Q1 2022 Myers Industries Inc Earnings Call
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Hello, Ladies and gentlemen, thank you for your patience.
Myers Industries first quarter 2022 earnings conference call will begin shortly.
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Hello, and welcome to today's Myers Industries first quarter 2022 earnings call. My name is David and I will be your moderator for today's call all.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
If you would like to ask a question. Please press star followed by one on your telephone keypad.
I would now like to pass the call to David to Monica Vinay Monica. Please go ahead.
Thank you.
Good morning, Thank you for joining us I'm Monica Vinay, Vice President of Investor Relations and Treasurer at Myers industries.
Joining me today are Mike Mcgaugh, President and Chief Executive Officer, and Sonal Robinson, Executive Vice President and Chief Financial Officer.
Earlier. This morning, we issued a news release outlining the financial results for the first quarter of 2022, we have also posted a powerpoint presentation to accompany today's prepared remarks.
If you've not yet received a copy of either of the release or the Powerpoint you can access them on our website at Www Dot Myers industries Dot com under the Investor Relations tab.
This call is also being webcast on our website and will be archived along with the transcript of the call. Shortly after this event.
Before I turn the call over to Mike I would like to remind you that we may make some forward looking statements. During this call. These comments are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095, such statements are based on management's current expectations and involve risks uncertainties and other factors, which may cause results to.
Differ materially from those expressed or implied in these statements.
Also please be advised that certain non-GAAP financial measures such as adjusted gross margin adjusted operating income adjusted EBITDA and adjusted EPS may be discussed on this call further information concerning these risks uncertainties and other factors is set forth in the company's periodic SEC filings and maybe found in the company's 10-K.
And 10-Q filings.
Please turn to slide three of our presentation and I am now pleased to turn the call over to Mike Mcgaugh.
Thank you Monica good morning, everyone welcome to our first quarter 2022 earnings call.
I'm pleased to share that first quarter 2022 was a record earnings quarter for buyers.
Our strategic vision and one borrowers approach to fundamentally change the way, we do business and how we operate our company.
This vision has been our north star, helping us get aligned and rolled together.
Our teams are beginning to look more like the collegiate rolling teams on the Charles River in Boston.
Voting together as a single unit in synchronicity with less effort producing more speed.
The proof is in our first quarter results.
Myers delivered record EPS for the quarter and our sixth consecutive quarter of double digit revenue growth.
During the quarter, we realized the benefits of pricing actions, we've taken to counter inflationary pressures and we increased our production to meet heightened demand from our customers.
These actions drove a 29% increase in net sales for the first quarter.
This momentum continued through the income stable with a 127% year over year improvement in adjusted EPS, and an 82% increase in adjusted EBITDA.
Our strong resort results from the first quarter gave us confidence to raise both our net sales and adjusted EPS expectations for the full year.
Donald will discuss our revised guidance in her remarks.
Please turn to slide four which has been more detailed financial summary of the quarter's results.
Sales of $225 million of.
A 29% compared with the first quarter of 2021, which in part was due to stronger than expected demand.
Demand in most of our end markets and incremental revenues from the acquisition of trilogy plastics.
Throughout the quarter were able to realize the benefits of the pricing actions taken by our commercial team in 2021.
These actions successfully countered cost headwinds stemming from strong raw material supplies and ongoing inflationary pressures in raw materials and labor.
We also continued our efforts to be a highly reliable and value added partner to our customers.
We are true to our four corporate values with specific emphasis on being customer focused.
As a result of this focus our continued reliability supplying our customers we generated the second consecutive quarter of operating margin expansion, while also growing sales.
Before I turn the call over to Donald for an update on our financials I want to reiterate how gratified, we are with virus first quarter performance.
This performance is one more proof point that demonstrates the opportunity and the potential that exists in March.
Our team has done a lot of work over the last two years in the area of self help in improving our playa.
Capacity and our capability.
The changes we've made this company a deep it will be long lasting.
Recently, a potential investor took pause after listening to the changes I described that we're underway at Myers. She cleverly remark you are taking a large pricing large cap capabilities and bolting them to a small cap Bobby.
