Business Overview and History
Myers Industries, Inc. is a leading manufacturer of a wide range of polymer and metal products, serving a diverse array of end markets. Founded in 1933 in Akron, Ohio, the company has evolved over the decades, expanding its product portfolio and geographic reach through strategic acquisitions and organic growth initiatives. Today, Myers Industries operates two primary business segments – Material Handling and Distribution – catering to customers across a broad spectrum of industries.
Myers Industries’ roots can be traced back to 1933, when the company was established as a manufacturer of rubber and plastic products for the tire and automotive industries in Akron, Ohio. Over the years, the company has undergone a remarkable transformation, diversifying its portfolio and strengthening its market position through a series of strategic acquisitions and divestitures.
In the 1970s, Myers Industries made a significant move to diversify beyond its core plastics business by acquiring a distribution company that supplied tools, equipment, and supplies to the tire, wheel, and under-vehicle service industry. This acquisition marked the beginning of the company’s Distribution segment, allowing Myers to expand its customer base and market presence.
Throughout the 1980s and 1990s, Myers Industries continued its growth trajectory, both organically and through strategic acquisitions. The company made several key acquisitions during this period, including Buckhorn in 1987 and Patch Rubber in 1997, which further diversified its product portfolio and strengthened its position in the material handling, distribution, and engineered products markets.
The 2000s brought new challenges for Myers Industries as it navigated the Great Recession and shifts in its end markets. In response, the company implemented a series of strategic initiatives to streamline operations, optimize its portfolio, and strengthen its balance sheet. These efforts included divesting non-core businesses and implementing cost reduction measures. Despite these headwinds, Myers maintained its focus on innovation and continued to develop its core brands.
Today, Myers Industries operates as a leading manufacturer of a wide range of polymer and metal products, as well as a distributor for the tire, wheel, and under-vehicle service industry. The company’s nearly 90-year history demonstrates its resilience and ability to adapt to changing market conditions, positioning it for continued success in the future.
Financial Performance and Key Metrics
Over the past three years, Myers Industries has demonstrated a mixed financial performance. In 2020, the company reported net income of $36.77 million on revenue of $510.37 million, with an operating cash flow of $46.51 million and free cash flow of $33.09 million.
In 2021, the company’s financial performance improved, with net income increasing to $33.54 million on revenue of $761.43 million. Operating cash flow and free cash flow also saw an uptick, reaching $44.91 million and $27.05 million, respectively.
The trend continued in 2022, with Myers Industries reporting net income of $60.27 million on revenue of $899.55 million. Operating cash flow and free cash flow for the year stood at $72.62 million and $48.33 million, respectively.
For the fiscal year 2023, Myers Industries reported revenue of $813.07 million, net income of $48.87 million, operating cash flow of $86.17 million, and free cash flow of $63.32 million.
In the most recent quarter (Q3 2024), the company reported revenue of $205.07 million, a net loss of $10.88 million, operating cash flow of $17.33 million, and free cash flow of $10.15 million. The decrease in net income was primarily due to a $22 million non-cash goodwill impairment charge related to the rotational molding business within the Material Handling segment. This charge does not impact cash flows or covenant compliance.
For the first nine months of 2024, the company reported net sales of $632.40 million, compared to $621.99 million in the same period of the prior year, representing a 1.7% year-over-year increase. Adjusted EBITDA for the nine-month period was $95.00 million, up from $91.18 million in the corresponding period of 2023.
Liquidity and Financial Position
Key financial ratios for Myers Industries as of the latest reported quarter (Q3 2024) include a current ratio of 1.80, a quick ratio of 1.11, and a debt-to-equity ratio of 1.43. These metrics suggest that the company maintains a relatively strong financial position, with adequate liquidity and manageable debt levels.
As of Q3 2024, Myers Industries had $29.71 million in cash and $239.4 million available under its credit line. The company’s Amended Loan Agreement provides a $250 million revolving credit facility and a $400 million term loan, maturing in 2027. As of Q3 2024, the company had $5.6 million in outstanding letters of credit and had drawn $5 million on the revolver.
Segmental Performance and Market Dynamics
Myers Industries’ Material Handling segment has consistently been the larger and more profitable of the two business units. In the first nine months of 2024, this segment generated $468.95 million in net sales, up 9.5% year-over-year, and $51.84 million in adjusted EBITDA, reflecting a healthy margin of 11.0%. The increase in net sales was primarily driven by $71.8 million in incremental sales from the February 2024 acquisition of Signature Systems, partially offset by lower sales volume of $19.9 million and lower pricing of $11 million. Gross profit for the Material Handling Segment increased 1.5% to $204.92 million, with a gross margin of 32.4%, compared to 32.5% in the prior year period.
