Myers Industries announces Fourth Quarter and Full Year 2022 Results

Posted on Mar 1, 2023 in Nuts & Bolts

Record Top-and-Bottom Line results delivered for four consecutive quarters outlook for sustained revenue growth in fiscal 2023

Myers Industries, Inc., a 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 fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Financial Highlights:

• Net sales of $213 million, up 7% versus the prior year period
• GAAP EPS of $0.36; Adjusted EPS of $0.32, up 39% versus the prior year period
• Cash flow provided by operations of $22 million and free cash flow of $15 million

The full Year 2022 Financial Highlights:

• Net sales of $900 million, up 18% versus the prior year period; Organic net sales up 10%
• GAAP EPS of $1.64; Adjusted EPS of $1.68, up 73% versus the prior year period
• Cash flow provided by operations of $73 million and free cash flow of $48 million

Myers Industries President and CEO Mike McGaugh said, “2022 was a strong year as Myers posted record results in each quarter with robust top-and bottom-line growth, serving as proof that our 3-Horizon strategy is working. We continued to generate healthy margins and strong cash flow from the initiatives we took throughout 2022. In addition to improving the company, we also made two acquisitions during the year, adding scale to our Distribution Segment with Mohawk Rubber and enhancing our Material Handling Segment with the addition of a rotational molding facility in Decatur, Georgia. Our team continues to do a nice job growing and transforming the company.”

McGaugh continued, “While recognizing that 2022 was a year of record results, I’m excited about Myers’ future because I continue to believe that the company still has significant unrealized potential. We can see the opportunity and we have the right people in place to capture it. We are now working to institutionalize our improvements into an operating system. In 2023, we will implement the “Myers Operating System” to make sure our improvements are ingrained, lasting, and scalable. The Myers Operating System will drive standard work processes across the company, ensuring that best practices are applied across all of our legacy business units as well as our new acquisitions. I am confident the Myers Operating System will further Myers on its journey to become a world class company. I believe there is still a long runway for our company and significant value creation opportunity for our shareholders.”

Fourth Quarter 2022 Financial Summary

Net sales for the fourth quarter of 2022 were $212.8 million, an increase of $13.3 million, or 6.6%, compared with $199.6 million for the fourth quarter of 2021, primarily driven by incremental sales of $17 million from the Mohawk Rubber acquisition in the Distribution Segment. On an organic basis, higher pricing was offset by lower volume/mix.

Gross profit increased $13.3 million, or 25.6% to $65.1 million, primarily due to continued benefits from pricing actions, lower material costs and the Mohawk Rubber acquisition, partially offset by lower volume and a change in sales mix. While we continue to experience cost inflation, we were able to successfully offset it through our self-help initiatives, including cost reductions. Gross margin expanded to 30.6% compared with 26.0% for the fourth quarter of 2021. Selling, general and administrative expenses increased $6.1 million, or 14.8% to $47.4 million due to the Mohawk Rubber acquisition, higher variable selling expenses, salaries, and incentive compensation. SG&A as a percentage of sales increased to 22.3%, compared with 20.7% in the same period last year. Net income per diluted share was $0.36, compared with $0.20 for the fourth quarter of 2021. Adjusted earnings per diluted share were $0.32, compared with $0.23 for the fourth quarter of 2021.

Fourth Quarter 2022 Segment Results

(Dollar amounts in the segment tables below are reported in millions)

Material Handling

Net sales for the Material Handling Segment during the fourth quarter of 2022 were $142.2 million, a decrease of $5.0 million, or 3.4%, compared with $147.3 million for the fourth quarter of 2021. Net sales increases in the food and beverage and consumer markets were more than offset by decreases in the vehicle and industrial markets. Operating income increased 69.7% to $20.9 million, compared with $12.3 million in 2021. Adjusted operating income increased 58.4% to $21.0 million, compared with $13.2 million in 2021. Contributions from pricing actions and lower material costs more than offset lower sales volume and a change in sales mix. Additionally, SG&A expenses were higher year-over-year. The increase in SG&A expenses was primarily due to increased variable selling expenses and higher incentive compensation costs. The Material Handling Segment’s adjusted operating income margin increased 570 basis points to 14.7%, compared with 9.0% for the fourth quarter of 2021.