I think thats, a great way to describe what we're doing.
<unk> large cap capability to a small cap Bobby.
I think we've uncovered an approach that will generate superior returns and long term shareholder value creation.
We are a diversified industrial company that has the number one or number two position in most of our niche markets.
We believe that much of our business is resilient to potential macroeconomic headwinds.
Compelling.
As I say on every call I like the progress we.
We are transforming the company. However, we're still just getting started and we're in the early innings of what's possible for Myers industries.
Now I'll turn the call over to Donald to review, the first quarter financial results and provide our updated 2022 outlook.
I will then spend a few minutes discussing our progress to date and current goals for our three horizons strategy subtle.
Thank you, Mike and good morning, everyone let.
Let me begin by reiterating that we are extremely pleased with our performance in the first quarter.
As you can see on slide four sales were up $51 million or 29% with healthy underlying demand across most of our key end markets.
Adjusted gross profit increased 44% or 21, 9 million, primarily driven by higher prices and a <unk> plastics acquisition.
Our pricing and sales teams executed pricing exceptionally well last year, which allowed us to realize our second quarter of a positive price to cost relationship.
In addition to higher raw material costs, other inflationary pressures, particularly in our labor and manufacturing costs continue to impact our results and partially offset some of our gross profit growth.
<unk> gross margin increased 320 basis points for the quarter from 28, 9% in the prior year to 32, 1% this year.
Adjusted operating income was $25 $8 million, an increase of $14 million.
Increased gross profit was partially offset by higher SG&A expenses related to higher salary and incentive compensation costs, along with increased variable selling expenses.
However, as a percentage of sales adjusted SG&A expenses decreased to 29% in the first quarter compared to 22, 1% in the prior year.
Adjusted EBITDA was $31 million, an increase of $14 million or <unk>, 82% compared to the prior year.
Adjusted EBITDA margin was 13, 8% for the first quarter compared with 98% in the prior year.
Lastly, adjusted EPS was <unk> 50.
An increase of 28.
More than doubling last year's first quarter EPS.
Please turn to slide five for an overview of our segment performance for the quarter.
Beginning with materials handling net sales increased $47 million or 36%, including the trilogy acquisition, which occurred at the end of July 2021.
On an organic basis material handling net sales increased approximately 28% driven by favorable pricing at 24% with strong volume mix, which contributed another 4%.
Notably organic net sales increase in the vehicle industrial food and beverage and consumer end markets.
Material handling is adjusted operating income increased $15 million or <unk>, 88% to $31 9 million.
Mike mentioned, we did see better than expected seed sales during the quarter, which tends to be a fourth and first quarter event for us.
Additionally, our pricing actions more than offset the higher raw material input costs in the quarter.
Inflationary pressures related to labor and other manufacturing costs, partially offset these benefits.
SG&A expenses were higher primarily due to the <unk> plastics acquisition higher compensation costs increased variable selling expenses and higher facility costs.
In the distribution segment sales increased approximately $4 million or 10%.
The increase was driven by our previously noted pricing actions.
Distributions adjusted operating income increased $1 3 million or 68% to $3 $3 million in.
A favorable price cost relationship more than offset the higher SG&A expenses.
Turning to slide six.
Free cash flow was $2 2 million compared to $1 4 million for the first quarter of 2021.
Cash from operations increased in the quarter driven by income growth, partially offset by an increase in cash used for working capital primarily accounts receivable and inventory.
Capital expenditures were $5 1 million for the quarter and cash on hand at quarter end was $17 6 million.
Overall, our balance sheet remains strong with leverage at one two times and our capital structure continues to provide the flexibility needed to execute on our long term growth strategy.
On slide seven turning now to our updated outlook for fiscal year 2022.
Given the strength of our results in the first quarter along with the additional pricing actions. We've taken we now anticipate our net sales to increase in the low to mid double digit range versus our previous outlook of a high single to low double digit range.
Approximately one quarter of the sales increase is attributed to the incremental seven months of sales related to the trilogy acquisition.
