Myers Industries Reports 2016 Second Quarter Results

GAAP EPS of $0.19; Adjusted EPS of $0.21
Company Maintained Gross Margin despite Volume and Revenue Declines

AKRON, Ohio--()--Myers Industries, Inc. (NYSE: MYE) today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Business Highlights

  • Net sales decreased 12% (or 11% organic) compared to the second quarter of 2015
  • Gross profit margin 30.9%, compared to 30.8% for the second quarter of 2015
  • GAAP income per diluted share from continuing operations $0.19, compared to $0.35 for the second quarter of 2015
  • Adjusted income per diluted share from continuing operations $0.21, compared to $0.30 for the second quarter of 2015

President and Chief Executive Officer Dave Banyard commented, “A weakened environment for capital spending in some of our key end markets contributed to the shortfall in sales in both the Material Handling and Distribution segments during the second quarter. Based on these results and our current indicators, we now expect full-year revenue to be down mid-to-high single digits.”

Banyard continued, “Despite the lower sales volume, we delivered solid margins and concurrently made progress on our strategic plans during the quarter. I am pleased with the extensive strategic marketing work we completed and the key initiatives we established for each of our businesses. In light of the current market environment, we are accelerating certain cost actions within those initiatives and expect to provide a more comprehensive update of our long-term strategy later this year.”

  Quarter Ended June 30,    

Six Months Ended June 30,

2016   2015  

% Increase
(Decrease)

2016   2015  

% Increase
(Decrease)

(Dollars in thousands, except per share data)
Net sales $ 144,117 $ 164,335 (12.3 )% $ 295,322 $ 320,683 (7.9 )%
Gross profit $ 44,536 $ 50,581 (12.0 )% $ 92,707 $ 96,338 (3.8 )%
Gross profit margin 30.9 % 30.8 % 31.4 % 30.0 %
Operating income $ 11,166 $ 19,742 (43.4 )% $ 12,295 $ 26,458 (53.5 )%
Income from continuing operations:
Income $ 5,684 $ 10,925 (48.0 )% $ 2,348 $ 13,547 (82.7 )%
Income per diluted share $ 0.19 $ 0.35 (45.7 )% $ 0.08 $ 0.43 (81.4 )%
 
Operating income as adjusted(1) $ 11,710 $ 17,181 (31.8 )% $ 23,395 $ 25,847 (9.5 )%
Income from continuing operations as adjusted(1):
Income $

6,180

$

9,461

(34.7

)% $

12,367

$

13,296

(7.0

)%
Income per diluted share $ 0.21 $ 0.30 (30.0 )% $ 0.41 $ 0.42 (2.4 )%
 
(1)  

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

 

Segment Results

Net sales in the Material Handling Segment for the second quarter of 2016 were down 13% (or 12% organic) vs. the second quarter of 2015 due primarily to declines in the food and beverage markets. The segment’s GAAP operating income was $14.3 million for the second quarter of 2016 compared to $20.8 million for the second quarter of 2015. The segment’s adjusted operating income was $13.3 million for the second quarter of 2016 compared to $18.3 million for the second quarter of 2015.

Net sales in the Distribution Segment for the second quarter of 2016 were down 11% vs. the second quarter of 2015. The decline was primarily the result of lower equipment sales. The segment continues to implement its new sales model which is designed to broaden market coverage and improve the overall sales process. The segment’s operating income was $4.0 million for the second quarter of 2016 compared to $4.5 million for the second quarter of 2015.

2016 Outlook

The Company now anticipates that total revenue will be down mid-to-high single digits on a constant currency basis in fiscal year 2016 as the headwinds from a weak capital spending environment continue to impact sales performance.

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Wednesday, August 3, 2016 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 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) 877-660-6853 or (Int'l) 201-612-7415. The replay passcode is Conference ID #13641625.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted EPS, adjusted income per diluted share from continuing operations and adjusted operating income are non-GAAP financial measures and are intended to serve as a complement 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 an international manufacturer of polymer products for industrial, agricultural, automotive, commercial and consumer markets. The Company is also the largest 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; 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 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.

MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except share data)

     
Quarter Ended Six Months Ended
June 30, 2016   June 30, 2015 June 30, 2016   June 30, 2015
Net sales $ 144,117 $ 164,335 $ 295,322 $ 320,683
Cost of sales   99,581   113,754   202,615   224,345
Gross profit 44,536 50,581 92,707 96,338
Selling, general and administrative expenses 32,041 30,839 70,538 69,880
Impairment charges   1,329   -   9,874   -
Operating income 11,166 19,742 12,295 26,458
Interest expense, net   2,053   2,467   4,072   5,169
Income from continuing operations before income taxes 9,113 17,275 8,223 21,289
Income tax expense   3,429   6,350   5,875   7,742
Income from continuing operations 5,684 10,925 2,348 13,547
Income (loss) from discontinued operations, net of income taxes   (190 )   494   (247 )   3,111
Net income $ 5,494 $ 11,419 $ 2,101 $ 16,658
Income per common share from continuing operations:
Basic $ 0.19 $ 0.35 $ 0.08 $ 0.44
Diluted $ 0.19 $ 0.35 $ 0.08 $ 0.43
Income (loss) per common share from discontinued operations:
Basic $ (0.01 ) $ 0.02 $ (0.01 ) $ 0.10
Diluted $ (0.01 ) $ 0.02 $ (0.01 ) $ 0.10
Net income per common share:
Basic $ 0.18 $ 0.37 $ 0.07 $ 0.54
Diluted $ 0.18 $ 0.37 $ 0.07 $ 0.53
Weighted average common shares outstanding:
Basic 29,623,177 30,968,269 29,586,708 31,004,779
Diluted 30,089,574 31,284,915 30,012,839 31,342,103
 

MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)

     
Quarter Ended June 30, Six Months Ended June 30,
2016   2015   % Change 2016   2015   % Change
Net Sales
Material Handling $ 100,907 $ 115,774 (12.8 )% $ 209,931 $ 228,055 (7.9 )%
Distribution 43,234 48,592 (11.0 )% 85,455 92,697 (7.8 )%
Inter-company Sales   (24 )   (31 ) -   (64 )   (69 ) -
Total $ 144,117 $ 164,335 (12.3 )% $ 295,322 $ 320,683 (7.9 )%
 
Operating Income
Material Handling $ 14,333 $ 20,846 (31.2 )% $ 21,774 $ 34,253 (36.4 )%
Distribution 3,966 4,508 (12.0 )% 6,502 7,999 (18.7 )%
Corporate   (7,133 )   (5,612 ) -   (15,981 )   (15,794 ) -
Total $ 11,166 $ 19,742 (43.4 )% $ 12,295 $ 26,458 (53.5 )%
 

MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
OPERATING INCOME BY SEGMENT (UNAUDITED)
(Dollars in thousands, except per share data)

     
Quarter Ended June 30, Six Months Ended June 30,
2016   2015 2016   2015

Material Handling

Operating income as reported $ 14,333 $ 20,846 $ 21,774 $ 34,253
Litigation reserve reversal - (3,010 ) - (3,010 )
Asset impairments 1,329 - 9,874 -
Reduction to contingent liability (2,335 ) (2,335 )
Restructuring expenses and other adjustments   -   449   -   540
Operating income as adjusted 13,327 18,285 29,313 31,783
 

Distribution

Operating income as reported 3,966 4,508 6,502 7,999
Restructuring expenses and other adjustments   -   -   -   53
Operating income as adjusted 3,966 4,508 6,502 8,052
 

Corporate Expense

Corporate expense as reported (7,133 ) (5,612 ) (15,981 ) (15,794 )
CFO severance related costs - - 2,011 -
Environmental reserve 1,550 - 1,550 -
Professional, legal fees and other adjustments   -   -   -   1,806
Corporate expense as adjusted (5,583 ) (5,612 ) (12,420 ) (13,988 )
 

Continuing Operations

Operating income as reported 11,166 19,742 12,295 26,458
Total of all adjustments above   544   (2,561 )   11,100   (611 )
Operating income as adjusted 11,710 17,181 23,395 25,847
Interest expense, net   (2,053 )   (2,467 )   (4,072 )   (5,169 )
Income before taxes as adjusted 9,657 14,714 19,323 20,678
Income tax expense*   (3,477 )   (5,253 )   (6,956 )   (7,382 )
Income from continuing operations as adjusted $ 6,180 $ 9,461 $ 12,367 $ 13,296
 
Adjusted earnings per diluted share from continuing operations $ 0.21 $ 0.30 $ 0.41 $ 0.42
 
*Income taxes are calculated using the normalized effective tax rate for each year. The normalized rate used above is 36%.
 

