Myers Industries, a leading manufacturer of polymer and metal products and a distributor for the tire, wheel, and under-vehicle service industry, has announced its financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 Financial Highlights
- Net Sales: $205.1 million, up from $197.8 million in the same period last year.
- Net Income (Loss): $(10.9) million, compared to a profit of $12.7 million in the prior-year period, which included a non-cash goodwill impairment charge of $22.0 million.
- Adjusted EBITDA: $30.7 million, compared to $25.6 million in the prior-year period.
- GAAP Gross Margin: 31.8%, an increase of 30 basis points from the previous year.
- Adjusted Gross Margin: 32.4%, up 70 basis points compared to the prior-year period.
- GAAP Net Income (Loss) Per Diluted Share: $(0.29), compared to $0.34 in the prior-year period.
- Adjusted Earnings Per Diluted Share: $0.25, down from $0.38 in the prior-year period.
- Cash Flow: Provided by operations of $17.3 million and free cash flow of $10.1 million.
- Debt Paydown: An additional $13 million in debt was paid down during the quarter.
Dave Basque, Interim President and CEO of Myers Industries, commented, “This quarter’s results reflect strong performance from our Signature Systems acquisition, growth in our military end market, initial benefits from our cost-cutting initiatives, and reduced variable compensation. These factors helped mitigate broader macroeconomic challenges in the RV and Marine sectors and new headwinds in the Food and Beverage markets.”
He added, “During the quarter, we focused on cost containment actions that we now estimate will lead to an additional $15 million in annualized savings, exceeding our original target of $7 million to $9 million. These savings will come from labor efficiencies, manufacturing optimizations, and other initiatives. We will continue implementing cost measures to address revenue headwinds in key markets.”
Basque also noted recent leadership changes to address underperformance in the Distribution business, appointing Jeff Baker as President, Distribution. Since assuming his role, Baker and his team have identified plans to close sales coverage gaps, improve customer experiences, and enhance operational efficiency.
The company is updating its outlook, expecting full-year adjusted earnings per share to range from $0.92 to $1.02. Myers Industries remains confident in the growth and earnings potential of its four power brands as demand recovers in affected markets, while focusing on improving operations in the short term to navigate challenging macroeconomic conditions.
Third Quarter 2024 Financial Summary
| Quarter Ended September 30 | 2024 | 2023 | % Change |
|---|---|---|---|
| Net Sales | $205,067 | $197,798 | +3.7% |
| Gross Profit | $65,130 | $62,379 | +4.4% |
| Gross Margin | 31.8% | 31.5% | +0.3% |
| Operating Income (Loss) | $(4,764) | $18,703 | -125.5% |
| Net Income (Loss) | $(10,878) | $12,747 | -185.3% |
| Net Income (Loss) Per Diluted Share | $(0.29) | $0.34 | -185.3% |
| Adjusted Operating Income | $20,539 | $20,039 | +2.5% |
| Adjusted Net Income | $9,212 | $13,875 | -33.6% |
| Adjusted Earnings Per Diluted Share | $0.25 | $0.38 | -34.2% |
| Adjusted EBITDA | $30,735 | $25,648 | +19.8% |
Net sales for the third quarter of 2024 reached $205.1 million, representing a $7.3 million or 3.7% increase compared to $197.8 million in the same quarter of 2023. The growth was driven by contributions from the recent acquisition of Signature Systems, although this was partially offset by lower volumes and pricing in both the Material Handling and Distribution segments.
Gross profit increased by $2.8 million or 4.4% to $65.1 million, supported by the performance of Signature Systems and a favorable product mix. However, this was countered by lower pricing, volume, and rising material and other costs. The gross margin improved to 31.8%, up from 31.5% in Q3 2023. On an adjusted basis, gross margin rose to 32.4% from 31.7%.
Third Quarter 2024 Segment Results
Material Handling Segment
- Net Sales: $150.7 million, up from $132.5 million in Q3 2023.
- Operating Income: $0.9 million compared to $20.0 million in the previous year, primarily due to a non-cash goodwill impairment charge and lower sales volume and pricing.
- Adjusted EBITDA: Increased 33.0% to $33.5 million.
Distribution Segment
- Net Sales: $54.4 million, down from $65.3 million in Q3 2023.
- Operating Income: Decreased to $2.1 million from $5.0 million last year.
- Adjusted EBITDA: Fell to $3.2 million from $6.6 million in the previous year.
Balance Sheet & Cash Flow
As of September 30, 2024, Myers Industries had $29.7 million in cash and total debt of $396.2 million. The company’s net leverage ratio was 2.7x, with $239.4 million available under its revolving credit facility. Cash flow from operations for the quarter was $17.3 million, with free cash flow of $10.1 million, down from $22.1 million and $18.1 million, respectively, in the third quarter of 2023.
2024 Outlook
For fiscal 2024, Myers Industries expects:
- Net Sales Growth: 0% to 5%, adjusted from the previous guidance of 5% to 10%.
- Net Income Per Diluted Share: $0.11 to $0.21, revised from $0.76 to $0.91.
- Adjusted Earnings Per Diluted Share: $0.92 to $1.02, down from $1.05 to $1.20.
- Capital Expenditures: $28 million to $32 million, reduced from $30 million to $35 million.
- Effective Tax Rate: Approximately 26%.
