OREANDA-NEWS. Myers Industries, Inc. (NYSE: MYE) today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Business Highlights

  • Net sales decreased 12% (or 11% organic) compared to the second quarter of 2015
  • Gross profit margin 30.9%, compared to 30.8% for the second quarter of 2015
  • GAAP income per diluted share from continuing operations $0.19, compared to $0.35 for the second quarter of 2015
  • Adjusted income per diluted share from continuing operations $0.21, compared to $0.30 for the second quarter of 2015

President and Chief Executive Officer Dave Banyard commented, “A weakened environment for capital spending in some of our key end markets contributed to the shortfall in sales in both the Material Handling and Distribution segments during the second quarter. Based on these results and our current indicators, we now expect full-year revenue to be down mid-to-high single digits.”

Banyard continued, “Despite the lower sales volume, we delivered solid margins and concurrently made progress on our strategic plans during the quarter. I am pleased with the extensive strategic marketing work we completed and the key initiatives we established for each of our businesses. In light of the current market environment, we are accelerating certain cost actions within those initiatives and expect to provide a more comprehensive update of our long-term strategy later this year.”

    Quarter Ended June 30,      

Six Months Ended June 30,

  
    2016     2015    

% Increase
(Decrease)

       2016     2015    

% Increase
(Decrease)

  
    (Dollars in thousands, except per share data)
Net sales   $ 144,117     $ 164,335     (12.3 )%     $ 295,322     $ 320,683     (7.9 )%
Gross profit   $ 44,536     $ 50,581     (12.0 )%     $ 92,707     $ 96,338     (3.8 )%
Gross profit margin     30.9 %     30.8 %             31.4 %     30.0 %      
Operating income   $ 11,166     $ 19,742     (43.4 )%     $ 12,295     $ 26,458     (53.5 )%
Income from continuing operations:                                              
Income   $ 5,684     $ 10,925     (48.0 )%     $ 2,348     $ 13,547     (82.7 )%
Income per diluted share   $ 0.19     $ 0.35     (45.7 )%     $ 0.08     $ 0.43     (81.4 )%
                                               
Operating income as adjusted(1)   $ 11,710     $ 17,181     (31.8 )%     $ 23,395     $ 25,847     (9.5 )%
Income from continuing operations as adjusted(1):                                              
Income   $

6,180

     $

9,461

    

(34.7

 )%     $

12,367

     $

13,296

    

(7.0

 )%
Income per diluted share   $ 0.21     $ 0.30     (30.0 )%     $ 0.41     $ 0.42     (2.4 )%
                                               
(1)  

Details regarding the adjusted charges are provided on the Reconciliations of Non-GAAP Financial Measures included in this release.
     

Segment Results

Net sales in the Material Handling Segment for the second quarter of 2016 were down 13% (or 12% organic) vs. the second quarter of 2015 due primarily to declines in the food and beverage markets. The segment’s GAAP operating income was $14.3 million for the second quarter of 2016 compared to $20.8 million for the second quarter of 2015. The segment’s adjusted operating income was $13.3 million for the second quarter of 2016 compared to $18.3 million for the second quarter of 2015.

Net sales in the Distribution Segment for the second quarter of 2016 were down 11% vs. the second quarter of 2015. The decline was primarily the result of lower equipment sales. The segment continues to implement its new sales model which is designed to broaden market coverage and improve the overall sales process. The segment’s operating income was $4.0 million for the second quarter of 2016 compared to $4.5 million for the second quarter of 2015.

2016 Outlook

The Company now anticipates that total revenue will be down mid-to-high single digits on a constant currency basis in fiscal year 2016 as the headwinds from a weak capital spending environment continue to impact sales performance.

Use of Non-GAAP Financial Measures

The Company uses certain non-GAAP measures in this release. Adjusted EPS, adjusted income per diluted share from continuing operations and adjusted operating income are non-GAAP financial measures and are intended to serve as a complement 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 an international manufacturer of polymer products for industrial, agricultural, automotive, commercial and consumer markets. 

