Myers Industries (MYE) 4 May 232023 Q1 Earnings call transcript

Good morning, and welcome to the Myers Industries First Quarter 2023 Earnings Conference Call. All participants are will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask question. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Monica Vinay. ahead. go Please

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

Mike me McGaugh, Joining is our and Officer. Chief President Executive today

a we XXXX. results of release outlining Earlier for issued the first the this press morning, quarter financial

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

can Investor at received a is webcasted release the tab. PowerPoint, archived shortly you event. call the www.myersindustries.com call copy or website after along the our the either yet access of not also on you've on Relations and If This our with under them will this of the being transcript website be

Private would management's or cause some to we of Please Slide statements differ Act provisions these like Securities to which may statements from for forward-looking that of results of and remind X our harbor safe Reform and you pursuant statements. this are factors, in may made Such presentation comments uncertainties expressed those that call. expectations disclosures. the These risks, current make materially turn PowerPoint to XXXX. during Litigation other the on I implied to safe harbor based are involve

information in in financial set may and the these be and is operating Further filings. periodic adjusted income, on risks, found please adjusted discussed factors measures, adjusted uncertainties company's and other forth EPS that Also, concerning company's certain XX-Q gross SEC advised call. be non-GAAP this EBITDA as and such profit, adjusted the may XX-K filings be

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

report expanded we cash quarter operational accomplishments. welcome We and of adjusted Thank and deliver I'm call. pleased gross flow, you, continue for initiatives and these first delivered morning, self-help I'm our consecutive significant our fifth our quarter, and Monica. XXXX results. proud that to Good earnings margin the excellence efforts to everyone, to free

businesses ongoing and molding teams The record that Their injection and were demand excellence. commercial our are of profitability. in out results call specifically great on also levels deliver improvements continue molding hitting strong to cylinders. all like I'd injection operational to to due

of remainder end Material the revenue. led were distribution to however, marginal side, ultimately summer. demand, a to Over mixed we market higher in which primarily experienced decline on the last Within segment, Mohawk the the Handling sales acquisition due

beverage sales a financial before brief provide X.X%. decrease but Monica greater and consumption trends markets and of in of a strong demand our million, perspective, I'll quarter saw demand our a results From Now end net see vehicle, outlines we the end performance. of marine recreational overview consumer detail. within where We market, end food our industrial $XXX.X achieved market to and market, are impacting reduced inflationary within in mixed we demand continue the overall

been we To in help concentration end on focused our laser increasing customer further markets. have headwinds, the growth offset diversifying and our demand base higher

customer reusable [Buckhorn] and $X a manufacturer, We beverage providing container to growth, auto are electric business industrial a million business (ph) the large and and win aftermarket, we million win. aftermarket boxes Examples and reusable food recent in industrial new business vehicle $X.X include winning new new end to a multimillion are auto an supplier markets. pursuing dollar win an

new We a projects business to lightweighting qualifying economic future. also the project success make near the for continue around to potential military the and cases testing be sector large has our progress in development This world.

practices gross a business and the and helps actions Myers on The our best our X a we on XX% a Now are of of company. repeatable business in Horizon that was percentage $XX.X increase first is implementing self-help back sales, XX million our margin quarter basis, they or initiatives on gross across basis our a Adjusted basis. a ensure in dollar sustainable X.X% system, increase and of result crystallizes results. but of decrease profit to the an points implemented system

same You'll the SG&A period year. last the notice quarter is first that compared to higher in

Some a is is to success a acquisition of due Mohawk this and some win fee paid legal the to due that quarter. on

pleased are outcome, significant it and was a to We a the patent segment. the Material win case in with relating Handling

have solid. first XXXX the do was distribution of growing and to Overall, quarter segment. still We some our optimizing work

the cost recall, coverage and last We're to summer, expanding and out. the our our business you business, we Mohawk improving service to take our acquired continue grow customers. As integrate we geographic and level

our to And see levels, we have underway to movement quarters. positive we this, several service do need price next margins. increases over margin improved these to provide expect grow To and the

to the the Material sales we the Handling and operations, out of to of combine costs to we handling units. lower take organizations continue material continue and cost our commercial effectiveness all our side, of On across business improve parts

size the last strategic in we the the to On the years. of company, transform front, three nearly Myers doubling continue