Significant pricing actions taken throughout 2021, combined with healthy underlying demand across most of our end markets are expected to drive growth in 2022.
We are also raising our full year adjusted EPS outlook from a.
The range of $1 20 to $1 40 per share to a range of $1 30.
The $1 50 per share.
At the midpoint of our range. This reflects more than a 40% increase over our 2021 adjusted EPS.
Once again keep in mind that the first quarter was a record earnings quarter for the company.
While resin costs have somewhat moderated in the first quarter.
We are beginning to see signals of upward movement in the near term and have continued to take additional pricing actions in response.
We expect that the pricing actions, we've taken to date, along with our ability to continue to take future pricing to offset inflation should drive over 200 basis points of gross margin expansion for the full year.
The adjusted gross margin for fiscal year, 2021 was 27, 9%.
SG&A expenses are still expected to approximate 22% of net sales.
Morally reflecting investments, we are making in our people processes and operational efficiencies.
Other key modeling assumptions include depreciation and amortization expenses of approximately $23 million.
Capex in the range of 25% to $28 million interest expense of $5 $5 million.
And an effective tax rate of approximately 26%.
Despite increased Capex, we expect higher earnings to translate to increased cash flow in 2022.
Before I turn the call back to Mike I want to expand extend my gratitude to the Myers team for their tireless efforts and delivering an outstanding quarter.
I am confident in our ability to foster long term growth and execute on our strategic plans and 2022 and beyond.
With that I'll turn the call back over to Mike to provide an update on our strategy.
Thank you Donald and Great work, well does let's turn to slide eight.
I'll now my third year as CEO of Myers.
We've been running our three horizons strategy for about two full years.
We're seeing meaningful and lasting results, which continue to give me confidence in delivering our horizon. One goal of a run rate of $1 billion in annual revenue at a 15% EBITDA margin by the end of 2023.
Although we are technically in PRASM, one we are starting our planning and our preparation for horizon two.
The future is exciting and will be here soon.
All of the excitement aside are key to meaningfully growing myers in sales and profitability executing against our core tenets of horizon one.
Self help which provides the oxygen in the funding for the next two elements, which are organic growth and bolt on M&A.
In the area of self help our internal pricing excellence group that has helped our commercial teams analyze and better understand data.
Better understand the value our products bring.
We are seeing in the results and gaining traction in value based pricing.
In addition to pricing excellence, we focused on making <unk>, a core competence as well.
Over the past few quarters, we piloted a robust sales and operations planning process in one of our plastics businesses the.
The results were very good the planet production and profitability Records.
With central Southeast pilot to a few of our other businesses and plan to continue to roll this out to all businesses and Myers completing work over the next 12 months to 24 months.
The enhanced <unk> increases output and ensures that we can reliably supply our customers.
This reliability of supply puts us in good stead with our customers often putting us in a preferential position to grow with them.
In the area of organic growth I'm proud to say that this was our sixth consecutive quarter of double digit sales growth and customer demand has continued.
Still training and market planning processes that I've spoken about before had been a breakthrough.
The new sales and market planning processes have provided alignment across our commercial and operations team.
We are rowing together.
Going back to my Charles River analogy, where one of those eight personal boats that are smooth and imbalance.
Not filing not struggling we are aligned with where on planes and were moving faster with more harmony across the water.
Just like watching those dates cut across the water wound hit stride at Myers and were rolling in Synchronicity, It's a beautiful thing.
We're having more of those moments with each passing month and quarter, yes, we still have our moments of struggles when we fall out of sequence those moments are becoming less and less frequent.
Regarding bolt on M&A, Elkhart, and <unk> acquisitions continue to increase their contributions to our financial results.
Elkhart in trilogy of proof that we are disciplined in our acquisitions we.
We will buy companies with an easy to see and easy to understand competitive moat.
We'll buy a talented leadership team and will pay a fair price.
In Q1, we received numerous inbound in the past on me, we're not going to get started we will have discipline or acquisition and which ones we pursue.
This discipline is important.
The opportunity to Shepherd, our shareholders' capital as an owner not a REIT and we will make decisions accordingly.
