10-Q 1 mye-20230331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

 

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

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 001-08524

Myers Industries, Inc.

(Exact name of registrant as specified in its charter)

 

Ohio

34-0778636

(State or other jurisdiction of

(IRS Employer Identification

incorporation or organization)

Number)

1293 South Main Street

Akron, Ohio

44301

(Address of principal executive offices)

(Zip code)

 

(330) 253-5592

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

 

Name of Exchange on Which Registered

Common Stock, without par value

MYE

 

New York Stock Exchange

 

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. Yes ☑ No ☐

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). Yes ☑ No ☐

 

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

Accelerated filer

Non-Accelerated filer

Smaller reporting company

 

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 April 28, 2023 was 36,741,718 shares.

 

 


 

TABLE OF CONTENTS

 

Part I — Financial Information

1

 

 

Item 1. Financial Statements

1

 

 

Condensed Consolidated Statements of Operations (Unaudited)

1

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

2

 

 

Condensed Consolidated Statements of Financial Position (Unaudited)

3

 

 

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

4

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

5

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

22

 

 

Item 4. Controls and Procedures

23

 

 

Part II — Other Information

23

 

Item 1. Legal Proceedings

23

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

24

 

 

Item 6. Exhibits

25

 

 

Signature

26

 

 

Exhibit 31.1

 

Exhibit 31.2

 

Exhibit 32.1

 

Exhibit 101

 

 

 

 

 


 

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)

 

 

 

For the Quarter Ended March 31,

 

 

 

2023

 

 

2022

 

Net sales

 

$

215,739

 

 

$

225,486

 

Cost of sales

 

 

144,674

 

 

 

153,558

 

Gross profit

 

 

71,065

 

 

 

71,928

 

Selling, general and administrative expenses

 

 

52,081

 

 

 

47,990

 

(Gain) loss on disposal of fixed assets

 

 

27

 

 

 

(467

)

Operating income

 

 

18,957

 

 

 

24,405

 

Interest expense, net

 

 

1,646

 

 

 

1,147

 

Income before income taxes

 

 

17,311

 

 

 

23,258

 

Income tax expense

 

 

4,335

 

 

 

5,921

 

Net income

 

$

12,976

 

 

$

17,337

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

0.35

 

 

$

0.48

 

Diluted

 

$

0.35

 

 

$

0.47

 

 

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)

 

 

 

For the Quarter Ended March 31,

 

 

 

2023

 

 

2022

 

Net income

 

$

12,976

 

 

$

17,337

 

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

42

 

 

 

570

 

Total other comprehensive income

 

 

42

 

 

 

570

 

Comprehensive income

 

$

13,018

 

 

$

17,907

 

 

See notes to unaudited condensed consolidated financial statements.

 

2


 

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position (Unaudited)

(Dollars in thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$

28,241

 

 

$

23,139

 

Accounts receivable, less allowances of $3,183 and $3,259, respectively

 

 

130,616

 

 

 

133,716

 

Inventories, net

 

 

102,141

 

 

 

93,351

 

Prepaid expenses and other current assets

 

 

5,781

 

 

 

7,001

 

Total Current Assets

 

 

266,779

 

 

 

257,207

 

Property, plant, and equipment, net

 

 

105,803

 

 

 

101,566

 

Right of use asset - operating leases

 

 

28,381

 

 

 

28,908

 

Goodwill

 

 

95,166

 

 

 

95,157

 

Intangible assets, net

 

 

50,096

 

 

 

51,752

 

Deferred income taxes

 

 

130

 

 

 

129

 

Other

 

 

9,842

 

 

 

7,915

 

Total Assets

 

$

556,197

 

 

$

542,634

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

93,477

 

 

$

73,536

 

Accrued employee compensation

 

 

13,647

 

 

 

24,664

 

Income taxes payable

 

 

4,889

 

 

 

2,054

 

Accrued taxes payable, other than income taxes

 

 

2,940

 

 

 

3,169

 

Accrued interest

 

 

661

 

 

 

1,264

 

Other current liabilities

 

 

27,016

 

 

 

26,380

 

Operating lease liability - short-term

 

 

6,072

 

 

 

6,177

 

Finance lease liability - short-term

 

 

523

 

 

 

518

 

Long-term debt - current portion

 

 

25,984

 

 

 

 

Total Current Liabilities

 

 

175,209

 

 

 

137,762

 

Long-term debt

 

 

62,784

 

 

 

93,962

 

Operating lease liability - long-term

 

 

22,409

 

 

 

22,786

 

Finance lease liability - long-term

 

 

8,785

 

 

 

