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First Quarter 2015 Earnings Presentation

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This document provides an earnings presentation for Myers Industries' first quarter of 2015. It summarizes key financial metrics such as sales, gross profit margin, SG&A expenses, and income. It also discusses segment-level results for Material Handling and Distribution. The presentation notes sales increases from the Scepter acquisition but declines in agricultural end markets. It provides an outlook expecting continued challenges in agriculture but benefits from strategic actions. The appendix reconciles non-GAAP metrics and provides market indicators for relevant industries.

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May 1, 2015 | Myers Industries, Inc. First Quarter 2015 Earnings Presentation
2 Statements in this presentation concerning the Company’s goals, strategies, and expectations for business and financial results may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current indicators and expectations. Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we "believe," "expect," or "anticipate" will occur, and other similar statements), you must remember that our expectations may not be correct, even though we believe they are reasonable. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You should review this presentation with the understanding that actual future results may be materially different from what we expect. Many of the factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statement. We do not intend, and undertake no obligation, to update these forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. Such risks include: (1) Changes in the markets for the Company’s business segments (2) Changes in trends and demands in the markets in which the Company competes (3) Unanticipated downturn in business relationships with customers or their purchases (4) Competitive pressures on sales and pricing (5) Raw material availability, increases in raw material costs, or other production costs (6) Harsh weather conditions (7) Future economic and financial conditions in the United States and around the world (8) Inability of the Company to meet future capital requirements (9) Claims, litigation and regulatory actions against the Company (10) Changes in laws and regulations affecting the Company (11) The Company’s ability to execute the components of its Strategic Business Evolution process Myers Industries, Inc. encourages investors to learn more about these risk factors. A detailed explanation of these factors is available in the Company’s publicly filed quarterly and annual reports, which can be found online at www.myersind.com and at the SEC.gov web site. Safe Harbor Statement
• Revising policies and procedures associated with the preparation and retention of supporting documentation for account reconciliations. • Revising policies and procedures associated with the review and approval of manual journal entries prior to posting to the general ledger. • Enhancing the finance personnel with accounting and internal control knowledge. • Remediation all of the control deficiencies will take place during 2015. 3 Brazilian Internal Control Enhancements In response to the Company’s completed investigation of a weakness in internal controls at its Brazilian operations in 4Q14, the following measures are currently in process in Brazil:
First Quarter 2015 Financial Summary 4 • Sales increased due to the Scepter acquisition but were offset by decreased sales in the Material Handling Segment’s agricultural and food processing end markets • Gross profit margin increase mainly due to pricing actions and the incremental contribution from Scepter • SG&A increased due to incremental expenses from the Scepter acquisition and restructuring/other unusual pre- tax charges • Adjusted income per diluted share of $0.13 vs. $0.15 in the first quarter of 2014 Note: All figures except ratios and percents are $Millions Continuing Operations Q1 Q1 % Highlights 2015 2014 Change Net sales $156.3 $150.5 3.9% Gross profit margin 29.3% 28.0% SG&A $39.0 $33.2 17.5% Income from continuing ops - adjusted¹ $4.0 $5.0 (19.9)% Effective tax rate 34.7% 34.7% Income per diluted share from continuing ops - adjusted¹ $0.13 $0.15 (13.3%) ¹See Reconciliation of Non-GAAP measures on slide 10
First Quarter 2015 Financial Summary 5 Notes: All figures except ratios and percents are $Millions Free cash flow = cash flow from operations – capital expenditures Continuing Operations Three Months Ended Three Months Ended Cash March 31, March 31, Highlights 2015 2014 Cash used for continuing operations ($20.5) ($40.1) Capital expenditures $4.7 $2.5 Free cash flow ($25.2) ($42.6) Dividends $4.2 $3.1 Balance Sheet March 31, December 31, Highlights 2015 2014 Long-term debt $204.7 $236.4 Debt - net of cash $201.0 $231.8
