Investor Presentation

Transcription

1 Investor Presentation November 2018

2 SAFE HARBOR STATEMENT & NON-GAAP MEASURES Statements in this presentation include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Any statement that is not of historical fact may be deemed forward-looking. Words such as expect, believe, project, plan, anticipate, intend, objective, outlook, target, goal, view and similar expressions identify forward-looking statements. These statements are based on management's current views and assumptions of future events and financial performance and involve a number of risks and uncertainties, many outside of the Company's control that could cause actual results to materially differ from those expressed or implied. Risks and uncertainties include: raw material availability, increases in raw material costs, or other production costs; risks associated with our strategic growth initiatives or the failure to achieve the anticipated benefits of such initiatives; unanticipated downturn in business relationships with customers or their purchases; competitive pressures on sales and pricing; changes in the markets for the Company's business segments; changes in trends and demands in the markets in which the Company competes; operational problems at our manufacturing facilities, or unexpected failures at those facilities; future economic and financial conditions in the United States and around the world; inability of the Company to meet future capital requirements; claims, litigation and regulatory actions against the Company; changes in laws and regulations affecting the Company; and other risks as detailed in the Company's 10-K and other reports filed with the Securities and Exchange Commission. Such reports are available on the Securities and Exchange Commission's public reference facilities and its website at and on the Company's Investor Relations section of its website at Myers Industries undertakes no obligation to publicly update or revise any forward-looking statements contained herein. These statements speak only as of the date made. The Company refers to certain non-gaap financial measures throughout this presentation. Adjusted EPS, adjusted income per diluted share from continuing operations, adjusted operating income, adjusted gross profit, adjusted EBITDA and free cash flow are non-gaap financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. The Company believes that such information provides an additional measurement and consistent historical comparison of the Company s performance. A reconciliation of the non- GAAP financial measures to the most directly comparable GAAP measures is available in the appendix of this presentation. 2

3 OUR PATH TO SUCCESS: MYERS INVESTMENT HIGHLIGHTS MARKET LEADING POSITIONS ACROSS DIVERSE, NICHE MARKETS INDUSTRY DEFINING BRANDS STRONG SECULAR GROWTH TRENDS ESTABLISHED CHANNELS TO MARKET THROUGH SUPERIOR INTIMACY WITH A DIVERSE CUSTOMER BASE FLEXIBLE OPERATIONS AND CONTINUOUS IMPROVEMENT CULTURE SUPPORTS PROFITABLE GROWTH SEASONED MANAGEMENT TEAM EXECUTING A SOLID PLAN COMPELLING STRATEGY TO DRIVE EARNINGS GROWTH 3

4 MYERS PROVIDES DIVERSE SOLUTIONS TO IMPROVE SAFETY, HEALTH AND EFFICIENCY ACROSS NICHE MARKETS BUSINESS HIGHLIGHTS KEY DATA (2017)» A market leader focused on a #1 or #2 position in diverse, niche markets A leading manufacturer of a diverse range of material handling and storage solutions A leading distributor to the U.S. tire, wheel and undervehicle service industry» Seven strong brands, each with a unique value proposition and differentiated offerings Auto Aftermarket Net Sales $547M End Market 28% FINANCIAL METRICS 1 NET REVENUE MIX Industrial 26% Adjusted EBITDA Margin 11% Distribution Segment 29%» Building an asset light business model to provide operational and financial flexibility 14% 17% 14% Vehicle Consumer Food & Beverage 71% Material Handling» Long-standing relationships with diverse, blue-chip customers and channel partners Material Handling LEADING BRANDS Distribution» ~1,900 employees responsible for manufacturing ~15,000 products and distributing 13,500+ products 1 Reflects continuing operations. See appendix for non-gaap reconciliations. 4