we've and competencies period, pricing, in in lasting Over we acquisition integration want improved acquisitions sales this and Strategically, executed capabilities. right be. both to are purchasing We've planning. operations we our built and and in bolt-on where

strong sheet are is strong. capabilities our and balance Our

Horizon are At acquisitions is high. We larger positioned well impactful and part to the that Myers, we've as pursue of outlined X. a more morale

to about a Myers exciting time a fired special be Our at to once-in-a-lifetime build up opportunity company. It's really Industries. here an employees are

first over Monica? call the turn outlook. financial XXXX to full Monica and I'll for year a review Now quarter results of our

results. Please for quarter summary Thank a you, first to X turn our Mike. of Slide

While long-term challenges economic we continue near-term impacting strategy, our execute results. to are successfully

XXXX, first Material X.X% were partially sales segment, in compared which net distribution the first the segment. the quarter million offset sales lower in quarter by higher Our sales Handling $X.X were to down of primarily due or to

to the X.X% profit a decreased actions, enough not higher basis, raw the volume from lower was lower Rubber acquisition and material more contribution gross change an On sales volume pricing offset mix. by million offset contributions and organic in than a mix. Quarterly from in or as Mohawk $X.X were costs adjusted pricing decline

quarter points compared XX.X% basis margin the XXXX. gross with XX% to XX quarter adjusted in first increased of for However, the

gross as year a as result to to period quarter higher Rubber in million The a $X.X or of million. with $X.X to increase acquisition, the due higher First SG&A XX.X% patent prior compared favorable income including with expenses. legal as adjusted million increased and lower in a Mohawk Mike $X.X $XX.X year. profit operating results. SG&A increased primarily sales was or fees, fees stated, SG&A decreased expenses the to in XX.X% SG&A X.X% million success of same and last the XX.X% conjunction compared payable percentage of trial

or decrease same year period. prior was EBITDA to quarter million of million points Adjusted the with the margin XX.X% year. in $XX.X compared for quarter, EBITDA first last XXX XX.X% XX% basis the period Adjusted first decreased compared in the a $X.X to

was to Lastly, in period the same adjusted $X.XX EPS $X.XX last year. compared

Next, for please performance the turn our to segment quarter. Slide X an overview first for of

$XX than Material sales end demand market decreased in or to prior net by offset the the segment, compared For and Handling the beverage consumer sales were the Net end million markets. industrial from year. vehicle XX.X% specific decreases more in food increases and

costs. to year-over-year. $XX.X or a more $X offset sales Material raw mix the Net XX.X% by Handling material sales in million volume increased change $XX.X adjusted Lower segment million. than for distribution sales or decreased and lower XX.X% million EBITDA

organic Excluding net increased the of acquisition, million incremental net Mohawk sales sales X.X%. $XX.X from the Rubber

Mohawk cost product and the year-over-year to The XX.X% costs. were price expenses a acquisition decreased continues million Distribution's to $X.X Rubber freight or and and to margins. to $X.X the primarily inflation segment million, EBITDA SG&A due offset integrate result at SG&A Mohawk as higher centers. to expand labor adjusted of implement costs Rubber higher higher distribution and increases acquisition

to quarter increase was million primarily cash year, capital X. of first due in XXXX. to The collections. decrease percentage a for XX flow Turning working the period in decreased initiatives flow basis of compared compared was a to from sales quarter first and capital. same cash stronger $XX.X last $X.X result for self-help to Working of net million the Slide the contributions cash as primarily Free of the our points XXXX

expenditures at million. XX basis the XXXX quarter points. end as million Capital on $XX.X net On sequential quarter a of percent basis, were working first sales cash a capital for hand and totaled decreased $X.X of

to the to EBITDA remains our debt adjusted of times. strong Our continues with support sheet balance growth runway X.X and

for to an for on turn X please update XXXX. outlook year Slide fiscal our Now

are increase in We to guidance maintaining low the anticipated our for year with mid-single-digit the sales net the to range. full

segment's We key expect to end sales in will the decreases than segment in higher Handling sales offset that the more markets. Material in distribution of some demand softer segment due the

the new In to to growth quarter, we expect as QX, wins in soft be Mike the a that organic continued of of but the be the lower increases second year, sales than through price back and half deliver sequentially expect higher result In year-over-year demand. outlined. we business to

throughout conditions will monitor updates we to continue always, the year. market As provide and

