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EX-99.2 - EX-99.2 - MYERS INDUSTRIES INCd379767dex992.htm
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Exhibit 99.1

 

LOGO

Myers Industries Reports 2017 First Quarter Results

Strong cash flow growth driven by working capital and capital spending discipline

May 8, 2017, Akron, Ohio - Myers Industries, Inc. (NYSE: MYE) today announced results for the first quarter ended March 31, 2017.

First Quarter 2017 Business Highlights

 

    Net sales decreased 6.3% (or 7.2% excluding currency fluctuation) compared to the first quarter of 2016

 

    Gross profit margin of 29.6% compared to 31.9% in the first quarter of 2016

 

    GAAP net income per diluted share from continuing operations of $0.10, compared to $(0.11) in the first quarter of 2016

 

    Adjusted net income per diluted share from continuing operations of $0.13, compared to $0.21 in the first quarter of 2016

 

    Generated cash from continuing operations of $13.1 million and free cash flow of $12.6 million

The Company reported net sales of $141.7 million, compared to $151.2 million in the first quarter of 2016. Gross profit margin decreased 230 basis points to 29.6 percent as compared to the prior year quarter, primarily due to lower sales volume and higher restructuring and manufacturing costs in the Material Handling Segment. Selling, general and administrative expenses declined by $3.9 million to $34.6 million, in the first quarter of 2017, with the improvement in expenses primarily attributable to lower compensation costs.

President and Chief Executive Officer Dave Banyard commented, “First quarter earnings were in line with our expectations, despite softer than expected demand in the auto aftermarket end market. Net sales were down mid-single digits due to the decline in auto aftermarket as well as the expected continued weakness in agricultural end markets. Despite the lower sales volumes, we are executing well on our strategic initiatives. We have made solid progress with our niche market growth teams, and our strategic realignment to improve operating flexibility is well underway. Our continued focus on working capital and disciplined capital spending helped us generate strong free cash flow of $12.6 million during the quarter.”

 

     Quarter Ended March 31,  
     2017     2016     % Increase
(Decrease)
 
     (Dollars in thousands, except per share data)  

Net sales

   $ 141,703     $ 151,205       (6.3 )% 

Gross profit

   $ 42,003     $ 48,171       (12.8 )% 

Gross profit margin

     29.6     31.9  

Operating income

   $ 7,358     $ 1,129       551.7

Income from continuing operations:

      

Income (loss)

   $ 3,128     $ (3,336     193.8

Income (loss) per diluted share

   $ 0.10     $ (0.11     190.9

Operating income as adjusted(1)

   $ 8,104     $ 11,685       (30.6 )% 

Income from continuing operations as adjusted(1):

      

Income (loss)

   $ 3,923     $ 6,186       (36.6 )% 

Income (loss) per diluted share

   $ 0.13     $ 0.21       (38.1 )% 

 

(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 declined 5.4% (or 6.6% excluding currency fluctuation) as compared to the first quarter of 2016. The reduction in net sales was primarily due to decreased volume in the Company’s agricultural end market. GAAP operating income was $12.1 million compared to $7.4 million in the first quarter of 2016. GAAP operating income in the first quarter of 2016 included non-cash impairment charges of $8.5 million in Brazil. Adjusted operating income was $12.8 million compared to $16.0 million in the first quarter of 2016. The decline in adjusted operating income was primarily the result of lower sales volumes and some impact from higher commodity prices that the Company expects to recover with price increases moving forward.

Net sales in the Distribution Segment declined 8.6% as compared to the first quarter of 2016. The decrease in net sales was across all product lines, particularly in our northern sales regions as a milder winter had an adverse effect on demand. We also continued to see lower capital spending on equipment across all regions. Operating income was $1.5 million compared to $2.5 million in the first quarter of 2016. The decrease in operating income was primarily the result of lower sales volumes.

Other Financial Items

In March 2017, in order to enable greater financial flexibility, the Company entered into a Fifth Amended and Restated Loan Agreement (the “Loan Agreement”). The Loan Agreement replaced the pre-existing $300 million senior revolving credit facility with a $200 million facility and extended the term from December 2018 to March 2022.

2017 Outlook

The Company continues to anticipate that total revenue will be flat on a constant currency basis in fiscal year 2017 as compared to the prior year. Capital expenditures are expected to be in the range of $10 to $12 million, net interest expense in the range of $8 to $9 million, depreciation and amortization in the range of $32 to $34 million, and an effective tax rate of approximately 36%.

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Monday, May 8, 2017 at 10:00 a.m. ET. The call is anticipated to last approximately one hour and may be accessed at: (US) 866-393-4306 or (Int’l) 734-385-2616. The Conference ID # is 12996981. Callers are asked to sign on at least five minutes in advance. A 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 12996981.

