8-K
MYERS INDUSTRIES INC (MYE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 6, 2020
Myers Industries, Inc.
(Exact Name of Registrant as Specified in Charter)
| Ohio | 001-8524 | 34-0778636 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
1293 South Main Street, Akron, Ohio 44301
(Address of Principal Executive Offices, and Zip Code)
(330) 253-5592
Registrant’s Telephone Number, Including Area Code
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol | Name of each exchange<br><br><br>on which registered |
|---|---|---|
| Common Stock, without par value | MYE | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 6, 2020, Myers Industries, Inc. (the “Company”) issued a press release announcing earnings results for the first quarter ended March 31, 2020. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. In addition, a copy of the presentation which will be discussed during the Company’s earnings conference call at 8:30 a.m. Eastern Time on May 6, 2019, is attached as Exhibit 99.2 to this Current Report on Form 8-K. Information about the call can be found in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 and Exhibits 99.1 and 99.2 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 and Exhibits 99.1 and 99.2 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”) except as may be expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure. |
|---|
As described in “Item 2.02 Results of Operations and Financial Condition” above, on May 6, 2020, the Company issued a press release announcing earnings results for the first quarter ended March 31, 2020, the full text of which is attached as Exhibit 99.1 to this Current Report on Form 8-K. In addition, a copy of the presentation which will be discussed during the Company’s earnings conference call at 8:30 a.m. Eastern Time on May 6, 2020 is attached as Exhibit 99.2 to this Current Report on Form 8-K.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 7.01 and Exhibits 99.1 and 99.2 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Furthermore, the information in this Item 7.01 and Exhibits 99.1 and 99.2 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act except as may be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release dated May 6, 2020 |
| 99.2 | First Quarter 2019 Earnings Presentation dated May 6, 2020 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Myers Industries, Inc. | |
|---|---|
| By: | /s/ Andrean R. Horton |
| Andrean R. Horton | |
| Chief Legal Officer and Secretary |
Date: May 6, 2020
EX-99.1
Exhibit 99.1
Myers Industries Reports 2020 First Quarter Results
Gross margin improves despite lower sales;
Company updates 2020 annual revenue outlook and withdraws annual EPS guidance
May 6, 2020, Akron, Ohio—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 first quarter ended March 31, 2020.
First Quarter 2020 Financial Highlights
| • | GAAP income per diluted share from continuing operations was $0.47, including $11.9 million of pre-tax income from the sale of notes and release of lease guarantee liability related to the Company’s Lawn and Garden business (sold in 2015), compared with $0.19 for the first quarter of 2019<br> |
|---|---|
| • | Adjusted income per diluted share from continuing operations was $0.22, compared with $0.23 for the first quarter<br>of 2019 |
| --- | --- |
| • | Net sales decreased 12.1% to $122.3 million, compared with $139.1 million for the first quarter of 2019<br> |
| --- | --- |
| • | Gross margin increased to 34.8%, compared with 32.7% for the first quarter of 2019 |
| --- | --- |
| • | Cash flow from continuing operations was $5.0 million and free cash flow was $2.5 million, compared<br>with $5.3 million and $2.4 million, respectively, for the first quarter of 2019 |
| --- | --- |
“During the first quarter, our teams continued to perform well, delivering gross margin expansion despite a decline in sales due to the softening of several end markets,” said Mike McGaugh, President and Chief Executive Officer of Myers Industries. “As I step into my role as the new CEO of Myers, we will continue to execute our strategic objectives, while maintaining our focus on minimizing the impact of COVID-19. Our primary concern is the safety and well-being of our employees and their families, our communities, our customers, and our suppliers. We have implemented operational protocols at each of our locations providing our sites with detailed guidelines and procedures for responding to the COVID-19 pandemic, consistent with federal, state and local requirements. The Myers teams remain committed to meeting our customers’ needs during this unprecedented time of uncertainty and have quickly adapted to ensure our customers get the essential products they need.”
Mr. McGaugh continued, “As we navigate the current environment, we are well-positioned with a strong balance sheet, including $73.2 million in cash at the end of the quarter, and have sufficient liquidity to support our operations. We have conducted scenario planning and developed contingency plans that we will continue to adjust, as needed, to help mitigate any potential risks and capitalize on opportunities in the months ahead.”