From a pipeline standpoint, we're always evaluating potential M&A opportunities within both our material handling and distribution segments and we continue to be pleased with our prospects.
Slide nine outlines the strategic pillars of Verizon one of our strategy.
This one slide is the simple clear playbook for our true north our strategic objectives.
We will execute and deliver the strategic objective by driving the four pillars organic growth strategic M&A operational excellence and by having a high performing culture.
We will have success in execution, because we have clearly defined areas of focus for each of these four pillars.
These areas of focus have specific action items for the year 2022 and are paired with a single executive team member who is accountable for delivering results.
It drives alignment drives clarity.
It's the <unk> that helps us keep kimbo enrolled ready together.
Now I'd like to walk through our progress against those pillars quickly on slide 10.
With the first pillar, we have seen encouraging and consistent organic growth in both top and bottom line, which has allowed us to hire new excellent people with world class global multinational training and experience.
With respect to our sales efforts our teams are better trained.
Training continues our teams are focused incentivized unprofitable growth on cross selling and on pricing our products for the value they deliver.
Now on the strategic M&A, which has been an integral part in helping the company get scale.
Over the past two years through the deals we've consummated and the opportunities we have evaluated we've learned.
The valuable lessons and approaches have been incorporated into our proven integration playbook, which is helping us better identify negotiate and integrate newly acquired businesses.
Moving on to commercial excellence the operational excellence. This is an area, where we are truly transforming myers and an area, where we have added the greatest concentration of world class talent and capability.
As I mentioned earlier, we continue to implement as it will be across our businesses.
These improvements are helping us better schedule plan and operate our plant.
By doing this we are identifying a hidden factories.
We're identifying and unleashing additional capacity.
Finally, we've seen meaningful improvements in our high performing culture.
We have and will continue to transform buyers' mindset into our culture of winning.
We are now doing company wide employee development planning and succession planning.
You can still robust world class frameworks and processes to ensure that we are developing our associates and leaders with an eye to their aspirations and needs over the next five years and the company's aspiration and needs over the next five years.
We want our employees to have the career they seek here at Myers.
We run a low ego servant leader model Sir.
Leadership inspires all of us to serve our people.
Certain leadership requires enrolled to sleeves and get the job done mindset all of us take the hill together.
The second leadership.
Approach is resonating very well.
Especially with the post Covid mindset, where employees are interested in not only delivering great products reliability to our customers and making a great return for our shareholders. They're also interested in doing good for society and doing good for each other.
We've now completed four ways that served in leadership training covering over 100 leaders.
I've participated in all of the sessions.
Often hear from seasoned veteran that this is the <unk>.
Best training I've ever been through.
It's remarkable something special is happening at <unk> in terms of culture.
I'll close today by thanking our current investors for their confidence we delivered solid results last quarter that continue to believe that our performance will continue to build in the future.
Can't forecast precisely how every quarter will shake out in the near term however, with all the great things occurring at Myers with our transformation underway I am confident that over the long term.
We are moving the company up into the right.
The company is on a remarkable journey and I encourage you to join us on that journey.
With that I will turn the call over for questions operator.
Thank you.
I'd like to ask a question. Please press star followed by one on your telephone keypad.
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The first question today comes from Steve Barger from Keybanc capital markets. Please.
Please go ahead. Your line is now open.
Thank you good morning, everyone.
Hey, Steve Good morning.
Great to see operating leverage come back on strong revenue growth. So I'll start with the guidance. It seems like <unk> will be the peak revenue and EPS quarter.
Demand still seems solid youre getting traction on the pillars <unk> been aggressive on price.
What caused the operating margin to step back to more single digit for the rest of the year.
So this is Mike.
Dressed and I'll ask Donald to follow up.
We still see some underlying pressure on raw materials.
That's a bit uncertain to what degree that will take but we see some underlying pressure on raw materials theres, a little bit of mix that we're watching.
Namely in our consumer segment with some of the fuel containers.
It's been a colder wetter spring and so you have a.
