MYERS INDUSTRIES INC Q4 FY2024 earnings call

• Company Overview: Myers is a diversified industrial company with strong brands like Scepter (defense industry solutions), Signature System (composite mats), Buckhorn (sustainable packaging), and Myers Tire Supply (under vehicle industry). - Focused Transformation: Prioritize critical areas, drive performance, improve profitability, restructure for $20 million annualized cost savings in SG&A by year-end 2025, launch a new $10 million share repurchase program, and suspend formal guidance to refine action plan. - Financial Results: 4Q 2024 net sales were $203.9 million (+6.7%), adjusted gross margin was 32.2% (+210 basis points), adjusted EBITDA was up 26.2% with a margin of 13.5% (+2.1 percentage points). Full year 2024 net sales were $836.3 million (+2.9%), adjusted EBITDA improved $24.2 million (+24.7%), and e-commerce sales were $36 million (+12%).

Material Handling segment: Net sales increased 20.3% compared to the prior year. Adjusted EBITDA increased 22.3% to $34.7 million, resulting in a 30 basis point increase in adjusted EBITDA margin to 22.7%. Contributions from the Signature acquisition and strong Scepter military and fuel can sales were partially offset by seed box sales declines in Buckhorn. Distribution segment: Net sales decreased 20.2% due to lower volume and pricing. Adjusted EBITDA decreased $1.5 million to a loss of $300,000 primarily due to lower gross margin, partially offset by lower SG&A. The segment also saw the consolidation of a fourth distribution center earlier this year.

• Temporarily suspends formal guidance to refine action plan but expects balanced risk and opportunities for revenue and margin. - Commits to a $20 million or approximately 10% annualized cost reduction in SG&A by the end of 2025 through the focused transformation program. - Tariffs are expected to have limited near-term impact but macroeconomic uncertainty remains.

• Macro-economic uncertainties that may affect business performance. - Tariffs' impact on the company's manufacturing and supplier footprint, with uncertain overall macroeconomic impact. - Underperforming businesses within the portfolio requiring strategic actions to improve performance.

Q: Lay of the land for the first 65 days regarding the overall portfolio and optimism actions.

A: Assessing the portfolio, focusing on reinforcing strong businesses, deep diving into underperforming ones, and emphasizing portfolio optimization. Early on, pleasantly surprised by some portfolio strength, and will look at cost structure and customer value for weaker sides.

Q: 4Q material handling sales deceleration, cause of share loss, secular decline, or end market demand.

A: Buckhorn seed box declines after strong 2023, plans for market share gains in manufacturing and bulk containers, with RV and marine markets starting to stabilize.

Q: Tariffs impact on direct COGS and material costs, mitigation steps.

A: ~10% material cost exposure, some inventory from Canada moved to US, and potential pricing mitigation for longer-term tariff impacts.

Q: Signature integration status.

A: Good cultural fit, management tools aligned, synergies on track, Signature had a strong 4Q with record MegaDeck sales.

Q: Distribution business issues, integration problems or end market issues.

A: Mixture of end market consolidation issues and integration mistakes, with management changes and structure review planned to fix issues.

Q: Tariffs impact on competitors relative to Myers.

A: Myers in good position with US-based operations, likely better positioned than some competitors due to domestic manufacturing.

Q: RV/marine market and share pickup opportunities.

A: New designs offer opportunity for redesign to improve cost and margin, working closely with customers on design changes to benefit their businesses.

Q: Distribution segment profitability in 2025.

A: Continuing to work on cost structure improvements, with closed distribution centers, new sellers, and e-commerce efforts, with more updates to come in future earnings calls.