AKRON, Ohio--()--Myers Industries, Inc. (NYSE: MYE) today announced results for the full year and fourth quarter ended December 31, 2012.
“As part of the ongoing success of our Innovation initiative, we introduced more than 40 new products and services in 2012 which will further help to drive top-end growth in 2013”
Net sales for the full year of 2012 were $791.2 million compared with $755.7 million for the full year of 2011. Strong sales performance in the Engineered Products and Material Handling Segments more than offset sales decreases in the Distribution and Lawn & Garden Segments. Gross margin for the year expanded to 27.2% compared to 26.2% in 2011.
Net income for the full year of 2012 was $30.0 million, or $0.88 per diluted share, compared to net income of $24.5 million, or $0.71 per diluted share, for the full year of 2011. Income for the full year of 2012 included approximately $3.7 million of special pre-tax adjusted items while income for the full year of 2011 included approximately $4.6 million of special pre-tax adjusted items. Details regarding the special pre-tax adjusted items for both years are provided on the Reconciliation of Non-GAAP Financial Measures included in this release. Income in 2011 also included net favorable tax adjustments of approximately $3.8 million for discrete items. Earnings per diluted share as adjusted for the special items and the net favorable tax adjustments were $0.94 for the full year of 2012 compared to $0.67 for the full year of 2011.
Net sales in the fourth quarter were $214.0 million compared with $192.5 million in the fourth quarter of 2011. A very strong sales performance in the Material Handling Segment more than offset sales decreases in all other segments. Gross margin was 26.7% in the fourth quarter of 2012 compared to 27.0% in the fourth quarter of 2011. The gross margin declined year-over-year as a result of a change in sales mix across the business segments year-over-year.
Net income in the fourth quarter of 2012 was $8.5 million, or $0.25 per diluted share, compared to net income of $5.9 million, or $0.18 per diluted share, in the fourth quarter of 2011. Income in the fourth quarter of 2012 included approximately $0.3 million of special pre-tax adjusted items while income in the fourth quarter of 2011 included approximately $1.4 million of special pre-tax adjusted items. Details regarding the special pre-tax adjusted items for both quarters are provided on the Reconciliation of Non-GAAP Financial Measures included in this release. Earnings per diluted share as adjusted for the special items were $0.26 in the fourth quarter of 2012 compared to $0.19 in the fourth quarter of 2011.
President and Chief Executive Officer John C. Orr said, "We are pleased with our performance in 2012, particularly the strong growth we had in earnings on moderate top-line growth. Our results continue to demonstrate the value creation impact of our Innovation and Operations Excellence programs. Additionally, our strong free cash flow generation and balance sheet enabled us to make two key acquisitions, Novel and Jamco, which were accretive. We also continued to return cash to shareholders through share repurchases and increased dividends."
The results below are as adjusted and exclude special pre-tax costs as detailed on the Reconciliation of Non-GAAP Financial Measures included in this release.
Net sales in the Material Handling Segment for the full year of 2012 were $286.0 million compared to $261.8 million for the full year of 2011. The acquisitions of Novel and Jamco combined with sales of new products were the main drivers behind the increase in sales year-over-year. Material Handling's adjusted income before taxes was $47.7 million for the full year of 2012 compared to $34.1 million for the full year of 2011. Lower manufacturing expenses resulting from the Company's Operations Excellence initiative and the sales increase resulted in the higher adjusted income before taxes year-over-year.
The Material Handling Segment's net sales in the fourth quarter of 2012 were $84.4 million compared to $57.0 million in the fourth quarter of 2011. Sales generated by a delay in shipments from earlier in the year to the fourth quarter combined with sales from the acquisitions of Novel and Jamco led to the 48% increase in sales year-over-year. Material Handling's adjusted income before taxes was $12.8 million in the fourth quarter of 2012 compared to $6.6 million in the fourth quarter of 2011. The increase in adjusted income before taxes was a result of the increased sales combined with improved productivity and lower manufacturing costs driven by our Operations Excellence programs during the quarter.
Net sales in the Lawn & Garden Segment for the full year of 2012 were $205.8 million compared to $217.1 million for the full year of 2011. Lawn & Garden's adjusted income before taxes for the full year of 2012 was $3.5 million compared to $4.6 million for the full year of 2011. By driving productivity improvements, material substitution cost savings and lower distribution costs, the segment was able to offset a portion of decline in income resulting from the lower sales.
The Lawn & Garden Segment's net sales in the fourth quarter of 2012 were $58.8 million compared to $62.3 million in the fourth quarter of 2011. Sales were lower in the quarter due to a shift in customer demand, to better match customers' growing season, from the fourth quarter of 2012 to the first quarter of 2013. Lawn & Garden's adjusted income before taxes was $3.8 million in the fourth quarter of 2012 compared to $3.7 million in the fourth quarter of 2011. The segment was able to offset the income lost from lower sales through improved productivity and raw material substitution cost savings.
