Myers Industries Inc. has announced results for the second quarter ended June 30, 2017.
The company reported net sales of $142.3 million, compared to $144.1 million in the second quarter of 2016. Gross profit margin decreased 330 basis points to 27.6 percent as compared to the prior year quarter, primarily due to higher restructuring and manufacturing costs in the Material Handling Segment. Selling, general and administrative expenses increased by $1.1 million to $33.2 million, in the second quarter of 2017, with the increase in expenses primarily attributable to higher compensation costs and professional fees, partially offset by lower facility costs.
President and CEO Dave Banyard commented, “We made excellent progress in the second quarter on our strategic initiatives to improve cash flow and long-term earnings potential. Year-to-date, free cash flow was $21.3 million, compared to cash used of $13.6 million last year. This improvement underlines the company’s increased flexibility of operations, disciplined capital spending and focus on working capital. Further signs of our progress include year-over-year sales growth in the Material Handling Segment during the second quarter, driven by our strategic focus on targeted niche markets. Our strategic restructuring activities, which caused temporary increases in costs during the quarter, are well underway. We are confident that our lean initiatives are gaining traction and that the company is poised for significant improvements in long-term performance.”
Segment Results
Net sales in the Material Handling Segment increased 2.1 percent (or 2 percent excluding currency fluctuation) as compared to the second quarter of 2016. The increase in net sales was primarily due to increased volume in the company’s consumer and vehicle end-markets. GAAP operating income was $7.4 million compared to $14.3 million in the second quarter of 2016.
GAAP operating income in the second quarter of 2017 included restructuring and related charges of $3.8 million. Adjusted operating income was $11.7 million compared to $13.3 million in the second quarter of 2016. The decline in adjusted operating income was primarily the result of operational inefficiencies and the impact from higher commodity prices that the company has begun to offset with price increases.
Net sales in the Distribution Segment declined 9.2 percent as compared to the second quarter of 2016. The decrease in net sales was primarily the result of soft market demand in the early part of the quarter, overall weakness in the export business, and year-over-year revenue decline from 2016 territory gaps. Operating income was $3 million compared to $4 million in the second quarter of 2016. The decrease in operating income was primarily the result of lower sales volumes.
2017 Outlook
The company continues to anticipate that total revenue will be flat on a constant currency basis in fiscal year 2017 as compared to the prior year. Capital expenditures are expected to be in the range of $10 million to $12 million, net interest expense in the range of $8 million to $9 million, depreciation and amortization in the range of $32 million to $34 million, and an effective tax rate (normalized) of approximately 36 percent.
