AKRON, Ohio—Myers Industries, Inc. today announced results for the third quarter ended September 30, 2016.

Third Quarter 2016 Business Highlights

  • Net sales decreased 6.3% (or 6.7% organic) compared to the third quarter of 2015
  • Gross profit margin 27.1%, compared to 29.4% for the third quarter of 2015
  • GAAP income per diluted share from continuing operations of $0.01, compared to $0.02 for the third quarter of 2015
  • Adjusted income per diluted share from continuing operations of $0.04, compared to $0.09 for the third quarter of 2015

The Company reported third quarter net sales of $132.7 million, compared to $141.7 million for the third quarter of 2015. The reduction in sales was primarily the result of decreased capital spending in several of the Company’s key end markets and a decline in sales of retread products in the Distribution Segment. The gross profit margin decreased 230 basis points to 27.1% during the third quarter of 2016 due to operational inefficiencies resulting from lower sales volumes and an unfavorable product mix. Selling, general and administrative expenses were $32.9 million, compared to $39.1 million in the third quarter of 2015. Lower non-recurring compensation costs, reduced environmental expenses and other cost reductions led to the $6.2 million improvement.

President and Chief Executive Officer Dave Banyard commented, “Third quarter results were in line with our expectations as customers in both our Material Handling and Distribution segments continue to operate in a reduced capital spending environment. Despite lower sales, we delivered a strong quarter of free cash flow due primarily to process improvements in working capital management and a more disciplined approach to capital spending.”

Banyard continued, “We are maintaining our full-year 2016 outlook of sales declines in the mid-to-high single digits on a constant currency basis, and we expect to provide a preliminary outlook for 2017 in conjunction with our fourth-quarter results early next year. We believe that we have some meaningful opportunities to build upon an excellent product platform that provides safe and efficient solutions for a variety of niche applications and end-markets, and we are in the later stages of refining an enterprise strategy that will support these competitive strengths.”

  Quarter Ended September 30,   Nine Months Ended September 30,
    % Increase     % Increase
2016 2015 (Decrease) 2016 2015 (Decrease)
(Dollars in thousands, except per share data)
Net sales $ 132,676 $ 141,661 (6.3 )% $ 427,998 $ 462,344 (7.4 )%
Gross profit $ 35,918 $ 41,686 (13.8 )% $ 128,625 $ 138,024 (6.8 )%
Gross profit margin 27.1 % 29.4 % 30.1 % 29.9 %
Operating income $ 2,986 $ 2,578 15.8 % $ 15,281 $ 29,037 (47.4 )%
Income from continuing operations:
Income $ 424 $ 631 (32.8 )% $ 2,772 $ 14,178 (80.4 )%
Income per diluted share $ 0.01 $ 0.02 (50.0 )% $ 0.09 $ 0.45 (80.0 )%
 
Operating income as adjusted(1) $ 3,883 $ 5,895 (34.1 )% $ 27,278 $ 31,743 (14.1 )%
Income from continuing operations as adjusted(1):
Income $ 1,195 $ 2,679 (55.4 )% $ 13,563 $ 15,975 (15.1 )%
Income per diluted share $ 0.04 $ 0.09 (55.6 )% $ 0.45 $ 0.51 (11.8 )%

(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 third quarter of 2016 were down 2.8% (or 3.4% organic) vs. the third quarter of 2015 due primarily to declines in the food and beverage markets. The segment’s GAAP operating income was $4.4 million for the third quarter of 2016 compared to $7.4 million for the third quarter of 2015. The segment’s adjusted operating income was $4.7 million for the third quarter of 2016 compared to $8.6 million for the third quarter of 2015.

Net sales in the Distribution Segment for the third quarter of 2016 were down 13% vs. the third quarter of 2015. The decline was primarily due to lower sales of equipment and tire retread products. 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 $3.3 million for the third quarter of 2016 compared to $5.6 million for the third quarter of 2015. The segment’s adjusted operating income was $3.3 million for the third quarter of 2016 compared to $5.7 million for the third quarter of 2015.

2016 Outlook

The Company anticipates that total revenue will be down mid-to-high single digits on a constant currency basis for both the fourth quarter and full year of 2016 primarily due to a continued weak capital spending environment.

