Myers Industries Reports 2014 Fourth Quarter and Full Year Results

Company completes strategic initiative to focus business;

Positioned for incremental success in 2015 as end markets improve

AKRON, Ohio--()--Myers Industries, Inc. (NYSE: MYE) today announced results for the fourth quarter and full year ended December 31, 2014.

Financial Highlights

  • Net sales increased 9.4% in the fourth quarter of 2014 and 6.7% for the full year of 2014, due mainly to the acquisition of Scepter
  • Income per diluted share from continuing operations as adjusted was $0.13 in the fourth quarter of 2014 and $0.60 for fiscal 2014, versus $0.15 and $0.75 for the comparable 2013 periods
  • Completed strategic initiative to focus the business through the sale of WEK Industries in June 2014, the sale of the Lawn and Garden business in February 2015 and the acquisition of Scepter in July 2014
  • Returned $70.6 million of cash to shareholders through dividends and repurchases of common stock in 2014

Summary

  Quarter Ended December 31,   Year Ended December 31,
2014   2013(1)  

% Increase
(Decrease)

2014   2013(1)  

% Increase
(Decrease)

(Dollars in thousands, except per share data)
 
Net sales $ 158,271 $ 144,724 9.4 % $ 623,649 $ 584,733 6.7 %
Gross profit $ 39,151 $ 39,943 (2.0 )% $ 163,715 $ 169,554 (3.4 )%
Gross profit margin 24.7 % 27.6 % 26.3 % 29.0 %
Income from continuing operations before income taxes $ 4,999 $ 8,096 (38.3 )% $ 16,602 $ 39,785 (58.3 )%
Income from continuing operations:
Income $ 3,799 $ 6,382 (40.5 )% $ 11,271 $ 26,442 (57.4 )%
Income per diluted share $ 0.12 $ 0.19 (36.8 )% $ 0.34 $ 0.77 (55.8 )%
 
Income from continuing operations before income taxes as adjusted(2) $ 6,030 $ 8,172 (26.2 )% $ 28,722 $ 40,219 (28.6 )%
Income from continuing operations as adjusted(2):
Income $ 4,101 $ 5,230 (21.6 )% $ 19,531 $ 25,740 (24.1 )%
Income per diluted share $ 0.13 $ 0.15 (13.3 )% $ 0.60 $ 0.75 (20.0 )%
 

1. Historical information has been adjusted to reflect discontinued operations presentation.

2. Details regarding the pre-tax adjusted charges are provided on the Reconciliations of Non-GAAP Financial Measures included in this release.

 

President and Chief Executive Officer John C. Orr commented, "As we anticipated, sales in the fourth quarter improved over the previous year's fourth quarter. However, weakened demand for our Material Handling Segment's agricultural and food processing products, together with a challenging Brazilian economy, led to lower profitability versus last year. We continued to streamline our business portfolio in 2014 to realize our strategic goal to strengthen our leadership position in the Material Handling Segment, while preserving a strong market position in our Distribution Segment. To accomplish this, we sold WEK Industries and acquired Scepter Products. The Scepter acquisition continued our strategic growth and profitability improvement plan for the Material Handling Segment. Scepter provides an expansion of product assortment, added global reach and has already expanded our customer base through cross-selling opportunities. In February of this year, we completed the previously announced sale of the Lawn and Garden business for $110 million. In 2014, we continued our balanced approach to capital allocation. We generated $28 million of free cash flow and returned $70.6 million of cash to shareholders through dividends and repurchases of common stock. The result of all of these transactions is a streamlined, more focused Myers Industries with strong cash generating business segments that we believe will continue to generate sustainable returns for shareholders."

Segment Results

The results below are as adjusted and exclude restructuring and other unusual pre-tax charges as detailed on the Reconciliation of Non-GAAP Financial Measures included in this release.

Net sales in the Material Handling Segment for the fourth quarter of 2014 were $110.1 million compared to $95.6 million for the fourth quarter of 2013. Incremental sales from the Scepter acquisition were offset by sales declines in the agriculture and food processing end markets as compared to the fourth quarter of 2013. Material Handling's adjusted income before taxes was $11.5 million for the fourth quarter of 2014 compared to $10.5 million for the fourth quarter of 2013. Although adjusted income before taxes increased year-over-year, it was adversely impacted by the decline in sales of agricultural and food processing products and a change in product mix that resulted from those declines. Reductions in labor costs, overhead and selling, general and administrative expenses partially offset those impacts.