Net sales in the Distribution Segment were $176.6 million for the full year of 2012 compared to $183.7 million for the full year of 2011. The decline in the replacement tire industry combined with lower equipment sales during part of the year led to the decrease in sales year-over-year. Distribution's adjusted income before taxes was $14.7 million for the full year of 2012 compared to $17.0 million for the full year of 2011. The lower sales volume drove the decrease in adjusted income before taxes.
The Distribution Segment's net sales were $44.7 million in the fourth quarter of 2012 compared to $47.2 million in the fourth quarter of 2011. A weaker market and a continued decline in the replacement tire industry led to the decrease in sales year-over-year. Distribution's adjusted income before taxes was $3.2 million in the fourth quarter of 2012 compared to $4.7 million in the fourth quarter of 2011. The lower sales volume resulted in a decrease in adjusted income before taxes year-over-year.
Net sales in the Engineered Products Segment were $141.7 million for the full year of 2012 compared to $116.2 million for the full year of 2011. Strong sales across all end markets which included a rebound in the transplant auto market generated the 22% increase in sales year-over-year. Engineered Products' adjusted income before taxes was $15.7 million for the full year of 2012 compared to $11.5 million for the full year of 2011. The increased sales during the year led to the higher adjusted income before taxes year-over-year.
The Engineered Products Segment's net sales were $30.1 million in the fourth quarter of 2012 compared to $31.1 million in the fourth quarter of 2011. A decline in sales of custom products was partially offset by sales increases in the RV and marine markets during the quarter. Engineered Products' adjusted income before taxes was $2.4 million in the fourth quarter of 2012 compared to $2.9 million in the fourth quarter of 2011. The decrease in sales during the quarter was the primary reason for the lower adjusted income before taxes year-over-year.
Other Financial Items
For 2012, the Company's free cash flow generation was $33.8 million. Capital expenditures totaled $27.0 million for the twelve months ended December 31, 2012 and are forecasted to be approximately $30 million to $35 million in 2013. At December 31, 2012, debt, net of cash, was $88.9 million compared to $67.2 million at December 31, 2011, reflecting the additional debt due to the acquisitions of Novel and Jamco. The Company's full year and Q4 2012 earnings reflect the acquisitions of Novel and Jamco and included transactional costs of $0.9 million.
Comments and Outlook
"As part of the ongoing success of our Innovation initiative, we introduced more than 40 new products and services in 2012 which will further help to drive top-end growth in 2013," Orr said. "While we expect continued weakness in the markets we serve, we also expect another year of performance improvement in 2013. The year is expected to start slowly partially due to investments in information technology infrastructure and other projects. However, after the first quarter, we expect our results to improve year-over-year. We are continuing to work on improving the performance and value of our Lawn and Garden Segment which has been generating returns that are below our cost of capital. We will continue to examine external opportunities for improvement, but a key part of our focus will be on an internal project, announced today, to reduce costs and increase productivity. We expect this project to yield $5 million of annual savings beginning in 2014."
Conference Call Details
The Company will host an earnings conference call and webcast for investors and analysts on Wednesday, February 13, 2013 at 10:00 a.m. ET. The call is anticipated to last approximately one hour and may be accessed at (877) 407-8033. Callers are asked to sign on at least five minutes in advance. The call will be available as a webcast through the Company's web site, 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 a telephone replay, callers should dial: (US) 877-660-6853 or (Int'l) 201-612-7415. The replay passcode is Conference ID # 408023.
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 wholesale 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: changes in the markets for the Company's business segments; changes in trends and demands in the markets in which the Company competes; unanticipated downturn in business relationships with customers or their purchases; competitive pressures on sales and pricing; raw material availability, increases in raw material costs, or other production costs; future economic and financial conditions in the United States and around the world; ability to weather the current economic downturn; 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; the Company's ability to execute the components of its Strategic Business Evolution process; 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 web site at http://www.sec.gov, and on the Company's Investor Relations section of its web site at http://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.