5 MYERS HAS TRANSFORMED THE ORGANIZATION SIGNIFICANT ACCOMPLISHMENTS SINCE 2015 MYERS TODAY UPGRADED LEADERSHIP TEAM INSTILLED NICHE MARKET FOCUS INVESTED IN THE SALES FORCE ESTABLISHED OPERATIONAL EXCELLENCE BEGAN BUILDING A GROWTH INFRASTRUCTURE» Installed a high-caliber leadership team» 80% of current executive team added since 2015» Identified five key niche markets for growth» Divested non-core, commodity businesses» Implemented tools to enhance effectiveness across both the sales force and pricing» Invested in marketing resources and innovation» Instituted 80/20 and lean initiatives» >30% footprint reduction» ~19% headcount reduction» Established an acquisition funnel with clear strategic objectives and return thresholds» Focus on cash flow and debt reduction Growth platform with leading positions in niche markets Leaner operating footprint and more asset light business model generating $10M in annual cost savings Decentralized organization; employees are trained to Act Like Owners Improved cash flow profile M&A a key option to drive enhanced cash returns, growth and margins Management team focused on delivering a clear strategy Safer, healthier, more efficient ESTABLISHED AN ENTERPRISE STRATEGY TO POSITION THE ORGANIZATION FOR GROWTH 5

6 MYERS HAS INSTITUTED A ROBUST ENTERPRISE STRATEGY GOAL STRATEGY We think and operate for the long-term and maintain a continuous improvement mindset. Value R. David Banyard Creation Act Like Owners Cash Flow Growth Niche Market Focus Flexible Operations MISSION Safer Healthier More Efficient CULTURE Structured and Organized Bias For Action Analytical and Results-Oriented Customer Intimacy Flexible and Exploratory Transparency and Integrity Humble and Team-Oriented ESTABLISHED FRAMEWORK FOR DRIVING GROWTH AND OUTPERFORMANCE WITHIN THE BUSINESS 6

7 LEADING PROVIDER OF A COMPREHENSIVE SUITE OF OFFERINGS BRANDS SELECT PRODUCTS 2017 FINANCIALS 1 MATERIAL HANDLING $391M Net Sales $44M Adj. Operating Income $156M Net Sales DISTRIBUTION $9M Adj. Operating Income 1 Reflects continuing operations. See appendix for non-gaap reconciliations. 7

8 ATTRACTIVE END MARKET DYNAMICS CONSUMER 14% FY17 Revenue Strong consumer sentiment including amongst outdoor enthusiasts» Consumer sentiment currently very strong at ~99» U.S. unemployment rate is the lowest in 17 years FOOD & BEVERAGE 14% FY17 Revenue Increasing demand across agricultural and food processing markets» U.S. farm cash receipts currently ~15% below peak» U.S. population sustaining steady growth VEHICLE 17% FY17 Revenue Significant installed revenue base with continued demand growth» ~55M people in U.S. and Canada over 65 years old» Increased participation among younger buyers» Large installed base: ~7M U.S. households have RVs INDUSTRIAL 26% FY17 Revenue Significant rebound in production coupled with strong macro outlook» Highest U.S. Manufacturing PMI in over three years» 3% Global GDP growth AUTO AFTERMARKET 28% FY17 Revenue Large market; many cars on road requiring maintenance and repair» 250M+ U.S. registered vehicles» 17M+ cars and trucks produced in North America annually 8

9 COMPELLING STRATEGY TO DRIVE EARNINGS GROWTH NICHE MARKET FOCUS FLEXIBLE OPERATIONS STRATEGIC M&A 1» Drive further market penetration across Material Handling» Leverage strategic customer relationships» Continued product innovation» Sales tools and strategies 2» Drive enhanced sales effectiveness across Distribution 3» Identify and enter new niche markets where we can win» Leverage 80/20 initiatives to focus on higher value customers» Continued simplification of operations through further footprint reduction and implementation of lean initiatives» Value-added process improvement initiatives» Identify partnership opportunities with outsourced manufacturers Robust pipeline of opportunities Deliver superior cash return on investment Established M&A criteria» Enhance current portfolio» Generally #1 or #2 in niche markets» Asset light businesses» Accretive to cash flow and operating margin STRONG CASH FLOW GROWTH THE MYERS MANAGEMENT TEAM HAS A ROBUST PLAN FOR DRIVING EARNINGS GROWTH 9