 

MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except share data)
           
    Quarter Ended     Six Months Ended
    June 30, 2016     June 30, 2015     June 30, 2016     June 30, 2015
Net sales   $ 144,117     $ 164,335     $ 295,322     $ 320,683
Cost of sales     99,581       113,754       202,615       224,345
Gross profit     44,536       50,581       92,707       96,338
Selling, general and administrative expenses     32,041       30,839       70,538       69,880
Impairment charges     1,329       -       9,874       -
Operating income     11,166       19,742       12,295       26,458
Interest expense, net     2,053       2,467       4,072       5,169
Income from continuing operations before income taxes     9,113       17,275       8,223       21,289
Income tax expense     3,429       6,350       5,875       7,742
Income from continuing operations     5,684       10,925       2,348       13,547
Income (loss) from discontinued operations, net of income taxes     (190 )     494       (247 )     3,111
Net income   $ 5,494     $ 11,419     $ 2,101     $ 16,658
Income per common share from continuing operations:                              
Basic   $ 0.19     $ 0.35     $ 0.08     $ 0.44
Diluted   $ 0.19     $ 0.35     $ 0.08     $ 0.43
Income (loss) per common share from discontinued operations:                              
Basic   $ (0.01 )   $ 0.02     $ (0.01 )   $ 0.10
Diluted   $ (0.01 )   $ 0.02     $ (0.01 )   $ 0.10
Net income per common share:                              
Basic   $ 0.18     $ 0.37     $ 0.07     $ 0.54
Diluted   $ 0.18     $ 0.37     $ 0.07     $ 0.53
Weighted average common shares outstanding:                              
Basic     29,623,177       30,968,269       29,586,708       31,004,779
Diluted     30,089,574       31,284,915       30,012,839       31,342,103
                               

MYERS INDUSTRIES, INC.
SALES AND EARNINGS BY SEGMENT (UNAUDITED)
(Dollars in thousands)
               
    Quarter Ended June 30,       Six Months Ended June 30,  
    2016     2015     % Change       2016     2015     % Change  
Net Sales                                              
Material Handling   $ 100,907     $ 115,774     (12.8 )%     $ 209,931     $ 228,055     (7.9 )%
Distribution     43,234       48,592     (11.0 )%       85,455       92,697     (7.8 )%
Inter-company Sales     (24 )     (31 )   -         (64 )     (69 )   -  
Total   $ 144,117     $ 164,335     (12.3 )%     $ 295,322     $ 320,683     (7.9 )%
                                               
Operating Income                                              
Material Handling   $ 14,333     $ 20,846     (31.2 )%     $ 21,774     $ 34,253     (36.4 )%
Distribution     3,966       4,508     (12.0 )%       6,502       7,999     (18.7 )%
Corporate     (7,133 )     (5,612 )   -         (15,981 )     (15,794 )   -  
Total   $ 11,166     $ 19,742     (43.4 )%     $ 12,295     $ 26,458     (53.5 )%
                                               

MYERS INDUSTRIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
OPERATING INCOME BY SEGMENT (UNAUDITED)
(Dollars in thousands, except per share data)
               
    Quarter Ended June 30,       Six Months Ended June 30,  
    2016     2015       2016     2015  

Material Handling

                                  
Operating income as reported   $ 14,333     $ 20,846       $ 21,774     $ 34,253  
Litigation reserve reversal     -       (3,010 )       -       (3,010 )
Asset impairments     1,329       -         9,874       -  
Reduction to contingent liability     (2,335 )               (2,335 )        
Restructuring expenses and other adjustments     -       449         -       540  
Operating income as adjusted     13,327       18,285         29,313       31,783  
                                   

Distribution

                                  
Operating income as reported     3,966       4,508         6,502       7,999  
Restructuring expenses and other adjustments     -       -         -       53  
Operating income as adjusted     3,966       4,508         6,502       8,052  
                                   

Corporate Expense

                                  
Corporate expense as reported     (7,133 )     (5,612 )       (15,981 )     (15,794 )
CFO severance related costs     -       -         2,011       -  
Environmental reserve     1,550       -         1,550       -  
Professional, legal fees and other adjustments     -       -         -       1,806  
Corporate expense as adjusted     (5,583 )     (5,612 )       (12,420 )     (13,988 )
                                   

Continuing Operations

                                  
Operating income as reported     11,166       19,742         12,295       26,458  
Total of all adjustments above     544       (2,561 )       11,100       (611 )
Operating income as adjusted     11,710       17,181         23,395       25,847  
Interest expense, net     (2,053 )     (2,467 )       (4,072 )     (5,169 )
Income before taxes as adjusted     9,657       14,714         19,323       20,678  
Income tax expense*     (3,477 )     (5,253 )       (6,956 )     (7,382 )
Income from continuing operations as adjusted   $ 6,180     $ 9,461       $ 12,367     $ 13,296  
                                   
Adjusted earnings per diluted share from continuing operations   $ 0.21     $ 0.30       $ 0.41     $ 0.42  
                                   
*Income taxes are calculated using the normalized effective tax rate for each year. The normalized rate used above is 36%.
 

