Myers Industries has announced results for the first quarter ended March 31, 2018.
The company reported net sales of $152.6 million, compared to $136.6 million in the first quarter of 2017, with the increase primarily driven by greater demand within the company’s food and beverage end market. Gross profit margin increased 30 basis points to 30.9 percent as compared to the prior year, primarily due to the higher sales volume. Selling, general and administrative expenses increased by $1 million to $35.5 million, in the first quarter of 2018, with the increase in expenses primarily attributable to higher incentive compensation costs.
President and CEO Dave Banyard commented, “We are pleased with our performance to start the year, which demonstrated strong year-over-year improvement in both sales and earnings. We saw sequential improvements in key operating metrics each month, and overall improvement in gross margin and operating profit from the fourth quarter of last year.”
Banyard continued, “Our focus on niche market strategies resulted in a third consecutive quarter of double-digit sales growth in our food and beverage end market. Increased demand coupled with the positive impact of last year’s manufacturing footprint realignment and restructuring initiatives produced significant operating income growth and strong free cash flow generation. We look forward to the continuation of this trend in our cash flow performance in 2018 and expect it to enable further investments in both organic and acquisitive growth.”
Segment Results
Net sales in the Material Handling Segment increased 18.6 percent (or 18.2 percent excluding currency fluctuation) compared to the first quarter of 2017. The increase in net sales was primarily due to increased volume in the company’s food and beverage end market. The segment’s Adjusted EBITDA was $23 million compared to $20.8 million in the first quarter of 2017. The increase in Adjusted EBITDA was primarily the result of higher sales volume and the benefit from the restructuring actions taken in 2017.
Net sales in the Distribution Segment declined 7.2 percent compared to the first quarter of 2017. The decrease in net sales was partially the result of the company’s planned exit from a low-margin custom product in the Patch Rubber business. The organization continues to work to improve sales force effectiveness in its Myers Tire Supply business. The segment’s Adjusted EBITDA was $1.4 million compared to $1.8 million in the first quarter of 2017.
2018 Outlook
For the 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 also expects capital expenditures to be in the range of $10 million to $12 million, net interest expense to be between $7 million and $8 million, and depreciation and amortization 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.