A little bit of a lag in some of the sales of those products I think youll see that lawn and garden with most other with most all segments.
<unk>.
What we've got also just some uncertainty with inflation with the macros with the war with product availability.
So let me tell you want to add anything to that.
Sure Good morning, Steve.
So I would just reiterate that.
One was a very strong quarter for us we had extremely strong feedback sales we realized the accumulated benefit from pricing actions that we took in 2021 and as you recall a lot of that really benefited us last year in Q3 and Q4, so from a lapping standpoint.
Get a greater benefit in Q1, and Q2 of this year that will start to moderate as we go throughout the back of the year and then as we mentioned in Q1, we did see rising costs starting to moderate sequentially. It was down but still up year over year and as Mike mentioned, we are seeing some inflationary pressures on that in the short term there.
Understood.
And Mike.
You made the comment that much of the business is resilient to Mike to macro headwinds and I know you list consumer is 15%, but what percentage of products would you consider more consumer discretionary stuff that goes into recreational activities like rv's boats coolers.
Let's see.
To get back to you on that one Steve I would say the lion's share of our products. If you look at how diversified we are.
For being a smaller company.
And then the traction and uptake of those particular products and markets.
<unk>.
We're still seeing.
<unk> demand, we're still seeing strong demand.
And again like I said I think our product mix is relatively resistant even if we have some.
Some difficult headwinds in the back half of the year from from.
Inflationary environment and some cooling in the economy I think our products are going to be quite resilient I think our product mix is going to be quite resilient on the specific breakout there.
To come back to you on that.
Okay.
Longer term question working through the guidance. It seems like you expect EBITDA margin in the mid 11% range. This year, maybe 12% so you'd need three to 350 basis points of expansion in 2023.
That would be mix or price or volume just can you talk about what the margin expansion roadmap is from here to the end of horizon one.
Yes for sure I think some of it is the <unk> work.
Lowering our cost position.
Some of it is getting continued pricing traction or in holding prices as raw materials start to wane.
And then some of it is just volume and operating leverage across the company. So those are the other I'll say, it's a third a third a third.
The margin targets, we talked about as a run rate into 2023, Steve I've got confidence in the I can just see how much potential is in the company.
Great I have more but I'll get back in line and see if anybody else has questions.
Thanks, Steve Thank you.
<unk>.
Thank you Steve.
As a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.
The next question today comes from Jonathan <unk> from Cowen Jonathan. Please go ahead. Your line is now open.
Hey, good morning, everyone congrats on the quarter.
Good morning, ladies who started with.
With the pricing.
So the team has done exceptionally well as you mentioned in 2021.
And Im wondering here.
All of the inflationary pressures that the whole country facing the world for that matter.
How quickly you can.
So just to provide some color on how quickly can you pass on those costs too.
It's Clyde.
And what is the typical lag that pricing had with costs.
Yes, Jonathan call typically as we've talked in the past, it's a quarter, maybe two depending upon the product line.
This is a real area of focus for us over the last 24 months as we talk about not pricing to our cost but pricing to the value we deliver to our customers.
Being a highly reliable supplier and in these times that's been highly important to our customers is being able to deliver the right products at the right time, that's given us as I talked about a bit of a leg up we believe in partnership.
And preference from our customers.
Not to say that pricing doesn't matter, but it's been a secondary issue many time availability.
Our customers are more concerned with availability. So we do price to the value we create thats a whole different mindset and we brought in a number of people who are.
Who have helped us change that mindset, so going back to your original question quarter to lag, but I.
I, just think it's going to be sustainable in a way that has not been present and buyers in the past.
Great.
I guess to that end.
Since the company's pricing based on value.
Despite would contract.
Whether your costs go up or down in the future. It seems like the value would can only increase right. So perhaps pricing will stay and it won't go down in tandem with cost correct.
Yes, again, we can't hold it forever, if we have a significant recessionary environment.
U S economy basis, or a global basis.
But the spread between our costs and our sales price.
We're going to continue to drive a wedge between that.
We have good products, we have good brands, we make quality products.
Most of the time, we have a competitive moat.
