MYE - Earnings call transcript Q2 2021

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Operator

Good morning or good afternoon all, and welcome to the Myers Industries 2021 Second Quarter Earnings Call. My name is Adam, and I will be your operator today. [Operator Instructions] I will now hand you over to Monica Vinay. Monica, please go ahead when you are ready.

Monica Vinay

Thank you. morning. Good joining for us. you Thank am Vice and of Relations Vinay, at I Myers President Treasurer Industries. Investor Monica

Joining me quarter Chief today Officer; are results a Mike McGaugh, President the outlining Robinson, this we financial Vice news Earlier release and the and Executive President XXXX. Officer. and second Financial for morning, issued of Sonal Chief Executive

of you event. archived along be have and website will this not If after the yet the transcript our shortly received cast on call with

Mike, to cause or statements I expressed the filings these is like Before involve and and may to These filings. on I periodic the the over from turn Litigation Act which information implied Mike XX-Q company's may and the uncertainties company's forward-looking uncertainties call in you risks, results Private remind some turn set and pleased comments to to Reform based we management's am materially concerning of of found McGaugh. during would current that harbor pursuant the statements. I other over in other to call. may provisions XXXX. factors expectations to safe Securities be call Further are in are risks, differ Such those make made this the now XX-K factors forth and these statements SEC

Mike McGaugh

growth I sales to Thank living I every would and you, strong delivering our vision. to dynamic pleased the am be share of our in laser-focused needs reliably our Myers of uncertain call. continue day. second environment like products Monica. quarter on for advancing the that remaining good earnings teammates of what's all progress Good and values morning, had to long-term proven XXXX meeting navigating everyone, our and our thank and to welcome customers, quarter for an our we another make to and

rotational of that, in second by acquisition another Plastics, and in announced we challenging have slide #X earlier Trilogy appendix second today markets X for top the was and now, The long-term strong marks with quarter the continue strategy last continued provide molding months some our on this across for our our of included in background turn platform, Trilogy quarter acquisition X I remarks. of our closing a our an of slide in a in acquisition our of second will our we and grow to more to the environment. the operational execution execution for updates you. additional and results. defined of Slide week, Horizon On of my The review strategy. deck please point recovery overview Trilogy But key end proof which

drove consecutive across of year-over-year demand Material excess markets all and XX% of continue. and supplying end solid we year-over-year to on XX% delivered growth and quarter Distribution a sales, our in Demand in a customers strong strong is Handling looks second from organic our growth revenue an Continued segments with growth. basis,

And than pressures some were Despite to in lasting, high-quality, the have the focus even we prices niche which for short-term with is long-term our It in products, Myers. however, more on demand foundation products grow have we throughout have share we increasing and that pandemic. anticipated. continued a our this inflationary other seen market us pleased exciting and these of durable and cases, approach. leading We vision, solid build some material provides had am a I well-regarded raw and and market headwinds, quarter.

temporary the have be them expect short-term around issues raw we While in to unprecedented. been supply escalations and material nature, cost

margin cost compression in and able implementing were and July. to up of the and announcing the have finished again and increases our We with not during keep we good quarter. pace March price April Unfortunately, taken experienced swift in action, prices increases,

seeing the we we of of the the enterprise. objectives committed As and This our Horizon of we across have scarcity been restoring the to X. margins near-term. in increases impact, working mitigate while key market. is are one are in said persist also labor component that cost have many in And to labor the we self-help companies, before, a tightness XXXX likely the are and headwind expanding Like will

monitoring coming remain months, the actions of we to mitigate our Over in inflation. diligent and impact the adjusting

best have working are priced strike while with a ensuring fair, supply, customers, our for to are doing to we appropriately the they they provide. ensure mindset our We our long-term products ensure value

the direction delivering and headed operationally. results, and were right Our are strategically self-help in efforts

strategy. Myers our our over Robinson, Chief our executing transforming are to Financial on like now are details We I against turn successfully provide results to to and Officer, Sonal and and would call long-term guidance. vision financial the

Sonal?

