Myers Industries has announced results for the fourth quarter and year ended Dec. 31, 2017.
Fourth quarter net sales increased $16.8 million or 13.6 percent (13 percent excluding currency fluctuation) to $140.1 million, compared to the fourth quarter of 2016. The increase in sales was the result of sales growth in the Material Handling Segment, partially offset by sales declines in the Distribution Segment. Gross profit increased $3 million to $38.3 million due to increased volume and favorable pricing, partially offset by an unfavorable sales mix, raw material inflation and operating inefficiencies.
Net sales in the Material Handling Segment for the fourth quarter of 2017 increased $20.7 million or 25.6 percent (24.7 percent excluding currency fluctuation) vs. the fourth quarter of 2016. The increase in net sales was due to increased demand and market share gains in the company’s food and beverage, consumer and vehicle end-markets, partially offset by a decline in net sales in the industrial end-market.
Net sales in the Distribution Segment for the fourth quarter of 2017 decreased $3.8 million or 9 percent vs. the fourth quarter of 2016. The decrease in net sales was due mostly to the planned exit of a low margin product line within the company’s Patch Rubber business, which contributed $2.7 million of the $3.8 million decline. The Myers Tire Supply business was down 3.1 percent for the quarter, showing improvement compared to the year-over-year sales performance during the first half of 2017. The segment’s operating income was $1.3 million for the fourth quarter of 2017, compared to $3.0 million for the fourth quarter of 2016. The decrease in operating income was the result of lower sales and higher selling, general and administrative expenses, partially offset by a favorable mix and higher pricing.
President and CEO Dave Banyard said, “We are excited about the pace of our strategic execution and the growth we achieved in the fourth quarter. This past year was transformational for Myers Industries. We focused the enterprise on the key niche markets where we deliver the strongest value. That focus resulted in double-digit revenue growth in our food and beverage and consumer end-market products, and high single-digit growth in our vehicle end market. Additionally, we focused our efforts on flexible operations, closing and moving three facilities on time and under budget with no adverse impact on our customers. We accomplished these moves in the face of increased demand, both from external market forces and major weather events as well as from our commercial efforts to gain share. Finally, we delivered on our commitment to generate strong free cash flow throughout the year, demonstrating the power of our strategy and our ability to execute.”
Full-Year 2017 Financial Summary
Full-year net sales increased 2.4 percent (or 2.2 percent excluding currency fluctuation) to $547 million, compared to full-year 2016. The increase in sales was the result of sales growth in the Material Handling Segment, partially offset by a sales decline in the Distribution Segment. Gross profit margin decreased 150 basis points to 28.8 percent, due mostly to restructuring expenses of $7.4 million.
The Material Handling Segment’s net sales for the full year of 2017 increased 7.5 percent (or 7.2 percent excluding currency fluctuation) vs. the full year of 2016. The increase in net sales was due primarily to increased demand and market share gains in the company’s food and beverage, consumer and vehicle end-markets, partially offset by a sales decline in the industrial end market.
The Distribution Segment’s net sales for the full year of 2017 declined 8.3 percent compared to the full year of 2016. The decrease in net sales was primarily due to the planned exit of a low margin product line within the company’s Patch Rubber business and sales declines in the Myers Tire Supply business, primarily during the first half of the year, partially offset by improved pricing. The segment’s operating income was $9.1 million for the full year of 2017, compared to $12.8 million for the full year of 2016.
2018 Outlook
For the fiscal year 2018, the company anticipates 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 one-time large orders delivered in the second half of 2017, particularly in its consumer end-market related to hurricane activity. It 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.
Banyard concluded, “We enter 2018 with excellent momentum. We have a strong order book coming into Q1 and expect to see the benefits of our operational efforts as we move throughout the year. Additionally, we expect to continue to improve our balance sheet and cash flow, both of which will allow us to invest in organic initiatives and acquisitive growth. We have a pipeline of potential acquisition candidates that we are evaluating and expect to be disciplined concerning price and valuation as we deploy cash toward these higher future growth opportunities. We will also continue to evaluate opportunities to reduce our manufacturing footprint and improve the operational flexibility of our business. These efforts, combined with our commitment to disciplined cash return metrics, should enable us to deliver compelling long-term value to our shareholders.”