The Material Handling Segment's net sales for the full year of 2014 were $432.1 million compared to $380.6 million for the full year of 2013. The increase in net sales as compared to last year was due mostly to incremental sales from the Scepter acquisition. Strong sales in the marine, recreational vehicle and industrial end markets also contributed to the increase in net sales year-over-year, but were partially offset by sales decreases in the agriculture, distribution and food processing end markets. Material Handling's adjusted income before taxes was $44.9 million for the full year of 2014 compared to $47.6 million for the full year of 2013. The decline in adjusted income before taxes year-over-year was due to a change in both customer and product mix.

Net sales in the Distribution Segment for the fourth quarter of 2014 were $48.3 million compared to $49.2 million for the fourth quarter of 2013. Organic growth in sales of supplies and equipment in the U.S. were more than offset by lower sales in Canada due to the closure of the Canadian branches in the first quarter of 2014, and a decline in custom sales as compared to the fourth quarter of last year. Distribution's adjusted income before taxes for the fourth quarter of 2014 was $3.1 million compared to $4.2 million for the fourth quarter of 2013. The year-over-year decline in adjusted income before taxes resulted from a change in product mix which more than offset operational excellence initiatives that were executed during the quarter.

The Distribution Segment's net sales for the full year of 2014 were $191.9 million compared to $204.5 million for the full year of 2013. The decrease in sales compared to 2013 was due to a decline in custom sales and lower Canadian sales due to the closure of the Canadian branches in the first quarter of 2014. Distribution's adjusted income before taxes for the full year of 2014 was $16.8 million compared to $21.9 million for the full year of 2013. The decrease in adjusted income before taxes year-over-year was due mostly to the lower custom sales volumes, a change in product mix and higher freight costs, which were partially offset by lower general and administrative expenses and other cost reductions.

Other Financial Items

For the year ended December 31, 2014, cash flow provided by continuing operations was $52.1 million compared to $74.9 million for the year ended December 31, 2013, reflecting lower earnings and a one-time benefit that the Company realized in 2013 due to an improvement in accounts payable terms.

Capital expenditures totaled $24.2 million for the year ended December 31, 2014 and are forecasted to be approximately $25 to $30 million in 2015.

The Company purchased $54.9 million of common stock during the year ended December 31, 2014. Approximately 4.4 million shares were available for repurchase at December 31, 2014 under the Company's current board authorization.

Outlook

Early indicators from the first quarter of 2015 have shown a continuation of some of the challenges in the Material Handling segment that were experienced in the fourth quarter of 2014. However, for the remainder of 2015, the Company expects to see the benefit of increased sales, incremental profit improvement driven by last year’s strategic initiatives that focused on structural changes, cross-selling opportunities, new products and cost reduction measures across both operating segments. As a result, the Company expects full year 2015 sales and profits to exceed 2014's results.

The Company remains fully committed to its balanced approach to capital allocation, which may include a mix of capital investment, debt reduction, dividends and share repurchases.

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Wednesday, February 25, 2015 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. A live and archived 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 telephone 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) 877-660-6853 or (Int'l) 201-612-7415. The replay passcode is Conference ID #13601157.

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; 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 OPERATIONS (UNAUDITED)
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2014 AND 2013
(Dollars in thousands, except share data)
       
For the Quarter Ended For the Year Ended
December 31, 2014 December 31, 2013* December 31, 2014   December 31, 2013*
 
Net sales $ 158,271 $ 144,724 $ 623,649 $ 584,733
Cost of sales 119,120   104,781   459,934   415,179  
Gross profit 39,151 39,943 163,715 169,554
Selling, general and administrative expenses 31,505   30,625   138,578   125,238  
Operating income 7,646 9,318 25,137 44,316
Interest expense, net 2,647   1,222   8,535   4,531  
Income from continuing operations before income taxes 4,999 8,096 16,602 39,785
Income tax expense 1,200   1,714   5,331   13,343  
Income from continuing operations $ 3,799 $ 6,382 $ 11,271 $ 26,442
Loss from discontinued operations, net of income taxes $ (13,856 ) $ (3,063 ) $ (17,642 ) $ (440 )
Net income (loss) $ (10,057 ) $ 3,319   $ (6,371 ) $ 26,002  
 