Sonal Robinson

Thank morning, you, Mike, good everyone. and

Let begin financial were second of sales Net X. million, review up increase us on Slide with of XX%. our a quarter results an $XX

the to was XX% to driven $XX.X $XX.X Elkhart, sales resin, price operating an while to up of which sequentially quarter. to the income by cost SG&A XX.X%. These X%. prior compared year, fully key was higher XX% $X.XX an compensation not in of to legal decreased and Favorable prior the primarily prior Material continued addition EBITDA Adjusted increased from adjusted EPS year. margin was higher mix. increased in $X.XX price XX% the incentive costs Excluding our XX.X% led increase the to million, in costs margin impacted increase to was gross was and Distribution X% higher relationship. the all increase and $X.X increased Elkhart material EBITDA both in by or million the unfavorable to net costs, organic markets. segments profit Adjusted of offset lastly, and Margin year raw The Adjusted increase were gross higher profit mostly an million And contributed gross $XX.X by the adjusted salaries which due million. expenses, volume prices, and in negatively of fees. by higher during compared Handling impact end higher offset FX $X.XX, primarily Sales acquisition, quarter. million, was

Beginning for mix. SG&A material was expenses the The was to primarily driven segment, higher $X.X XX%, equipment including prior X an offset due overview income compensation price material growth of increase XX% of handling, million. in and The an increased Elkhart incentive of doubled and higher salaries volume $XX.X Slide legal the $XX was sales additional to sales were now increased X% Elkhart, costs. We travel with addition by or expenses. driven In by consumable Distribution X% to from adjusted higher to incentive handling due the approximately net mix basis, $XX raw to increased mix operating more due and cost to to escalating fees. increased SG&A cost an strong the million, and million organic than year gained costs, compensation volume favorable Material segment relationship or sales. FX. which due costs addition volume net the unfavorable handling by performance. sales an Turning acquisition. and increased that XX%, Elkhart, On million partially to both partially higher adjusted by Distribution's operating price driven income X% offset by higher in material and

comps. flow flow X. cash cash On year, was prior Cash Turning $XX.X driven Free a the from year-to-date the cash in to over increase million. an by $XX.X quarter, at basis, hand was million of higher quarter million free million. on was end Slide $XX.X $X.X

strong. remains quarter, sheet the leverage balance of Our end At the second was Xx.

acquisition. on strategy. structure flexibility facility to And to July XX, growth execute our needed provide the Our our Trilogy revolving credit finance the continues we utilized capital to

X. to Turning Slide

providing an guidance, Before me let on environment. discuss take macroeconomic the a moment update to ongoing

As we chain, are unprecedented disruptions which many Mike increases have led the raw costs supply year. mentioned, in other are industrial manufacturers, facing and similar what in material temporary to this believe we to

to to We increases. to to with these have lag price continued mitigate we able increases. realization, due actions not cost take been up a in the have pace keep significant of pricing But

in additional resin potentially for believe quarter. As result and year. costs to position as the remain capacity factors, cost should in we to unfavorable through a price the easing continue an moderating supplier including third result, we We many expect

such, fourth to As to price quarter. turn favorable expect relationship we cost our in the

on of July XX. provide the net acquisition on sales increase in now our update results XXXX, anticipated completed for Reported fiscal me Trilogy includes which to are the outlook range. expected an Let mid-XX%

range. million. both the annual And net annual previous in XX% the approximately than Our little the expected Note high roughly and acquisition a were net acquisitions. time $XX the Trilogy's year that million. of impact sales Trilogy guidance the over are is due at prior sales Elkhart's the Elkhart sales half $XXX more was increase of to of

share. reaffirming our to XXXX for $X.XX per are of adjusted We EPS outlook $X.XX

