Myers Industries, a manufacturer of polymer products for industrial, agricultural, automotive, commercial and consumer markets, has announced results for the second quarter ended June 30, 2019.
Second quarter 2019 net sales decreased $6.3 million or 4.5% (4.2% excluding currency fluctuation) to $134.3 million, compared to the second quarter of 2018. The decrease was the result of a sales decline in the Material Handling Segment. Gross profit decreased $1.1 million to $46.9 million, compared to the second quarter of 2018.
GAAP income per diluted share from continuing operations was 18 cents, compared to 26 cents for the second quarter of 2018. Adjusted income per diluted share from continuing operations was 27 cents, which was flat compared to the second quarter of 2018.
Segment Results
Net sales in the Material Handling Segment for the second quarter of 2019 decreased $7.2 million or 7% (6.7% excluding currency fluctuation) compared to the second quarter of 2018. The decrease in net sales was primarily due to sales decreases in the company’s vehicle (RV market decline) and consumer (lower fuel can sales) end markets. The segment’s adjusted EBITDA declined 1% to $23.2 million for the 2019 second quarter, compared to $23.4 million in 2018. Favorable price-cost margin mostly offset the impact of the lower sales volume and unfavorable sales mix. Material Handling EBITDA margin increased 150 basis points to 24.2%.
Net sales in the Distribution Segment for the second quarter of 2019 increased $0.9 million or 2.4% compared to the second quarter of 2018. The segment’s adjusted EBITDA increased 16.3% to $3.6 million compared to the second quarter of 2018, due primarily to savings from the segment’s transformation plan and higher sales volume. The company continues to execute its transformation plan, which includes enhancements in its go-to-market strategy, the implementation of 80/20 to drive improved contribution margins, and optimization of its logistics and overhead costs, with a goal to expand Distribution Segment EBITDA margin to 10% by the end of 2020. Distribution EBITDA margin increased 120 basis points to 9.4%.
“Second-quarter adjusted earnings were in line with our expectations, despite softer than anticipated demand in our consumer end market. Net sales were down 4.5% due primarily to continued weakness in the Recreational Vehicle (RV) market and softer than anticipated spring seasonal demand in our consumer end market. We expanded our gross margin to 35% and increased adjusted operating income by 6% as volume declines were more than offset by cost discipline, selective price increases and execution of our Distribution Segment transformation,” said Dave Banyard, president and CEO of Myers Industries.
Banyard continued, “Within our Distribution Segment, we continued to make progress on the transformation. We grew sales for the third consecutive quarter and increased adjusted EBITDA by 16%. With this quarter’s performance, we are on track to meet our Distribution Segment EBITDA margin goal of 10% by the end of 2020.”
2019 Outlook
For the full-year 2019, the company now anticipates that total revenue year-over-year will be down low-to-mid-single digits on a constant currency basis versus its previous expectation of flat year-over-year revenue. While the company anticipates full-year sales growth in its auto aftermarket and industrial end-markets, it expects that growth to be more than offset by lower year-over-year demand in its food and beverage, consumer and vehicle end markets.
“The important spring selling season for outdoor power equipment was unusually weak due to the historic wet weather conditions experienced across much of the country. This sluggish start to the year took a toll on our consumer end market demand, which we anticipate will continue to be weak in the third quarter and will not recover by year-end. While we expect to offset some of the decline with our new product launch, this incremental revenue will not be enough to overcome the market decline, so we are adjusting our full-year sales outlook,” said Banyard.
Banyard continued, “At this point, we are cautious about the state of demand for the rest of the year. Seasonally, the fourth quarter is less affected by our consumer end market; however, demand in our food and beverage end market remains uncertain due to the late planting season in the U.S. farming sector. Despite these top-line challenges, our focus on improving operating margins by optimizing pricing, executing on various cost and productivity initiatives and delivering on our Distribution Segment transformation plan is expected to lead to growth in our adjusted operating margins in 2019.”
The company expects depreciation and amortization to be approximately $25 million, net interest expense to be approximately $5 million, and the effective tax rate to be approximately 27%. GAAP income per diluted share from continuing operations is now estimated to be in the range of 62 cents to 72 cents, which is updated from its previous estimates in the range of 70 cents to 80 cents, primarily as a result of a $4 million charge in the second quarter for estimated environmental liabilities. The company continues to expect adjusted income per diluted share from continuing operations to be in the range of 75 cents to 85 cents, based on a fully diluted share count of 36 million shares. Capital expenditures are anticipated to be approximately $10 million.