Income per common share from continuing operations:
Basic $ 0.12 $ 0.19 $ 0.35 $ 0.78
Diluted $ 0.12 $ 0.19 $ 0.34 $ 0.77
Loss per common share from discontinued operations:
Basic $ (0.44 ) $ (0.09 ) $ (0.55 ) $ (0.01 )
Diluted $ (0.44 ) $ (0.09 ) $ (0.54 ) $ (0.01 )
Net income (loss) per common share:
Basic $ (0.32 ) $ 0.10 $ (0.20 ) 0.77
Diluted $ (0.32 ) $ 0.10 $ (0.19 ) 0.76
 
Weighted Average Common Shares Outstanding
Basic 31,366,016 33,656,673 32,232,965 33,588,720
Diluted 31,733,955 34,204,594 32,704,012 34,043,425
 

*Historical information has been adjusted to reflect discontinued operations presentation.

 
 
MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)
       
Quarter Ended December 31, Year Ended December 31,
2014   2013* % Change 2014   2013* % Change
 
Net Sales from Continuing Operations
Material Handling $ 110,054 $ 95,618 15.1 % $ 432,054 $ 380,605 13.5 %
Distribution 48,293 49,176 (1.8 )% 191,873 204,460 (6.2 )%
Inter-company Sales (76 )   (70 ) --- (278 )   (332 ) ---
Total $ 158,271     $ 144,724   9.4 % $ 623,649     $ 584,733   6.7 %
 
 
Income from Continuing
Operations Before Income Taxes
Material Handling $ 10,543 $ 10,503 0.4 % $ 34,422 $ 47,428 (27.4 )%
Distribution 3,108 4,110 (24.4 )% 15,824 21,727 (27.2 )%
Corporate (8,652 )   (6,517 ) --- (33,644 )   (29,370 ) ---
Total $ 4,999     $ 8,096   (38.3 )% $ 16,602     $ 39,785   (58.3 )%
 

*Historical information has been adjusted to reflect discontinued operations presentation and the segment realignment completed in June 2014.

 
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
INCOME (LOSS) BEFORE TAXES BY SEGMENT (UNAUDITED)
(Dollars in millions, except per share data)
       
Quarter Ended Year Ended
December 31 December 31
2014 2013 2014 2013

Material Handling

Income from continuing operations before income taxes as reported $ 10.5 $ 10.5 $ 34.4 $ 47.4
Patent infringement lawsuit 0.2 3.3
Transaction costs - Scepter 2.9
Inventory step-up - Scepter acquisition 2.3
Restructuring expenses and other adjustments 0.8     2.0   0.2  
Income from continuing operations before income taxes as adjusted 11.5 10.5 44.9 47.6
 

Distribution

Income from continuing operations before income taxes as reported 3.1 4.1 15.8 21.7
Restructuring expenses and other adjustments   0.1   1.0   0.2  
Income from continuing operations before income taxes as adjusted 3.1 4.2 16.8 21.9
 
Corporate and interest expense as reported (8.7 ) (6.5 ) (33.7 ) (29.4 )
Transaction costs     0.7    
Corporate and interest expense as adjusted (8.7 ) (6.5 ) (33.0 ) (29.4 )
 

Continuing Operations

Income from continuing operations before income taxes as reported 5.0 8.1 16.6 39.8
Restructuring expenses and other adjustments 1.0 0.1 8.5 0.4
Transaction costs     3.6    
Income from continuing operations before income taxes as adjusted 6.0 8.2 28.7 40.2
Income taxes* 1.9   3.0   9.2   14.5  
Income from continuing operations as adjusted $ 4.1   $ 5.2   $ 19.5   $ 25.7  
 

Discontinued Operations

Loss from discontinued operations before income taxes as reported $ (20.9 ) $ (3.8 ) $ (27.1 ) $ (0.4 )
Restructuring expenses and other adjustments 0.4 9.1 13.9 13.3
Impairment charge 18.9 18.9
Gain on sale (0.9 ) 0.2   (4.7 ) 0.2  
Income (loss) from discontinued operations before income taxes as adjusted (2.5 ) 5.5 1.0 13.1
Income taxes* (0.8 ) 2.0   0.3   4.7  
Income (loss) from discontinued operations as adjusted $ (1.7 ) $ 3.5   $ 0.7   $ 8.4  
 

Consolidated

Net Income as adjusted $ 2.4   $ 8.7   $ 20.2   $ 34.1  
 
Adjusted earnings per diluted share from continuing operations $ 0.13 $ 0.15 $ 0.60 $ 0.75
Adjusted earnings per diluted share from discontinued operations $ (0.05 ) $ 0.10 $ 0.02 $ 0.25
 
*Income taxes calculated using the normalized effective tax rate for each year.
 