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Tuesday, November 8, 2016 at 10:00 a.m. ET. The call is anticipated to last approximately one hour and may be accessed at: (US) 866-393-4306 or (Int’l) 734-385-2616. 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) 855-859-2056 or (Int’l) 404-537-3406. The replay passcode is Conference ID: 6338568.

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 Nine Months Ended
September 30,       September 30, September 30,       September 30,
2016 2015 2016 2015
Net sales $ 132,676 $ 141,661 $ 427,998 $ 462,344
Cost of sales   96,758   99,975   299,373   324,320
Gross profit 35,918 41,686 128,625 138,024
Selling, general and administrative expenses 32,932 39,108 103,470 108,987
Impairment charges   -   -   9,874   -
Operating income 2,986 2,578 15,281 29,037
Interest expense, net   2,015   1,729   6,087   6,899
Income from continuing operations before income taxes 971 849 9,194 22,138
Income tax expense   547   218   6,422   7,960
Income from continuing operations 424 631 2,772 14,178
Income (loss) from discontinued operations, net of income taxes   (10 )   (298 )   (257 )   2,813
Net income $ 414 $ 333 $ 2,515 $ 16,991
Income per common share from continuing operations:
Basic $ 0.01 $ 0.02 $ 0.09 $ 0.46
Diluted $ 0.01 $ 0.02 $ 0.09 $ 0.45
Income (loss) per common share from discontinued operations:
Basic $ - $ (0.01 ) $ (0.01 ) $ 0.09
Diluted $ - $ (0.01 ) $ (0.01 ) $ 0.09
Net income per common share:
Basic $ 0.01 $ 0.01 $ 0.08 $ 0.55
Diluted $ 0.01 $ 0.01 $ 0.08 $ 0.54
Weighted average common shares outstanding:
Basic 29,849,005 30,674,604 29,682,798 30,873,594
Diluted 30,075,478 30,950,572 29,949,711 31,213,082
   
MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)
 
Quarter Ended September 30, Nine Months Ended September 30,
2016   2015   % Change 2016   2015   % Change
Net Sales
Material Handling $ 89,911 $ 92,479 (2.8 )% $ 299,842 $ 320,534 (6.5 )%
Distribution 42,793 49,212 (13.0 )% 128,248 141,909 (9.6 )%
Inter-company Sales   (28 )   (30 ) -   (92 )   (99 ) -
Total $ 132,676 $ 141,661 (6.3 )% $ 427,998 $ 462,344 (7.4 )%
 
Operating Income
Material Handling $ 4,378 $ 7,369 (40.6 )% $ 26,152 $ 41,622 (37.2 )%
Distribution 3,301 5,558 (40.6 )% 9,803 13,557 (27.7 )%
Corporate   (4,693 )   (10,349 ) -   (20,674 )   (26,142 ) -
Total $ 2,986 $ 2,578 15.8 % $ 15,281 $ 29,037 (47.4 )%
   
MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
OPERATING INCOME BY SEGMENT (UNAUDITED)
(Dollars in thousands, except per share data)
 
Quarter Ended Nine Months Ended
September 30, September 30,
2016   2015 2016   2015

Material Handling
Operating income as reported $ 4,378 $ 7,369 $ 26,152 $ 41,622
Litigation reserve reversal - - - (3,010 )
Asset impairments - -

9,874

-
Reduction to contingent liability - (2,335 )
Restructuring expenses and other adjustments   292   1,210  

292

 

  1,750
Operating income as adjusted 4,670 8,579 33,983 40,362
 

Distribution
Operating income as reported 3,301 5,558 9,803 13,557
Restructuring expenses and other adjustments   -   142   -   195
Operating income as adjusted 3,301 5,700 9,803 13,752
 

Corporate Expense
Corporate expense as reported (4,693 ) (10,349 ) (20,674 ) (26,142 )
CFO severance related costs - - 2,011 -
Environmental reserve 605 1,266 2,155 1,266
Professional, legal fees and other adjustments   -   699   -   2,505
Corporate expense as adjusted (4,088 ) (8,384 ) (16,508 ) (22,371 )
 

