MYE - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Myers Industries 2020 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Monica Vinay. you. Thank ma'am. ahead, go Please

Monica Vinay

you. Good quarter President Myers first Industries. welcome Investor morning earnings call. and Myers XXXX at Vice and to I'm Relations Industries Treasurer Thank Monica of Vinay,

Distribution. Mike me Executive Material are us Mike answer Brackman, and on McGaugh, Joining call President Group and are President Chief Chris and and Vice Also Executive Officer. Financial President, questions today Valentino, Handling; and DuPaul, Chief the Group Kevin Officer; joining President, to today available

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

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

over These Act call that during I the Private call. this we turn Reform made provisions Securities Safe of Litigation make the XXXX. Harbor like you the some may I to forward-looking statements pursuant to comments to of remind the of Mike, Before are course would

to statements. are materially or current based on results involve those and uncertainties, from other these statements factors, may implied cause expectations in and expressed which Such risks, management's differ

company's information the company's XX-K set uncertainties, and periodic Further concerning filings. be and the in risks, XX-Q is forth SEC may in these other factors found filings and

McGaugh. I'm now pleased the to turn Mike to over call

Mike McGaugh

us. for of thank my and morning Myers to CEO joining earnings you privileged the first you be as Good for I'm with call today Industries.

during as Andrean our Interim overview, Horton leadership her to the into want period. quarter thank go we first transition Before President and CEO for I

her she Executive contributions team as from role Legal Secretary. President, continue to Chief will returns to benefit and Officer, Andrean's as We Vice our to

our keeping team. COVID-XX. had phase, to challenges for also company leadership and during forward interim additional the to Well employees the done, which moving this team and unexpected I want thank related

in my Dow with about have attracted to tell functions spend on experience and years minutes around with the had me fortunate and I leading focused portfolios to Company on few to units a background world I'd and business spent Myers. the and innovation. significant plastics. lead significant I business Chemical polymers to you growth XX like several time and to the nearly was what opportunity had

M&A at extensively Also its executes Dow, on as growth integration. experiences which organic I helpful includes worked will in in be These and bolt-on strategy, M&A. and Myers

continuous Holdings, a spent with culture. growth have Officer through Myers. manufacturer at I've very on Most two BMC Stock under pillars products and initiatives the focused Operating and at improvement, recently, innovation, Chief years M&A, strategic a its bolt-on BMC way at well and align of building The as people-centric gaining advantage we distributor competitive

opportunities sheet. with a to I significant was it's company well-operated Myers attracted a solid, strong balance because and

high-quality products, share We and leading have exciting for positions, potential market long-term growth.

also the safety. the ensuring with dedicated impressed organization. commitment Since our serving while talent and arriving, I've been their remained have COVID our crisis, to customers own employees our in Throughout

and are leading the important our we accordingly. Our people are asset, most company

first and slide not auto much anticipated to did first quarter. the of we'll of end as industrial markets of turn of anticipate markets be Demand the you'll had and end XXXX. end the in Now, for three but and some it soft presentation, an our soft. if weakness would We was overview markets aftermarket vehicle food quarter share in beverage at

businesses March, the month were During pandemic. the COVID-XX of impacted by our

and the in saw auto the end negative On decline demand further aftermarket distribution markets. we industrial side,

containers. a The these combination the the customers sales quarter. factors side, more demand in On increased as to decline all our led in begin buying consumer for positive end XX% market of fuel

operational deliver to and margin the solid quarter. XX.X% expansion. due was ago I offset environment despite to in challenges earnings XXXX. team As from for first favorable year just during our the sales current demand of expansion, continued profit overall and quarter margin Adjusted margin the noted outlined, which the gross a lower This XX.X% execution gross volume increased release, to we more our than

operations per for with continuing from diluted income was Adjusted compared of quarter $X.XX XXXX. first share the $X.XX

it Regarding and credit our our balance $XXX.X $XX.X liquidity our revolving And available XXst, to significant initiatives, sheet, in operations facility remains of we strong. March our million cash including growth under and have XXXX. support as million

strategy focus deliver our revenue continue profitable will we on our growth. to forward, Looking executing

to investments employees ongoing place on the priorities to continue capitalize our the are of manufacture competitive and facilities, term, food including distribute consumers, truck have We processing, for to portable fuel and we the for products containers repair our for as plans handling material the safety containers companies. short healthcare ensure in require, our essential advantages. products entire our In fleet customers and

program we've pandemic working and To increased for quarantined. tested includes being It possible, plan. remotely distancing, accomplish and response this, pay cleaning protocols implemented a employees preparedness social or a where

and risks plans our developing help of mitigate return to refining are employees, we next customers. to plan continued work months. be move as the contingency ensure few as on And forward, a our through implementing look the potential capitalize to to and our communities, will the We safety and business we to opportunities we

staying Our safe. to team entire is dedicated

emerge products is crisis our to We financial the stronger are the growth company confident strategies strength, and the high-quality subsides. when the right that

first over outlook call the turn our financial of to a Kevin and I'll for on sales discussion more details Now, quarter results trends. on our