Trilogy expenses is EPS approximately million are and investing focus expected past current years closing, to $X.X addition our tax Interest is significant Other Elkhart XX%. assumptions of million. headwinds, the improving $XX in along weighted a XX.X and count higher to key million fundamentals million And by while effective being inflationary facilities and intact. is slightly our is million, forecasted to term shares. on of also between that our trend capacity, year. reflects of accretive guidance and in renewed of CapEx be the average forecasted Our rate X the depreciation $XX expense note and short than approximately include CapEx be In to share with the pressured our and amortization fiscal is Trilogy. modeling $XX to with long-term to be expected

potential cost manage while pricing increases the to impact actions, through balancing volume. continue We on

of are dynamic their this all we teams working appreciate in extremely environment, Our efforts. hard and

like Before Mike, over Trilogy turning an I now warm would our welcome I on will to over you a back the it turn to update provide strategy. it to extend to back Mike, to team.

Mike McGaugh

you, Sonal. appreciate I Thank it.

introduced phase time, map progress this and last X of In road I against underway. well X. our the transformation have is long-term Slide of period a Myers we October road current to of short year. Horizon of map turn please Now made our in meaningful

for right strategic a vision We focus on right have company. team value-creating have plan right it the execution focused, the and with a the place to believe I our in shareholder we reality. make

initiatives, and important improvements a and continue pricing execute our to optimize to to continue of Handling which #X, is a X our grow business component Material we of to optimization. by off innovator fueled to includes are X businesses. execution rooted true engineered e-commerce build that's our excellence, self-help bolt-on and in strategy and of into solutions, segment. the our #X, growth and we SG&A commercial value-based against goal purchasing, #X, our segment We transforming while Horizon build high-growth our Distribution existing sales out And also out of areas: plastic organic which M&A strong channel. in one is a of start,

outlined from gained these into to knowledge plan North enterprise propel to elements across roadmap Slide in by respect an Horizon give I execution each use to a will focus detail to and Slide to we X X update vision X pursue will X pillar our M&A The in M&A where on be our is enterprise with This scale. strategic we recent and have us on America. supported X. described Continued on have on flow pursue cash previous global I level Horizon X, made calls, will pillars Horizon level and in XX Because move progress each. the

On to growth sales, in strengthens structure management. in we product front, our the commercial organic improved and implementing headway marketing our that and make focus standardizes continue

training. world-class planning a of supply new we are planning management and Examples moving improving capability this areas additions our And account demand and and and account and will We Myers. optimizing our chain processes. needle include with new run at processes time, take in and we focus are how our of planning installing the some and while commercial organization

closed bolt-on products track our its high-quality service to supplement to and aligned our business. well summit it has M&A, we to have group. a and exemplary the providing in including X, investments delivery. we superior very have Plastics to organization, as record our strategic we Pillar and with on-time customers fortified Trilogy second are talent of seeing traction critical last On with an acquisition e-commerce objectives with is pleased plastics are through culture we and Additionally, good infrastructure, quarter, held stand-alone that relates and

will are expect expect of from the realize to million is by this We chain million we of through synergies targeting of $X of on which to $X million annual cost supply the $X cost Elkhart. approximately cost end reductions. synergies, top of we Most be XXXX. This

we to synergies we expect opportunities addition synergies, same Trilogy. cost are seeing growth from Elkhart, these and and In with the

Horizon of expected, X As and more as organization is part acquisitions approach, we as our learning. our pursue

are and as to We obtain working. synergies. integrate and are and and our to as This fine-tuning plan our capabilities approach identify complete playbook deals well

gaining we capability to speed pipeline. currently we targets to forward. seek important are and and acquire complementary numerous have We actionable step and our continue as was Trilogy businesses, opportunities an in our move we in journey,

integral In over Moving on sourcing chain our to been supply has the the newly excellence. our issues, necessary growth team of good operational procurement materials job midst most a raw This centralized to to pillar team and availability. global of on recent has quarters. his done Jeff meet The been issues. customers' both on several last cost job have have challenge procurement and raw material nice our a in supply months needs. Baker and done chain a

