Myers Industries Reports 2021 First Quarter Results

Rhea-AI Summary

Myers Industries (NYSE: MYE) reported first-quarter 2021 financial results with net sales rising by $52.2 million (42.7%) to $174.4 million, aided by the Elkhart Plastics acquisition contributing $27.1 million. However, net income per diluted share fell to $0.20 from $0.47 in Q1 2020. Adjusted earnings remained flat at $0.22. Gross profit increased to $50.4 million, but gross margin declined to 28.9% from 34.8%. The company has raised its net sales guidance for 2021, projecting high 30% growth, along with diluted EPS expectations between $0.87 and $1.02.

Positive

• Net sales increased by 42.7% to $174.4 million, driven by strong performance in core segments.
• The Elkhart Plastics acquisition added $27.1 million to net sales.
• Adjustments in guidance expect net sales growth in the high 30% range for 2021.
• Free cash flow improved to $1.4 million compared to $2.5 million last year.

Negative

• Net income per diluted share decreased by 57.4% to $0.20 compared to $0.47 in Q1 2020.
• Gross margin reduced to 28.9% from 34.8%, indicating a decline in profitability.
• Selling, general and administrative expenses rose by 27.1%, leading to increased operational costs.

Myers Industries, Inc. (NYSE: MYE), 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.”

First Quarter 2021 Financial Summary

		Quarter Ended March 31,
		2021		2020		% Inc (Dec)
		(Dollars in millions, except per share data)
Net sales		$174.4		$122.3		42.7%
Operating income		$10.9		$23.3		(53.4)%
Adjusted operating income		$11.9		$11.7		1.5%
Net income		$7.3		$16.7		(56.3)%
Adjusted net income		$8.0		$7.7		3.8%
Net income per diluted share		$0.20		$0.47		(57.4)%
Adjusted earnings per diluted share		$0.22		$0.22		0.0%

Net sales for the first quarter of 2021 were $174.4 million, an increase of $52.2 million, or 42.7%, compared with $122.3 million for the first quarter of 2020, driven by increases in both the Material Handling and Distribution Segments. Excluding the $27.1 million net sales impact from the Elkhart acquisition, organic net sales increased 20% due to higher volume/mix and 1% due to favorable pricing and foreign currency exchange.

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.

First Quarter 2021 Segment Results

(Dollar amounts in the segment tables below are reported in millions)

Material Handling

	Net Sales		Op Income		Adj Op Income		Adj Op Income Margin
Q1 2021 Results	$129.9		$16.9		$16.9		13.0%
Increase (decrease) vs prior year	54.5%		11.6%		11.6%		-500 bps

Net sales for the first quarter of 2021 were $129.9 million, an increase of $45.8 million, or 54.5%, compared with $84.1 million for the first quarter of 2020. The increase was primarily due to the incremental $27.1 million of sales from the Elkhart Plastics acquisition completed in late 2020 and higher organic volume/mix. Sales increased in the food and beverage, vehicle, consumer, and industrial end markets. Operating income increased 11.6% to $16.9 million, compared with $15.2 million in 2020. Contributions from the higher volume and Elkhart Plastics acquisition were partially offset by an unfavorable price to cost relationship, an unfavorable sales mix, higher manufacturing expenses, higher incentive compensation costs, and increased legal fees. The Material Handling Segment’s adjusted operating income margin was 13%, compared with 18% for the first quarter of 2020.

Distribution

	Net Sales		Op Income		Adj Op Income		Adj Op Income Margin
Q1 2021 Results	$44.6		$1.4		$2.0		4.4%
Increase (decrease) vs prior year	16.6%		(22.3)%		5.2%		-50 bps

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 $2.0 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%

Conference Call Details

The Company will host an earnings conference call and webcast for investors and analysts on Thursday, May 6, 2021, at 8:30 a.m. EDT. The call is anticipated to last less than one hour and may be accessed using the following online participation registration link: http://www.directeventreg.com/registration/event/5283649. Upon registering, each participant will be provided with call details and a registrant ID that will be used to track call attendance. Reminders will also be sent to registered participants via email. The live webcast of the conference call can be accessed from the Investor Relations section of the Company's website at www.myersindustries.com. Click on the Investor Relations tab to access the webcast. Webcast attendees will be in a listen-only mode. An archived replay of the call will also be available on the site shortly after the event. To listen to the telephone replay, callers should dial: (US) 800-585-8367 or (Int’l) 416-621-4642. The Conference ID # is 5283649.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted gross profit, adjusted gross profit margin, adjusted operating income (loss), adjusted operating income margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA margin, adjusted income (loss) before taxes, adjusted net income, adjusted earnings per diluted share, and free cash flow are non-GAAP financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. Myers Industries believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.

About Myers Industries

Myers Industries, Inc. is a manufacturer of polymer products for industrial, agricultural, automotive, commercial, and consumer markets. The Company is also the largest distributor of tools, equipment and supplies for the tire, wheel, and under-vehicle service industry in the United States. Visit www.myersindustries.com to learn more.

Caution on Forward-Looking Statements

Statements in this release include “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that is not of historical fact may be deemed “forward-looking.” Words such as “will,” “expect,” “believe,” “project,” “plan,” “anticipate,” “intend,” “objective,” “outlook,” “target,” “goal,” “view” and similar expressions identify forward-looking statements. These statements are based on management's current views and assumptions of future events and financial performance and involve a number of risks and uncertainties, many outside of the Company's control that could cause actual results to materially differ from those expressed or implied. Risks and uncertainties include: impacts from the COVID-19 pandemic on our business, conditions, customers and capital position; the impact of COVID-19 on local, national and global economic conditions; the effects of various governmental responses to the COVID-19 pandemic, raw material availability, increases in raw material costs, or other production costs; impacts of price increases, risks associated with our strategic growth initiatives or the failure to achieve the anticipated benefits of such initiatives; unanticipated downturn in business relationships with customers or their purchases; competitive pressures on sales and pricing; changes in the markets for the Company’s business segments; changes in trends and demands in the markets in which the Company competes; opera

FAQ

What were Myers Industries' first-quarter 2021 net sales?

First-quarter 2021 net sales were $174.4 million, an increase of 42.7%.

How did the Elkhart Plastics acquisition impact Myers Industries' revenue?

The Elkhart Plastics acquisition contributed $27.1 million to net sales.

What is the diluted EPS forecast for Myers Industries in 2021?

The diluted EPS forecast for 2021 is between $0.87 and $1.02.

How did Myers Industries' net income change in Q1 2021?

Net income per diluted share decreased to $0.20 from $0.47 in Q1 2020.

What was the gross margin for Myers Industries in the first quarter of 2021?

The gross margin for Q1 2021 was 28.9%, down from 34.8% in Q1 2020.