Kevin Brackman

numbers note first everyone. good as XXXX presentation full that the and morning updated and quarter our our performance Mike I'll financial all continuing guidance. sales outlook well as operations. review in Thanks Today, reflect year Please

million, four. decline decrease segment. saw Distribution slide with we The in were first a the the XX% Tuffy first compared by the the than increase Material segment $XXX offset for a acquisition of quarter more quarter XXXX. sales sales Net of in from was Handling to turn the Please

margin. Adjusted profit cost This to XX.X%. XXX increased favorable gross margin to due primarily price points basis was

$XX.X decreased the to income X% operating million quarter. Our for adjusted

despite income sales volume. to However, basis margin lower the adjusted operating the increased X.X% points XX

of compensation from savings as result in earnings gross first $X.XX to the SG&A profit share transformation margin Distribution for a decrease to segment's the adjusted diluted and was lower the the year-over-year of quarter costs per as higher initiatives. were compared XXXX. primarily Adjusted due well This $X.XX variable

an performance Now, net end five by decreased and let's vehicle in segment the for the by business sales Segment, of only offset and turn partially as first sales declines to our by sales beverage, the increase markets in industrial Handling market. overview in slide were the a food quarter. consumer In Material end XX.X%

operating to XX% XX.X% The price offset year. However, first for the overall quarter compared margin partially was cost of and incentive segment's lower income volume the increased with adjusted overall favorable lower variable by margin compensation sales last costs.

increase XXXX Distribution the in the led In August over XXXX segment, of first sales year. to net quarter a Tuffy X.X% last Manufacturing acquisition

As Mike earlier, March. of sales mentioned dropped the since off have middle in significantly this market

increased $X.X cost this compared of first X.X% the with a income year to margin income to compared savings. adjusted first transformation with million operating The the X.X% for our operating year quarter million XXXX. ago of as segment's deliver was continued Adjusted $X.X actions quarter for

cash Turning our sheet and balance to six, review slide I'll flow.

of with cash $X.X first XXXX, compared the flow last million $X.X quarter year. million free of generated we For

higher which higher balances. sales of X.X%, increase capital at and Working a working quarters. The was previous as due inventory than first percent the accounts was in of was receivable capital to quarter the end primarily

at $XX quarter and was sheet times. end on the adjusted debt EBITDA first our million, the X.X to balance of was Cash ratio the

of market Now, potential at uncertainty. our there for lot impacts estimation updated turn on projected end best our a market of the seven let's and current time this slide to XXXX COVID-XX, outlook. and which of around Based conditions is

that anticipate sales XX% year-over-year XXXX. in now decline We approximately will

sales also from Handling with and We decline the remainder XX% quarter Distribution. the anticipate from the the coming XX% in second will approximately that decline Material of

our optimistic end our end quarter consumer of Starting end current result, full end expected first and by an digits. outlook the We low sales and market as demand COVID-XX. further expect our quarter as market, increase was boosted we in be an review a Let's the decline despite up in that with decline food for single the for market markets. And we this in continue about first the our well. year, remain will a quarter, saw market to during second beverage each

QX sales XXXX. the boxes mid-single-digits our will slightly XXXX high because be digits by previous single last season now anticipate QX anticipate consolidations. a a in late which, up spring from which reminder, outlook year's seed customer year, and for impacted upcoming unfavorably to is seed down We of occurs demand we season, For as was demand increased the

the Turning to in first to to the couple decline were while margin RV started second months year, market, customers our vehicle the decline continued up during sales they of during quarter. of have to and end

due was sales to the first COVID-XX. during impact global OEMs to environment weaker decreased This automotive and vehicle of As a quarter. the expected,

continue. to We expect environment a weaker

We this there new model year. be will also expect fewer launches

year As in compared decline both automotive will down end RV a be with sales, customer double-digits vehicle sales result we previous low now single-digits. in our market full of XXXX expect of the down outlook anticipated and

the a end our in the sales end including as industrial and our toward demand March to result quarter, were industrial sales e-commerce our entire shift market, products. health safety of softened first to customers In a COVID-XX during manufacturing and sales, of soft industrial while customers, to distribution