Myers as value-added a Over provider. the past we solutions months, positioned

customers stakeholders. thoughtful made ensure to price for on have decisions all goodwill value well we of supply We and long-term our our and create as as

this than visual our focus choice consider Myers may have more to reflect its integrity, of unveiled values aesthetic key a One can-do seen, strategic attitude. Myers rather be We vision you change, and our customer new As identity website. to identity reinforce optimism, much brand but recently and new logo

signs, the to changing name badges, are business all a cards, website, one mindset. We team single

We are are company. we together of a no longer as coming smaller brands, collection one

have customers base. our achieve we our high our exciting. and our order to pillar, serve continuity We we this is turn to more our war System, performance, that, It's I need capability online will and us fourth on employee classes help culture. to To see talent. new see live execute is With will comprised to It is the drive improvement that growth, a Learning In working. we have mass, that and of that help We recently critical which culture. performing our high-performance -- breakthrough more employees. to end, LMS Management and in win launched which

at that investing want are in We see here our their employees Myers. to Our grow employees careers their them, in development. in we and

larger success employee the We planning found a within that training typically of culture in to We seek employee world of type includes the are companies. programs This at creating succession replicate company. development here. class and and career

like Our key by work. would to team close and a be people will are I for advantage. their today the Myers hard competitive again thanking

our while are service. very customers quality economic We this and managing in fast-paced environment, serving

with believe It considerable open will long-term we that, strategy is our line significant long-term will results customers, is and momentum. Operator? And Our tangible create gaining shareholders. value producing now for our the our employees, we for communities that our questions.

Operator

Barger Our first [Operator from Instructions] question today Steve KeyBanc. is

Steve Barger

aggressive have price. on You been

are still costs. You on behind price

dynamics have the impact increases is, any you Or price just question see talk on demand? first you The had can about as end them? market

Mike McGaugh

no. an announced success upon At raw at July seeing are all in increases. recently point, Steve, in feel We market-based August implementing we there's got Yes. this still in point, the the you acceptance materials. good have inflation this and no, the

There where point. positives. generally off at there We we are it demand in way. are some may are certain not this But tail a speaking, not submarkets certain seeing be demand market may have no, seeing impact -- you

Steve Barger

said are hearing suppliers what those What's start to And thought from when disruptions the Or you any might are you chain off? roll you handicap temporary. way expect process there? and to the prices supply

Mike McGaugh

Yes.

to maintenance and side, a don't pandemic, degree. polyethylene, play. the into month. ultimately turnarounds out and factors turnarounds. on have circumstances So lot side, a is maintenance be since ball. the to We think a the course polypropylene and out a and events had revert When turnarounds but to threw the also those The COVID freeze polyethylene lesser that we of it next pushed read that the which spring, into which of more side one. number steel, had It's We it has done, quarter. majeures. of came crystal pushed those polypropylene were tough will That that force But stabilize over to a was XX over out unique we third second the maintenance of

Sonal's information, to ground cost price we accurate. favorably expect quarter to is So fourth gain in

Steve Barger

push contract price contracts until has you the renewal? where now What line product percentage can't of right

Mike McGaugh

not the this Yes, that at disclosed past. we in have point,

would disclose that And at time, to Steve. prefer so I this not

Steve Barger

unprofitable? Well, everything are contributing? product any is right do lines or Okay. still you breakeven Or that now have

Mike McGaugh

point, on demand. short-term say I positive. At into specifics. That's the disruptions I a would price go polypropylene have polyethylene, The want this significant don't significant. been standpoint there's to from the

that addressing vast product with The increases. contribute. of the to lines price are our We majority continue

get However, I mean in that healthy. quarter to We more versus we need see you mean, second that EBITDA Steve. second quarter. to revert, can our need

Steve Barger

of And I more than this And income and to is what inflation a driver know that million. -- a $X understand. sales question I I see? last are did an input that you up and huge you but It's are know one. situation. it's tough cost is talking combination operating up first $XXX growth But that should half me, normalized what unusual But leverage Yes, over million, acquisitions? Or first half operating organic be about. of from is the a the expect for