Note on Reconciliation of Income and Earnings Data: Income from continuing operations as adjusted and adjusted earnings per diluted share from continuing operations are non-GAAP financial measures that Myers Industries, Inc. calculates according to the schedule above, using GAAP amounts from the unaudited Consolidated Financial Statements. The Company believes that the excluded items are not primarily related to core operational activities. The Company believes that income (loss) excluding items that are not primarily related to core operating activities is generally viewed as providing useful information regarding a company's operating profitability. Management uses income (loss) excluding these items as well as other financial measures in connection with its decision-making activities. Income (loss) excluding these items should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company's method for calculating income (loss) excluding these items may not be comparable to methods used by other companies.

MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(Dollars in thousands)
           
    June 30, 2016     December 31, 2015
Assets              
Current Assets              
Cash   $ 6,499     $ 7,344
Restricted cash     8,627       8,627
Accounts receivable, net     77,677       77,633
Inventories     55,698       54,738
Other     3,474       5,966
Total Current Assets     151,975       154,308
Other Assets     133,974       143,710
Property, Plant, & Equipment, Net     124,355       130,773
Total Assets   $ 410,304     $ 428,791
Liabilities & Shareholders' Equity              
Current Liabilities              
Accounts payable   $ 41,266     $ 71,310
Accrued expenses     31,851       45,502
Total Current Liabilities     73,117       116,812
Long-term debt, net     217,440       191,881
Other liabilities     9,401       12,354
Deferred income taxes     9,476       10,041
Total Shareholders' Equity     100,870       97,703
Total Liabilities & Shareholders' Equity   $ 410,304     $ 428,791
               

MYERS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
       
    Six Months Ended June 30,  
    2016     2015  
Cash Flows From Operating Activities                
Net income   $ 2,101     $ 16,658  
Income (loss) from discontinued operations, net of income taxes     (247 )     3,111  
Income from continuing operations     2,348       13,547  
Adjustments to reconcile income from continuing operations to net cash provided by (used for) operating activities                
Depreciation     12,283       13,290  
Amortization     4,981       5,279  
Non-cash stock-based compensation expense     2,064       1,638  
Deferred taxes     (1,354 )     (1,673 )
Excess tax deficit (benefit) from stock-based compensation     5       (215 )
Impairment charges     9,874       —  
Other     (273 )     91  
Payments on performance based compensation     (1,794 )     (1,332 )
Accrued interest income on note receivable     (628 )     —  
Other long-term liabilities     (726 )     2,497  
Cash flows provided by (used for) working capital                
Accounts receivable     1,623       (12,835 )
Inventories     (12 )     (4,020 )
Prepaid expenses and other assets     2,475       2,511  
Accounts payable and accrued expenses     (33,938 )     (21,747 )
Net cash provided by (used for) operating activities - continuing operations     (3,072 )     (2,969 )
Net cash provided by (used for) operating activities - discontinued operations     —       (11,672 )
Net cash provided by (used for) operating activities     (3,072 )     (14,641 )
Cash Flows From Investing Activities                
Capital expenditures     (10,565 )     (9,381 )
Proceeds from sale of property, plant and equipment     178       36  
Proceeds (payments) related to sale of business     (4,034 )     69,787  
Net cash provided by (used for) investing activities - continuing operations     (14,421 )     60,442  
Net cash provided by (used for) investing activities - discontinued operations     —       (581 )
Net cash provided by (used for) investing activities     (14,421 )     59,861  
Cash Flows From Financing Activities                
Net borrowing (repayments) on credit facility     23,838       (31,548 )
Cash dividends paid     (8,112 )     (8,367 )
Proceeds from issuance of common stock     610       1,515  
Excess tax (deficit) benefit from stock-based compensation     (5 )     215  
Repurchase of common stock     —       (6,577 )
Shares withheld for employee taxes on equity awards     (617 )     (975 )
Net cash provided by (used for) financing activities - continuing operations     15,714       (45,737 )
Net cash provided by (used for) financing activities - discontinued operations     —       —  
Net cash provided by (used for) financing activities     15,714       (45,737 )
Foreign exchange rate effect on cash     934       (272 )
Net increase (decrease) in cash     (845 )     (789 )
Cash at January 1     7,344       4,676  
Cash at June 30   $ 6,499     $ 3,887