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 undervehicle service industry in the U.S. 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.

Contact:

Monica Vinay

Vice President, Investor Relations & Treasurer

(330) 761-6212


MYERS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in thousands, except share data)

 

     March 31, 2017     March 31, 2016  

Net sales

   $ 141,703     $ 151,205  

Cost of sales

     99,700       103,034  
  

 

 

   

 

 

 

Gross profit

     42,003       48,171  

Selling, general and administrative expenses

     34,645       38,497  

Impairment charges

     —         8,545  
  

 

 

   

 

 

 

Operating income

     7,358       1,129  

Interest expense, net

     1,975       2,019  
  

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     5,383       (890

Income tax expense (benefit)

     2,255       2,446  
  

 

 

   

 

 

 

Income (loss) from continuing operations

     3,128       (3,336

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

     (14     (57
  

 

 

   

 

 

 

Net income (loss)

   $ 3,114     $ (3,393
  

 

 

   

 

 

 

Income (loss) per common share from continuing operations:

    

Basic

   $ 0.10     $ (0.11

Diluted

   $ 0.10     $ (0.11

Income (loss) per common share from discontinued operations:

    

Basic

   $ —       $ —    

Diluted

   $ —       $ —    

Net income (loss) per common share:

    

Basic

   $ 0.10     $ (0.11

Diluted

   $ 0.10     $ (0.11

Weighted average common shares outstanding:

    

Basic

     30,029,679       29,547,514  

Diluted

     30,292,583       29,547,514  


MYERS INDUSTRIES, INC.

SALES AND EARNINGS BY SEGMENT (UNAUDITED)

(Dollars in thousands)

 

     Quarter Ended March 31,  
     2017     2016     % Change  

Net Sales

      

Material Handling

   $ 103,180     $ 109,024       (5.4 )% 

Distribution

     38,574       42,221       (8.6 )% 

Inter-company Sales

     (51     (40     —    
  

 

 

   

 

 

   

 

 

 

Total

   $ 141,703     $ 151,205       (6.3 )% 
  

 

 

   

 

 

   

 

 

 

Operating Income

      

Material Handling

   $ 12,088     $ 7,441       62.5

Distribution

     1,538       2,536       (39.4 )% 

Corporate

     (6,268     (8,848     —    
  

 

 

   

 

 

   

 

 

 

Total

   $ 7,358     $ 1,129       551.7
  

 

 

   

 

 

   

 

 

 


MYERS INDUSTRIES, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

OPERATING INCOME BY SEGMENT (UNAUDITED)

(Dollars in thousands, except per share data)

 

     Quarter Ended March 31,  
     2017     2016  

Material Handling

    

Operating income as reported

   $ 12,088     $ 7,441  

Asset impairments

     —         8,545  

Restructuring expenses and other adjustments

     746       —    
  

 

 

   

 

 

 

Operating income as adjusted

     12,834       15,986  

Distribution

    

Operating income as reported

     1,538       2,536  

Corporate Expense

    

Corporate expense as reported

     (6,268     (8,848

CFO severance related costs

     —         2,011  
  

 

 

   

 

 

 

Corporate expense as adjusted

     (6,268     (6,837

Continuing Operations

    

Operating income as reported

     7,358       1,129  

Total of all adjustments above

     746       10,556  
  

 

 

   

 

 

 

Operating income as adjusted

     8,104       11,685  

Interest expense, net

     (1,975     (2,019
  

 

 

   

 

 

 

Income (loss) before taxes as adjusted

     6,129       9,666  

Income tax expense*

     (2,206     (3,480
  

 

 

   

 

 

 

Income (loss) from continuing operations as adjusted

   $ 3,923     $ 6,186  
  

 

 

   

 

 

 

Adjusted earnings (loss) per diluted share from continuing operations

   $ 0.13     $ 0.21  

 

* Income taxes are calculated using the normalized effective tax rate for each year. The normalized rate used above is 36%.

Note on Reconciliation of Income and Earnings Data: Income from continuing operations as adjusted and adjusted earnings per diluted share from continuing operations are non-GAAP financial measures that Myers Industries, Inc. calculates according to the schedule above, using GAAP amounts from the unaudited Consolidated Financial Statements. The Company believes that the excluded items are not primarily related to core operational activities. The Company believes that income (loss) excluding items that are not primarily related to core operating activities is generally viewed as providing useful information regarding a company’s operating profitability. Management uses income (loss) excluding these items as well as other financial measures in connection with its decision-making activities. Income (loss) excluding these items should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company’s method for calculating income (loss) excluding these items may not be comparable to methods used by other companies.