Distribution

Net sales for the Distribution Segment during the fourth quarter of 2022 were $70.6 million, an increase of $18.3 million, or 35.0%, compared with $52.3 million for the fourth quarter of 2021. Excluding the incremental $17 million of net sales from the Mohawk Rubber acquisition, organic net sales increased 2%. Operating income decreased 37.2% to $3.4 million, compared with $5.4 million in 2021. Adjusted operating income decreased 24.0% to $4.1 million, compared to $5.4 million in 2021. The contribution from higher pricing wasn’t enough to offset higher product costs and increased SG&A expenses year-over-year. The increase in SG&A expenses was primarily the result of the Mohawk Rubber acquisition and higher variable selling and incentive compensation costs. The Distribution Segment’s adjusted operating income margin was 5.8%, compared with 10.3% for the fourth quarter of 2021. The Distribution Segment continues to implement price increases to offset cost inflation.

The full Year 2022 Financial Summary

Net sales for the full year of 2022 were $899.5 million, an increase of $138.1 million, or 18.1%, compared with $761.4 million for the full year of 2021, driven by strong sales in both the Material Handling and Distribution segments. Excluding the incremental $64 million of net sales from the Trilogy Plastics and Mohawk Rubber acquisitions, organic net sales increased 10% primarily due to higher pricing.

Gross profit increased $71.9 million, or 34.0% to $283.4 million, primarily due to the contribution from pricing actions and the Trilogy Plastics and Mohawk Rubber acquisitions, partially offset by cost inflation and unfavorable volume/mix. Gross margin improved to 31.5% compared with 27.8% for the full year of 2021. Selling, general and administrative expenses increased $36.0 million, or 22.0% to $199.5 million, reflecting the Mohawk Rubber and Trilogy Plastics acquisitions, higher salaries and incentive compensation costs, increased variable selling expenses and higher repairs and maintenance costs, partly due to inflation. SG&A as a percentage of sales increased to 22.2% for the full year, compared with 21.5% last year. Net income per diluted share was $1.64, compared with $0.92 for the full year of 2021. Adjusted earnings per diluted share were $1.68, compared with $0.97 for the full year of 2021.

Full Year 2022 Segment Results

(Dollar amounts in the segment tables below are reported in millions)

Material Handling

Net sales for the Material Handling Segment for the full year of 2022 were $647.6 million, an increase of $83.6 million, or 14.8%, compared with $564.1 million for the full year of 2021. Excluding the incremental $24 million of net sales from the Trilogy Plastics acquisition, organic net sales increased 11%. Organic net sales increases in the food and beverage and industrial markets were partially offset by declines in the vehicle and consumer end markets. Operating income increased 67.4% to $104.1 million, compared with $62.2 million in 2021. Adjusted operating income increased 68.4% to $105.1 million, compared with $62.4 million in 2021. Contributions from higher pricing and supply chain initiatives during the year were partially offset by unfavorable volume/mix and increased labor costs. Additionally, SG&A expenses were higher year-over-year. The increase in SG&A expenses was primarily due to the Trilogy Plastics acquisition, higher salaries and incentive compensation costs, increased selling expenses and higher repairs and maintenance costs. The Material Handling Segment’s adjusted operating income margin was 16.2%, compared with 11.1% for the full year of 2021.

Distribution

Net sales for the Distribution Segment for the full year of 2022 were $252.0 million, an increase of $54.6 million, or 27.6%, compared with $197.4 million for the full year of 2021. Excluding the incremental $40 million of net sales from the Mohawk Rubber acquisition, organic net sales increased 7%, primarily due to higher pricing. Operating income increased 2.8% to $15.9 million, compared with $15.4 million in 2021. Adjusted operating income increased 5.6% to $16.8 million, compared with $16.0 million in 2021. Contributions from pricing actions were offset by higher product costs and an increase in SG&A expenses. The increase in SG&A expenses was primarily the result of the Mohawk Rubber acquisition and higher salaries and incentive compensation costs. The Distribution Segment’s adjusted operating income margin was 6.7%, compared with 8.1% for the full year of 2021. The Distribution Segment continues to implement price increases to offset cost inflation.

Balance Sheet & Cash Flow

As of December 31, 2022, the Company’s cash on hand totaled $23.1 million. Total debt as of December 31, 2022 was $103.4 million.

For the full year of 2022, cash flow provided by operations was $72.6 million and free cash flow was $48.3 million, compared with cash flow provided by operations of $44.9 million and free cash flow of $27.0 million for the full year of 2021. The increase in cash flow was driven primarily by higher earnings. Capital expenditures for the full year of 2022 were $24.3 million, compared with $17.9 million for the full year of 2021.

2023 Outlook

Based on current exchange rates, market outlook, and business forecast, the Company provided the following outlook for fiscal 2023:

• Net sales growth in the low-to-mid single digit range
• Diluted EPS in the range of $1.51 to $1.81; adjusted diluted EPS in the range of $1.55 to $1.85
• Capital expenditures in the range of $25 to $30 million
• Effective tax rate to approximate 25%

We will continue to monitor market conditions and provides updates as we progress throughout the year.