Myers Industries Inc. has announced the results for the second quarter ended June 30, 2018.
The company reported a GAAP net income per diluted share from continuing operations of 26 cents, compared to 8 cents in the second quarter of 2017. Adjusted net income per diluted share from continuing operations of 27 cents, compared to 18 cents in the second quarter of 2017.
Net sales increased 3.9 percent (or 3.6 percent excluding currency fluctuation) compared to the second quarter of 2017. Gross profit margin of 34.1 percent compared to 28.3 percent in the second quarter of 2017. Generated cash from continuing operations of $14.4 million and free cash flow of $13.3 million. Raised net proceeds of $79.5 million through sale of common stock, improving financial flexibility to make strategic investments
Company Re-Affirms Its 2018 outlook
The company reported net sales of $140.6 million, compared to $135.3 million in the second quarter of 2017, with the increase primarily driven by increased sales in the company’s consumer, vehicle and food and beverage end-markets. Gross profit margin increased 580 basis points to 34.1 percent as compared to the prior year, primarily due to pricing actions and savings from last year’s manufacturing footprint realignment and restructuring initiatives. Selling, general and administrative expenses increased $2.4 million year-over-year to $34.5 million, with the increase in expenses primarily attributable to higher incentive compensation costs.
President and CEO Dave Banyard commented, “We are pleased with the continued improvement in our business during the second quarter, which demonstrated another consecutive quarter of year-over-year growth in both sales and earnings. Our focus on niche market strategies drove double-digit sales growth across three of our key end-markets, including consumer, vehicle, and food and beverage. Continued strength of demand, combined with the impacts of recent pricing and operational improvement initiatives, resulted in strong gross margin expansion, operating income growth and free cash flow generation during the quarter.”
Banyard continued, “As we look to the second half of 2018, we expect year-over-year sales growth to temper somewhat as a result of the non-recurrence of certain prior-year order activity. However, continued strong operating and cash flow performance should enable us to capitalize on both organic and acquisitive growth opportunities, especially considering our improved leverage profile following the secondary equity offering and reduction of debt during the second quarter.”
Segment Results
Net sales in the Material Handling Segment increased 7.4 percent (or 6.9 percent excluding currency fluctuation) compared to the second quarter of 2017. The increase in net sales was primarily due to increased volume in the company’s consumer, vehicle, and food and beverage end-markets. The segment’s Adjusted EBITDA margin was 22.7 percent compared to 19.7 percent in the second quarter of 2017. The increase in Adjusted EBITDA margin was primarily the result of pricing actions and the benefit of restructuring actions taken in 2017.
Net sales in the Distribution Segment declined 4.5 percent compared to the second quarter of 2017. The segment’s Adjusted EBITDA margin was 8.2 percent compared to 8.3 percent in the second quarter of 2017. The impact of the lower sales volume year-over-year was mostly offset by operational efficiencies and the benefit of the change in pricing structure completed last year.
2018 Outlook
For fiscal year 2018, the company continues to anticipate that total revenue will be up low-to-mid-single digits on a constant currency basis compared to the prior year based on strong backlog, tempered by the non-recurrence of some large, one-time orders delivered in the second half of 2017. The company expects capital expenditures to be in the range of $10 to $12 million. Net interest expense is now forecasted to be between $4 million and $6 million (vs. between $7 million and $8 million previously) as a result of the reduction in debt due to the secondary equity offering completed during the second quarter of 2018. Depreciation and amortization are forecasted to be between $26 million and $28 million.
The Tax Cuts and Jobs Act will benefit the company through a decrease in its effective tax rate, which is expected to be approximately 25 percent, compared to approximately 36 percent previously.