with outlook have We XXXX in continue will result, a industrial expect end manufacturing teens industrial compared above soft to throughout our single-digits. previous down low outlook market environment low demand be as the and our updated

soft our Finally, dropped weeks low market last versus in off was outlook quarter, aftermarket, in we high but be auto this of single down digits really our of March. teens. sales the Demand now previous forecasting to first up end of most are the two

incremental We acquisition. weakness than Tuffy expect the August continue more and from sales XXXX to the this offset

for you XXXX. our can slide see to Turning guidance eight,

As duration noted of guidance. and COVID-XX, EPS to extent related release, withdrawn the potential to in we due from impacts press the the have our our uncertainty

for year discussed, sales be just the we I XX%. of down will anticipate XXXX approximately As full

approximately sales Distribution. remainder also second quarter decline decline that We will the in the and Handling be XX%, coming will XX% with of Material from the from anticipate

depreciation million. roughly approximately million will We will continue and to expenditures be amortization capital $XX expect be and $XX

tax an a anticipate shares. count of we XX% million share effective diluted and of XX Lastly, rate

line With now questions. open the that, to we will

Operator

Our JPMorgan. line Langton [Operator first the Instructions] question comes of from Tyler with

Tyler Langton

bit, food I talk Monica. the little comps. a down and can bit be and have of you and morning, much from first guidance, obviously Mike, XX% you you year-over-year how that little demand that expect on the easier good the off, beverage visibility expect guess But up year? part I and I revenue to year, just about Kevin Yeah, you consumer for guess, there's the guess some benefit we're a just for

Mike McGaugh

lot a while unfortunately, as to associates, about I'm possible. a of and telephone. that my for I've our of visit our our here the opportunity as our That Tyler, here. business, suppliers. you listening, meet Oh, the up over meeting way soon month Michael been Good the finding pandemic and McGaugh Yes. because sorry. now. some I'm actually under to meet our facilities will of meet slowed way customers, be learning

question, So, President do who I is the that Mike of with Valentino Group segment. have that here,

it me to So over pass let Mike.

Mike Valentino

Good morning Thanks Mike. Tyler.

Tyler Langton

Good morning.

about the upcoming a ag tend So, know, and past, season as upcoming quarter get the into first third you ag talked season this is to we quarter, in and in the fourth visibility business. the we've quarter

So, into that, to year. quarter say, we anticipate mid of greater visibility having late I'd this third

and weather. mentioned, based a soft planting somewhat we're due year Kevin out season his last optimistic the comments, of we're the spring fact I coming the to as we're think, late And that wet in on

On mentioned to we saw COVID-XX think his the a tied I end mean, comments. market good markets. to consumer side, in for related impact pretty those McGaugh Mike this revenue I

as market an the you start as And from to the year. last year then by know, in that slow was earlier And season start spring again, spring benefiting we're well. impacted this wet

the right So, better consumer mid we'll end visibility and QX. in side got and into a in beverage fair have food pretty to we've late the market, now, visibility

Tyler Langton

bit sort I a seems Great. this this No, some benefits could benefit be year? guess, year. given any then benefit little you And that's think initial drove for cost, I of a type are, be on resins of it like helpful. this a it of could guess, thoughts benefit Handling, price there year, it with I talk what quarter. the And Material off was what where about is to guess just tail quarter, I then to last especially it that the

Kevin Brackman

year-over-year it benefit mean, by raw expect to lower primarily tail I the the do material costs. we And start Yes, benefit was driven to off.

was won't year-over-year a in as QX, QX benefit So, be we a margin the received from to significant it as in again, rate. remainder continue, price It XXXX. we of cost significant declining in but for expect XXXX. at favorability And the

Tyler Langton

then Great. And question. just final a as

bit, sort of opening in should of bolt-on maybe I think to and looking expect on think, potential. that we of put with sort currently? looking is you're as hold of mean, your sort you're M&A kind something be that of remarks, certainties is for something from I deal you COVID-XX at mentioned just at that of that I a that of sort you little or sort Mike, sort

Mike McGaugh

It our part focus. Tyler. part It remains of Sure, remains Yes. our of strategy.

be to continue in We active market. the

evaluate We be and course, next the and continue may time, two, of But it's got opportunities right at over to price. right more quarter the anticipate the opportunities right to or deal, emerge.

