Gross Margin Expansion Through Effective Cost Management

Reiterates Full Year Fiscal 2023 Revenue and Earnings Outlook

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 first quarter ended March 31, 2023.

First Quarter 2023 Financial Highlights

• Net sales of $215.7 million compared to $225.5 million in the prior year period
• Gross margin of 32.9%, up 100 basis points versus the prior year period
• GAAP net income per diluted share of $0.35 compared to $0.47 in the prior year period
• Adjusted earnings per diluted share of $0.38 compared to $0.50 in the prior year period
• Cash flow provided by operations was $25.8 million and free cash flow was $16.7 million

Myers Industries' President and CEO Mike McGaugh said, "We are pleased with our gross margin expansion and increased cash flow generation in the first quarter. These results demonstrate the strength of our ongoing self-help initiatives and cost savings measures, which are a cornerstone of Horizon 1 of our Strategy. Countering those great results, though, was continued and anticipated reduced demand for our products that serve the Recreational Vehicle end market and our products that are high quality, high dollar discretionary purchases for the Consumer. Inflationary trends are impacting overall consumption and performance in those two markets year-over-year. To help offset these demand headwinds, we are laser focused on pursuing growth and winning new business in our other end markets.

"In the Distribution segment, I continue to be optimistic about the strategic move of acquiring Mohawk Rubber; we are stronger together, we have more channel power, and we can serve our customers better than ever. As we continue to integrate Mohawk, I expect our Distribution segment to deliver breakthrough performance.”

McGaugh continued, "We are keenly focused on operational excellence, by way of the "Myers Business System" which serves as the foundation for sustainable and scalable improvements throughout our organization. The System is an integral part of our transformation into a world-class organization that generates significant value for all our stakeholders."

McGaugh concluded, “We believe our Strategy to drive commercial and operational excellence, our leading positions in the strong markets in which we play, and our culture of continuous improvement will serve as a solid defense against these near-term macroeconomic headwinds and will propel our long-term growth as we progress through our 3-horizon strategy."

First Quarter 2023 Financial Summary

Net sales were $215.7 million, a decrease of $9.7 million, or 4.3%, compared with $225.5 million for the first 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 $13.9 million from the Mohawk Rubber acquisition. On an organic basis, the contribution from higher pricing was more than offset by lower volume/mix.

Gross profit decreased $0.9 million, or 1.2% to $71.1 million, as the contribution from pricing actions, lower raw material costs and the Mohawk Rubber acquisition was not enough to offset lower volume and a change in sales mix. Gross margin expanded to 32.9% compared with 31.9% for the first quarter of 2022. Selling, general and administrative expenses increased $4.1 million, or 8.5% to $52.1 million due to the Mohawk Rubber acquisition and higher legal fees, which were primarily due to $1.4 million of success fees payable in conjunction with a favorable patent trial result. SG&A as a percentage of sales increased to 24.1%, compared with 21.3% in the same period last year. Net income per diluted share was $0.35, compared with $0.47 for the first quarter of 2022. Adjusted earnings per diluted share were $0.38, compared with $0.50 for the first quarter of 2022.

First 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 $152.6 million, a decrease of $24.0 million, or 13.6%, compared with $176.6 million for the first quarter of 2022. Net sales increases in the food and beverage end market were more than offset by decreases in the consumer, vehicle, and specific demand from industrial end markets. Operating income decreased 18.8% to $25.4 million, compared with $31.2 million in the first quarter of 2022. Adjusted EBITDA decreased 16.5% to $30.4 million, compared with $36.4 million in the first quarter of 2022. Lower sales volume and a change in sales mix more than offset lower raw material costs. SG&A expenses were higher year-over-year, primarily due to higher legal fees resulting from $1.4 million of success fees payable in conjunction with a patent infringement matter. The Material Handling segment's GAAP operating income margin was 16.6% compared with 17.7% for the first quarter of 2022. The Material Handling segment’s adjusted EBITDA margin was 19.9% compared with 20.6% for the first quarter of 2022.

Distribution

Net sales for the Distribution segment were $63.2 million, an increase of $14.3 million, or 29.3%, compared with $48.9 million for the first quarter of 2022. Excluding the incremental $13.9 million of net sales from the Mohawk Rubber acquisition, organic net sales increased 0.9%. Operating income decreased $1.1 million to $2.2 million, compared with $3.3 million for the first quarter of 2022. Adjusted EBITDA decreased 11.9% to $3.4 million, compared with $3.9 million in the first quarter of 2022. The decrease in operating income and adjusted EBITDA was due primarily to an unfavorable sales mix and higher freight costs. Additionally, SG&A was higher year-over-year. The increase in SG&A expenses was primarily the result of the Mohawk Rubber acquisition and higher labor costs at distribution centers. The Distribution segment's GAAP operating income margin was 3.5% compared with 6.8% for the first quarter of 2022. The Distribution segment’s adjusted EBITDA margin was 5.4%, compared with 7.9% for the first quarter of 2022. The Distribution Segment continues to integrate the Mohawk Rubber acquisition and is implementing price increases to offset cost inflation and expand margins.

Balance Sheet & Cash Flow

As of March 31, 2023, the Company’s cash on hand totaled $28.2 million. Total debt as of March 31, 2023 was $98.1 million.

For the first quarter of 2023, cash flow provided by operations was $25.8 million and free cash flow was $16.7 million, compared with cash flow provided by operations of $7.3 million and free cash flow of $2.2 million for the first quarter of 2022. The increase in cash flow was driven primarily by a decrease in working capital. Capital expenditures for the first quarter of 2023 were $9.1 million, compared with $5.1 million for the first quarter of 2022.

2023 Outlook

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

• Net sales growth in the low-to-mid single digit range
• Net income per diluted share in the range of $1.50 to $1.80; adjusted earnings per diluted share in the 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, May 4, 2023, at 8:00 a.m. EDT. The call is anticipated to last less than one hour and may be accessed using the following telephone numbers: toll free at 1-833-630-1956 or International at 1-412-317-1837. Participants should ask to be joined into the Myers Industries call. The live webcast of the conference call can be accessed at https://edge.media-server.com/mmc/p/tonzkk76 or from the Investor Relations section of the Company's website at www.myersindustries.com. Webcast attendees will be in a listen-only mode.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted operating income (loss), adjusted operating income margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA margin, adjusted net income, adjusted earnings per diluted share (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 sustainable plastic and metal 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 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 contains “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. Forward-looking statements can be identified by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” or variations of these words, or similar expressions. These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’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.

Specific factors that could cause such a difference on our business, financial position, results of operations and/or liquidity include, without limitation, 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; impacts from the novel coronavirus (“COVID-19”) pandemic; and other risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including without limitation, the risk factors disclosed in Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Given these factors, as well as other variables that may affect our operating results, readers should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or trends in future periods. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company expressly disclaims any obligation or intention to provide updates to the forward-looking statements and the estimates and assumptions associated with them.

M-INV

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005269/en/