The strong performance of the Material Handling segment has been driven, in part, by the company’s strategic acquisition of Signature Systems in February 2024. Signature Systems is a manufacturer and distributor of composite matting ground protection for industrial applications, stadium turf protection, and temporary event flooring. This acquisition has expanded Myers Industries’ product portfolio and enhanced its presence in the infrastructure and construction markets.
The Distribution segment, on the other hand, has faced more challenging market conditions. In the first nine months of 2024, this segment reported net sales of $163.54 million, a 15.6% decline compared to the same period in the prior year. This decline was primarily driven by lower sales volume of $27.2 million and lower pricing of $3 million. Gross profit for the Distribution Segment decreased 2.4% to $49.48 million, with a gross margin of 30.3%, compared to 31.3% in the prior year period. Adjusted EBITDA for the Distribution segment was $10.63 million, down from $14.55 million in the corresponding period of 2023.
The decline in the Distribution segment’s performance can be attributed to lower volume and pricing in the automotive aftermarket, as well as the impact of the ongoing macroeconomic headwinds affecting the recreational vehicle and marine industries. To address these challenges, Myers Industries has recently appointed a new leadership team for the Distribution segment, with a focus on improving operational efficiency and revenue growth.
Geographic Performance
Myers Industries operates globally, with international sales making up approximately 14% of total revenue in Q3 2024, up from 10.2% in the prior year quarter. Key international markets include Canada and the United Kingdom. This increase in international sales demonstrates the company’s efforts to expand its global presence and diversify its revenue streams.
Navigating Uncertain Times
The current macroeconomic environment has presented a mix of opportunities and challenges for Myers Industries. While the company’s Material Handling segment has continued to perform well, driven by the integration of Signature Systems and robust demand in certain end markets, the Distribution segment has faced more significant headwinds.
To navigate these uncertain waters, Myers Industries has implemented a series of cost-cutting initiatives, targeting $15 million in annualized savings by 2025. These actions, in addition to the $7 million to $9 million in cost improvements and $8 million in Signature Systems synergies previously announced, are designed to help the company mitigate the revenue pressures in its Distribution segment and various end markets.
Furthermore, the company is focused on leveraging its four power brands – Buckhorn, Akro-Mils, Scepter, and Signature Systems – to drive future growth. These brands have demonstrated strong market positions and brand recognition, positioning Myers Industries to capitalize on emerging opportunities in the material handling, infrastructure, and military end markets.
Myers Industries’ leadership team has also undertaken strategic actions to strengthen the company’s financial position. In February 2024, the company entered into a new $400 million term loan facility to finance the Signature Systems acquisition, while also repaying its outstanding senior unsecured notes. This refinancing has provided the company with increased financial flexibility and liquidity to navigate the current market environment.
Looking ahead, Myers Industries has revised its full-year 2024 guidance, with net sales growth expected to be between 0% and 5%, net income per diluted share in the range of $0.11 to $0.21, and adjusted earnings per diluted share in the range of $0.92 to $1.02. The company also expects capital expenditures to be in the range of $28 million to $32 million, with an effective tax rate remaining at approximately 26%. This revised outlook reflects the continued demand headwinds in certain end markets, including recreational vehicles, marine, automotive aftermarket, and food and beverage, as well as the company’s proactive efforts to streamline its operations and capitalize on its diversified product portfolio.
Conclusion
Myers Industries is a diversified manufacturer with a long history of navigating industry challenges and evolving its business model to address changing market dynamics. While the company’s Material Handling segment continues to perform well, the Distribution segment has faced more significant headwinds due to the broader macroeconomic conditions.
To overcome these challenges, Myers Industries has implemented a comprehensive strategy focused on cost optimization, leveraging its power brands, and strengthening its financial position. The company’s recent acquisition of Signature Systems and the appointment of a new leadership team for the Distribution segment further underscore its commitment to positioning the business for long-term success.
As Myers Industries navigates the uncertain economic landscape, investors will closely monitor the company’s ability to execute on its strategic initiatives, drive operational efficiencies, and capitalize on emerging opportunities in its key end markets. With a diversified product portfolio, a focus on innovation, and a seasoned management team, Myers Industries appears well-positioned to weather the current storm and emerge as a stronger, more resilient organization.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.