Tyler Langton

Appreciate you, much. Got perfect. Thanks it. so

Mike McGaugh

you. Thank

Operator

line of question from comes Chan Your the next Josh Baird. with

Josh Chan

McGaugh. Mike Hi good and everyone, morning, welcome

Mike McGaugh

you. Thank

Josh Chan

ago. your current Could about you talk opportunities remarks on back Yes, the those what longer-term sort elaborate from sort minute And I mentioned balancing you vision bit maybe that? little see a little with maybe near-term at and Myers. environment a are? know Mike, the how here. a mentioned in a you sort just that of minute you environment some are But here? for of of stepping M&A the you

Mike McGaugh

so answer happy discipline. that. at a with units found well operated, are our I'm to business yes, is operated I of far Josh, lot What Myers

So, addition like find help to that's to a a in way do positive. more M&A. to organically bolt-on What grow the is I'd us

hope under growth, a additional of there's so some that And bring way. number growth. on we in processes have I organic focus to

company for for And my a perspective, poised that. the well here month, being is

have great share. businesses market Our

them. running now to a I'm And and working leaders that way with like disciplined. to have leaders the I'd well growth, good unit find They're to We that. turbocharge do

there. and So think of come processes a lot under I to way just there's more

Josh Chan

good All to right. That's hear.

you think the Material into of guidance from kind in of should for give terms in maybe raw Handling? moving walk about volume that? the we What's that how of and could the the appreciating through factor didn't initiatives kind maybe So, and material decremental business I year. some EPS guess pieces control how expect does typical of margins you'd cost you

Mike McGaugh

bring well I Yes, expect I that I the I hope can side. a the in that, that that that space. on years will can a to benefit if -- bit had And I the be as Kevin as resin again, covered company margin ask beyond to on the to Kevin in Clearly, work continue on as to we're as can. me going let aggressively. much hope to hold the to side, we side resin procurement But there. and that step nuances the And specific comment

Kevin Brackman

Yes.

revenue, about So, in significant able in apply company to benefits XXXX, both The X% talking I'm comments we the that, across margin, when I in my still think reason had a able segments. we to were our do And year-over-year XXXX. because but there expand three will to margin. decline were were we operating

One margin cost was price talked I that about.

in compensation, we of incentive and completed business. was March that restructuring in Second third action XXXX our Distribution a was

XXXX. year-over-year realized received in benefits so of And or quarters we three

at XXXX. as should they to items nearly significant all as look three I continue were year-over-year, favorable but be XXXX, in not When those of

of and which that's cost then three incentive So, true quarters quarter this the only benefit. which was as margin one actions, in price as quarter, And compensation. obviously, restructuring we first the leaves both of XXXX, year far year-over-year realized

challenging we're that maintain XX% reason, in to be currently for more decline a another is even revenue lot ability margin going expand that or I to operating our So, with think that XXXX forecasting.

consistently XXXX. challenging think become So, to lower margin at the remainder lot why in and revenue start been looking that's despite going to that's able a over the of I I'm past. more how But we've margin to expand

Josh Chan

mentioned a businesses? in and sort businesses. thinking you're any That's question, the I you year of And of in, other of last Yes. are your and the sense. that to it's regarding there half? return where growth think into in just for is But second then my expecting guess, know the about beverage sort trajectory I food I helpful Basically, outlook both color. very Okay. makes how you verticals kind

Mike McGaugh

these Josh, share, lot again customer. customer our of our there's We're of got doing course We're and growth uncertainty. together and use calls. just described heard of growth over sure putting a building strength, you've off time offense. the if good financial strategies, And our question. I'm plans. just looking gain the out come and that I to, use tactics play by we've horsepower We're we of that can, to this that

just There's business by uncertainty talked so much in consumer. some upside We business. about

I think valid. that's

additional I'll has difficult. Mike too just Kevin it's Valentino. any see or if others, The to color look

Kevin Brackman

don't I anything No, have to add to that.

Josh Chan

Yes, color your thanks the for for thanks time. and

Kevin Brackman

Thank you.

Mike McGaugh

Thank you.

Operator

the comes question of Cowen. Chris Sinnott next from Your line with

Chris Sinnott

couple for of taking thanks call. from my and everyone questions A morning Good me.

are just sped up are new where we or And that's estimates, your to off, delayed work back if revenue in generally, First that the that how affect your guide? actual process? versus employees might or

with all And the is which there overall to not attributable, then economic you're orders, an can't down in different like or in simply any demand activity down of but segments that, chain that. lower the terms supply the you've chain taken supply the specifically or portion something and meet customer somewhere sales reduced where of issue something that's lower having you of because outlook,