As I've mentioned before we make big bulky products, we don't have competition from.
From Faraway lands I think there is a resurgence of U S based manufacturing.
There is a resurgence of made in America, I think that it's going to be a tailwind for us for many years and.
We were brought in a number of world class people are helping us dial in our plants.
Our OE operating rates are.
This is the best they have ever been.
So I think all these things are coming together and the outlook for the company.
I'm very bullish on it as I mentioned before.
Look.
Every time you pick up the newspaper every podcast revenues broadcasters the discussion on uncertainty inflation interest rate the war.
There is so much uncertainty, it's tough for us to get too aggressive.
About our outlook.
The next year and years, but as I said look are heading is up into the right.
Just a lot of good things going on here and that's what makes me makes me very excited and bullish.
Great.
Just my last one you mentioned one of the most important things to your customers' availability and Thats something that.
Advertising throughout all of our coverage universe.
And to that end given the demand was so robust right now.
You did the company having or can.
Can potentially see any trouble meeting demand, perhaps in the second half of the year or.
Given the inventory buildup that there there is like you guys are in a good point right now where you can meet demand and can even immediately were to increase.
Yes, yes, we can and to answer your question. So how we're doing that is we've put a lot of focus on employee.
<unk> on on contingent staffing.
On how we schedule and run our plants the shift schedules so that they allow us to get most products out the door in a way in creating an environment that.
There is good from our employees and allow us to retain them.
More of the factory and the shop floor I feel good about that.
On.
So that's I.
I feel I feel good about that piece now.
And honestly that debt.
Okay got it. Thank you so much congrats again.
Thank you. Thank you.
Thank you Jonathan.
Next up we have a follow up question from Steve Barger from Keybanc capital markets. Please go ahead. Your line is now open.
Thanks.
Mike could you give some more tangible examples around what you're finding with the hidden factory comment how is that working in manifesting.
Yes, so Steve I will give you. An example, some of them. So we have.
Depending on how you count it 80% to 100 machines across our plastics sized plastic side of what we found.
Some of these businesses that we've acquired as well as some of the people we brought in.
A really good experience set with running ethanol P doing better supply planning better demand planning and even just optimizing the ship schedule.
So we've gone to a different shift schedule as an example in our roto business, let's call. It three five to eight three shifts a day five days a week eight.
Eight hours a day.
That discipline and that rigor in that approach. What we're finding is we have more capacity than we anticipated. We look at a particular plant Middlebury, Indiana, Bristol, Indiana, and we thought we were sold out we brought in a Swat team to help us better schedule these plants and better schedule our machines.
It's the right products on the right machines did have longer run.
Those longer runs and less changeover less downtime.
The results have been remarkable as a result, we're finding that we've got in 2030% more capacity in some of these locations.
Than we ever thought we had and so.
The great thing is it's really it's free capacity.
<unk> capacity, so we can be a better more reliable supplier, we're running our employees less hard than less ragged and then we're also finding that we can just really put our foot on the gas and chase sales in a way that we made it up wasn't available 12 months ago.
That's great to hear very positive.
Shifting to M&A.
The macro world is obviously changing can you just update us on how youre thinking about the multiple that youre willing to pay time requirements for a deal to show accretion or hitting corporate ROIC.
Or just how youre thinking of.
<unk> has changed around M&A.
At all.
Yes, Steve.
A lot I mean, what we're always trying to do is buy.
Privately owned businesses.
It has good bones that probably need some improvement in how they're operated we feel we can operate them better.
Buying those businesses, we can typically get them for charter to less some of these businesses seek to not be acquired by a financial buyer.
And oftentimes these owners will.
We will take a.
Turner to less on their multiple to partner up with a company like Myers, which has a good reputation of taking care of the employees and growing the business oftentimes that's important to the to the owner.
And so we're able to buy businesses that reasonably good prices and then through cost synergies and growth synergies.
They become even more compelling.
Accretion and ROIC targets IRR targets.
Quite frankly, all of the deals that we're looking at.
All of those numbers are really off the charts.
Directionally.
So we're finding that we're getting more inbounds.
