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Myers Industries Reports 2020 Q2 Results

Company provides slightly improved 2020 revenue outlook.

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Myers Industries, manufacturer of polymer products and distributor for the tire, wheel and under-vehicle service industry, has announced its results for the second quarter ended June 30, 2020.

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Second Quarter 2020 Financial Highlights

  • GAAP income per diluted share from continuing operations was $0.23, compared with $0.18 for the second quarter of 2019
  • Adjusted income per diluted share from continuing operations was $0.23, compared with $0.27 for the second quarter of 2019
  • Net sales were $118.4 million, down 11.8% compared with $134.3 million for the second quarter of 2019
  • Gross margin increased to 36%, compared with 35% for the second quarter of 2019
  • Cash flow from continuing operations was $6.8 million and free cash flow was $3.7 million, compared with $10.9 million and $9.4 million, respectively, for the second quarter of 2019

“I am proud of how our teams performed during the second quarter, despite the challenges resulting from the COVID-19 crisis. Due to their focus and dedication, we were able to meet our customers’ needs and deliver sales and operational results that were better than we had expected going into the quarter. Demand in our auto aftermarket improved during the quarter as vehicles returned to the road after stay-at-home restrictions were lifted. Additionally, sales in our consumer end market increased significantly year-over-year due to increased demand compared with a weak spring season last year,” said Mike McGaugh, president and CEO of Myers Industries. “We continue to have sufficient liquidity to support our operations and execute our strategic plans, which include continued execution of growth and transformation initiatives.”

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Second Quarter 2020 Financial Summary 

Net sales for the second quarter of 2020 were $118.4 million, a decrease of $15.9 million, or 11.8%, compared with $134.3 million for the second quarter of 2019. The decrease was primarily the result of anticipated sales declines across several markets in the Material Handling Segment, which were due to the challenging business environment. Gross profit decreased to $42.6 million, compared with $46.9 million for the second quarter of 2019. However, gross profit margin increased to 36% compared with 35% last year as favorable price-cost margin more than offset the lower sales volume during the quarter. Lower selling, general and administrative (SG&A) expenses of $30.3 million compared favorably with $36.8 million for the second quarter of 2019, due partly to lower variable compensation costs and the Company’s continued emphasis on cost discipline. Additionally, 2019 second quarter SG&A expenses included a $4 million charge for estimated environmental liabilities related to the New Idria Mercury Mine. GAAP income per diluted share from continuing operations was $0.23, compared with $0.18 for the second quarter of 2019. Adjusted income per diluted share from continuing operations was $0.23, compared with $0.27 for the second quarter of 2019.

Segment Results

Net sales in the Material Handling Segment (consumer, food and beverage, industrial and vehicle end markets) for the second quarter of 2020 were $80.9 million, a decrease of $15 million or 15.7%, compared with $95.9 million for the second quarter of 2019. Sales declines in the company’s food and beverage, vehicle and industrial end markets were partially offset by a sales increase in the company’s consumer end market. For the second quarter of 2020, operating income for this segment declined 10.2% to $15.8 million, compared with $17.6 million in 2019. The lower volume was partially offset by favorable price-cost margin, a positive sales mix and lower costs. As a result, the Material Handling Segment’s operating income margin increased to 19.5%, compared with 18.3% for the second quarter of 2019.

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Net sales in the Distribution Segment (auto aftermarket end market) for the second quarter of 2020 were $37.5 million, a decrease of $0.9 million, or 2.2%, compared with $38.4 million for the second quarter of 2019. Incremental sales from the August 2019 acquisition of Tuffy Manufacturing Industries, Inc. mostly offset the impact of sales declines in the rest of the segment. Second quarter operating income for this segment decreased to $1.6 million, compared with $3.3 million in 2019. The decrease in adjusted operating income was due primarily to an unfavorable sales mix. The Distribution Segment’s operating income margin was 4.4%, compared with 8.7% for the second quarter of 2019.

2020 Outlook

The company has revised its outlook for 2020 revenue. For full-year total revenue, the company now expects a percentage decline in the mid-to-high single digits, which is a slight improvement from its previous guidance of a 10% decline. The company is maintaining its previous guidance that depreciation and amortization will be approximately $21 million, net interest expense will be approximately $4 million and capital expenditures will be approximately $15 million. The company is updating its guidance for the effective tax rate to be approximately 26%, compared with a previous estimate of approximately 27%.

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