We continue expenses XX% to approximate to SG&A expect net of sales.

projecting of million We interest approximately effective and year. are $X.X still expense for rate XX% tax of the also an

Finally, $X.XX adjusted to of to share. we $X.XX expect EPS per an range continue

As seeing Mike are results. on self-help and noted have earlier, significant we initiatives progress our made

these cash from continue and expect flow to We stronger flow free result year-over-year operations to initiatives from benefit in cash generation.

the quarter. turn Myers efforts Mike, the team call like work I first to their thank for the and I'd entire over hard Before to in

to on turn back Mike I'll strategy. call update the that, an our to With over provide

turn Slide Please to X. Monica. you, Thank

high-growth, map as Horizon As organization. world-class outlines calls, road our noted on a three prior to our I've serves this into transforming slide strategy, company which our

efforts continue against improvements strategy we cultural this and we'll improvements, as operational grow our build the Additionally, to financial, meaningful on yielded have those and company.

a These organic our growth pillars We've that X. support our growth; on: pillars and is and Slide predicated X serve four the Horizon to and accelerate culture. to operational efforts Horizon high-performing outlined as strategic X. in M&A; Turning foundation excellence; X

pillar recent Slide Let's on at look moment as take to within progress each our shown XX. a

and weaker markets. able also number Starting to boxes, year-over-year in XX% of accounts, new offset in success winning end significant a strong for seed had were demand we our with growth within our drive to beverage demand food helping Due organic of verticals. growth. consumer-facing We've

implemented we've price increases distribution Additionally, our segment. across

but expanding to increasing in work price wheelhouse, done. margin will is and and our more here, we it have get We do

growth. on to organic drive We our also remain focused initiatives internal

better specific focused wins. As is or them, I call, we growth are needs. how and them This aspirations with extend last customers' make approach fit customer-driven we organic higher on innovation, existing our with mentioned off take products our or targeted paying performing can make them on

Mohawk power I in to serve M&A. strategic to pillar, better and continue It provides made that second than us more our the the the distribution be about segment. acquisition optimistic our Rubber customers to Shifting ability ever. we channel

I As to it Mohawk, to has. segment we integrate Distribution than margin deliver ever continue stronger EBITDA expect our

on to Moving M&A our playbook.

and refine results. While acquisition, repeatable, with we it scalable we able and be to it to accretive fast additional each view continuously deliver

expect we balance flexibility provides M&A with part our as opportunities, as X. to sheet bolt-on as of health a us complete enterprise Horizon pursuing the the the Additionally, of continue to well level

excellence and makes Myers implementation to company on over progress we respect Myers and improvements focused is which the business With pillar, business Myers documents that the operational made are more integral those resilient three system are ensures system, the transformation. of and ensures we've and last years all the lasting. the repeatable to our

significant the buy, not the of model Myers rigorously at applied key call is many whose practices approach, aggression, sounds want at are the the and The simple, aggregate I this this to effective. it's we've total about and unique example even perfect institutionalized system. the I our all. fully, that leverage our Myers It spoken before. SALT A of model, and Standardize Myers found and made the I've cost. we best to buy, lower ensure team, or comes your business success longevity. to from it's companies, costs gains in and SALT suppliers are very have titrate purchasing part but model,

table. we as cost peers competitors that on the As often evaluate left other market we are in there reductions raw the potential and evaluate acquisitions, or see we material

left price the both me also our the targets. implement well levers of We and confidence Squeezing well. EBITDA do in these we what see increases ability to as execute is on and table acquisition there performance of gives are what our

team new and Fitz. our high-performing growth, Grant Financial transformation His May start, integrating Chief increasing moving we our prior Horizon recently acquisitions our be appointment will company and top experience successfully our driving Last, our look transformation, joining to Officer, to X. the forward margins culture. in strategy. announced of three to Grant expanding I on invaluable To line to

large Additionally, our company, strategic echoes attract fueling small-cap Grant's talent ability to progress. to our our hiring cap

strong and across of our in we talent are we are capabilities an our invest influx While benefiting talent improving company, from also to the board. training the training our These programs internal through employee to programs. investments and continue development

progress strategic the I the confident remain conclusion, In buyers. in future in direction of

great we Monica doing as this nice I has for interim has open questions, job you, Chief the job through Officer. for our Thank finance period. and a thank been tremendous a Before our leading Financial to Vinay team call a want Monica done Monica. partner interim

the I'd Operator? that, to call like With over turn questions. for

from will go now question question-and-answer [Operator comes the with ahead. Jonnathan begin Please We Navarrete Our first TD session. Cowen. Instructions]

good quarter? April weakness summer understand Jonnathan on and up I so of this second start Hi, marine in seeing that off in there's in pick RV, like for two trends morning. the been -- would of end first But markets. the I with It’s ahead you Lance. months some the May, particularly consumer the overall season, are to

