Myers Industries (MYE) 27 Oct 222022 Q3 Earnings call transcript

Good morning, and a warm welcome to the Myers Industries Third Quarter 2022 Earnings Conference Call. My name is Candice, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Monica Vinay. Please go ahead.

Thank you, Candice. you us. thank and morning for joining Good I'm President at of Interim Chief Myers and Vice Financial Officer Investor Monica Vinay, Industries. Relations and Treasurer

Chief we Joining Officer. Earlier for outlining the today is of McGaugh, results President me XXXX. quarter Mike the financial this a issued and morning, third press release our Executive

a to also accompany We remarks. prepared posted have today's PowerPoint presentation

of Investor on will company's concerning the If Relations income, our and XX-Q risks, in are uncertainties our XX-K and adjusted discussed presentation, implied we you the factors found be some SEC adjusted the Act Such non-GAAP adjusted Safe-Harbor differ and forward-looking release the Securities information factors set in EBITDA you've these Slide or for call. may adjusted measures be Safe-Harbor they to forth disclosures. statements These Further is turn expectations on current and management's call uncertainties not yet expressed statements during I these Private company's may risks, This gross make please this along certain profit, website www.myersindustries.com, such access involve to on after and operating tab. EPS may XXXX. Reform those or from received are cause statements. Also the results filings filings. the our which of them materially also may a call advised that this the to under be is this call. are made to would that and pursuant event. Please on based other Litigation at copy periodic you as in financial other transcript the provisions presentation be X of comments of the either webcasted with website the can like of being archived and shortly remind

Slide turn to McGaugh. to to the our presentation, please Mike Now X over call turn of I'm pleased

top to welcome margin results earnings driven consistent morning to progress results. and of momentum We everyone our and proof our strategy. third I'm continue Thank excited past saw to teams a Monica. the our healthy the bottom year-over-year and actions initiatives continue report by growth, our net million and than grew consumer demand Increased $XX.X the aftermarket call. record XXXX our These third you, from in our more the X majority and that continued expansion period, of quarter's resilient Good pricing as organic the third sales execute commercial weaker across acquisitions, an and and environment. of another over businesses, working line quarter self-help deliver our revenue quarter to then end-markets. to strong we quarter, against results serve sales our realize taken the and incremental were on the which benefit from Mohawk X%. in X years. The auto by vehicle X to Horizon is end-markets consecutive the continue we Trilogy rubber industrial expansion. On macro of recreational quarter the net represents year of are ago and compared double-digit consecutive point increased excluding strategy businesses in a sales the face our XX% of our impact offset basis, In revenue the agriculture, challenging

per continue increased share share profitability also period. XX% to earnings our by We meaningfully per year-ago to adjusted our the as expand compared $X.XX or

challenging especially million macroeconomic EBITDA the record team proud bottom-line $XX and increased or of by This I'm accomplish Myers third our backdrop. adjusted year-ago XX% to our consecutive nearly was midst that period. able represents the to this Additionally, performance quarterly in the a

more Slide are guidance detailed X will outline review momentarily. Please Monica raising have the performance detail in our of for the result year-to-date, to results. a a greater which strong we of full-year, turn earnings our where quarter's As we

wedge X.X we with third to sales excellence segments, to and the by expand by goal sales our purchasing increases costs. one price goal. As this the across our down margin, progress XXXX. Dropping raw-material operating on company both deploying for another making of discussed quarter I of a making EBITDA of and simple margin we're meaningful driven over I've compared mentioned, up quarter XX% the net our good driving we're By between the the growth a revenue cost of against driving managing is strong progress experienced and in tactics past $XXX.X years, million,

in value the was and bring the service margin XXX to distributors. I've gap in we're we're to customers and cost year. of basis On success the the success The on pricing excellence other our our side our pricing calls, the excellence with these same-period they pricing up. on initiatives high discussed demonstrated commercial now last products the versus having the point value-based prices initiatives. reflect pricing moving the of our past executing We're having equation expanding levels by by improvement between We're

are Our exciting. results

Now and our the to through for performance guidance. more the call quarter walk our for I'll over Monica? details, Monica financial to to turn speak

