Myers Industries Announces Second Quarter 2023 Results – RVBusiness – Breaking RV Industry News

AKRON, Ohio – Myers Industries, Inc. (NYSE: MYE), a leading 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 second quarter ended June 30.

Second Quarter 2023 Financial Highlights

• Net sales of $208.5 million compared to $233.2 million in the prior year period
• Gross margin of 32.8%, up 80 basis points versus the prior year period
• GAAP net income per diluted share of $0.29 compared to $0.43 in the prior year period
• Adjusted earnings per diluted share of $0.35 compared to $0.45 in the prior year period
• Cash flow provided by operations was $22.9 million and free cash flow was $16.7 million

Myers Industries’ President and CEO Mike McGaugh said “I am pleased with our business’s ability to maintain gross margins and navigate a more complex operating environment during the second quarter while facing macro-economic and inflationary headwinds. Our self-help initiatives drove further margin expansion, allowing us to continue making capital investments in our plants and investments in our M&A and Commercial Excellence processes and capabilities. We are working to drive a more variable cost structure and we are well positioned to meet the demand when key markets recover. We also see strong demand for our agriculture and military products, and our e-commerce initiative has strong momentum. There are also very good dynamics for the tire market given the growth of electric vehicles, which bodes well for our Distribution segment, where we are refocusing our sales and sourcing structure, and integrating our Mohawk acquisition to enable us to better capture this market opportunity.

Recognizing softer demand in our RV and Marine end markets, we have taken meaningful cost reduction actions to mitigate bottom line impact. We adjusted operating costs to match production requirements and increased efficiencies, including deactivating one of our Roto Molding facilities. As we drive targeted cost containment initiatives in our businesses that serve the RV and Marine industries, we continue to evaluate consolidating opportunities and decreasing capacity where needed, while retaining an appropriate level of reserved capacity to activate when market conditions improve.

We are continuing to invest in our people and processes for future growth, while also working to better align our manufacturing and SG&A costs to match current market conditions. Given the current macro challenges, we have elected to lower our revenue guidance for the full year; however, due to our demonstrated ability to deliver operational improvements, price increases and self-help measures, we believe our earnings capability will be resilient and we are maintaining our adjusted EPS guidance.

We continue to maintain a strong balance sheet, supported by consistent free cash generation. We also continue to develop and evaluate a strong pipeline of potential acquisition opportunities, while exercising discipline in evaluating those opportunities, including walking away when the economics aren’t right.”

McGaugh concluded “We have the right strategy and the right team to continue to execute and further transform Myers into a high-growth, world class organization while delivering significant value to our stakeholders.”

Second Quarter 2023 Financial Summary

Net sales were $208.5 million, a decrease of $24.7 million, or 10.6%, compared with $233.2 million for the second quarter of 2022. The decrease was the result of lower sales in the Material Handling segment, partially offset by higher sales in the Distribution segment largely from incremental sales of $9.3 million from the Mohawk Rubber acquisition. On an organic basis, the contribution from higher pricing in the Distribution segment was more than offset by lower volumes in both segments.

Gross profit decreased $6.3 million, or 8.4% to $68.4 million, as the contribution from lower raw material costs and the Mohawk Rubber acquisition was not enough to offset lower volumes. Gross margin expanded 80 basis points to 32.8% compared with 32.0% for the second quarter of 2022. Selling, general and administrative expenses were flat for the second quarter of 2023 compared to the same period last year. SG&A as a percentage of sales increased to 25.1%, compared with 22.4% in the same period last year. After removing the adjusting items, SG&A was down year over year by $1.7 million. SG&A also included $1.3 million of consulting expense that was used to increase and strengthen Myers capabilities as the company moves into the Horizon-2 strategy. Net income per diluted share was $0.29, compared with $0.43 for the second quarter of 2022. Adjusted earnings per diluted share were $0.35, compared with $0.45 for the second quarter of 2022.

Second Quarter 2023 Segment Results

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

Material Handling

Net sales for the Material Handling segment were $143.3 million, a decrease of $29.8 million, or 17.2%, compared with $173.1 million for the second quarter of 2022. Net sales decreased in the vehicle, industrial and consumer end markets, led by reduced demand for RV and marine products, as well as being impacted by the timing of food & beverage sales. Operating income decreased 11.4% to $24.8 million, compared with $28.0 million in the second quarter of 2022. Operating income margin improved to 17.3% compared with 16.2% for the second quarter of 2022. Adjusted EBITDA margin improved by 200 basis points, primarily attributed to self-help initiatives, partially dampened by a decrease in sales volume. Adjusted EBITDA decreased 8.2% to $29.9 million, compared with $32.5 million in the second quarter of 2022. Lower sales volume and pricing more than offset lower raw material costs and a favorable mix. SG&A expenses were lower year-over-year, primarily due to a decrease in legal fees and lower salaries.

Distribution

Net sales for the Distribution segment were $65.2 million, an increase of $5.1 million, or 8.5%, compared with $60.1 million for the second quarter of 2022. Excluding the incremental $9.3 million of net sales from the Mohawk Rubber acquisition, organic net sales decreased 6.9%. Operating income decreased $0.9 million to $3.4 million, compared with $4.3 million for the second quarter of 2022. Adjusted EBITDA decreased 3.7% to $4.7 million, compared with $4.9 million in the second quarter of 2022. The decrease in operating income and adjusted EBITDA was primarily due to an increase in product costs and higher SG&A expenses. The increase in SG&A expenses was primarily the result of the Mohawk Rubber acquisition and higher salaries. The Distribution segment’s operating income margin was 5.2% compared with 7.1% for the second quarter of 2022. The Distribution segment’s adjusted EBITDA margin was 7.2%, compared with 8.1% for the second quarter of 2022. The Distribution Segment continues to integrate the Mohawk Rubber acquisition and is implementing pricing actions to counter cost inflation and improve margin.

Balance Sheet & Cash Flow

As of June 30, 2023, the Company’s cash on hand totaled $30.7 million. Total debt as of June 30, 2023 was $88.2 million.

For the second quarter of 2023, cash flow provided by operations was $22.9 million and free cash flow was $16.7 million, compared with cash flow provided by operations of $27.0 million and free cash flow of $21.1 million for the second quarter of 2022. The decrease in cash flow was driven primarily by lower earnings. Capital expenditures for the second quarter of 2023 were $6.1 million, compared with $5.9 million for the second quarter of 2022.

2023 Outlook

Based on current exchange rates, market outlook, and business forecast, the Company revised its outlook for fiscal 2023, and currently forecasts:

• Net sales decline in the mid single digit range
• Net income per diluted share in the range of $1.41 to $1.73
• Maintain adjusted earnings per diluted share range of $1.55 to $1.85
• Capital expenditures to be in the range of $25 to $30 million
• Effective tax rate to approximate 25%

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

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Tuesday, August 3, 2023, at 8:30 a.m. EDT. The call is anticipated to last less than one hour and may be accessed using the following online participation registration link: https://www.netroadshow.com/events/login?show=95bfe4bb&confId=52763. Upon registering, each participant will be provided with call details and a registrant ID. Reminders will also be sent to registered participants via email. Alternatively, the conference call will be available via a live webcast. To access the live webcast or a replay, visit the Company’s website www.myersindustries.com and click on the Investor Relations tab. 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 Local) 1-929-458-6194 or (US Toll-Free) 1-866-813-9403.

Source: https://rvbusiness.com/myers-industries-announces-second-quarter-2023-results/