RV more little the consumer, to and still particular, of expectations of Yes. continues meeting Parts the We're be garden, Parts That's coming seeing in is some beverage of RV is of season a industrial. strong. are and trends. strong. and to and still our a Food lawn industrial are balance for and in weak. our which part garden consumer. outlook in stay expected. is lawn Consumer, continued

of have year the we for make we various items whether retail dollars The anything that a about, higher doesn't Some talked it's still your additional? there's discretionary items ticket pressure. they high-dollar consumer decorative that outlets, had ago. Monica, the

is the Mike just would -- expected. part talked as I would that just in coming May. say consumer starting that Yes, that's here on add in we I the

a that's think bit. to of start had a impacted kind late I April spring the season, we've so little

Okay. Thank you.

markets? beverage just all Like, that beverage, there's on how more To expect I it's up I on? opportunity kind as want other food the can take to the there's there. and going see take end can mentioned, food don't right? to you and [indiscernible], and focus extent this more that know weakness of some offset I we of much lag, in see what Now

Yes.

that's the lot by -- ag a of driven seed box and So have. we box sales

good number business into have go also traction also. in that's IBCs food quite a units IBCs and doing we that Now make and beverage, of well our

the be margin standpoint of from half those volume back standpoint. markets strong end and the year expect both a We to of for a

cover? an now, So trend. we're I how much can it think upward on Right

cover first totally didn't revenue we So the a on in quarter. basis

price distribution end price like I would quarter on root of think back a be of in taking that same. half in the lot driving aftermarket. talked second acquisition. we auto But of the the were repeat probably the a year, these see heels the markets I've increases about Mohawk

come You'll the see that through of in year. the second half

in do and price or to about Mike that would I we so of just on I we -- second that the and wins talked That a Yes. talked about the year single-digit beverage. combination But growth. prepared customer the the delivering increase the wins, be the QX. increases, organic remarks in food will the QX anticipate and in customer mid growth add of price anticipate that half -- high the both

those on confidence got we've numbers. And right. that's Yes,

Okay. And last one for me.

flow than I quarter? been there it is prior higher quarters. wondering, what see that cash of type this your is acquisitions at some And during has a because little looking CapEx bit was I'm Just in small the statement,

step Some it of our capital expense. XXXX. that But maintenance some we up is brought need from some plants catch-up load still our really us machines, We've and experts our XXXX, also run helping in machines better, do XXXX, operations to capital schedule who catch-up capable better. are on in

and spending Some the particularly of some capital, that for as and well end food industrial markets. in is growth in of beverage

as of in half will that this running is over the back the year. I capital. see A appears that's be term So up, CapEx where us as rich don't long bit Jon. expenses catch the we of it you anticipate

Thank Got you. it. Okay.

Thank you.

Capital Barger Please is question from KeyBanc next go The ahead. Steve with Markets.

Hi, good morning.

Steve. Hi,

Steve. Hi,

new of would kind What be markets that applications? And industrial displacing end are for another pursuing? you or competitor product

A are tanks, industrial -- tanks hydraulic bit markets, both. fluid niche it is tanks, is that construction it agriculture some and lot of applications. of applications. application, fuel A into application larger It's the going of

focus it out of high kind well, area high-quality make was can it's much providing industrial that heavy that tanks tanks an equipment too equipment. We water RV and a ourselves into of fuel for agriculture, infrastructure, know So consumer the moving well, the focus, tanks, volume. of really at of but construction we or do and fluid too Steve. of We hydraulic more type much tanks, and a

it's million, as We've had and The wins And $X.X and would a there. a long cover hard lot of in there. to like. -- RV $X as million, wins quickly here are $X the coming, it’s dramatic we decline are they time million

good Yes. pretty I runway industrial. that, a should you on have understand but

company machinery every a much cover backlog record pretty now. I think I right has