Thank Mike. you,

As were Distribution $XX sales Mike third both Handling Material by compared mentioned the driven up quarter the of on or Slide segments. in XX% to and strong X, our million XXXX, net sales

and higher basis prior due to Rubber incremental acquisitions, increased and primarily compared increased million Mohawk or profit, compared our the SG&A XXXX. expenses. contributions XX.X%, margin X%. XX% increased profit partially to offset driven Mohawk quarter mix acquisitions expenses and million volume. Adjusted incentive Excluding increased a and XXX by acquisitions compensation higher Plastics the and partially of in SG&A by Adjusted recent to XX%, variable pricing actions cost $XX.X inflation, change higher and gross third increased by Rubber XX.X% offset income by Adjusted expenses. by Trilogy gross the operating the costs sales Trilogy selling salaries, the year, driven $X.X nearly from lower in to points and gross sales or organic net

to Adjusted basis EBITDA an percentage compared year. EBITDA last expanded million, same result, $XX.X million for margin or to of SG&A in with the quarter X.X% $XX XX.X% to the the points nearly same as Adjusted prior was a compared XX.X% increased year. XXX year. the adjusted period last with increase As third period of in XX% XX% sales a compared

Lastly, XX%. Please X $X.XX turn increase to adjusted of of EPS $X.XX, an or quarter. segment Slide was the overview for an for our performance

For sales segment, to increased compared net prior the million Material Handling year. or X% $X the

lower-volume Organic operations $X $XX income and incentive or SG&A sales or million partly actions the recreational partially costs vehicle higher the were sales Trilogy and and incremental initiatives. expenses. consumer driven the $XX sales benefits million, end-markets increases $X.X net in offset acquisitions, due expenses. Net million increased in higher decline from in the Plastics to the Excluding compensation X%. ongoing million increased pricing Distribution agriculture excellence benefits sales primarily in increased change and of sales were XX% and salaries, expenses to a sales XX% industrial were acquisition, inflation, a year-over-year. organic variable for and by higher net by by selling These increased end-markets. Adjusted cost the Plastics offset SG&A strategic operating by Trilogy mix, segment from

SG&A increased to to of the acquisition, XX% net net from income favorable higher million. XX% increased organic pricing $XX.X $X.X contribution Adjusted Excluding operating Rubber Mohawk cost in year-over-year. compensation The acquisition increase The offset million costs incremental volume volume selling variable the were due was and Mohawk SG&A from incentive and the and inflation, expenses price. and sales sales and expenses product expenses. higher higher due partially an primarily to higher Rubber by

flow free Free was of million cash X. of $XX.X negative compared to $X.X Slide to the third quarter flow cash million for Turning XXXX.

as capital last million businesses compared working the of cash last XXX a on net impacted an You cycle sales capital the for cash year. implementation working conversion quarter of cash shortening $XX.X in and our and quarter basis $X.X may planning, recall our decreased across hand the and year. Capital the operations at that processes third result quarter as end flow S&OP is a period of expenditures during significantly million. percentage same increase sales the to The was points were of

flexibility capital strong long-term support structure is provides sheet ample balance at EBITDA plans. Xx with our debt-to-adjusted our to Our growth

our the Plastics to our in first execution the acquisitions of approximately of Mohawk XX% the are sales X Given sales Rubber. growth solid in with to and reiterating XXXX we Trilogy of range, XXXX, with due anticipated be high-teens increase the quarters outlook

we EPS, previous the adjusted Additionally, our $X.XX between are we which for updating outlook to $X.XX. and full expect our year XXXX $X.XX now be $X.XX to compared to raising range to of

the thank another quarter. With continued an tireless tax effective in $XX reflecting include forecasted to million. SG&A and to net primarily Mike XX%. for entire to Myers expect processes million investments expense to our efficiencies. Other million their team amortization and ongoing approximately forecasted on call be record a $XX still I modeling be of approximately update the to like Interest assumptions million deliver $XX to extend operational to $X and inflation our sales, continue approximately is to We of CapEx expenses provide depreciation is and to XX% be back and key turn over rate of approximately to will I'd strategy. expenses you that, efforts people,

Thank you, Monica.

our Horizon organic a And us factory come. cost Now of turn we the little and to made identification to rollout the X has Slide unlocking bolt-on of providing of strategy, elements continue call schedule, first leading S&OP the self-help, Since will sequence both and better unveiled years strategy, an to capacity. more the X the robust to process This better as we've provide a significant X, to to of M&A. and which against additional self-help, element, allow we continued than progress launch growth our ago. update drive plants, years to us our volume want is X it allowed revenue X. and to I Horizon in capacity our hidden growth

