total

 

 

Corporate

& Other

 

 

Total

 

GAAP Net sales

 

$

95,902

 

 

$

38,395

 

 

$

134,297

 

 

$

(12

)

 

$

134,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross profit

 

 

 

 

 

 

 

 

 

 

46,936

 

 

 

 

 

 

46,936

 

Gross profit margin

 

 

 

 

 

 

 

 

 

 

34.9

%

 

n/a

 

 

 

35.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating income (loss)

 

 

17,589

 

 

 

3,328

 

 

 

20,917

 

 

 

(10,735

)

 

 

10,182

 

Add: Environmental charges

 

 

 

 

 

 

 

 

 

 

 

4,000

 

 

 

4,000

 

Operating income (loss) as adjusted

 

 

17,589

 

 

 

3,328

 

 

 

20,917

 

 

 

(6,735

)

 

 

14,182

 

Operating income margin as adjusted

 

 

18.3

%

 

 

8.7

%

 

 

15.6

%

 

n/a

 

 

 

10.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add: Depreciation and amortization

 

 

5,588

 

 

 

263

 

 

 

5,851