10 SUMMARY FINANCIALS NET SALES ($M) ADJ. OP INCOME ($M) AND % OF SALES $571 $534 $547 $39 $32 $31 7% 6% 6% 2015A 2016A 2017A 2015A 2016A 2017A ADJ. EBITDA ($M) AND % OF SALES FREE CASH FLOW 1 ($M) AND % OF SALES $72 $43 13% $64 12% $60 11% $22 $21 4% 4% 8% 2015A 2016A 2017A 2015A 2016A 2017A Note: Reflects continuing operations. See appendix for non-gaap reconciliations. 1 Free cash flow defined as Operating Cash Flow from Continuing Operations less Capital Expenditures 10

11 FREE CASH FLOW SUMMARY ANNUAL FREE CASH FLOW 1 ($M) AND % OF NET SALES YEARLY FREE CASH FLOW 1 ($M) $43 COMMENTARY» Actions resulting in stabilized free cash flow performance $22 $21 4% 4% 8%» Implementing asset light and lean operations» Disciplined approach to working 2015A 2016A 2017A capital and capex spending driving strong cash flow generation QUARTERLY FREE CASH FLOW AS REPORTED 2 ($M)» Long-term, continued improvement $2 $36 $5 $21 $14 $13 $9 $10 $8 $12 $13 $13 is expected to support both organic and acquisitive growth ($18) Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 1 Free cash flow defined as Operating Cash Flow from Continuing Operations less Capital Expenditures 2 As reported, includes all continuing operations at the time of the quarter-end; Free cash flow defined as Operating Cash Flow less Capital Expenditures 11

12 YTD SEPTEMBER UPDATE NET SALES ($M) ADJ. OP INCOME ($M) AND % OF NET SALES $407 $428 $33 $26 6% 8% YTD Sept '17 YTD Sept '18 YTD Sept '17 YTD Sept '18 ADJUSTED EBITDA ($M) AND % OF NET SALES FREE CASH FLOW 1 ($M) AND % OF SALES $48 $52 $35 $38 12% 12% 9% 9% YTD Sept '17 YTD Sept '18 YTD Sept '17 YTD Sept '18 Note: Reflects continuing operations. See appendix for non-gaap reconciliations. 1 Free cash flow defined as Operating Cash Flow from Continuing Operations less Capital Expenditures 12

13 OUR PATH TO SUCCESS: MYERS INVESTMENT HIGHLIGHTS MARKET LEADING POSITIONS ACROSS DIVERSE, NICHE MARKETS INDUSTRY DEFINING BRANDS STRONG SECULAR GROWTH TRENDS ESTABLISHED CHANNELS TO MARKET THROUGH SUPERIOR INTIMACY WITH A DIVERSE CUSTOMER BASE FLEXIBLE OPERATIONS AND CONTINUOUS IMPROVEMENT CULTURE SUPPORTS PROFITABLE GROWTH SEASONED MANAGEMENT TEAM EXECUTING A SOLID PLAN COMPELLING STRATEGY TO DRIVE EARNINGS GROWTH 13

14 APPENDIX

15 MATERIAL HANDLING SEGMENT» A leading designer, manufacturer and marketer of highly engineered polymer packaging containers, storage and safety products and specialty molded parts» Operates under five well-established brand names Buckhorn, Scepter, Ameri-Kart, Akro-Mils and Jamco Products» Manufacturing facilities in the U.S. and Canada» Targets niche markets across North America» Variety of sales channels OVERVIEW» Represents 71% of Myers 2017 net sales 2017 NET SALES BREAKDOWN Highly engineered packaging, transportation, storage, and organization containers serving specialty customer needs Customer-intimate sales model VALUE PROPOSITION Increase productivity, product protection, handling efficiency and safety across customer s operations Reduce freight and disposal costs and handling risks Customer-driven product innovation FINANCIALS Consumer Food & Beverage 20% INDUSTRY 20% 24% 36% Vehicle Industrial BUSINESS $384 NET SALES 1 ($M) $364 $391 Adjusted Op. Inc. 14% 11% 11% Margin 1 Note: See appendix for non-gaap reconciliations 1 Excludes impact from corporate eliminations 15