Note: Historical information has been adjusted to reflect discontinued operations presentation and the segment realignment completed in June 2014. Also, numbers 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, 2014 December 31, 2013*
Assets
Current Assets
Cash $ 4,676 $ 6,539
Accounts receivable, net 90,785 74,932
Inventories 64,743 53,123
Assets held for sale 117,775 92,760
Other 9,070   7,556
Total Current Assets 287,049 234,910

Assets held for sale

67,808
Other Assets 142,731 68,289
Property, Plant, & Equipment, Net 138,228   98,450
Total Assets $

568,008

  $ 469,457
 
 
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable $ 77,989 $ 68,897
Accrued expenses 49,477 41,642
Liabilities held for sale 27,122   40,044
Total Current Liabilities 154,588 150,583
Long-term debt, net 236,429 44,347
Liabilities held for sale 7,825
Other liabilities 13,839 14,687
Deferred income taxes 14,281 16,508
Total Shareholders' Equity 148,871   235,507
Total Liabilities & Shareholders' Equity $ 568,008   $ 469,457
 

*Historical information has been adjusted to reflect discontinued operations presentation.

 
 
MYERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013
(Dollars in thousands)
  December 31, 2014   December 31, 2013*
Cash Flows From Operating Activities
Net income (loss) $ (6,371 ) $ 26,002
Loss from discontinued operations, net of income tax (17,642 ) (440 )
Income from continuing operations $ 11,271 $ 26,442
 
Items not affecting use of cash
Depreciation 23,775 20,386
Amortization 6,999 3,142
Non-cash stock compensation 3,115 2,557
Provision for loss on accounts receivable 406 457
Deferred taxes (2,663 ) (4,416 )
Other long-term liabilities 744 709
(Gain) loss from asset disposition (44 ) 598
Tax benefit from options (679 ) (390 )
Other 200 202
Payments on performance based compensation (1,293 ) (1,719 )
Cash flow provided by (used for) working capital, net of acquisitions:
Accounts receivable 2,574 (1,964 )
Inventories 801 3,011
Prepaid expenses (1,468 ) (840 )
Accounts payable and accrued expenses 8,382   26,758  
Net cash provided by operating activities - continuing operations 52,120 74,933
Net cash (used for) provided by operating activities - discontinued operations (13,062 ) 21,135  
Net cash provided by operating activities 39,058   96,068  
 
Cash Flows From Investing Activities
Capital expenditures (24,170 ) (20,709 )
Acquisition of business, net of cash acquired (156,620 ) (600 )
Proceeds from sale of property, plant and equipment 566
Other   (273 )
Net cash used for investing activities - continuing operations (180,224 ) (21,582 )
Net cash provided by (used for) investing activities - discontinued operations 11,626   (8,359 )
Net cash used for investing activities (168,598 ) (29,941 )
 
Cash Flows From Financing Activities
Proceeds from long-term debt 89,000 11,000
Net borrowing (repayments) on credit facility 106,493 (57,175 )
Cash dividends paid (15,707 ) (9,103 )
Proceeds from issuance of common stock 2,926 5,805
Tax benefit from options 679 390
Repurchase of common stock (54,897 ) (8,096 )
Shares withheld for employee taxes on equity awards (1,083 ) (684 )
Deferred financing costs (547 ) (608 )
Net cash provided by (used for) financing activities - continuing operations 126,864 (58,471 )
Net cash used for financing activities - discontinued operations   (2,317 )
Net cash provided by (used for) financing activities 126,864   (60,788 )
 
Foreign exchange rate effect on cash 813   (2,748 )
 
Net (decrease) increase in cash (1,863 ) 2,591
Cash at January 1 6,539   3,948  
Cash at December 31 $ 4,676   $ 6,539  
 

*Historical information has been adjusted to reflect discontinued operations presentation.

 

Contacts

Myers Industries, Inc.
Gregg Branning, 330-761-6303
Senior Vice President & Chief Financial Officer
or
Monica Vinay, 330-761-6212
Vice President, Investor Relations & Treasurer

Release Summary

Myers Industries Reports 2014 Fourth Quarter and Full Year Results

Contacts

Myers Industries, Inc.
Gregg Branning, 330-761-6303
Senior Vice President & Chief Financial Officer
or
Monica Vinay, 330-761-6212
Vice President, Investor Relations & Treasurer