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and is to our is approach. call life our in through and call these discuss execution today's against executed pillar Our earnings exception. I'll at pillars our no strategy progress comes X every

completed works. I'd have to single who a minutes simple these leader, we have bear will a focus goals, pillars, As team take accountable continues market market roadmap to comprehensive plans for we This a grow walk it organically. In deliver we fruit. like XX. quarter, is each and goals execute. for approach our turn reminder, and each segment. how track Starting through organic X detailed and relentlessly pillar please a for the third progress where to person provide with we These to growth, we to is commercial and our on XXXX Slide plans and training our annual a few excellence for

also most notably sales fruit. bear This training training market business, in gain agriculture combined with plans Our end-market. new enabled us has to continues our to the

is more We pillar growing, our are allowed in our our in it's line remain increased focused and believe margins and to invest on us year-over-year. profitability transformation. to Myers Our capabilities. These margins this expanding bottom have crucial people

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recently with culturally. success Additionally, We've Rubber we had these good in Trilogy most Horizon criteria and acquisition want potential to Plastics. X, Mohawk meeting be sure fits at

an and and M&A. will pipeline will believe quarters the a and of our our represents for at assets, in third opportunities and I our supply how in many costs. pillar provide day. improving I've they're to we sheet, capability transforming and expect core talent culture Myers in operate about how frankly, over good the we've that our improvement. continuous and companies acquire Myers manage develop improved and grow our company past get our to continue we'll have the We to Quite M&A. to that Myers how to believe been economics. aim This products the X.X grow past large better these how little years through value. Operational the every continue next We capabilities we has years. reduce attractive we capabilities has new improved excellence, Myers. chains cap added We're by catalyzed balance excellent significant opportunities approach shareholder our create I spoken businesses

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which to culture our Myers morale, the our leadership servant continues focus culture satisfaction Myers critical is performing is The Finally, high building traction results. on at the approach a core organization, is transformation. improving and to job fourth and our in pillar gain One values, business

I'm our the an One reached the As to employees moving from pleased culture, have how we a end transitioned of company X, Myers with Horizon holding to integrated one.

I questions, Before X the resilient. well to pace strategy. to potential headwinds. Myers strategy consistent to reiterate continue are will I we open want Myers products, for I'm the new our economic that despite our our we and Horizon allow believe advancing and our perform markets clear is through with encouraged simple,

of underway, well be with to is the what's early we transformation Our Myers. and continue innings in possible

call expect we long turn value that, the We for with over to shareholder years. And and now create next we'll runway the over have a significant questions.

Operator?

question from Lance the line our [Operator first Vitanza of Instructions] of Cowen. So comes

okay. if thought And a and start the X got Mike actually on I couple, I'd vision. Slide that's long-term I've

think mentioned hear you You you a think guess lot -- M&A and talked about I'm I about should Horizon more X the I to you what in expect that coming we said. that's I quarters, curious,

North And on are just suggesting that you I focused overseas think to enterprise more then And Horizon just phase more transformative guess market, sort I'm we're is, America, hear want so you to American that expansion that type going going the slide, within a make for I is of of I are read bolt-ons a as North is mean, I global squarely the wondering M&A question be doing X -- opposed as I to is suggesting to part is there if about Horizon sure next transaction, in my quarters. so also you're level coming so is, X expansion within of that the you?

transformational terms We've then the improve was transformational move us looked Horizon on question. in global more profitability, bolt-on would organic think was more which that funds Appreciate self-help domestic, to needle gives Horizon more shareholder still I some Lance. was X but for us gets X M&A, scale nature. creation. Horizon value that potential and largely Yes, potentially deals focus the in And of X comfortable growth deals. at and our to

to to more continue large-size or profitability. be moats on has about that itself think talk typically just allows are our We for our products going focused entry, because it focus products I really adjacencies, in on in release, they those durable competitive barriers to plastics greater large-format and with

right do kind on Horizon year talk outlined if X about XXXX through slide we Horizon our stride the look to the commercial. and I've hit Lance XXXX What's really X the piece on So you I company exciting in and that X, and is and beginning as at sunsetting in on excellence believe year X the of we're self-help Horizon on continues schedule. growth most operational organic

macro we'll hit continue as Myers some just stride potentially of negative factors targets. the to more see acquisition potential think on a have impact start to I

a put economics. think months, companies to I'm the at so that's we're going going in XX getting excited, stride XX XX basis, on us next acquire a and I relative attractive XX to to good months position great And to to be over