That's got You right. it.

having last big there with up, we we're of names. runway And the capability is wins engineering and manufacturing in lot are Those and some our also over quality that humming guys there's specific years. and of on part two have the So there. customers a brought that's plants our

are I sooner. see it I could just You correct. wish

Yes.

mentioned military more big You detail you talk And be any Can could that? time? on just program. about how a over that

for It's various munitions. the the Yes. for armament,

not to so heightened in U.S. it that globally, the has rearmament, And only everyone's the Ukraine also there's but depleted but reserves, rearm. need we awareness wars

cases the had results the testing. And munitions. favorable on so, we're various some We've making for

as some interest there's has declined. some demand So plastic to metal past, now had to favorable hesitancy on results go the Steve, or qualification the the we've some great from And this that recent even been And is is high. week, wood, in so now but tests. the hesitancy as

She may it million to $XX I'll I. term, than say, XX be longer million that $XX next closer let's next, a the look little Monica. think, I amount, dollar million, be or over $XX The months. to could

range, months, XX to little probably or near term, XX in the the next be a the $XX will closer closer to below in $XX million think to million. and I it

military for to volume Yes. the we're shrink our next And Steve, And margins. that like, right, filled has doing off. fuel there decade portable all two, as where has has in. really, taken what take using is it military strong. electrification, really with also we're X% those like a assets And good expertise. is, it's be containers really we whatever it looks going year, can your or Military else is

seeing pleased engineers we're So of portable military. kind beyond some and and what our with of we're move sales we really into far. capability fuel containers pivoted move to And so

We through funnel. to the it just need get

No, know realignment. doing And have training lot a you force and Understood. I you've number of lines that right good. the Yes. salespeople product sales the been right footprint the sounds now? you have and Do for of

and a we good point. sales much we're we have or there's the together now. And that's much we're the teams capability customer. to it those is and forces work combining overlap What reduce gives molding finding, Getting cost rotational there. blow with more effectiveness of consolidating actually actually molding, Steve, Yes, us so can finding them, so

have. One these for price. If side, to margins And test we're less we all progress, take again, value been there. for price. distribution making and volume repping two going test and if talking lessens it's to need journey. some and we're get of that still Myers action but we're higher customers. we our test bring years, ultimately, a lot on the about We salespeople, Over we'll capabilities the it to a I've we We're going price

for me. last one one And it. Got

those talk larger about start multisite, what those about Or just of look impactful does can mentioned, bigger you could like? terms think revenue? As that you and mean you more multi-process, in to acquisitions

how got we you've strategic about, with little we've aftermarket. the bit talked company about do And We Yes. auto the the past view lens. a right, all in talked

engineered way. vertical. We storage And still You've products. you thinking then that protection this have engineered customer-specific got about handling solutions, are and

right We're Our expertise on going that and is plastic metal in to build expertise. now.

go So we the there's of excellence. that's terms we're clearly, be excellence. operational -- at capability reservation good bring too something We're I look, But of can a commercial to off not clear. good want drastic pretty in do at and going we're really to lot there. sure

and and a ones, winning can And S&OP. companies, our We expertise so, purchasing that's in larger in acquire these think market. and pricing even bring how we

a We're strategically, the think have act equity also private seeing to any together And on worked that. it's seeing We're valuations great we time a to have balance the and two, here next be great to We're come out our to the buyers-market kinks year go. down. or of just I have on small of seeing the to we're over sheet. feel sidelines. going ready kind a acquisitions, it's

Do more is do to you acquisition back still early feel sizable half you're now? right XXXX? ready that like XXXX, a Or something

Capability-wise, right financial operations the just find to calls. the to and But right more But ready. We're have deals we're economics. Steve, commercial ready. then We capability-wise, ready. we we're and continue with get capacity,

That’s great. Thanks.

support. Thank your you. Appreciate Thank you.

This further the any no At question-and-answer Vinay like time, to this closing Monica would the questions. session. turn back to remarks. there are concludes for over conference I

We interest in Thank you for your Myers today. joining day. appreciate us great Industries. a Have

The today's you presentation. has for concluded. conference attending now Thank

You disconnect. may now