Myers Industries announces Third Consecutive Quarter of record results

Posted on Oct 27, 2022 in Nuts & Bolts

Strong Execution Drives Record Top and Bottom Line Results Reiterates Full Year Fiscal 2022 Revenue Outlook and Raises Earnings Outlook

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 third quarter that ended September 30, 2022.

Third Quarter 2022 Financial Highlights

• Net sales increased 14% to $228.1 million, compared with $200.1 million for the third quarter of 2021
• On an organic basis, net sales increased 4% compared with the third quarter of 2021
• Earnings per diluted share increased 68% to $0.37, compared with $0.22 for the third quarter of 2021
• Adjusted earnings per diluted share increased 78% to $0.41, compared with $0.23 for the third quarter of 2021
• Adjusted EBITDA increased 57% to $27.2 million, compared with $17.3 million for the third quarter of 2021
• Cash flow provided by operations was $16.5 million and free cash flow was $9.8 million, compared with cash flow used for operations of $7.8 million and negative free cash flow of $13.8 million for the third quarter of 2021

Myers Industries’ President and CEO Mike McGaugh said, “I’m pleased to report a third consecutive quarter of record performance, highlighted by solid top-line growth, consistent execution by our team, and continued year-over-year margin expansion. During the third quarter, we made further progress against our 3-horizon strategy. We saw meaningful benefits from our value-based pricing actions and sales and operations process improvements, which mitigated most of the effects of ongoing inflationary and macro-environmental headwinds. Our sustained performance over several quarters, and across a variety of economic conditions, supports our confidence that we can continue to successfully execute on our transformation across future market and economic cycles.”

McGaugh continued, “Given the resilience of our business model and another quarter of record results, we are raising our earnings outlook for 2022. We are revising our adjusted EPS range from $1.40 – $1.60 to $1.50 – $1.70. Our net sales expectations remain the same, with growth in the high teens range year-over-year. We are near the successful completion of Horizon One of our strategy and our strategic work to begin execution of Horizon Two is under way. Within that next phase, we expect to broaden our focus around plastic durable goods, as well as adjacencies with competitive moats and large format products.”

Third Quarter 2022 Financial Summary

Net sales were $228.1 million, an increase of $28.0 million, or 14.0%, compared with $200.1 million for the third quarter of 2021, driven by sales increases in both the Material Handling and Distribution segments. Excluding the incremental $19.4 million of net sales from the Trilogy Plastics and Mohawk Rubber acquisitions, organic net sales increased 4.3%. Favorable pricing of 11% was partially offset by a decrease in volume/mix of 6%.

Gross profit increased $17.5 million, or 32.2% to $71.6 million, primarily due to the increased contribution from pricing actions and the Mohawk Rubber and Trilogy Plastics acquisitions, partially offset by a change in sales mix and lower volume. Gross margin was 31.4% compared with 27.1% for the third quarter of 2021. Selling, general and administrative expenses increased $9.2 million, or 21.7% to $51.8 million due to cost inflation, the Mohawk Rubber and Trilogy Plastics acquisitions, higher salaries, commissions and incentive compensation costs and a charge for estimated environmental liabilities. SG&A as a percentage of sales increased to 22.7%, compared with 21.3% in the same period last year. Net income per diluted share was $0.37, compared with $0.22 for the third quarter of 2021. Adjusted earnings per diluted share were $0.41, compared with $0.23 for the third quarter of 2021.

Third Quarter 2022 Segment Results

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

Material Handling

Net sales for the Material Handling Segment were $155.7 million, an increase of $6.0 million, or 4.0%, compared with $149.7 million for the third quarter of 2021. Excluding the incremental $2.9 million of net sales from the Trilogy Plastics acquisition, organic net sales increased 2.1%. Organic net sales increases in the food and beverage and industrial markets were partially offset by lower sales in the consumer and recreational vehicle markets. Operating income increased 59.0% to $24.0 million, compared with $15.1 million in 2021. Adjusted operating income increased 58.9% to $24.2 million, compared with $15.2 million in 2021. Contributions from pricing actions more than offset a change in sales mix and lower volume. Additionally, SG&A expenses were higher year-over-year. The increase in SG&A expenses was primarily due to cost inflation, the Trilogy Plastics acquisition, higher salaries, incentive compensation costs and variable selling expenses. The Material Handling Segment’s adjusted operating income margin increased 540 basis points to 15.6%, compared with 10.2% for the third quarter of 2021.

Distribution

Net sales for the Distribution Segment were $72.4 million, an increase of $22.0 million, or 43.6%, compared with $50.4 million for the third quarter of 2021. Excluding the incremental $16.6 million of net sales from the Mohawk Rubber acquisition, organic net sales increased 10.8%. Operating income increased 11.9% to $4.9 million, compared with $4.4 million in 2021. The contribution from higher pricing and increased volume was partially offset by an increase in product costs and higher SG&A expenses year-over-year. The increase in SG&A expenses was primarily the result of cost inflation, the Mohawk Rubber acquisition and higher variable selling and incentive compensation costs. The Distribution Segment’s adjusted operating income margin was 7.1%, compared with 8.7% for the third quarter of 2021.

Balance Sheet & Cash Flow

As of September 30, 2022, the Company’s cash on hand totaled $20.4 million. Total debt as of September 30, 2022 was $107.5 million.

For the third quarter of 2022, cash flow provided by operations was $16.5 million and free cash flow was $9.8 million, compared with cash flow used for operations of $7.8 million and negative free cash flow of $13.8 million for the third quarter of 2021. The increase in cash flow was driven primarily by higher earnings. Capital expenditures for the third quarter of 2022 were $6.7 million, compared with $6.0 million for the third quarter of 2021.

2022 Outlook

Based on current exchange rates, market outlook, and business forecast, the Company updated its outlook for fiscal 2022, and currently forecasts:

• Net sales growth in the high teens range with approximately 45% of the increase due to the acquisitions of Trilogy Plastics and Mohawk Rubber
• Diluted EPS in the range of $1.39 to $1.59; adjusted diluted EPS in the range of $1.50 to $1.70
• Capital expenditures to be in the range of $25 to $28 million
• Effective tax rate to approximate 26%