We're getting more inbounds I think at.
I think valuation expectations are still pretty high.
I believe that those valuation expectations, they start to soften a bit.
I think it's going to play very well into our hands given our balance sheet position and also the fact that hey, we will have two or three or four these deals under our belt, we will be better at integrating them.
Again gives me some optimism as well.
And I think you said that you had walked away from a few of us that due to price or culture or just product fit whats.
For the things you are passing on the yes, what we're planning is that culture piece is so important the culture is so important but what we do is we'll find businesses that we think fit in terms of the.
Leading position in a niche market segment, and we can help them get better and they can bring something to us.
But we'll go through a diligent and even if it were two to three months in Asia, We spent some money.
If it's not right, it's not right and so they'll constructively, probably the way to move on but it's just.
We can't we.
Can't be Starry eyed and chase things, if we start to see some things that make us a little concern.
I'd say, it but we'll have to pull the plug and we've done that.
Got it.
I've gotten a couple of questions from investors around your automotive exposure just given volatile production schedules I know you sell more to the factory floor, but has that affected you at all.
No at this point at this point it hasn't in fact.
That piece of business, our <unk> business because of all the model changeover Steve.
Actually.
That should have a pretty good run rate for the balance of the year.
Yeah, Okay, and then last one for Sean.
Just from a near term modeling perspective, do you expect revenue will be up sequentially coming off what was obviously a record quarter.
Yeah, Steve the way I would answer that is.
From a top line standpoint distribution you saw some nice top line growth here in Q1, I would expect that to be in.
A similar type of range as you think about material handling we saw very nice growth in Q1.
Clearly, we'll start lapping some of the pricing benefit that we saw in Q1 in Q2, and then also given the strength of Vascepa sales season. In Q1, we would expect not to not to probably see as large of across there, but still very nice sizable growth organically.
Double digit understood I guess.
Yes, I guess I do have one more with higher fuel prices does that affect does a change in miles driven effect distribution I mean, it seems like it showed some tire repair how are you thinking about what the forward look is for that just given.
Gas prices above four bucks.
Yes, Steve Thats, a good point I was with actually the blow molding team yesterday, one of their operational reviews and on the MTS side, we're not seeing it as much the distribution side, we're not seeing as much.
You are seeing it and we're watching it we don't know if it's a trend or just a data point.
Look we had a cold wet spring.
Some of the fuel can sales were were little slow.
As you would expect in the spring we're also watching.
Our customers so the.
Polaris is of the world the doors of the world et cetera, They have positive outlooks on the recreational toys recreational products they are positive and bullish outlooks.
But we don't know is.
Is it inflation costing.
People not camp not ride their atvs not take their boats out.
Does that impact.
The signals, we're getting right now is that the impact will be negligible if any.
<unk>.
But it may actually caused us to temper, even our outlook a little bit.
We just don't know, we just don't know how much inflation.
I was in Walmart last week and looking at all the prices prices. It's almost like we've caught six to seven years of inflation and four to five months.
And I don't know how much that's going to that consumer demand. It's just it's just the uncertainty that's causing us to have a little bit more of a tempered outlook.
Yes, I should have been more clear on my.
Earlier in the questioning I mean that was really was the motivation for the consumer exposure question. It seems like there has to be an impact at some level to the recreational stuff.
You would think you would think again the order book still seeing strong the reports of those customers are still bullish.
But we're watching it Steve.
Things look okay for us like I said I don't want to belabor it but we did have a little bit of a slower start in that piece and second quarter.
But.
It remains to be seen and that's why I said, there's just uncertainty that's the reason, we're not coming out with the bigger swing.
On some of our outlooks, because it's just 2022 theres some uncertainty.
Understood. Thanks for the time.
Thank you.
Yes.
Thank you Steve.
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Okay.
There are no additional questions waiting at this time, so that concludes to Myers industries first quarter 2022 earnings call. Thank you for your participation you may now disconnect your lines.
Okay.
Yeah.
Yes.
Sure.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Sure.
Yes.
Okay.
Yes.
Thanks.