First Quarter 2020Financial Summary
Net sales for the first quarter of 2020 decreased $16.9 million, or 12.1% to $122.3 million, compared with $139.1 million for the first quarter of 2019. The decrease was the result of sales declines across key markets in the Material Handling Segment. Gross profit decreased to $42.5 million, compared with $45.6 million for the first quarter of 2019. However, gross profit margin increased to 34.8% compared with 32.7% last year as favorable price-cost margin more than offset the lower sales volume during the quarter. Selling, general and administrative expenses decreased $3.4 million to $31.1 million, compared with $34.5 million in the first quarter of 2019, due primarily to lower compensation costs and savings from the transformation initiatives in the Distribution Segment. GAAP income per diluted share from continuing operations was $0.47 (including $11.9 million of pre-tax income from the sale of notes and release of lease guarantee liability related to the Company’s Lawn and Garden business, which was sold in 2015), compared with $0.19 for the first quarter of 2019. Adjusted income per diluted share from continuing operations was $0.22, compared with $0.23 for the first quarter of 2019.
Segment Results
Net sales in the Material Handling Segment (consumer, food and beverage, industrial and vehicle end markets) for the first quarter of 2020 were $84.1 million, a decrease of $18.9 million or 18.3%, compared with $103.0 million for the first quarter of 2019. Sales declines in the Company’s food and beverage, vehicle and industrial end markets were only partially offset by a sales increase in the Company’s consumer end market. For the first quarter of 2020, operating income for this segment declined 6.4% to $15.2 million, compared with $16.2 million in 2019. Adjusted operating income declined 12.3% to $15.2 million, compared with $17.3 million in 2019. The lower volume was partially offset by favorable price-cost margin and lower variable incentive compensation costs. The Material Handling Segment’s adjusted operating income margin was 18.0%, compared with 16.8% for the first quarter of 2019.
Net sales in the Distribution Segment (auto aftermarket end market) for the first quarter of 2020 were $38.2 million, an increase of $2.0 million, or 5.6%, compared with $36.2 million in 2019. Incremental sales from the August 2019 acquisition of Tuffy Manufacturing Industries, Inc. led to the improvement. First quarter operating income for this segment increased to $1.9 million, compared with $0.2 million in 2019. Adjusted operating income increased to $1.9 million, compared with $1.1 million in 2019. The increase in adjusted operating income was due primarily to savings from the segment’s transformation initiatives. The Distribution Segment’s adjusted operating income margin was 4.9%, compared with 3.1% for the first quarter of 2019.
2020 Outlook
“As a result of the uncertainty related to the duration and extent of the potential impacts of COVID-19, and the lack of visibility we have going forward due to how quickly things are changing, we are withdrawing our 2020 earnings per share guidance that we provided during our fourth quarter 2019 earnings call,” said Mr. McGaugh. “That being said, we will continue to provide quarterly updates regarding sales trends and our revised outlook for end markets.”
The Company now expects total revenue to decline approximately 10% year-over-year in 2020, down from its previous guidance of a mid-single-digit percentage increase. The Company also anticipates that sales will be down approximately 20% year-over-year in the second quarter, with approximately 60% of the decline in the second quarter coming from continued sales decreases in the Company’s food and beverage, industrial and vehicle end markets. The remainder of the decline is expected to come from sales decreases in the auto aftermarket end market, where sales dropped off significantly in the last couple weeks of March and continued to decline in the second quarter. The Company is still anticipating that depreciation and amortization will be approximately $21 million, net interest expense will be approximately $4 million, the effective tax rate will be approximately 27%, and capital expenditures will be approximately $15 million.
“In spite of the short-term headwinds due to the COVID-19 pandemic, I remain optimistic about Myers’ longer-term growth prospects. We are a solid, well-operated company with a strong balance sheet. I believe these attributes will be a tailwind for Myers as the economy begins to re-start, and we continue to focus on executing our strategies to deliver profitable revenue growth,” said Mr. McGaugh.