Okay. that. you Thank clarifying for

a us could the year that growth, were that's near-term, then earlier back X% the we big But better from seeing slowdown were trends So the setup sort for saw good. we -- in leave just reported generally get versus expected, we we and but quite to in XXXX? just is the that that make we how revenue the rates having as year-on-year as we first the than about the big you why then you expecting think And the the are slowdown of performance this remind does organic it of how in half that year? does the me growth that organic

segment some believe file I business season. the the fuel container and pretty year-over-year notwithstanding of question. great or quiet our the that was day is quarter, the when of published today we down XX% at column Ian that the the and of Lance, it of Yes, portable market consumer is later today, and hurricane a Hurricane was results we end part at end

saw And we that. so

in that we decorative I've that The make is, road these molding piece an high-end in household example, of as consumer planters, other warehouses goods box covers, of boxes about lawn past, big get moldings, We're discretionary slowing the talked some some high-end and are retail and really business the garden end. covers products that's high mill those seeing at the for full the down.

pinch buying seeing I our XX%. discretionary segment on consumers' inflation, consumer is high-end think habits of that's why we're and consumer

you've margin and think inflationary to that of upside cost the Do as year increases the you the have XQ, margin just into if of margin about that you -- takes, that revenues level on of trend is third biased, that hit then -- and year? quarter, we to about fourth sort as think price wondering quarter, you the as you that about of And gross Okay. there's are sustainable? a puts were next rest different biased the gross that, were through. of side, the the should the lot same into that or downside think we the pressures, in got think you hit flowing Or I'm I increases, is that you

let ask to address Lance, Monica me that.

our same be guidance points I level, We at Lance, would at down be level, the outlook, QX expect top to based would the lower QX, XXX the we our expect of that you year-over-year midpoint the margin to say but But plus are we on and margin question with revenue obviously, started up sales going same sustainable. Thanks. sales again the saw line. in be expansion sales in sequentially. basis still Sure.

lower So volume the it overall on impact have will an -- will margins.

about infrastructure Yes, ag going to and healthy, going you volume just be beyond, is going XXXX industrial for and think healthy. is Lance, to still fourth will the construction into is quarter be be industrial if be talking healthy, I sales I look can, healthy, as to overall

problematic. consumer is think I be going still to

or are RV and muted themselves, as really sales or having do segments think of problematic segments to that X and going those I to balance are continue off. significantly be spite kind of that X is see more you X growth X things good in

[Operator the Barger Instructions] from of question comes Our line next KeyBanc. Steve of

from team the sides cost of has a your question done price job equation. no managing great of Mike, both

ability you yet As can you And you some other still auto in to price? How you're input your costs ag down, areas are high. see come and seeing are the that thinking weakness consumer? versus industrial compare hold about maybe

customer. to Steve, I expansion going in value say, seriously. our areas to products upon to a think price excellence, there to to are. I'd the through our able going through the we're pricing have may we've it's I I hold taken allow a I general, will -- be take where the hang we in believe us going for directionally. moderate competitive to And commercial to pressures, of think really really Well, we there continue bring to take to they -- but be training, be believe margin. we price, that's on provide where will based this We areas that durable general

and volumes I will are expand down So think next a I the margin hold and be quarters able what if to into as we even years, look bit.

base, Now capital. what not asset high is Steve, across cost extremely our

the having plant to had we that to in up deliberately. So throttle upon some we're is basis. force need. these cost actually based cover We past, the contract big plants a these I talked a facilities, can labor not fixed for down run and of

So down needed. we of a to ability that throttle lot our as labor well. There's vary our can plants and as down

in got where fortunately, if we run it, we've order just a asset we've in run slows, and demand high drop position fixed have to we're in And not so have to got price we that don't cost, not -- cost to we're big situation. a that to

us X time service pricing. of the quality we're And are great leader one so that really our products allows most -- we're and or in levels of and high markets, the good the remember confidence niche or and our top make our stickiness to the in most we have in of

it, And shift to It's you're footprint close want or the be, And plants? $XXX or anything spend to to great utilization on where you rates year, need per anything this call plants, money the million quarter as color. is running, where the are on just to do point rationalize? you the it

in driven may asset There -- more Southern be results a that we've do, Southeastern by really South, help that. to a pleased capital States, in decrease and more have good expand that's really into United few assets in in need of the that a Yes, we're demand, with to -- really it's we to frankly, could planning we're I -- consolidation, is States. it's looking some our footprint. us seeing personnel to planning, but personnel brought South not We're we a And as United to with south a actually question. years, good an into attractive dial good more an Southeast. doing quite recession, we and from if Steve, footprint Southeast. Overall provide some capital discipline trying think out opportunity of figure that exposure the the we're the as X outlook I'm Steve, helped the of far the points I good overall looking rationalization, capital brought more may us go necessarily potential Directionally, need but at of over think next on in exposure X that, we that in have price there's really at the us the does in.

