Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - MYERS INDUSTRIES INC | d494979dex992.htm |
| EX-2.1 - EX-2.1 - MYERS INDUSTRIES INC | d494979dex21.htm |
| 8-K - 8-K - MYERS INDUSTRIES INC | d494979d8k.htm |
Exhibit 99.1
Myers Industries, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On December 18, 2017, Myers Industries, Inc. (“Company”), collectively with its wholly owned subsidiary, Myers Holdings Brasil, Ltda. (“Holdings”), completed the sale of its subsidiaries, Myers do Brasil Embalagens Plasticas Ltda. and Plasticos Novel do Nordeste Ltda. (collectively, the “Brazil Business”), to Novel Holdings – Eireli (“Buyer”), an entity controlled by a current member of the Brazil Business’ management team. The divestiture of the Brazil businesses will allow the Company to focus resources on its core businesses and additional growth opportunities. The Brazil businesses are leading designers and manufacturers of reusable plastic shipping containers, plastic pallets, crates and totes used for closed-loop shipping and storage in Brazil’s automotive, distribution, food, beverage and agriculture industries. The sale of the Brazil businesses included manufacturing facilities and offices located in Lauro de Freitas City, Bahia, Brazil; Ibipora, Parana, Brazil; and Jaguarinuna, Brazil.
Pursuant to the terms of the Quota Purchase Agreement by and among the Company, Holdings, Buyer and Gabriel Alonso Neto (the “Purchase Agreement”), Buyer will pay a purchase price of one U.S. Dollar to the Company and Buyer will assume all liabilities and obligations of the Brazil Business, whether arising prior to or after the closing of the transaction. There are no additional amounts due, or to be settled, under the terms of the Purchase Agreement with the Buyer. The Company has also agreed to be the guarantor under a factoring arrangement between with the Buyer and Banco Alfa de Investimento S.A., in the event the Buyer is unable to meet its obligations under this arrangement.
As a result of the sale, the results of operations of the Brazil Business for all periods prior to the sale will be presented as discontinued operations in the Consolidated Statements of Operations for all periods presented, which will be included in the annual financial statements to be filed on Form 10-K for the year ended December 31, 2017.
The unaudited pro forma consolidated financial data was derived from the Company’s historical consolidated financial statements. The unaudited pro forma consolidated statement of financial position assumes the disposition of the Brazil Business occurred on September 30, 2017. The unaudited pro forma consolidated statements of operations give effect to the disposition of the Brazil Business as if the disposition occurred on January 1, 2014. The following unaudited pro forma consolidated financial information should be read in conjunction with our historical financial statements and notes, and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable and reasonable; however, such adjustments are subject to change and may not be indicative of all adjustments required for presentation of the Brazil Business as a discontinued operation under ASC Topic 205-20, Discontinued Operations. The unaudited pro forma consolidated information is for illustrative and informational purposes only and is not intended to reflect what our consolidated financial position and results of operations would have been had the disposition occurred on the dates indicated and is not necessarily indicative of our future consolidated financial position and results of operations.
The pro forma adjustments removed all of the Brazil Business’ assets, liabilities and results of operations, and give effect to an adjustment to reflect the estimated loss from the sale of the Brazil Business.
