Myers Industries (MYE) Q4 2023 earnings summary

Executive summary

• FY23 net sales fell 9.6% to $813.1M and adjusted diluted EPS was $1.39 versus $1.68; adjusted gross margin rose 40 bps to 32.0% despite cyclical demand declines.

• Operating cash flow increased to $86.2M from $72.6M and free cash flow to $63.3M from $48.3M; self-help initiatives supported margins.

• Signature Systems, acquired for $350M, closed on Feb. 8, 2024.

Financial highlights

• FY23 net sales were $813.1M, down 9.6%; reported gross margin was 31.9%, up 40 bps, and adjusted operating income was $75.3M, down 14.4%.

• FY23 adjusted EBITDA was $98.0M, down 10.2%, with a 12.1% margin; adjusted diluted EPS was $1.39 versus $1.68.

• FY23 operating income fell 13.7% to $72.4M; net income was $48.9M versus $60.3M, and adjusted net income was $51.7M versus $61.7M.

• Q4 net sales decreased 10.2% to $191.1M; gross margin declined 60 bps to 30.0%, GAAP diluted EPS was $0.34, and adjusted diluted EPS was $0.29 versus $0.32.

• Q4 operating income increased 9.3% to $18.6M; adjusted EBITDA was $21.8M versus $22.1M, and net income was $12.5M versus $13.4M.

Outlook and guidance

• FY24 net sales growth outlook is 15%–20%; diluted EPS guidance is $1.03–$1.23 and adjusted diluted EPS is $1.30–$1.45.

• FY24 capital expenditures are forecast at $35M–$40M; effective tax rate is ~25%, D&A is ~$42M, net interest expense is ~$33M and diluted share count is ~37.3M.

• EPS guidance is subject to Signature Systems purchase accounting, which could affect depreciation and amortization.