Mike McGaugh

Yes.

you do take like Sonal, that? to

Sonal Robinson

Steve. Sure,

compression So saw Steve, of with in our terms gross start in margin quarter. what you this I would

we So basis were XXX down points.

commentary about was price X/X to think of this due to our cost from unfavorable about you compression. relationship, As a relationship that of around being the

So of compression much would expect seen. turn, look this this when starts to as that regain we out you margin to have of some we

Mike McGaugh

be I And labor labor everyone. Yes. for That's labor, shortages, scarcity, a scarcity there's headwind quarters. incremental That's That's right. labor think going next Yes. on the right. hitting the to is

off. but a lot covering of curveball expect unemployment falls Barring also on a supplemental it we be a COVID, of premium You're the bit expense, good to as labor remedied. from insurance that

the but headwind. labor employee has proactive also a been are employee feel gap, closing also and we cost that I actions development, labor scarcity staffing employee confident on investment, Steve, solution, training, taking that We are and

Operator

Natera] Cowen. from question next from Our [Jonathan is

Unidentified Analyst

is on first handling of on assume Or material one can increasing a increase Jonathan also that price? Lance. function organic quarter. XX% the it increase? question for Congratulations organically, volumes sales is My with just was This in

Sonal Robinson

is this No. Jonathan, Sonal.

approximately was of volume mix. that that So XX% yes, of XX%,

was that so And then pricing that side, about and driven solid from FX. there X% by on growth X% then good from

Unidentified Analyst

it. Got Okay.

see that Now you am guys X Once Eventually, I point still cost. this year. do know where that you do up do the as view that how catch them the tailwind catch potential months see you in Or sticky? And in QX reach a will. sure then are you prices it's to you -- do potential. and a One, you have you as remainder of 'XX? think prices I raised you guys up, do And remain prices do able for if that? X, are not guys

Mike McGaugh

Yes, Jonathan, this is Mike.

So to to some on highly quality, back based high believe make it that, We continue reliable kind a price for we And of we with with we I invest want -- value my products can our our that we to a they of And goes in products comments. in. fair that long-term the create this approach customers. our a customers. mindset way in mentioned to

token, On could That's specific talked of the your pricing. I one can question. opposite I It's we to Those we are if in price about the past. have price not one initiatives know the the I to. want It's value-based focused underway. of answers that there, try cost. on the and more same at I give value don't initiatives Myers. have

Unidentified Analyst

forward? this have sheet. those? No, a will the of up remain to is Or I the And take wondering, opportunities leases last that portion am it's going the noted leases status helpful. something My you quo that balance were financial of like have decided that and came question, I become

Sonal Robinson

we to plan was about a announced really we change through and it's the that took going fund and opportunity sell think process. a lease really structure It back we went and we proceed Yes, as Jonathan. opportunity an capital structural how had the it No, essentially will look we it our that at as project in how not forward.

Operator

Barger. [Operator from Instructions] We Steve have a follow-up

Steve Barger

responded translated technologies Mike, the customers Can the in to those the companies marketplace? capabilities? X Myers is broader that's have wins the one that bring product into market. past, plastic in to you've about you molding said Or how only talk that how new can of

Mike McGaugh

seeing it's points, proof Yes, seeing playout. that Steve, early we're we're days, but

done prior mentioned And what training. can't We I have not. cross I have remember calls or on

occurring what does we plants overlap example, in growth and we rotational blow For blow run and the there. X price, they -- It's the and leading our the point, however, as there so volume, one the there's a of molding our good That's had on bearing rate, millions are order most have in plastic are out. because the our our the approach technologies. technical on It's revenue understand that to the versa molding new a and hypothesis that? a the of playing single-digit we dollars. pleasing cross-selling from platform. et of what's of company, side, team. of what the At of vice like Specific this capabilities the molding cetera, roto And look that that distribution -- leader to are out. What's molding molding interesting, sales results business seeing most terms me

plastic We Bin also Akro of distribution the we are as example, in an even products initial Conbon in the cross-selling some seeing that opportunities make, mills. are

storage in are made of Buckhorn. Some containers the that over

we those raising the sales XXX of team and have could Just Steve, about even products previously, sales though been bifurcated. segments make them move the that they how person awareness

frankly, approach. volume we more price, to seeing seeing we are we would getting there. are that on Quite the also more but Myers One I So like