• Incremental sales from the Scepter acquisition were offset by sales declines in the agriculture and food processing end markets compared to Q1 2014 • Adjusted income before taxes (IBT) increased versus Q1 2014 due to the Scepter acquisition but was also negatively impacted by lower sales volumes in agricultural and food processing products and a resulting change in product mix First Quarter Results – Material Handling 6 $ Millions See Reconciliation of Non-GAAP measures on slide 10 $112.3 $106.7 $100 $105 $110 $115 Q1 2015 Q1 2014 Net Sales $13.5 $12.8 $0 $5 $10 $15 Q1 2015 Q1 2014 IBT - Adjusted
• Increases in supply and equipment sales in the U.S. were more than offset by a decrease in custom sales and lower Canadian sales due to the closure of the Canadian branches late in the first quarter of 2014 • Savings from operational excellence initiatives and cost reductions taken during the quarter were more than offset by the decline in profits that resulted from a change in product mix First Quarter Results – Distribution 7 $ Millions See Reconciliation of Non-GAAP measures on slide 10 $3.6 $4.1 $0 $1 $2 $3 $4 $5 Q1 2015 Q1 2014 IBT - Adjusted $44.1 $43.9 $40 $41 $42 $43 $44 $45 Q1 2015 Q1 2014 Net Sales
Outlook/Guidance • Challenging market conditions in Material Handling continue in 2015 • Decreased corn production and low crop prices are expected to continue to depress demand for agricultural storage containers • Second quarter and full year 2015 results will benefit from strategic actions taken in 2014 to focus and solidify structure • Scepter acquisition should continue to deliver strong results • Our Material Handling and Distribution platforms are strong cash generating businesses with attractive prospects for: • Continued new product introductions • Additional synergies at Scepter • Growth in the marine platform • Growth driven by enhanced marketing activities • Capital expenditures for continuing operations in 2015 will be approximately $25 - $30 million • Approximately 70% of Capital Expenditures will be used for growth and productivity projects • Anticipate effective tax rate for full year 2015 will be approximately 32.5% • A result of shift to more international earnings with a full year of Scepter in our results 8
Appendix 9
Reconciliation of Non-GAAP Measures 10 MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES INCOME (LOSS) BEFORE TAXES BY SEGMENT (UNAUDITED) (Dollars in millions, except per share data) For the Quarter Ended March 31, 2015 March 31, 2014 Material Handling Income from continuing operations before income taxes as reported $ 13.4 $ 12.8 Restructuring expenses and other adjustments 0.1 — Income from continuing operations before income taxes as adjusted 13.5 12.8 Distribution Income from continuing operations before income taxes as reported 3.5 3.5 Restructuring expenses and other adjustments 0.1 0.6 Income from continuing operations before income taxes as adjusted 3.6 4.1 Corporate and interest expense as reported (12.9) (9.0) Professional and legal fees 1.8 — Corporate and interest expense as adjusted (11.1) (9.0) Continuing Operations Income from continuing operations before income taxes as reported 4.0 7.3 Restructuring expenses and other adjustments 2.0 0.6 Income from continuing operations before income taxes as adjusted 6.0 7.9 Income taxes* 2.0 2.8 Income from continuing operations as adjusted $ 4.0 $ 5.0 Adjusted earnings per diluted share from continuing operations $ 0.13 $ 0.15 *Income taxes calculated using the normalized effective tax rate for each year. Note: Historical information has been adjusted to reflect discontinued operations presentation and the segment realignment completed in June 2014. Also, numbers may be rounded for presentation purposes. Note on Reconciliation of Income and Earnings Data: Income (loss) excluding the items mentioned above in the text of this release and in this reconciliation chart is a non-GAAP financial measure 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.
Market Indicators • Shipments grew 3.6% in January 2015 and 2.5% in February 2015. 11 Material Handling Source: Material Handling Industry (MHI) Feb 2015 Forecast
Market Indicators • The Outdoor Power Equipment Institute (OPEI) estimates that total outdoor power equipment shipments will increase by 3.6% in 2015. 12 Material Handling Source: OPEI U.S. Econometric Forecast – December 2014 2009 2010 2011 2012 2013 2014 2015 2016 Consumer Products 6,223,328 6,588,176 5,875,396 6,191,291 6,379,735 5,897,982 6,221,402 6,553,717 Percent Change -10.6 5.9 -10.8 5.4 3.0 -7.6 5.5 5.3 Commercial Products 131,050 180,226 183,609 182,817 221,200 224,227 238,675 253,264 Percent Change -34.4 37.5 1.9 -0.4 21.0 1.4 6.4 6.1 Handheld Products 10,558,563 10,825,352 10,365,472 10,921,443 10,909,630 11,149,771 11,430,870 11,679,547 Percent Change -7.9 2.5 -4.2 5.4 -0.1 2.2 2.5 2.2 Total 16,912,941 17,593,754 16,424,477 17,295,551 17,510,565 17,271,980 17,890,947 18,486,528 -9.1 4.0 -6.6 5.3 1.2 -1.4 3.6 3.3 ACTUAL FORECAST