Conference Call Details
The Company will host an earnings conference call and webcast for investors and analysts on Wednesday, May 6, 2020, at 8:30 a.m. EDT. The call is anticipated to last approximately one hour and may be accessed by dialing: (US) 833-513-0562 or (Int’l) 236-714-2198. The Conference ID # is 6894555. Callers are asked to sign on at least five minutes in advance. 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) 800-585-8367 or (Int’l) 416-621-4642. The Conference ID # is 6894555.
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.
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 and per share data)
| Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| March 31,2020 | March 31,2019 | |||||
| Net sales | $ | 122,250 | $ | 139,115 | ||
| Cost of sales | 79,767 | 93,556 | ||||
| Gross profit | 42,483 | 45,559 | ||||
| Selling, general and administrative expenses | 31,116 | 34,468 | ||||
| Gain on disposal of fixed assets | (7 | ) | (43 | ) | ||
| Impairment charges | — | 916 | ||||
| Gain on sale of notes receivable | (11,924 | ) | — | |||
| Operating income (loss) | 23,298 | 10,218 | ||||
| Interest expense, net | 1,069 | 1,049 | ||||
| Income (loss) from continuing operations before income taxes | 22,229 | 9,169 | ||||
| Income tax expense (benefit) | 5,503 | 2,526 | ||||
| Income (loss) from continuing operations | 16,726 | 6,643 | ||||
| Income (loss) from discontinued operations, net of income tax | — | 127 | ||||
| Net income (loss) | $ | 16,726 | $ | 6,770 | ||
| Income (loss) per common share from continuing operations: | ||||||
| Basic | $ | 0.47 | $ | 0.19 | ||
| Diluted | $ | 0.47 | $ | 0.19 | ||
| Income (loss) per common share from discontinued operations: | ||||||
| Basic | $ | — | $ | — | ||
| Diluted | $ | — | $ | — | ||
| Net income (loss) per common share: | ||||||
| Basic | $ | 0.47 | $ | 0.19 | ||
| Diluted | $ | 0.47 | $ | 0.19 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 35,723,979 | 35,388,989 | ||||
| Diluted | 35,828,428 | 35,694,830 |
MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)
| Quarter Ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % Change | |||||||
| Net sales | |||||||||
| Material Handling | $ | 84,076 | $ | 102,951 | (18.3 | )% | |||
| Distribution | 38,195 | 36,174 | 5.6 | % | |||||
| Inter-company Sales | (21 | ) | (10 | ) | — | ||||
| Total | $ | 122,250 | **** | $ | 139,115 | **** | **** | (12.1 | )% |
| Operating income (loss) | |||||||||
| Material Handling | $ | 15,167 | $ | 16,207 | (6.4 | )% | |||
| Distribution | 1,850 | 213 | 768.5 | % | |||||
| Corporate | 6,281 | (6,202 | ) | — | |||||
| Total | $ | 23,298 | **** | $ | 10,218 | **** | **** | 128.0 | % |
| Operating income (loss) as adjusted | |||||||||
| Material Handling | $ | 15,167 | $ | 17,295 | (12.3 | )% | |||
| Distribution | 1,867 | 1,114 | 67.6 | % | |||||
| Corporate | (5,359 | ) | (6,202 | ) | — | ||||
| Total | $ | 11,675 | **** | $ | 12,207 | **** | **** | (4.4 | )% |
| Operating income margin as adjusted | |||||||||
| Material Handling | 18.0 | % | 16.8 | % | |||||
| Distribution | 4.9 | % | 3.1 | % | |||||
| Corporate | n/a | n/a | |||||||
| Total | **** | 9.6 | % | **** | 8.8 | % | |||
| EBITDA as adjusted | |||||||||
| Material Handling | $ | 20,197 | $ | 22,821 | (11.5 | )% | |||
| Distribution | 2,463 | 1,376 | 79.0 | % | |||||
| Corporate | (5,260 | ) | (6,092 | ) | — | ||||
| Total | $ | 17,400 | **** | $ | 18,105 | **** | **** | (3.9 | )% |
| EBITDA margin as adjusted | |||||||||
| Material Handling | 24.0 | % | 22.2 | % | |||||
| Distribution | 6.4 | % | 3.8 | % | |||||
| Corporate | n/a | n/a | |||||||
| Total | **** | 14.2 | % | **** | 13.0 | % |
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED)
(Dollars in thousands)
| Quarter Ended March 31, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MaterialHandling | Distribution | SegmentTotal | Corporate<br>& Other | Total | |||||||||||