8,919

 

Other liabilities

 

 

13,681

 

 

 

15,270

 

Deferred income taxes

 

 

8,082

 

 

 

7,508

 

Total Liabilities

 

 

290,950

 

 

 

286,207

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

Serial Preferred Shares (authorized 1,000,000 shares; none issued and outstanding)

 

 

 

 

 

 

Common Shares, without par value (authorized 60,000,000 shares;
   outstanding
36,716,788 and 36,500,020; net of treasury shares
   of
5,835,669 and 6,052,437, respectively)

 

 

22,525

 

 

 

22,332

 

Additional paid-in capital

 

 

316,709

 

 

 

315,865

 

Accumulated other comprehensive loss

 

 

(17,751

)

 

 

(17,793

)

Retained deficit

 

 

(56,236

)

 

 

(63,977

)

Total Shareholders’ Equity

 

 

265,247

 

 

 

256,427

 

Total Liabilities and Shareholders’ Equity

 

$

556,197

 

 

$

542,634

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

3


 

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(Dollars in thousands, except per share data)

 

 

 

Quarter Ended March 31, 2023

 

 

 

Common Shares

 

 

Additional
Paid-In Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Retained
Deficit

 

 

Total
Shareholders'
Equity

 

Balance at January 1, 2023

 

$

22,332

 

 

$

315,865

 

 

$

(17,793

)

 

$

(63,977

)

 

$

256,427

 

Net income

 

 

 

 

 

 

 

 

 

 

 

12,976

 

 

 

12,976

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

42

 

 

 

 

 

 

42

 

Shares issued under incentive plans,
   net of shares withheld for tax

 

 

193

 

 

 

(1,060

)

 

 

 

 

 

 

 

 

(867

)

Stock compensation expense

 

 

 

 

 

1,904

 

 

 

 

 

 

 

 

 

1,904

 

Declared dividends - $0.135 per share

 

 

 

 

 

 

 

 

 

 

 

(5,235

)

 

 

(5,235

)

Balance at March 31, 2023

 

$

22,525

 

 

$

316,709

 

 

$

(17,751

)

 

$

(56,236

)

 

$

265,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31, 2022

 

 

 

Common Shares

 

 

Additional
Paid-In Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Retained
Deficit

 

 

Total
Shareholders'
Equity

 

Balance at January 1, 2022

 

$

22,172

 

 

$

306,720

 

 

$

(15,401

)

 

$

(104,166

)

 

$

209,325

 

Net income

 

 

 

 

 

 

 

 

 

 

 

17,337

 

 

 

17,337

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

570

 

 

 

 

 

 

570

 

Shares issued under incentive plans,
   net of shares withheld for tax

 

 

53

 

 

 

74

 

 

 

 

 

 

 

 

 

127

 

Stock compensation expense

 

 

 

 

 

1,727

 

 

 

 

 

 

 

 

 

1,727

 

Declared dividends - $0.135 per share

 

 

 

 

 

 

 

 

 

 

 

(4,948

)

 

 

(4,948

)

Balance at March 31, 2022

 

$

22,225

 

 

$

308,521

 

 

$

(14,831

)

 

$

(91,777

)

 

$

224,138

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

4


 

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

 

 

For the Quarter Ended March 31,

 

 

 

2023

 

 

2022

 

Cash Flows From Operating Activities

 

 

 

 

 

 

Net income

 

$

12,976

 

 

$

17,337

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

5,618

 

 

 

5,200

 

Amortization of deferred financing costs

 

 

78

 

 

 

121

 

Non-cash stock-based compensation expense

 

 

1,904

 

 

 

1,727

 

(Gain) loss on disposal of fixed assets

 

 

27

 

 

 

(467

)

Other

 

 

(827

)

 

 

521

 

Cash flows provided by (used for) working capital

 

 

 

 

 

 

Accounts receivable

 

 

3,181

 

 

 

(31,894

)

Inventories

 

 

(8,778

)

 

 

(5,980

)

Prepaid expenses and other current assets

 

 

1,220

 

 

 

614

 

Accounts payable and accrued expenses

 

 

10,387

 

 

 

20,113

 

Net cash provided by (used for) operating activities

 

 

25,786

 

 

 

7,292

 

Cash Flows From Investing Activities

 

 

 

 

 

 

Capital expenditures

 

 

(9,091

)

 

 

(5,060

)

Acquisition of business, net of cash acquired

 

 

(160

)

 

 

 

Proceeds from sale of property, plant and equipment

 

 

33

 

 

 

1,076

 

Net cash provided by (used for) investing activities

 

 

(9,218

)