|MYERS INDUSTRIES, INC.|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011|
|(Dollars in thousands, except share data)|
|For the Quarter Ended||For the Twelve Months Ended|
|December 31,||December 31,||December 31,||December 31,|
|Cost of sales||156,818||140,653||575,907||557,385|
|Selling, general and administrative expenses||42,215||41,787||163,425||159,860|
|Interest expense, net||1,187||1,067||4,515||4,722|
|Income before income taxes||13,788||9,042||47,341||33,687|
|Income tax expense||5,267||3,127||17,379||9,182|
|Income per common share:|
|Weighted Average Common Shares Outstanding|
|MYERS INDUSTRIES, INC.|
|SALES AND EARNINGS BY SEGMENT (UNAUDITED)|
|(Dollars in thousands)|
|Fourth Quarter Ended December 31,||Twelve Months Ended December 31,|
|2012||2011||% Change||2012||2011||% Change|
|Lawn and Garden||58,806||62,329||(5.7||)%||205,814||217,140||(5.2||)%|
Income (Loss) Before Income Taxes
|Lawn and Garden||3,588||3,379||6.2||%||2,905||4,226||(31.3||)%|
|MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES|
|INCOME (LOSS) BEFORE TAXES BY SEGMENT (UNAUDITED)|
|(Dollars in millions)|
|Quarter Ended||Twelve Months Ended|
|December 31||December 31|
|Income before taxes as reported||$||12.6||$||6.6||$||47.5||$||34.1|
|Income before taxes as adjusted||12.8||6.6||47.7||34.1|
Lawn & Garden
|Income before taxes as reported||3.6||3.4||2.9||4.2|
|Income before taxes as reported||3.8||3.7||3.5||4.6|
|Income before taxes as reported||3.7||4.1||14.8||15.7|
|Gain on building sale||(0.5||)||(0.3||)||(0.8||)||(0.7||)|
|Income before taxes as adjusted||3.2||4.7||14.7||17.0|
|Income before taxes as reported||2.3||2.4||14.5||10.8|
|Income before taxes as adjusted||2.4||2.9||15.7||11.5|
Corporate and interest expense
|Income (loss) before taxes as reported||(8.4||)||(7.5||)||(32.4||)||(31.1||)|
|Severance and other||0.3||0.0||1.8||0.3|
|Income (loss) before taxes as adjusted||(8.1||)||(7.5||)||(30.6||)||(28.9||)|
|Income before taxes as reported||13.8||9.0||47.3||33.7|
|Restructuring expenses and other adjustments||0.3||1.4||3.7||4.6|
|Income before taxes as adjusted||14.1||10.4||51.0||38.3|
|Net income as adjusted||$||8.9||$||6.4||$||32.1||$||23.4|
|Adjusted earnings per share||0.26||0.19||0.94||0.67|
|Note: Numbers in the Corporate and interest expense section above may be rounded for presentation purposes.|
Note on Reconciliation of Income and Earnings Data: Income (loss) excluding the items mentioned above in the text of this release and in this reconciliation chart is a non-GAAP financial measure that Myers Industries, Inc. calculates according to the schedule above, using GAAP amounts from the unaudited Consolidated Financial Statements. The Company believes that the excluded items are not primarily related to core operational activities. The Company believes that income (loss) excluding items that are not primarily related to core operating activities is generally viewed as providing useful information regarding a company's operating profitability. Management uses income (loss) excluding these items as well as other financial measures in connection with its decision-making activities. Income (loss) excluding these items should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company's method for calculating income (loss) excluding these items may not be comparable to methods used by other companies.
|MYERS INDUSTRIES, INC.|
|CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)|
|(Dollars in thousands)|
|December 31,||December 31,|
|Accounts receivable, net||115,508||105,830|
|Total Current Assets||239,596||218,452|
|Property, Plant, & Equipment, Net||150,483||140,934|
|Liabilities & Shareholders' Equity|
|Current portion of long-term debt||—||305|
|Total Current Liabilities||114,477||110,656|
|Long-term debt, less current portion||92,814||73,725|
|Deferred income taxes||29,678||23,893|
|Total Shareholders' Equity||230,022||206,140|
|Total Liabilities & Shareholders' Equity||$||484,856||$||428,757|
|MYERS INDUSTRIES, INC.|
|CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)|
|FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011|
|(Dollars in thousands)|
|December 31,||December 31,|
|Cash Flows From Operating Activities|
|Items not affecting use of cash|
|Impairment charges and asset write-offs||—||1,249|
|Amortization of intangible assets||3,340||2,969|
|Non-cash stock compensation||2,708||2,595|
|(Recovery of) provision for loss on accounts receivable||(543||)||915|
|Other long-term liabilities||4,057||4,251|
|Gain on sale of property, plant and equipment||(1,085||)||(875||)|
|Payments for long-term incentive compensation||(333||)||—|
|Cash flow (used for) provided by working capital, net of acquisitions:|
|Accounts payable and accrued expenses||(1,222||)||3,000|
|Net cash provided by operating activities||60,752||64,172|
|Cash Flows From Investing Activities|
|Acquisition of business, net of cash acquired||(16,043||)||(1,100||)|
|Proceeds from sale of property, plant and equipment||3,086||1,089|
|Net cash used for investing activities||(39,984||)||(22,037||)|
|Cash Flows From Financing Activities|
|Repayment of long-term debt||(29,758||)||(305||)|
|Net borrowing on credit facility||17,700||(9,383||)|
|Cash dividends paid||(13,006||)||(9,523||)|
|Proceeds from issuance of common stock||3,122||751|
|Tax benefit from options||(253||)||—|
|Repurchase of common stock||(4,204||)||(20,946||)|
|Net cash used for financing activities||(26,399||)||(39,406||)|
|Foreign Exchange Rate Effect on Cash||2,778||(633||)|
|Net (decrease) increase in cash||(2,853||)||2,096|
|Cash at January 1||6,801||4,705|
|Cash at December 31||$||3,948||$||6,801|