| GAAP Net sales | $ | 84,076 | $ | 38,195 | $ | 122,271 | $ | (21 | ) | $ | 122,250 | ||||
| GAAP Gross profit | 42,483 | — | 42,483 | ||||||||||||
| Add: Restructuring expenses and other adjustments | — | — | — | ||||||||||||
| Gross profit as adjusted | 42,483 | — | 42,483 | ||||||||||||
| Gross profit margin as adjusted | 34.7 | % | n/a | 34.8 | % | ||||||||||
| GAAP Operating income (loss) | 15,167 | 1,850 | 17,017 | 6,281 | 23,298 | ||||||||||
| Add: Restructuring expenses and other adjustments | — | — | — | 249 | 249 | ||||||||||
| Add: Tuffy acquisition costs | — | 17 | 17 | 35 | 52 | ||||||||||
| Less: Lawn and Garden sale of note/release of lease guarantee liability | — | — | — | (11,924 | ) | (11,924 | ) | ||||||||
| Operating income (loss) as adjusted | 15,167 | 1,867 | 17,034 | (5,359 | ) | 11,675 | |||||||||
| Operating income margin as adjusted | 18.0 | % | 4.9 | % | 13.9 | % | n/a | 9.6 | % | ||||||
| Add: Depreciation and amortization | 5,030 | 596 | 5,626 | 99 | 5,725 | ||||||||||
| EBITDA as adjusted | $ | 20,197 | $ | 2,463 | $ | 22,660 | $ | (5,260 | ) | $ | 17,400 | ||||
| EBITDA margin as adjusted | 24.0 | % | 6.4 | % | 18.5 | % | n/a | 14.2 | % | ||||||
| Quarter Ended March 31, 2019 | |||||||||||||||
| MaterialHandling | Distribution | SegmentTotal | Corporate<br>& Other | Total | |||||||||||
| GAAP Net sales | $ | 102,951 | $ | 36,174 | $ | 139,125 | $ | (10 | ) | $ | 139,115 | ||||
| GAAP Gross profit | 45,559 | — | 45,559 | ||||||||||||
| Add: Restructuring expenses and other adjustments | 172 | — | 172 | ||||||||||||
| Gross profit as adjusted | 45,731 | — | 45,731 | ||||||||||||
| Gross profit margin as adjusted | 32.9 | % | n/a | 32.9 | % | ||||||||||
| GAAP Operating income (loss) | 16,207 | 213 | 16,420 | (6,202 | ) | 10,218 | |||||||||
| Add: Restructuring expenses and other<br>adjustments^(1)^ | 172 | 901 | 1,073 | — | 1,073 | ||||||||||
| Add: Asset impairment | 916 | — | 916 | — | 916 | ||||||||||
| Operating income (loss) as adjusted | 17,295 | 1,114 | 18,409 | (6,202 | ) | 12,207 | |||||||||
| Operating income margin as adjusted | 16.8 | % | 3.1 | % | 13.2 | % | n/a | 8.8 | % | ||||||
| Add: Depreciation and amortization | 5,570 | 262 | 5,832 | 110 | 5,942 | ||||||||||
| Less: Depreciation adjustments | (44 | ) | — | (44 | ) | — | (44 | ) | |||||||
| EBITDA as adjusted | $ | 22,821 | $ | 1,376 | $ | 24,197 | $ | (6,092 | ) | $ | 18,105 | ||||
| EBITDA margin as adjusted | 22.2 | % | 3.8 | % | 17.4 | % | n/a | 13.0 | % | ||||||
| (1) | Includes gross profit adjustments of $172 and SG&A adjustments of $901 | ||||||||||||||
| --- | --- |
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
INCOME AND EARNINGS PER DILUTED SHARE (UNAUDITED)
(Dollars in thousands, except per share data)
| Quarter Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| GAAP Operating income (loss) | $ | 23,298 | $ | 10,218 | ||
| Add: Restructuring expenses and other adjustments | 249 | 1,073 | ||||
| Add: Tuffy acquisition costs | 52 | — | ||||
| Less: Lawn and Garden sale of note/release of lease guarantee liability | (11,924 | ) | — | |||
| Add: Asset impairment | — | 916 | ||||
| Operating income as adjusted | 11,675 | 12,207 | ||||
| Less: Interest expense, net | (1,069 | ) | (1,049 | ) | ||
| Income before taxes as adjusted | 10,606 | 11,158 | ||||
| Less: Income tax expense^(1)^ | (2,864 | ) | (3,013 | ) | ||
| Income from continuing operations as adjusted | $ | 7,742 | $ | 8,145 | ||
| Adjusted earnings per diluted share from continuing operations | $ | 0.22 | $ | 0.23 | ||
| (1) | Income taxes are calculated using the normalized effective tax rate for each year. The rate used in 2020 and2019 is 27%. | |||||
| --- | --- |
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(Dollars in thousands)
| March 31, 2020 | December 31, 2019 | |||
|---|---|---|---|---|
| Assets | ||||
| Current Assets | ||||