Market Indicators • Recreational vehicle market will continue to grow in 2015, but at a lower rate than the previous few years. 13 Material Handling Source: RVIA Release
Market Indicators • The Rubber Manufacturers Association (RMA) projects a slight decrease in replacement tire shipments in 2015 (-0.4%). 14 Distribution Source: JP Morgan, RMA
First Quarter 2015 Earnings Presentation

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First Quarter 2015 Earnings Presentation

  • 1. May 1, 2015 | Myers Industries, Inc. First Quarter 2015 Earnings Presentation
  • 2. 2 Statements in this presentation concerning the Company’s goals, strategies, and expectations for business and financial results may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current indicators and expectations. Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we "believe," "expect," or "anticipate" will occur, and other similar statements), you must remember that our expectations may not be correct, even though we believe they are reasonable. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You should review this presentation with the understanding that actual future results may be materially different from what we expect. Many of the factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statement. We do not intend, and undertake no obligation, to update these forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. Such risks include: (1) Changes in the markets for the Company’s business segments (2) Changes in trends and demands in the markets in which the Company competes (3) Unanticipated downturn in business relationships with customers or their purchases (4) Competitive pressures on sales and pricing (5) Raw material availability, increases in raw material costs, or other production costs (6) Harsh weather conditions (7) Future economic and financial conditions in the United States and around the world (8) Inability of the Company to meet future capital requirements (9) Claims, litigation and regulatory actions against the Company (10) Changes in laws and regulations affecting the Company (11) The Company’s ability to execute the components of its Strategic Business Evolution process Myers Industries, Inc. encourages investors to learn more about these risk factors. A detailed explanation of these factors is available in the Company’s publicly filed quarterly and annual reports, which can be found online at www.myersind.com and at the SEC.gov web site. Safe Harbor Statement
  • 3. • Revising policies and procedures associated with the preparation and retention of supporting documentation for account reconciliations. • Revising policies and procedures associated with the review and approval of manual journal entries prior to posting to the general ledger. • Enhancing the finance personnel with accounting and internal control knowledge. • Remediation all of the control deficiencies will take place during 2015. 3 Brazilian Internal Control Enhancements In response to the Company’s completed investigation of a weakness in internal controls at its Brazilian operations in 4Q14, the following measures are currently in process in Brazil:
  • 4. First Quarter 2015 Financial Summary 4 • Sales increased due to the Scepter acquisition but were offset by decreased sales in the Material Handling Segment’s agricultural and food processing end markets • Gross profit margin increase mainly due to pricing actions and the incremental contribution from Scepter • SG&A increased due to incremental expenses from the Scepter acquisition and restructuring/other unusual pre- tax charges • Adjusted income per diluted share of $0.13 vs. $0.15 in the first quarter of 2014 Note: All figures except ratios and percents are $Millions Continuing Operations Q1 Q1 % Highlights 2015 2014 Change Net sales $156.3 $150.5 3.9% Gross profit margin 29.3% 28.0% SG&A $39.0 $33.2 17.5% Income from continuing ops - adjusted¹ $4.0 $5.0 (19.9)% Effective tax rate 34.7% 34.7% Income per diluted share from continuing ops - adjusted¹ $0.13 $0.15 (13.3%) ¹See Reconciliation of Non-GAAP measures on slide 10
  • 5. First Quarter 2015 Financial Summary 5 Notes: All figures except ratios and percents are $Millions Free cash flow = cash flow from operations – capital expenditures Continuing Operations Three Months Ended Three Months Ended Cash March 31, March 31, Highlights 2015 2014 Cash used for continuing operations ($20.5) ($40.1) Capital expenditures $4.7 $2.5 Free cash flow ($25.2) ($42.6) Dividends $4.2 $3.1 Balance Sheet March 31, December 31, Highlights 2015 2014 Long-term debt $204.7 $236.4 Debt - net of cash $201.0 $231.8
  • 6. • Incremental sales from the Scepter acquisition were offset by sales declines in the agriculture and food processing end markets compared to Q1 2014 • Adjusted income before taxes (IBT) increased versus Q1 2014 due to the Scepter acquisition but was also negatively impacted by lower sales volumes in agricultural and food processing products and a resulting change in product mix First Quarter Results – Material Handling 6 $ Millions See Reconciliation of Non-GAAP measures on slide 10 $112.3 $106.7 $100 $105 $110 $115 Q1 2015 Q1 2014 Net Sales $13.5 $12.8 $0 $5 $10 $15 Q1 2015 Q1 2014 IBT - Adjusted