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except per share data)
| Nine Months Ended September 30, 2017 | ||||||||||||
| Historical | Brazil Sale Adjustments (a) |
Pro Forma | ||||||||||
| Net sales |
$ | 428,081 | $ | (21,145 | ) | $ | 406,936 | |||||
| Cost of sales |
306,056 | (18,316 | ) | 287,740 | ||||||||
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| Gross profit |
122,025 | (2,829 | ) | 119,196 | ||||||||
| Selling, general and administrative expenses |
105,560 | (3,781 | ) | 101,779 | ||||||||
| (Gain) loss on fixed asset sales |
(4,128 | ) | 116 | (4,012 | ) | |||||||
| Impairment charges |
544 | — | 544 | |||||||||
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| Operating income |
20,049 | 836 | 20,885 | |||||||||
| Interest expense, net |
5,545 | 283 | 5,828 | |||||||||
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| Income (loss) from continuing operations before income taxes |
14,504 | 553 | 15,057 | |||||||||
| Income tax expense |
6,088 | (53 | ) | 6,035 | ||||||||
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| Income (loss) from continuing operations |
$ | 8,416 | $ | 606 | $ | 9,022 | ||||||
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| Income (loss) per common share from continuing operations: |
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| Basic |
$ | 0.28 | $ | 0.30 | ||||||||
| Diluted |
$ | 0.28 | $ | 0.30 | ||||||||
| Weighted average common shares outstanding: |
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| Basic |
30,149,818 | 30,149,818 | ||||||||||
| Diluted |
30,524,161 | 30,524,161 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except per share data)
| Year Ended December 31, 2016 | ||||||||||||
| Historical | Brazil Sale Adjustments (a) |
Pro Forma | ||||||||||
| Net sales |
$ | 558,062 | $ | (23,683 | ) | $ | 534,379 | |||||
| Cost of sales |
393,422 | (20,941 | ) | 372,481 | ||||||||
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| Gross profit |
164,640 | (2,742 | ) | 161,898 | ||||||||
| Selling, general and administrative expenses |
137,936 | (5,357 | ) | 132,579 | ||||||||
| Loss on fixed asset sales |
662 | (34 | ) | 628 | ||||||||
| Impairment charges |
9,874 | (8,545 | ) | 1,329 | ||||||||
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| Operating income |
16,168 | 11,194 | 27,362 | |||||||||
| Interest expense, net |
8,173 | 470 | 8,643 | |||||||||
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| Income (loss) from continuing operations before income taxes |
7,995 | 10,724 | 18,719 | |||||||||
| Income tax expense (benefit) |
6,470 | 925 | 7,395 | |||||||||
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| Income (loss) from continuing operations |
$ | 1,525 | $ | 9,799 | $ | 11,324 | ||||||
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| Income (loss) per common share from continuing operations: |
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| Basic |
$ | 0.05 | $ | 0.38 | ||||||||
| Diluted |
$ | 0.05 | $ | 0.38 | ||||||||
| Weighted average common shares outstanding: |
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| Basic |
29,750,378 | 29,750,378 | ||||||||||
| Diluted |
29,967,912 | 29,967,912 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except per share data)
| Year Ended December 31, 2015 | ||||||||||||
| Historical | Brazil Sale Adjustments (a) |
Pro Forma | ||||||||||
| Net sales |
$ | 601,538 | $ | (30,518 | ) | $ | 571,020 | |||||
| Cost of sales |
423,260 | (28,102 | ) | 395,158 | ||||||||
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| Gross profit |
178,278 | (2,416 | ) | 175,862 | ||||||||
| Selling, general and administrative expenses |
146,799 | (6,010 | ) | 140,789 | ||||||||
| Loss on fixed asset sales |
618 | (62 | ) | 556 | ||||||||
| Impairment charges |
— | — | — | |||||||||
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| Operating income |
30,861 | 3,656 | 34,517 | |||||||||
| Interest expense, net |
8,999 | 10 | 9,009 | |||||||||
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| Income (loss) from continuing operations before income taxes |
21,862 | 3,646 | 25,508 | |||||||||
| Income tax expense (benefit) |
7,809 | 228 | 8,037 | |||||||||
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| Income (loss) from continuing operations |
$ | 14,053 | $ | 3,418 | $ | 17,471 | ||||||
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| Income (loss) per common share from continuing operations: |
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| Basic |
$ | 0.46 | $ | 0.57 | ||||||||
| Diluted |
$ | 0.45 | $ | 0.56 | ||||||||
| Weighted average common shares outstanding: |
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| Basic |
30,616,485 | 30,616,485 | ||||||||||
| Diluted |
30,943,693 | 30,943,693 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except per share data)
| Year Ended December 31, 2014 | ||||||||||||
| Historical | Brazil Sale Adjustments (a) |
Pro Forma | ||||||||||
| Net sales |
$ | 623,649 | $ | (46,890 | ) | $ | 576,759 | |||||
| Cost of sales |
462,370 | (42,795 | ) | 419,575 | ||||||||
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| Gross profit |
161,279 | (4,095 | ) | 157,184 | ||||||||
| Selling, general and administrative expenses |
138,705 | (8,670 | ) | 130,035 | ||||||||