| Cash | $ | 73,214 | $ | 75,527 |
| Accounts receivable, net | 65,255 | 62,279 | ||
| Income tax receivable | — | 142 | ||
| Inventories, net | 49,127 | 44,260 | ||
| Prepaid expenses and other current assets | 3,036 | 2,834 | ||
| Total Current Assets | 190,632 | 185,042 | ||
| Property, plant, & equipment, net | 54,038 | 54,964 | ||
| Right of use asset—operating leases | 5,355 | 5,901 | ||
| Deferred income taxes | 716 | 5,807 | ||
| Other assets | 98,126 | 101,425 | ||
| Total Assets | $ | 348,867 | $ | 353,139 |
| Liabilities & Shareholders’ Equity | ||||
| Current Liabilities | ||||
| Accounts payable | $ | 49,456 | $ | 46,867 |
| Accrued expenses | 28,559 | 33,701 | ||
| Operating lease liability—short-term | 1,803 | 2,057 | ||
| Long-term debt—current portion | 39,937 | — | ||
| Total Current Liabilities | 119,755 | 82,625 | ||
| Long-term debt | 37,338 | 77,176 | ||
| Operating lease liability—long-term | 3,778 | 4,074 | ||
| Other liabilities | 11,773 | 22,582 | ||
| Total Shareholders’ Equity | 176,223 | 166,682 | ||
| Total Liabilities & Shareholders’ Equity | $ | 348,867 | $ | 353,139 |
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
| Quarter Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Cash Flows From Operating Activities | ||||||
| Net income (loss) | $ | 16,726 | $ | 6,770 | ||
| Income (loss) from discontinued operations, net of income taxes | — | 127 | ||||
| Income (loss) from continuing operations | 16,726 | 6,643 | ||||
| Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used<br>for) operating activities | ||||||
| Depreciation | 3,553 | 4,012 | ||||
| Amortization | 2,271 | 2,026 | ||||
| Non-cash stock-based compensation expense | 653 | 958 | ||||
| Gain on disposal of fixed assets | (7 | ) | (43 | ) | ||
| Gain on sale of notes receivable | (11,924 | ) | — | |||
| Impairment charges | — | 916 | ||||
| Other | 241 | 100 | ||||
| Payments on long-term performance based compensation | — | (413 | ) | |||
| Other long-term liabilities | (104 | ) | 379 | |||
| Cash flows provided by (used for) working capital | ||||||
| Accounts receivable | (3,524 | ) | 1,200 | |||
| Inventories | (5,209 | ) | 1,207 | |||
| Prepaid expenses and other current assets | (218 | ) | 733 | |||
| Accounts payable and accrued expenses | 2,569 | (12,417 | ) | |||
| Net cash provided by (used for) operating activities—continuing operations | 5,027 | 5,301 | ||||
| Net cash provided by (used for) operating activities—discontinued operations | — | 7,297 | ||||
| Net cash provided by (used for) operating activities | 5,027 | 12,598 | ||||
| Cash Flows From Investing Activities | ||||||
| Capital expenditures | (2,490 | ) | (2,933 | ) | ||
| Acquisition of business | (691 | ) | — | |||
| Proceeds from sale of property, plant and equipment | — | 4,486 | ||||
| Proceeds from sale of notes receivable | 1,200 | — | ||||
| Net cash provided by (used for) investing activities—continuing operations | (1,981 | ) | 1,553 | |||
| Net cash provided by (used for) investing activities—discontinued operations | — | — | ||||
| Net cash provided by (used for) investing activities | (1,981 | ) | 1,553 | |||
| Cash Flows From Financing Activities | ||||||
| Cash dividends paid | (4,899 | ) | (4,940 | ) | ||
| Proceeds from issuance of common stock | 125 | 146 | ||||
| Shares withheld for employee taxes on equity awards | (362 | ) | (974 | ) | ||
| Net cash provided by (used for) financing activities—continuing operations | (5,136 | ) | (5,768 | ) | ||
| Net cash provided by (used for) financing activities—discontinued operations | — | — | ||||
| Net cash provided by (used for) financing activities | (5,136 | ) | (5,768 | ) | ||
| Foreign exchange rate effect on cash | (223 | ) | 39 | |||
| Net (decrease) increase in cash | (2,313 | ) | 8,422 | |||
| Cash at January 1 | 75,527 | 58,894 | ||||
| Cash at March 31 | $ | 73,214 | $ | 67,316 |
MYERS INDUSTRIES, INC.