  • 7. • Increases in supply and equipment sales in the U.S. were more than offset by a decrease in custom sales and lower Canadian sales due to the closure of the Canadian branches late in the first quarter of 2014 • Savings from operational excellence initiatives and cost reductions taken during the quarter were more than offset by the decline in profits that resulted from a change in product mix First Quarter Results – Distribution 7 $ Millions See Reconciliation of Non-GAAP measures on slide 10 $3.6 $4.1 $0 $1 $2 $3 $4 $5 Q1 2015 Q1 2014 IBT - Adjusted $44.1 $43.9 $40 $41 $42 $43 $44 $45 Q1 2015 Q1 2014 Net Sales
  • 8. Outlook/Guidance • Challenging market conditions in Material Handling continue in 2015 • Decreased corn production and low crop prices are expected to continue to depress demand for agricultural storage containers • Second quarter and full year 2015 results will benefit from strategic actions taken in 2014 to focus and solidify structure • Scepter acquisition should continue to deliver strong results • Our Material Handling and Distribution platforms are strong cash generating businesses with attractive prospects for: • Continued new product introductions • Additional synergies at Scepter • Growth in the marine platform • Growth driven by enhanced marketing activities • Capital expenditures for continuing operations in 2015 will be approximately $25 - $30 million • Approximately 70% of Capital Expenditures will be used for growth and productivity projects • Anticipate effective tax rate for full year 2015 will be approximately 32.5% • A result of shift to more international earnings with a full year of Scepter in our results 8
  • 10. Reconciliation of Non-GAAP Measures 10 MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES INCOME (LOSS) BEFORE TAXES BY SEGMENT (UNAUDITED) (Dollars in millions, except per share data) For the Quarter Ended March 31, 2015 March 31, 2014 Material Handling Income from continuing operations before income taxes as reported $ 13.4 $ 12.8 Restructuring expenses and other adjustments 0.1 — Income from continuing operations before income taxes as adjusted 13.5 12.8 Distribution Income from continuing operations before income taxes as reported 3.5 3.5 Restructuring expenses and other adjustments 0.1 0.6 Income from continuing operations before income taxes as adjusted 3.6 4.1 Corporate and interest expense as reported (12.9) (9.0) Professional and legal fees 1.8 — Corporate and interest expense as adjusted (11.1) (9.0) Continuing Operations Income from continuing operations before income taxes as reported 4.0 7.3 Restructuring expenses and other adjustments 2.0 0.6 Income from continuing operations before income taxes as adjusted 6.0 7.9 Income taxes* 2.0 2.8 Income from continuing operations as adjusted $ 4.0 $ 5.0 Adjusted earnings per diluted share from continuing operations $ 0.13 $ 0.15 *Income taxes calculated using the normalized effective tax rate for each year. Note: Historical information has been adjusted to reflect discontinued operations presentation and the segment realignment completed in June 2014. Also, numbers may be rounded for presentation purposes. Note on Reconciliation of Income and Earnings Data: Income (loss) excluding the items mentioned above in the text of this release and in this reconciliation chart is a non-GAAP financial measure 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.
  • 11. Market Indicators • Shipments grew 3.6% in January 2015 and 2.5% in February 2015. 11 Material Handling Source: Material Handling Industry (MHI) Feb 2015 Forecast
  • 12. Market Indicators • The Outdoor Power Equipment Institute (OPEI) estimates that total outdoor power equipment shipments will increase by 3.6% in 2015. 12 Material Handling Source: OPEI U.S. Econometric Forecast – December 2014 2009 2010 2011 2012 2013 2014 2015 2016 Consumer Products 6,223,328 6,588,176 5,875,396 6,191,291 6,379,735 5,897,982 6,221,402 6,553,717 Percent Change -10.6 5.9 -10.8 5.4 3.0 -7.6 5.5 5.3 Commercial Products 131,050 180,226 183,609 182,817 221,200 224,227 238,675 253,264 Percent Change -34.4 37.5 1.9 -0.4 21.0 1.4 6.4 6.1 Handheld Products 10,558,563 10,825,352 10,365,472 10,921,443 10,909,630 11,149,771 11,430,870 11,679,547 Percent Change -7.9 2.5 -4.2 5.4 -0.1 2.2 2.5 2.2 Total 16,912,941 17,593,754 16,424,477 17,295,551 17,510,565 17,271,980 17,890,947 18,486,528 -9.1 4.0 -6.6 5.3 1.2 -1.4 3.6 3.3 ACTUAL FORECAST
  • 13. Market Indicators • Recreational vehicle market will continue to grow in 2015, but at a lower rate than the previous few years. 13 Material Handling Source: RVIA Release
  • 14. Market Indicators • The Rubber Manufacturers Association (RMA) projects a slight decrease in replacement tire shipments in 2015 (-0.4%). 14 Distribution Source: JP Morgan, RMA