MYERS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Dollars in thousands)

 

     March 31, 2017      December 31, 2016  

Assets

     

Current Assets

     

Cash

   $ 7,325      $ 7,888  

Restricted cash

     8,637        8,635  

Accounts receivable, net

     75,582        73,818  

Inventories

     50,522        46,023  

Other

     2,764        4,787  
  

 

 

    

 

 

 

Total Current Assets

     144,830        141,151  

Other Assets

     127,593        129,051  

Property, Plant, & Equipment, Net

     105,426        111,482  
  

 

 

    

 

 

 

Total Assets

   $ 377,849      $ 381,684  
  

 

 

    

 

 

 

Liabilities & Shareholders’ Equity

     

Current Liabilities

     

Accounts payable

   $ 56,654      $ 48,988  

Accrued expenses

     29,530        30,324  
  

 

 

    

 

 

 

Total Current Liabilities

     86,184        79,312  

Long-term debt, net

     179,571        189,522  

Other liabilities

     7,923        9,235  

Deferred income taxes

     10,527        10,582  

Total Shareholders’ Equity

     93,644        93,033  
  

 

 

    

 

 

 

Total Liabilities & Shareholders’ Equity

   $ 377,849      $ 381,684  
  

 

 

    

 

 

 


MYERS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

     Quarter Ended March 31,  
     2017     2016  

Cash Flows From Operating Activities

    

Net income (loss)

   $ 3,114     $ (3,393

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

     (14     (57
  

 

 

   

 

 

 

Income (loss) from continuing operations

     3,128       (3,336

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

    

Depreciation

     6,082       6,000  

Amortization

     2,436       2,499  

Accelerated depreciation associated with restructuring activities

     618       —    

Non-cash stock-based compensation expense

     894       1,282  

(Gain) loss on fixed asset sales

     (1,008     —    

Deferred taxes

     101       (967

Excess tax benefit from stock-based compensation

     —         106  

Accrued interest income on note receivable

     (322     (301

Impairment charges

     —         8,545  

Other

     109       214  

Payments on performance based compensation

     (992     (1,699

Other long-term liabilities

     (59     427  

Cash flows provided by (used for) working capital

    

Accounts receivable

     (1,799     (6,766

Inventories

     (4,403     (4,774

Prepaid expenses and other assets

     2,030       1,143  

Accounts payable and accrued expenses

     6,234       (13,690
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities - continuing operations

     13,049       (11,317

Net cash provided by (used for) operating activities - discontinued operations

     —         —    
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities

     13,049       (11,317
  

 

 

   

 

 

 

Cash Flows From Investing Activities

    

Capital expenditures

     (498     (7,140

Proceeds from sale of property, plant and equipment

     1,117       6  

Proceeds (payments) related to sale of business

     —         (4,034
  

 

 

   

 

 

 

Net cash provided by (used for) investing activities - continuing operations

     619       (11,168

Net cash provided by (used for) investing activities - discontinued operations

     —         —    
  

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     619       (11,168
  

 

 

   

 

 

 

Cash Flows From Financing Activities

    

Net borrowing (repayments) on credit facility

     (9,310     24,999  

Cash dividends paid

     (4,089     (4,079

Proceeds from issuance of common stock

     247       47  

Excess tax benefit from stock-based compensation

     —         (106

Shares withheld for employee taxes on equity awards

     (271     (502

Deferred financing costs

     (975     —    
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities - continuing operations

     (14,398     20,359  

Net cash provided by (used for) financing activities - discontinued operations

     —         —    
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities

     (14,398     20,359  
  

 

 

   

 

 

 

Foreign exchange rate effect on cash

     167       383  
  

 

 

   

 

 

 

Net increase (decrease) in cash

     (563     (1,743

Cash at January 1

     7,888       7,344  
  

 

 

   

 

 

 

Cash at March 31

   $ 7,325     $ 5,601  
  

 

 

   

 

 

 


MYERS INDUSTRIES, INC.

RECONCILIATION OF FREE CASH FLOW TO GAAP NET CASH PROVIDED BY

(USED FOR) OPERATING ACTIVITIES – CONTINUING OPERATIONS

(UNAUDITED)

(Dollars in thousands)

 

     For the Three Months Ended  
     March 31, 2017     March 31, 2016  

Net cash provided by (used for) operating activities - continuing operations

   $ 13,049     $ (11,317

Capital expenditures

     (498     (7,140
  

 

 

   

 

 

 

Free cash flow

   $ 12,551     $ (18,457

Note on Reconciliation of Cash Flow Data: Free cash flow is a non-GAAP financial measure that Myers Industries, Inc. calculates according to the schedule above using GAAP amounts from the unaudited Condensed Consolidated Statement of Cash Flows. The Company uses free cash flow as well as other financial measures in connection with its decision-making activities. The Company’s method for calculating free cash flow may not be comparable to methods used by other companies.