RECONCILIATION OF FREE CASH FLOW TO GAAP NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES – CONTINUING OPERATIONS
(UNAUDITED)
(Dollars inthousands)
| QTD | QTD | |||||
|---|---|---|---|---|---|---|
| March 31, 2020 | March 31, 2019 | |||||
| Net cash provided by (used for) operating activities—continuing operations | $ | 5,027 | $ | 5,301 | ||
| Capital expenditures | (2,490 | ) | (2,933 | ) | ||
| Free cash flow | $ | 2,537 | $ | 2,368 |
EX-99.2
MYERS INDUSTRIES, INC. First Quarter 2020 Earnings Presentation 21 54 91 142 184 230 56 67 73 Font Color Exhibit 99.2
Safe Harbor Statement & Non-GAAP Measures Statements in this presentation include “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including information regarding the Company’s financial outlook, future plans, objectives, business prospects and anticipated financial performance. Words such as “will”, “believe”, “anticipate”, “expect”, “estimate”, “intend”, “plan”, “project”, “objective”, “outlook”, “target”, “goal”, “view” and similar expressions or variations of these words identify forward-looking statements. These forward-looking statements are neither historical facts nor assurances of future performance. Instead, these statements are based on management’s current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, these statements inherently involve a wide range of inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. The Company’s actual actions, results, and financial condition may differ materially from what is expressed or implied by the forward-looking statements. 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. Such reports are available on the Securities and Exchange Commission's 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. The Company refers to certain non-GAAP financial measures throughout this presentation. Adjusted EPS, adjusted income per diluted share from continuing operations, adjusted gross profit, adjusted operating income, adjusted operating income margin, adjusted EBITDA, adjusted EBITDA margin 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. The Company believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are available in the appendix of this presentation.
Q1 2020 Operating Summary Q1 2020 Highlights Immediate Priorities Ensuring the safety and well-being of our employees and their families, our communities, our customers, and our suppliers Meeting our customers needs by manufacturing and distributing the essential products they require Developing and refining contingency plans to mitigate potential risks and capitalize on opportunities Results reflect continuing operations. See appendix for non-GAAP reconciliations. Adjusted gross margin increased 190 basis points due to solid operational execution despite soft market conditions and decreased sales Distribution Segment transformation actions continued to deliver cost savings Increased share in select markets as a result of our ability to meet customer needs during crisis We have implemented a pandemic preparedness and response plan that includes working remotely where possible, social distancing, increased cleaning protocols, and a pay program for employees being tested or quarantined We are closely monitoring the rapidly evolving situation, observing best practices and adhering to all local, state, and federal guidelines Our strong balance sheet and liquidity position provide adequate flexibility to support our operations and growth initiatives as we emerge from this crisis $73.2M of cash on balance sheet; $194.2M available under credit facility Debt/adjusted EBITDA ratio 1.2x COVID-19 Response Balance Sheet & Liquidity
Q1 2020 Financial Summary Operating Highlights Net sales down 12.1%, compared to Q1 2019 Material Handling down $18.9M (-18.3%) Distribution up $2.0M (+5.6%) Adjusted gross profit margin expanded to 34.8% from 32.9% Favorable price-cost margin Adjusted op income down 4.4% to $11.7M, compared to $12.2M in Q1 2019 Adjusted op income margin increased 80 bps due to higher gross margin, savings from Distribution Segment transformation, and lower incentive compensation costs Adjusted EBITDA down 3.9% to $17.4M, compared to $18.1 million in Q1 2019 Adjusted EPS of $0.22, compared to $0.23 in Q1 2019 GAAP Financial Highlights Non-GAAP Financial Highlights Results reflect continuing operations. See appendix for non-GAAP reconciliations.