| (Gain) loss on fixed asset sales |
(44 | ) | 24 | (20 | ) | |||||||
| Impairment charges |
— | — | — | |||||||||
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| Operating income |
22,618 | 4,551 | 27,169 | |||||||||
| Interest expense, net |
8,535 | 35 | 8,570 | |||||||||
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| Income (loss) from continuing operations before income taxes |
14,083 | 4,516 | 18,599 | |||||||||
| Income tax expense (benefit) |
5,122 | 558 | 5,680 | |||||||||
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| Income (loss) from continuing operations |
$ | 8,961 | $ | 3,958 | $ | 12,919 | ||||||
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| Income (loss) per common share from continuing operations: |
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| Basic |
$ | 0.28 | $ | 0.40 | ||||||||
| Diluted |
$ | 0.27 | $ | 0.40 | ||||||||
| Weighted average common shares outstanding: |
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| Basic |
32,232,965 | 32,232,965 | ||||||||||
| Diluted |
32,704,012 | 32,704,012 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
(Dollars in thousands)
| As of September 30, 2017 | ||||||||||||
| Historical | Brazil Sale Adjustments |
Pro Forma | ||||||||||
| Assets |
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| Current Assets |
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| Cash |
$ | 4,511 | $ | (1,594 | ) (b) | $ | 2,917 | |||||
| Restricted cash |
8,650 | — | 8,650 | |||||||||
| Accounts receivable, net |
87,711 | (14,479 | ) (b) | 73,232 | ||||||||
| Income tax receivable |
567 | 15,000 | (c) | 15,567 | ||||||||
| Inventories, net |
48,972 | (2,157 | ) (b) | 46,815 | ||||||||
| Prepapid expenses and other current assets |
2,881 | (95 | ) (b) | 2,786 | ||||||||
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| Total Current Assets |
153,292 | (3,325 | ) | 149,967 | ||||||||
| Other Assets |
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| Property, Plant, & Equipment, Net |
91,934 | (3,799 | ) (b) | 88,135 | ||||||||
| Goodwill |
60,048 | — | 60,048 | |||||||||
| Intangible assets, net |
42,377 | (1,116 | ) (b) | 41,261 | ||||||||
| Deferred income taxes |
253 | (137 | ) (b) | 116 | ||||||||
| Notes receivable |
18,632 | — | 18,632 | |||||||||
| Other |
6,871 | (118 | ) (b) | 6,753 | ||||||||
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| Total Assets |
$ | 373,407 | $ | (8,495 | ) | $ | 364,912 | |||||
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| Liabilities & Shareholders’ Equity |
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| Current Liabilities |
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| Accounts payable |
$ | 61,990 | $ | (3,698 | ) (b) | $ | 58,292 | |||||
| Accrued expenses |
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| Employee compensation |
17,921 | (1,018 | ) (b) | 16,903 | ||||||||
| Taxes, other than income taxes |
2,185 | (801 | ) (b) | 1,384 | ||||||||
| Accrued interest |
1,731 | — | 1,731 | |||||||||
| Other current liabilities |
14,493 | (75 | ) (b) | 14,418 | ||||||||
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| Total Current Liabilities |
98,320 | (5,592 | ) | 92,728 | ||||||||
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| Long-term debt, net |
158,010 | — | 158,010 | |||||||||
| Other liabilities |
7,616 | 4 | (b) | 7,620 | ||||||||
| Deferred income taxes |
11,729 | (222 | ) (b) | 11,507 | ||||||||
| Shareholders’ Equity |
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| Serial Preferred Shares |
— | — | — | |||||||||
| Common Shares |
18,418 | — | 18,418 | |||||||||
| Additional paid-in capital |
207,118 | — | 207,118 | |||||||||
| Accumulated other comprehensive loss |
(30,683 | ) | 16,500 | (b) | (14,183 | ) | ||||||
| Retained deficit |
(97,121 | ) | (19,185 | ) (c) | (116,306 | ) | ||||||
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| Total Shareholders’ Equity |
97,732 | (2,685 | ) | 95,047 | ||||||||
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| Total Liabilities & Shareholders’ Equity |
$ | 373,407 | $ | (8,495 | ) | $ | 364,912 | |||||
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See accompanying notes to the unaudited pro forma consolidated financial statements.
Myers Industries, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
| (a) | Amounts reflect the pro forma adjustments to eliminate the results of operations of the Brazil Business for the nine months ended September 30, 2017 and for the years ended December 31, 2016, 2015 and 2014 from the presentation of continuing operations in the unaudited pro forma condensed consolidated statements of operations. |
| (b) | Represents the adjustments to remove the assets and liabilities of the Brazil Business from the balance sheet, as well as the foreign currency translation adjustment related to Brazil, which was included as a component of accumulated other comprehensive loss. |
| (c) | Represents the non-recurring loss on sale of Brazil that would have been recorded as if we had completed the transaction on September 30, 2017. The loss on sale is presented net of a tax benefit of approximately $15 million, which is expected to be generated as a result of a worthless stock deduction for the Brazil Business that the Company will claim on its U.S. tax returns. |