Shifting of expect as great. in you Or auto that I pretty end go little you you expect -- bit, do Any is firm continued weakness strength and a That's remaining said industrial. to think you year-end? pockets markets already into there?

some to infrastructure, be there's still that's construction plastic that uptake exposure to sorts equipment in industrial for parts as big strong seems tanks still companies, of in Construction or Any the any well. we make there. hang seeing industrial we're has there, hang there. well. that Auto to still good to more going of seems seems If

can the In fact, a still I of product all those make companies them. think lot we will for take

if a in so the any have something weakness lot me some additional a food have, the that's discretionaries shopping is nice Just seeing where premium or see color? and left Monica, the consumer cart some But let customer over that their it's don't of car, money that particularly and to spending we into putting weakness. we're putting gas a if for they of -- much thing, good

I No, is One ag to continue covers. think that just too strong. other be comment will that

yes. Yes,

For sure, that's true.

do And trying to that about release, moats. a process? hard-to-replicate that then patent? with it you in relationship? about just define means. What I'm playing the are you talked how Is thinking looking to Is you're that moat adjacencies And what -- see Is press you a -- that manufacturing a out?

what's this more. a Steve, talk Yes, yes, that at spot company. little have good We is sweet question always and our should teased about maybe I bit

we're technologies So and we're good we plastics better. them actually at have all these executing and reasonably getting

we Asia. or ship large-format look because it we products make -- say, from can at and can we China geography a so low-cost to like And Southeast get difficult they're

a of because moat against us competing competitive only So companies. U.S. bit it a we're gives

benefits trend Now onshore. of that tell the also I'll from you seeing we're

well to Myers positioned is manufacturing capitalize I this on think pro-USA push.

thing. good a that's So

The like the the talk expensive, difficult because other products know-how I are they're technology I make, more difficulty molds is larger about greater. on is to the a and more standpoint,

falls that And is or parts. And result, that X have the just difficulty the or to competitors of moat XX. make CapEx rather naturally than little so out XX as competitive and you X bit knowledge the a and a

money. that's And it, we And that's do so our sheet. are have to that well. look how years, over potentially? plants And we opportunities But of in just companies want us next dialed with continue. to think I some beyond can some material beyond to to few going particularly great opportunities X believe, handling worked how it's in it's and do I to to with balance stay going look spaces, think some great to challenges going the we in private we're and over I years. capabilities for our There's get of And to months, I inbounds our but what lot with really can know make we I create lot handling, going us giving couple we've last think And the present value a we a to shareholders a large-format on -- it's that companies that? we the run really present core of material can think last

the industrial of me, lot things interesting from quotes requests of one for Are up think want countries? people that companies. nearshoring. that trend? brought a real you last about resource it's getting asking you a for Do -- other that's question to from One you We're this

to because customers China, ag are if it's Cities some the we particularly years. that costs Quad -- versus Southern you just X And supply delivery, construction in customers labor, feedback oversold. rapid can even spooked in those I are chain bit saw customers, example little X the it or make over the our and if means ability to higher are that have the somewhere rapid We last the something as issues think an on and it

that's away, miles And supply a that's a X,XXX the seeing supplier away. XXX chain quotes so versus we're reliable miles

question Lance from follow-up a of Vitanza Cowen. have We

And about which a circumstances Or last did maybe if something $X.XX be I I'm about or come seeing to months real that are wide will to of it's of closer I volatility closer the and EPS and lead Mike, you suggests expected. That little EPS if have to that range. the quarter in variability range is ask the couple than you guidance, just you wondering in the representative between sort if $X.XX. over would adjusted to wider else want that's versus believe I fourth the of there's $X.XX $X.XX what there? the And year? could what of the -- could talk of bit, coming

see of very simple, just raised yes, I correct, realistically. you and out. it keep $X.XX. that I mean that's spread Lance, happening $X.XX it by I between raised that probability. don't $X.XX. we think Yes, that's just guidance is point Mathematically fair, a lower low that we put end But a just the to mean, I good

raised that? color you So a we add $X.XX. just any to Monica, it But do

we the while and I we'll midpoint just we midpoint we of raised continue to I emphasize range, say of range. pretty to be it around $X.XX the to think feel think would some No, there confident the is about that that the uncertainty,

on Yes, the on maybe more midpoint I it year. kept late should I was just the $X.XX in I Lance, and focused have tightened up, either it side,

are no remarks. this over the management hand the there to back to closing As like I'd conference team call registered questions time, for more at

Have Industries. and Thank for day. everyone you. a time Myers in to interest Thanks wonderful your today your

Ladies and conference now call. today's this gentlemen, concludes

You disconnect lines. your may now