Material Handling Segment Net sales down 18.3% vs. Q1 2019 Food and Beverage end market down double digits due to lower seed box sales Consumer end market up mid teens due to increased fuel container sales which were boosted by COVID-19 Industrial end market down double digits due to a weak overall demand environment Vehicle end market down double digits due to soft demand for automotive and marine products Impact of lower sales volume offset favorable price-cost margin and lower incentive compensation Q1 2020 Segment Results Material Handling Financial Highlights Distribution Financial Highlights Results reflect continuing operations. See appendix for non-GAAP reconciliations. Distribution Segment Net sales up 5.6% vs. Q1 2019 Increase due to incremental sales from the Tuffy acquisition completed in August 2019 Sales dropped off significantly in the last few weeks of March and have continued to decline in Q2 Adjusted operating income increased; primarily due to savings from the segment’s transformation initiatives
Working Capital as a % of TTM Sales Balance Sheet and Cash Flow Operating Cash Flow Free Cash Flow (FCF) 2.1% 1.7% 4.1% 3.8% 1.2x Q1 Highlights Free cash flow generation of $2.5M, compared to $2.4M last year Working capital as a percentage of sales up due to higher inventory and AR balances Cash balance at end of Q1 was $73M; debt to adjusted EBITDA remains consistent with prior quarters at 1.2x Total Debt ($M) and Debt to Adj. EBITDA Results reflect continuing operations. See appendix for non-GAAP reconciliations. Cash Flow ($M) and FCF as % of Sales
End Market 2019 % of Sales 2020 Initial Outlook 2020 Updated Outlook Key Drivers to Outlook Consumer 14% Incremental fuel container sales from COVID-19 and increased end market demand following weak spring season last year Food & Beverage 13% Stronger seed box sales anticipated in Q4 following soft prior year season and customer consolidations; will have better indication of potential orders in Q3 Vehicle 16% Sales declines anticipated for remainder of the year across RV, marine and automotive end markets due to weak demand environment and COVID-19 impact Industrial 26% Soft market environment in industrial manufacturing that began early in the year expected to continue throughout 2020 Auto Aftermarket 31% Fall off in demand that started in second half of March expected to continue and more than offset incremental sales from Tuffy acquisition 2020 Revenue Outlook Low-single digits 2020 revenue now anticipated to be down approximately 10% Low-single digits High-single digits Mid-single digits Low-single digits Double-digits Low-single digits Low-teens Low-teens High-single digits
2020 Fiscal Year Guidance Net sales growth:~ Down 10% (vs. up mid-single digits previously) D&A: ~ $21M Net interest expense:~ $4M Effective tax rate (normalized):~ 27% Diluted share count:~ 36M Diluted EPS:Withdrawn (vs. $1.05 - $1.15 previously) Adjusted diluted EPS: Withdrawn (vs. $0.85 - $0.95 previously) Capital expenditures:~ $15M
Appendix
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED) (Dollars in thousands)
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES GROSS PROFIT, OPERATING INCOME AND EBITDA (UNAUDITED) (Dollars in thousands)
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES INCOME AND EARNINGS PER DILUTED SHARE (UNAUDITED) (Dollars in thousands, except per share data)
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF FREE CASH FLOW TO GAAP NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES – CONTINUING OPERATIONS (UNAUDITED) (Dollars in thousands)
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA AND DEBT (UNAUDITED) (Dollars in thousands)
Reconciliation of Non-GAAP Measures MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES WORKING CAPITAL (UNAUDITED) (Dollars in thousands)