16 DISTRIBUTION SEGMENT OVERVIEW» A leading distributor of tools, equipment and supplies used for tire, wheel and under-vehicle service» Serves passenger, heavy truck and off-road vehicles through retail channels» Designs and manufactures tire repair materials and custom rubber products under the Patch Rubber brand» Operates under three leading brands Myers Tire Supply, Myers Tire Supply International and Patch Rubber» Represents 29% of Myers 2017 net sales 2017 NET SALES BREAKDOWN VALUE PROPOSITION Link product and service offerings to customer s needs and priorities through continuous feedback loop High performance, knowledgeable and responsive sales organization driving penetration across customers and regions Offers one-stop-shopping for customers Trusted brand name with national footprint FINANCIALS Auto Aftermarket INDUSTRY BUSINESS $188 NET SALES 1 ($M) $171 $ % Adjusted Op. Inc. Margin % 8% 6% Note: See appendix for non-gaap reconciliations 1 Excludes impact from corporate eliminations 16

17 LONG-TERM FINANCIAL TARGETS Key Metrics Adj. Op Inc. Margin 5% >8% >10% Free Cash Flow/Sales 4% >7% >9% Working Capital/Sales 8% <9% <9% Adj. EBITDA $64M >$70M >$80M Net Debt to Adj. EBITDA 2.9 <2.0 <2.0 Note: 2016 reflects continuing operations. See appendix for non-gaap reconciliations. Reconciliations not provided for 2018 and 2020 since metrics reflect targets. Free cash flow defined as Operating Cash Flow from Continuing Operations less Capital Expenditures. 17

18 RECONCILIATION OF NON-GAAP ITEMS ADJUSTED EBITDA ($M) Income from continuing operations $17 $11 $11 Plus: tax expense Plus: net interest expense Plus: extinguishment of debt Plus: depreciation Plus: amortization EBITDA $67 $59 $56 Plus: one-time adjustments Adjusted EBITDA $72 $64 $60 Note: EBITDA and EBITDA as adjusted are financial measures that Myers Industries, Inc. calculates according to the schedule above using amounts from the unaudited Reconciliation of Non-GAAP Financial Measures Income (Loss) Before Taxes By Segment and GAAP amounts from the unaudited Condensed Consolidated Statement of Operations. The Company believes that EBITDA and EBITDA as adjusted provide useful information regarding a company's operating profitability. Management uses EBITDA and EBITDA as adjusted as well as other financial measures in connection with its decision-making activities. EBITDA and EBITDA as adjusted should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company's method for calculating EBITDA and EBITDA as adjusted may not be comparable to methods used by other companies. 18

19 RECONCILIATION OF NON-GAAP ITEMS (CONTINUED) ADJUSTED EBITDA ($M) YTD 2017 YTD 2018 Income from continuing operations $9 ($5) Plus: tax expense 6 0 Plus: net interest expense 6 4 Plus: depreciation Plus: amortization 7 6 EBITDA $45 $19 Plus: one-time adjustments 3 33 Adjusted EBITDA $48 $52 Note: EBITDA and EBITDA as adjusted are financial measures that Myers Industries, Inc. calculates according to the schedule above using amounts from the unaudited Reconciliation of Non-GAAP Financial Measures Income (Loss) Before Taxes By Segment and GAAP amounts from the unaudited Condensed Consolidated Statement of Operations. The Company believes that EBITDA and EBITDA as adjusted provide useful information regarding a company's operating profitability. Management uses EBITDA and EBITDA as adjusted as well as other financial measures in connection with its decision-making activities. EBITDA and EBITDA as adjusted should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company's method for calculating EBITDA and EBITDA as adjusted may not be comparable to methods used by other companies. 19

20 RECONCILIATION OF NON-GAAP ITEMS (CONTINUED) ADJUSTED OPERATING INCOME (BY SEGMENT) ($M) Material Handling Operating income as reported $53 $41 $39 Asset impairments Litigation reserve reversal (3) - - Reduction to contingent liability - (2) - Gain on sale of asset - 1 (4) Restructuring expenses and other adjustments Adjusted operating income $53 $41 $44 Distribution Operating income as reported $16 $13 $9 Restructuring expenses Adjusted operating income $17 $13 $9 Corporate Expense Corporate expense as reported ($35) ($26) ($23) Environmental reserve Legal fees Professional fees CFO severance related costs Adjusted corporate expense ($30) ($22) ($22) Continuing Operations Operating income as reported $35 $27 $25 Total of all adjustments above Adjusted operating income $39 $32 $31 20

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