Mike McGaugh

and take With me take Mike. let shot down Ameri-Kart that at Southern one that to Michigan. this a plant that. regard about to facilities, Chris, we we I'll facility had Yes, in have only is our was in month a our ago,

corporate been Zoom out we been tools the of operating just we've homes, All unit would. deemed essential. virtually standpoint, using than a from else; more factories thought a everyone staff business have They're other operating ever and like we standpoint our of

found we remarkably actually be proven what is that's effective. But to

business contact, to human the but the get been missed element we've and You done. human able

product, is so and and just getting done. customer the we're and talk side. here, product, make more softness about sell ship uncertainty we on that it The As weakness product,

the well, that process second Chris? of staffed operating plant So, question, as comes we're And well was back. what in back bringing the the up the with one of exception demand

Chris Sinnott

question supply -- It outlook the the chain, drop? revenue was, market-driven is is it or the reason it for

Mike McGaugh

we've long into So, market-driven. thoughts as lead-time proactively share supply where well. had there inventories. we've my chain, that It's I'll our The products, actually built

Our we demand get. of forward It's we've good some issue, to tough products inventories more but shape. some in be a that raw are buys just thought may on made material

Chris Sinnott

to same was million of reported. Okay, the that's helpful. I I you think time last as CapEx just the but finally, have think it's don't Then check $XX I'd changed. it, guidance double

So, I much into that be? like too concerned, a standpoint? Or on COVID-XX in end that Like in the effects am changing of CapEx from plans of reading you that not still before that? long-term XXXX, and executing sense the are you're you're to not liquidity all the had really going spending what the

Kevin Brackman

Yes.

So, of our CapEx did the change still $XX first It's correct. Remember, half of that side, maintenance on We you're outlook. CapEx not is about CapEx. all, million.

we then include projects. But defer that want we So that spending and second half that did necessary. some half flexibility in the it be that not time continue outlook if to is the to There with growth other of to becomes for do productivity may being. in some the

Your money. the on are comments liquidity right about

position a sheet. finished we the uncertainty cash. of have with first presents. million And deal our flexibility We quarter with the to that liquidity We the $XX strong balance gives this situation us really think

so good we about that. feel And

this some to that, we it. assess assess We'll outlook our CapEx to opportunities time. continue may updated we'll defer but at be So, There spending. haven't

Chris Sinnott

everyone. I appreciate That's really Thanks. helpful.

Operator

Instructions] [Operator

Your comes the with of Josh line from Baird. next Chan question

Josh Chan

just Yes, made. with my Kevin that question, point along follow-up thanks the just for taking going

So, balance a you strong sheet. very have

be any shouldn't in adjust to right? downturn to that. Just rate, confirm the any given expectation wanted the dividend, So, there

Kevin Brackman

for And number think plan pursue we've different remainder a maintain of to downturn first we think and would other a look reviewed dividend. the the of scenarios the measures dividend. XXXX. I we of are Our before change actions number to I there is would Yes,

to at the So, preference is levels. and our plan current dividend maintain

Josh Chan

you. Tats great. Thank

Operator

line from comes Carl the question of next [Indiscernible]. Your

Unidentified Analyst

morning. good Hi,

Monica Vinay

morning. Good

Unidentified Analyst

last side. off on Distribution the one weeks know of question couple the Just March. sales you said I in dropped

in Tuffy of the Just the growth sales to maybe were kind the then perspective, couple month excluding an you into weeks and from of organic acquisition, of if how curious first April? progressed talk maybe

Mike McGaugh

this I'll as Chris Mike I comment Material Carl, DuPaul just Handling. Valentino our Group McGaugh. that, is the Michael the Again, ask on President. on off passed who's to question to

DuPaul Chris - A

Yes. question. for Thank you the

volumes, So, broadly. with we're in lower in part were the the delays bit of and what gain was the make think little quarter. just that in or came average lower market the seeing but off order share That sizes, quarter we more in large quarter, line continue a did we soft. first orders some start the seeing We some softness later to overall in

And we continued part real in softness segment side back in what's saw for the that The demand shift for of the around revenue is of March, passenger significant segment or off, drop light driving a has particularly which QX, in the the where into came our the that vehicle shutdown business. guidance QX.

Unidentified Analyst

Great. Thanks.

Mike McGaugh

to If Chris' similar I to come teams that offense we've as discussion company of using share on this. we grow gain may focused are financial play the as had and the well. on to of out build using that strength strength, the

Unidentified Analyst

all Thank you. Great. I had. That's

Mike McGaugh

you. Thank

Operator

There are this at no time. further questions

Monica Vinay

thank time in Thank you. interest Myers and your Industries all today. and participation you We for your of

approximately found immediately call. the Thanks be of have XX hours. on Details Industries' will Relations be and our on under website A call be As a this website available transcript within great can reminder, Myers will tab. webcast day. the Investor replay or available a via a

Operator

today's concludes call. conference This

may now disconnect. You

Myers Industries (MYE) 12 May 202020 Q1 Earnings call transcript