UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of |
(IRS Employer Identification |
incorporation or organization) |
Number) |
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(Address of principal executive offices) |
(Zip code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol |
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Name of Exchange on Which Registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the issuer’s common stock, without par value, as of July 26, 2024 was
TABLE OF CONTENTS
Part I — Financial Information
Item 1. Financial Statements
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share data)
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For the Quarter Ended June 30, |
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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(Gain) loss on disposal of fixed assets |
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Operating income |
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Interest expense, net |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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Net income per common share: |
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Basic |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
1
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(Dollars in thousands)
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For the Quarter Ended June 30, |
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustment |
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Unrealized gain (loss) on interest rate swap contracts, net of tax expense (benefit) of ($ |
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Realized (gain) loss on interest rate swap contracts reclassified to interest expense |
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Total other comprehensive income |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
2
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Position (Unaudited)
(Dollars in thousands)
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June 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current Assets |
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Cash |
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$ |
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$ |
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Trade accounts receivable, less allowances of $ |
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Other accounts receivable, net |
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Income tax receivable |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Property, plant, and equipment, net |
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Right of use asset - operating leases |
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Goodwill |
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Intangible assets, net |
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Deferred income taxes |
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Other |
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Total Assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued employee compensation |
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Income taxes payable |
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Accrued taxes payable, other than income taxes |
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Accrued interest |
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Other current liabilities |
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Operating lease liability - short-term |
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Finance lease liability - short-term |
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Long-term debt - current portion |
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Total Current Liabilities |
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Long-term debt |
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Operating lease liability - long-term |
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Finance lease liability - long-term |
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Other liabilities |
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Deferred income taxes |
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Total Liabilities |
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Shareholders’ Equity |
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Serial Preferred Shares (authorized |
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Common Shares, without par value (authorized |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained deficit |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
3
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)
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Quarter Ended June 30, 2024 |
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Common Shares |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at April 1, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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Interest rate swap, net of tax of ($ |
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Shares issued under incentive plans, |
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Stock compensation expense |
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Declared dividends - $ |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Quarter Ended June 30, 2023 |
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Common Shares |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at April 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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Shares issued under incentive plans, |
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Stock compensation expense |
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Declared dividends - $ |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
4
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(Dollars in thousands, except per share data)
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Six Months Ended June 30, 2024 |
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Common Shares |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at January 1, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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( |
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Interest rate swap, net of tax of ($ |
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( |
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Shares issued under incentive plans, |
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Stock compensation expense |
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Declared dividends - $ |
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( |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Six Months Ended June 30, 2023 |
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Common Shares |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at January 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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Shares issued under incentive plans, |
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Stock compensation expense |
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Declared dividends - $ |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See notes to unaudited condensed consolidated financial statements.
5
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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Cash Flows From Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by (used for) operating activities |
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Depreciation and amortization |
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Amortization of deferred financing costs |
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Amortization of acquisition-related inventory step-up |
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Non-cash stock-based compensation expense |
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(Gain) loss on disposal of fixed assets |
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Other |
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Cash flows provided by (used for) working capital |
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Accounts receivable - trade and other, net |
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Inventories |
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Prepaid expenses and other current assets |
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( |
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Accounts payable and accrued expenses |
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Net cash provided by (used for) operating activities |
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Cash Flows From Investing Activities |
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Capital expenditures |
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( |
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Acquisition of business, net of cash acquired |
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( |
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Proceeds from sale of property, plant and equipment |
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Net cash provided by (used for) investing activities |
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( |
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Cash Flows From Financing Activities |
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Net borrowings (repayments) from revolving credit facility |
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( |
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( |
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Proceeds from Term Loan A |
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Repayments of Term Loan A |
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( |
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Repayments of senior unsecured notes |
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( |
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Payments on finance lease |
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( |
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( |
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Cash dividends paid |
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( |
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Proceeds from issuance of common stock |
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Shares withheld for employee taxes on equity awards |
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( |
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( |
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Deferred financing fees |
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( |
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Net cash provided by (used for) financing activities |
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( |
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Foreign exchange rate effect on cash |
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( |
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Net increase (decrease) in cash |
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Cash at January 1 |
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Cash at June 30 |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
6
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
(Dollars in thousands, except where otherwise indicated)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (collectively, the “Company”), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.
In the opinion of the Company, the accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position as of June 30, 2024, and the results of operations and cash flows for the periods presented. The results of operations for the quarter and six months ended June 30, 2024 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2024.
Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures to provide information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. For the Company, this ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments within this ASU should be applied prospectively although retrospective application is also permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. For the Company, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments within this ASU are required to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
Fair Value Measurement
The Company follows guidance included in ASC 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, as required. Under ASC 820, the hierarchy that prioritizes the inputs to valuation techniques used to measure fair value is divided into three levels:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable either directly or indirectly.
Level 3: Unobservable inputs for which there is little or no market data or which reflect the entity’s own assumptions.
The Company has financial instruments, including cash, accounts receivable, accounts payable and accrued expenses. The fair value of these financial instruments approximates carrying value due to the nature and relative short maturity of these assets and liabilities.
The fair value of the Company’s revolving credit facility, as defined in Note 11, approximates carrying value due to the floating rates and the relative short maturity (less than 90 days) of any revolving borrowings under this agreement. The carrying value of the unhedged portion of the Company’s term loan, as defined in Note 11, approximates fair value given that the underlying interest rate applied to such amounts outstanding is currently based upon floating market rates and the Company has the ability to repay the outstanding principal at par value at any time under the terms of this agreement. The fair value of the Company’s fixed rate senior unsecured notes was estimated using market observable inputs for the Company’s comparable peers with public debt, including quoted prices in active markets and interest rate measurements which are considered Level 2 inputs. At December 31, 2023, the aggregate fair value of the Company's outstanding fixed rate senior unsecured notes was estimated to be $
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
(Dollars in thousands, except where otherwise indicated)
The Company has also entered into an interest rate swap contract to reduce its exposure to fluctuations in variable interest rates for future interest payments, as defined in Note 11. The Company uses significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of its interest rate swap that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves. Refer to the derivative instruments section below for further information regarding the fair value measurements for the interest rate swap.
The purchase price allocations associated with the February 8, 2024 acquisition of Signature CR Intermediate Holdco, Inc. ("Signature" or "Signature Systems") and the May 31, 2022 acquisition of Mohawk Rubber Sales of New England Inc. ("Mohawk"), as described in Note 3, required fair value measurements using unobservable inputs which are considered Level 3 inputs. The fair value of the acquired intangible assets was determined using an income approach.
Derivative Instruments
On May 2, 2024, the Company entered into an interest rate swap agreement to limit its exposure to changes in interest rates on a portion of its floating rate indebtedness. The interest rate swap agreement is designated as a cash flow hedge that qualifies for hedge accounting. The swap has a beginning notional value of $
At June 30, 2024, the remaining notional value of the Company's interest rate swap totaled $
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) are as follows:
|
|
Foreign |
|
|
Interest Rate Swap (1) |
|
|
Defined Benefit |
|
|
Total |
|
||||
Balance at April 1, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Reclassification to (earnings) loss |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $(
|
|
Foreign |
|
|
Interest Rate Swap |
|
|
Defined Benefit |
|
|
Total |
|
||||
Balance at April 1, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current-period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at June 30, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
8
MYERS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
(Dollars in thousands, except where otherwise indicated)
|
|
Foreign |
|
|
Interest Rate Swap (2) |
|
|
Defined Benefit |
|
|
Total |
|
||||
Balance at January 1, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Reclassification to (earnings) loss |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(2) Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $(
|
|
Foreign |
|
|
Interest Rate Swap |
|
|
Defined Benefit |
|
|
Total |
|
||||
Balance at January 1, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current-period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at June 30, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Allowance for Credit Losses
Management has established certain requirements that customers must meet before credit is extended. The financial condition of customers is continually monitored and collateral is usually not required. The Company evaluates the collectability of accounts receivable based on a combination of factors. The Company reviews historical trends for credit loss as well as current economic conditions in determining an estimate for its allowance for credit losses. Additionally, in circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for credit losses is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably expects will be collected.
The changes in the allowance for credit losses for the six months ended June 30, 2024 and 2023 were as follows:
|
|
2024 |
|
|
2023 |
|
||
Balance at January 1 |
|
$ |
|
|
$ |
|
||
Provision for expected credit loss, net of recoveries |
|
|
|
|
|
|
||
Write-offs and other |
|
|
( |
) |
|
|
( |
) |
Balance at June 30 |
|
$ |
|
|
$ |
|
||
2. Revenue Recognition
The Company’s revenue by major market is as follows:
|
|
For the Quarter Ended June 30, 2024 |
|
|||||||||||||
|
|
Material |
|
|
Distribution |
|
|
Inter-company |
|
|
Consolidated |
|
||||
Consumer |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Vehicle |
|
|
|
|
|
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