Myers Industries, a manufacturer of polymer products and distributor for the tire, wheel and under-vehicle service industry, today announced results for the first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights:
• Net sales increased $52.2 million, or 42.7% to $174.4 million, including $27.1 million, or 22.2% from the Elkhart Plastics acquisition, compared with $122.3 million for the first quarter of 2020
• Net income per diluted share was $0.20, compared with $0.47 for the first quarter of 2020, which included $0.24 from the sale of notes and release of lease guarantee liability related to the Company’s Lawn and Garden business sold in 2015
• Adjusted earnings per diluted share was $0.22 in both the first quarter of 2021 and 2020
• Cash flow from operations was $6.6 million and free cash flow was $1.4 million, compared with $5.0 million and $2.5 million, respectively, for the first quarter of 2020
• Company announced two price increases during the first quarter in response to higher raw material costs
President and CEO, Mike McGaugh said, “Our strong start to 2021, combined with the successful implementation of two price increases, and a seamless onboarding of Elkhart Plastics, fortifies my optimism on our ability to create value for all of our stakeholders. The healthy demand across our core end-markets points to encouraging signs of a sustainable economic recovery. Strong demand was reflected as well in our recently acquired Elkhart Plastics business, which contributed $27 million to our top line. I’m pleased with our team’s ability to quickly integrate the business, as well as with the progress we’re collectively realizing to identify both cost and growth synergies.
“As a result of our growing confidence around the strength of the economic recovery and our business momentum, we are raising our sales guidance and expect to be at the higher end of our earnings guidance for 2021. We are mitigating the impact of elevated raw material costs and will be diligent in taking action to protect and ultimately expand our margins, as evidenced by the two price increases announced over the last few months.
“I joined Myers just over a year ago and I’m extremely proud of the progress we’ve made in executing against our One Myers strategy. We’ve added new expertise and experience to our senior leadership team, optimized our corporate structure, and reinvested in our equipment and labor force to make Myers more efficient and more commercially focused. We also completed our first acquisition, which so far has exceeded our expectations and set the blueprint for future integrations. Our One Myers strategy has achieved early success and I look forward to updating our investors on our progress as we continue through 2021 and beyond. We’ve only just begun.”
Gross profit increased $7.9 million, or 18.7% to $50.4 million, primarily due to the increased contribution from sales volume and the Elkhart Plastics acquisition, which was partially offset by an unfavorable price to cost relationship, an unfavorable sales mix, and higher manufacturing costs during the quarter. Gross margin was 28.9% compared with 34.8% for the first quarter of 2020. Selling, general and administrative expenses increased $8.4 million, or 27.1% to $39.5 million, reflecting the Elkhart Plastics acquisition, higher incentive compensation costs, increased legal fees, and higher selling expenses. SG&A as a percentage of sales declined to 22.7% in the first quarter, compared with 25.5% in the same period last year. Net income per diluted share was $0.20, compared with $0.47 for the first quarter of 2020, which included $0.24 from the sale of notes and release of lease guarantee liability related to the company’s Lawn and Garden business sold in 2015. Adjusted earnings per diluted share were $0.22, which was flat compared with the first quarter of 2020.
Distribution
Net sales for the first quarter of 2021 were $44.6 million, an increase of $6.4 million, or 16.6%, compared with $38.2 million for the first quarter of 2020, driven by higher volume/mix. Volume was up primarily due to increased sales of both supplies and equipment. Operating income decreased to $1.4 million, compared with $1.9 million in 2020. Adjusted operating income increased to $2 million, compared with $1.9 million in 2020. The increase in adjusted operating income was due primarily to the higher sales volume, partially offset by an unfavorable sales mix, an unfavorable price to cost relationship, and higher incentive compensation costs. The Distribution Segment’s adjusted operating income margin was 4.4%, compared with 4.9% for the first quarter of 2020.
2021 Outlook
The company updated and raised its net sales outlook for fiscal 2021 and currently forecasts:
• Net sales growth in the high 30% range, including impact of the Elkhart Plastics acquisition
• Diluted EPS in the range of $0.87 to $1.02; adjusted diluted EPS in the range of $0.90 to $1.05
• Capital expenditures to approximate $15 million
• Effective tax rate to approximate 26%