Note on Reconciliation of Income and Earnings Data: Income from continuing operations as adjusted and adjusted earnings per diluted share from continuing operations are non-GAAP financial measures 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)

     
June 30, 2016 December 31, 2015
Assets
Current Assets
Cash $ 6,499 $ 7,344
Restricted cash 8,627 8,627
Accounts receivable, net 77,677 77,633
Inventories 55,698 54,738
Other   3,474   5,966
Total Current Assets 151,975 154,308
Other Assets 133,974 143,710
Property, Plant, & Equipment, Net   124,355   130,773
Total Assets $ 410,304 $ 428,791
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable $ 41,266 $ 71,310
Accrued expenses   31,851   45,502
Total Current Liabilities 73,117 116,812
Long-term debt, net 217,440 191,881
Other liabilities 9,401 12,354
Deferred income taxes 9,476 10,041
Total Shareholders' Equity   100,870   97,703
Total Liabilities & Shareholders' Equity $ 410,304 $ 428,791
 

MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)

 
Six Months Ended June 30,
2016   2015
Cash Flows From Operating Activities
Net income $ 2,101 $ 16,658
Income (loss) from discontinued operations, net of income taxes   (247 )   3,111
Income from continuing operations 2,348 13,547
Adjustments to reconcile income from continuing operations to net cash provided by (used for) operating activities
Depreciation 12,283 13,290
Amortization 4,981 5,279
Non-cash stock-based compensation expense 2,064 1,638
Deferred taxes (1,354 ) (1,673 )
Excess tax deficit (benefit) from stock-based compensation 5 (215 )
Impairment charges 9,874
Other (273 ) 91
Payments on performance based compensation (1,794 ) (1,332 )
Accrued interest income on note receivable (628 )
Other long-term liabilities (726 ) 2,497
Cash flows provided by (used for) working capital
Accounts receivable 1,623 (12,835 )
Inventories (12 ) (4,020 )
Prepaid expenses and other assets 2,475 2,511
Accounts payable and accrued expenses   (33,938 )   (21,747 )
Net cash provided by (used for) operating activities - continuing operations (3,072 ) (2,969 )
Net cash provided by (used for) operating activities - discontinued operations     (11,672 )
Net cash provided by (used for) operating activities   (3,072 )   (14,641 )
Cash Flows From Investing Activities
Capital expenditures (10,565 ) (9,381 )
Proceeds from sale of property, plant and equipment 178 36
Proceeds (payments) related to sale of business   (4,034 )   69,787
Net cash provided by (used for) investing activities - continuing operations (14,421 ) 60,442
Net cash provided by (used for) investing activities - discontinued operations     (581 )
Net cash provided by (used for) investing activities   (14,421 )   59,861
Cash Flows From Financing Activities
Net borrowing (repayments) on credit facility 23,838 (31,548 )
Cash dividends paid (8,112 ) (8,367 )
Proceeds from issuance of common stock 610 1,515
Excess tax (deficit) benefit from stock-based compensation (5 ) 215
Repurchase of common stock (6,577 )
Shares withheld for employee taxes on equity awards   (617 )   (975 )
Net cash provided by (used for) financing activities - continuing operations 15,714 (45,737 )
Net cash provided by (used for) financing activities - discontinued operations    
Net cash provided by (used for) financing activities   15,714   (45,737 )
Foreign exchange rate effect on cash   934   (272 )
Net increase (decrease) in cash (845 ) (789 )
Cash at January 1   7,344   4,676
Cash at June 30 $ 6,499 $ 3,887

Contacts

Myers Industries, Inc.
Monica Vinay, 330-761-6212
Vice President, Investor Relations & Treasurer

Release Summary

Myers Industries, Inc. (NYSE:MYE) today announced results for second quarter ended June 30, 2016.

$Cashtags

Contacts

Myers Industries, Inc.
Monica Vinay, 330-761-6212
Vice President, Investor Relations & Treasurer