We getting there. are

a are a way. We more moving we see We a pricing P&L. hit the lot pronounced to in through are lot selling -- our need of just

we And bottom that's so line. on that hold more back actually the

Steve Barger

call, On process, the the a about XX-day done. said it X/X I was was and training think, you last sales

is -- now assuming the I that's well, on through complete guess that both the organization So question. that's complete, sides? Is

Mike McGaugh

a like process, almost more it's before, XX-day misspoke I maybe And Yes. Steve.

through. are a soon the we or be. seeing the other are handling of why success. part waves going lot XXX. team, people but that's distribution will the sales it's believe of training I are on side, XX management, we very the have we all that material or XX And done not have of The We But largely

are need that markets. even customer Our customer for the and recovery of value salespeople seeing the the of to more volume identification, creating we customers, some on addition our in needs, drive focused are end

sure Now, our our quite focus all making of get we assets. volume the is out frankly,

We XX%, our to mean, down be roles. volume XX% I the have not enough more bodies or pretty XX% those hard assets and bodies we plants. run to XX% may are running with fill got you

And so example. overtime as we have mandatory an

We with will to -- really that's a scarcity. keep work -- our headwind. working one up limiters. people the are It's of been That's demand. hard probably the It's been labor

Steve Barger

Is think is of facilities way any the there -- to or a -- move area? you you do? to it of mitigate of do how play? that? more as Is an function need location you automation it do a some do think to term, you longer these What Or populated

Mike McGaugh

Yes. It's answer. automation play. a That's bit little an longer-term

some each helping a opportunities. not the our huge And facilities lot of capital us that consultants them We incremental. of are at but automation are more have identify expenses, in

looking on practice of which fruit replicate that think tell, fruit HXB And it play. business that's pilots, can to business bearing some we bring how up at in you in I LMS through, staffing. here. of a off as migrate frankly as frankly up that a life have visa really then we my we're but contribute the very creative of gap why development a our come really Steve, that common success. work tapping to language token And seasonal are workers. we're got and bearing It's to leaders an there's the raise employee instance, bit that construction had rates. early In that's at to was that number same going So I -- unemployment a and we've falls of quite is continue got solution either close the system. come going some hourly workforces to and barrier innovative supplement I'll we're with framing the it's solutions that have some HR to these additional something in past we And on the -- up quite of implement immediately. Also, and or said Also our

control believe labor for that's run in issues, and and of So our first look X other well a year the availability of half to it but then that we're using believe near-term I performing the plants. but under headwind and space, labor that it's this will be I

Steve Barger

that Last one small has but channel exciting could grow. update that on any I Yes. for me, it's e-commerce? it's know -- know an new I

Mike McGaugh

It's very exciting.

really as a good, been some have some I a are the very talented. channels flywheel. very able so am it customers our are actually place. has team. And in use Chad We Collins with some put margins running now, folks pleased -- that as got to plants We are at point, for good good. The and in They not this right hard.

I e-commerce be the to the future. success to door. We bearing little bit get of throttle to going but think a have out And actually because our good is really can't had in a that we fruit. volume channel it's it the That's a secret problem have, to

Operator

remarks. we to will for As any no hand back Instructions] I have the management [Operator team closing further questions,

Monica Vinay

We great everyone for your a Have Industries. Thank Myers you. Thank interest today. Thanks appreciate participation time in day. you. and your

Operator

call. today's this you your for very gentlemen, attendance. Thank and much concludes Ladies

now You your lines. disconnect may

Myers Industries (MYE) 7 Aug 212021 Q2 Earnings call transcript