 

 

(3,984

)

Cash Flows From Financing Activities

 

 

 

 

 

 

Net borrowings (repayments) from revolving credit facility

 

 

(5,200

)

 

 

1,500

 

Payments on finance lease

 

 

(129

)

 

 

(124

)

Cash dividends paid

 

 

(5,274

)

 

 

(4,939

)

Proceeds from issuance of common stock

 

 

1,132

 

 

 

471

 

Shares withheld for employee taxes on equity awards

 

 

(1,999

)

 

 

(344

)

Net cash provided by (used for) financing activities

 

 

(11,470

)

 

 

(3,436

)

Foreign exchange rate effect on cash

 

 

4

 

 

 

49

 

Net increase (decrease) in cash

 

 

5,102

 

 

 

(79

)

Cash at January 1

 

 

23,139

 

 

 

17,655

 

Cash at March 31

 

$

28,241

 

 

$

17,576

 

 

See notes to unaudited condensed consolidated financial statements.

 

5


 

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, 2022.

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 March 31, 2023, and the results of operations and cash flows for the periods presented. The results of operations for the quarter ended March 31, 2023 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2023.

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 debt under the Company’s Loan Agreement, as defined in Note 11, approximates carrying value due to the floating rates and relative short maturity (less than 90 days) of any revolving borrowings under 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 March 31, 2023 and December 31, 2022, the aggregate fair value of the Company's outstanding fixed rate senior unsecured notes was estimated to be $37.6 million and $37.4 million, respectively.

The purchase price allocations associated with 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.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) are as follows:

 

 

Foreign
Currency

 

 

Defined Benefit
Pension Plans

 

 

Total

 

Balance at January 1, 2023

 

$

(16,410

)

 

$

(1,383

)

 

$

(17,793

)

Other comprehensive income (loss) before reclassifications

 

 

42

 

 

 

 

 

 

42

 

Net current-period other comprehensive income (loss)

 

 

42

 

 

 

 

 

 

42

 

Balance at March 31, 2023

 

$

(16,368

)

 

$

(1,383

)

 

$

(17,751

)

 

 


MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

 

 

 

 

Foreign
Currency

 

 

Defined Benefit
Pension Plans

 

 

Total

 

Balance at January 1, 2022

 

$

(13,935

)

 

$

(1,466

)

 

$

(15,401

)

Other comprehensive income (loss) before reclassifications

 

 

570

 

 

 

 

 

 

570

 

Net current-period other comprehensive income (loss)

 

 

570

 

 

 

 

 

 

570

 

Balance at March 31, 2022

 

$

(13,365

)

 

$

(1,466

)

 

$

(14,831

)

 

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 quarter ended March 31, 2023 and 2022 were as follows:

 

 

 

2023

 

 

2022

 

Balance at January 1

 

$

2,273

 

 

$

2,173

 

Provision for expected credit loss, net of recoveries

 

 

135

 

 

 

31

 

Write-offs and other

 

 

(195

)

 

 

(268

)

Balance at March 31

 

$

2,213

 

 

$

1,936

 

 

2. Revenue Recognition

The Company’s revenue by major market is as follows:

 

 

 

For the Quarter Ended March 31, 2023

 

 

 

Material
Handling

 

 

Distribution

 

 

Inter-company

 

 

Consolidated

 

Consumer

 

$

23,876

 

 

$

 

 

$

 

 

$

23,876

 

Vehicle

 

 

32,008

 

 

 

 

 

 

 

 

 

32,008

 

Food and beverage

 

 

41,156

 

 

 

 

 

 

 

 

 

41,156

 

Industrial

 

 

55,522

 

 

 

 

 

 

(8

)

 

 

55,514

 

Auto aftermarket

 

 

 

 

 

63,185

 

 

 

 

 

 

63,185

 

Total net sales

 

$

152,562

 

 

$

63,185

 

 

$

(8

)

 

$

215,739

 

 

 

 

For the Quarter Ended March 31, 2022

 

 

 

Material
Handling

 

 

Distribution

 

 

Inter-company

 

 

Consolidated

 

Consumer

 

$

31,924

 

 

$

 

 

$

 

 

$

31,924

 

Vehicle

 

 

47,777

 

 

 

 

 

 

 

 

 

47,777

 

Food and beverage

 

 

34,680

 

 

 

 

 

 

 

 

 

34,680

 

Industrial

 

 

62,255

 

 

 

 

 

 

(11

)

 

 

62,244

 

Auto aftermarket

 

 

 

 

 

48,861

 

 

 

 

 

 

48,861

 

Total net sales

 

$

176,636