Myers Industries Inc. announced results for the third quarter ended Sept. 30, 2017.
The company reported net sales of $144.1 million, compared to $132.7 million in the third quarter of 2016. Gross profit margin increased 120 basis points to 28.3 percent as compared to the prior year quarter, primarily due to the higher sales volume and favorable sales mix, partially offset by restructuring expenses and higher material costs in the Material Handling Segment. Excluding restructuring expenses, gross profit margin increased 250 basis points to 29.6 percent as compared to the prior year quarter. Selling, general and administrative expenses increased by $3.8 million to $36.4 million, in the third quarter of 2017, with the increase in expenses primarily attributable to higher incentive compensation costs.
President and CEO Dave Banyard commented, “We are very pleased with the progress we are making toward transforming Myers Industries. Our third-quarter results continue to demonstrate the improved cash flow generation potential of our business. Strong revenue growth in the quarter was driven by improved demand in our food and beverage end market, as well as increased sales of fuel cans in our consumer market associated with the recent hurricane season. Lean initiatives implemented over the prior year resulted in operating margin expansion and stronger cash flow during the quarter, and we are pleased with our free cash flow of $31 million year-to-date as compared to $7.1 million last year. We will continue to pursue opportunities to grow our business in targeted niche markets, and we are well positioned for sustained improvements in long-term financial and operating performance.”
Segment Results
Net sales in the Material Handling Segment increased 15.8 percent (or 15.1 percent excluding currency fluctuation) as compared to the third quarter of 2016. The increase in net sales was primarily due to increased volume in the company’s food and beverage and consumer end markets. GAAP operating income was $10.3 million compared to $4.4 million in the third quarter of 2016. GAAP operating income in the third quarter of 2017 included a gain on the sale of an asset of $2.8 million and restructuring and related charges of $2.3 million. Adjusted operating income was $9.9 million compared to $4.7 million in the third quarter of 2016. The increase in adjusted operating income was primarily the result of higher sales volumes, price, and a favorable sales mix, partially offset by higher material and compensation costs.
Net sales in the Distribution Segment declined 6.5 percent as compared to the third quarter of 2016. The decrease in net sales was primarily the result of the company’s planned exit from a low-margin custom product in the Patch Rubber business. Net sales in the Myers Tire Supply business were down 1.2 percent compared to prior year as the organization continues to improve sales force effectiveness. Operating income was $3.2 million compared to $3.3 million in the third quarter of 2016.
2017 Outlook
The company has revised its fiscal year 2017 outlook. The company now anticipates that total revenue will be in the low single digits on a constant currency basis in 2017 as compared to the prior year due to continued strength in the food and beverage and consumer end markets. This compares to the company’s previous expectations for flat sales compared to the prior year. Capital expenditures are now expected to be in the range of $7 million to $9 million, net interest expense in the range of $7 million to $8 million, depreciation and amortization in the range of $32 million to $34 million, and an effective tax rate (normalized) of approximately 36 percent.