Continuing Operations
Operating income as reported 2,986 2,578 15,281 29,037
Total of all adjustments above   897   3,317   11,997   2,706
Operating income as adjusted 3,883 5,895 27,278 31,743
Interest expense, net   (2,015 )   (1,729 )   (6,087 )   (6,899 )
Income before taxes as adjusted 1,868 4,166 21,191 24,844
Income tax expense*   (673 )   (1,487 )   (7,628 )   (8,869 )
Income from continuing operations as adjusted $ 1,195 $ 2,679 $ 13,563 $ 15,975
 
Adjusted earnings per diluted share from continuing operations $ 0.04 $ 0.09 $ 0.45 $ 0.51

*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)
 
September 30, 2016 December 31, 2015
Assets
Current Assets
Cash $ 5,538 $ 7,344
Restricted cash 8,627 8,627
Accounts receivable, net 77,517 77,633
Inventories 48,584 54,738
Other   5,396   5,966
Total Current Assets 145,662 154,308
Other Assets 131,408 143,710
Property, Plant, & Equipment, Net   118,285   130,773
Total Assets $ 395,355 $ 428,791
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable $ 51,025 $ 71,310
Accrued expenses   29,120   45,502
Total Current Liabilities 80,145 116,812
Long-term debt, net 197,930 191,881
Other liabilities 9,372 12,354
Deferred income taxes 9,133 10,041
Total Shareholders' Equity   98,775   97,703
Total Liabilities & Shareholders' Equity $ 395,355 $ 428,791
 
MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
 
Nine Months Ended September 30,
2016   2015
Cash Flows From Operating Activities
Net income $ 2,515 $ 16,991
Income (loss) from discontinued operations, net of income taxes   (257 )   2,813
Income from continuing operations 2,772 14,178
Adjustments to reconcile income from continuing operations to net cash

provided by (used for) operating activities

Depreciation 18,465 19,216
Amortization 7,428 7,854
Non-cash stock-based compensation expense 2,804 3,989
Deferred taxes (1,985 ) 2,301
Excess tax benefit from stock-based compensation (139 ) (211 )
Impairment charges 9,874 —
Other 184 (463 )
Payments on performance based compensation (1,794 ) (1,318 )
Accrued interest income on note receivable (948 ) (750 )
Other long-term liabilities (431 ) 644
Cash flows provided by (used for) working capital
Accounts receivable 1,057 (5,603 )
Inventories 7,349 (271 )
Prepaid expenses and other assets 484 (168 )
Accounts payable and accrued expenses   (26,520 )   (32,260 )
Net cash provided by (used for) operating activities - continuing operations 18,600 7,138
Net cash provided by (used for) operating activities - discontinued operations   —   (11,330 )
Net cash provided by (used for) operating activities   18,600   (4,192 )
Cash Flows From Investing Activities
Capital expenditures (11,490 ) (17,669 )
Proceeds from sale of property, plant and equipment 194 145
Proceeds (payments) related to sale of business   (4,034 )   69,787
Net cash provided by (used for) investing activities - continuing operations (15,330 ) 52,263
Net cash provided by (used for) investing activities - discontinued operations   —   (581 )
Net cash provided by (used for) investing activities   (15,330 )   51,682
Cash Flows From Financing Activities
Net borrowing (repayments) on credit facility 4,440 (16,157 )
Cash dividends paid (12,143 ) (12,550 )
Proceeds from issuance of common stock 2,582 1,553
Excess tax benefit from stock-based compensation 139 211
Repurchase of common stock — (18,613 )
Shares withheld for employee taxes on equity awards   (925 )   (975 )
Net cash provided by (used for) financing activities - continuing operations (5,907 ) (46,531 )
Net cash provided by (used for) financing activities - discontinued operations   —   —
Net cash provided by (used for) financing activities   (5,907 )   (46,531 )
Foreign exchange rate effect on cash   831   (395 )
Net increase (decrease) in cash (1,806 ) 564
Cash at January 1   7,344   4,676
Cash at September 30 $ 5,538 $ 5,240

Contacts

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