Q1 2024 Myers Industries Inc Earnings Call

May 7, 2024

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Operator: Ladies and gentlemen, the Myers Industries first quarter 2024 earnings call will begin shortly. If you would like to submit a question at any time, please press star one on your telephone keypad. Thank you.

Ladies and gentlemen, thank you for standing by the Myers Industries' first quarter 'twenty earnings call will begin shortly.

I'd like to read just a question at any time. Please press star one on your telephone keypad. Thank you.

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Elliot: Hello, and welcome to the Myers Industries first quarter 2024 earnings call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Meghan Beringer. The floor is yours. Please go ahead.

Alex: Hello, and welcome to the Myers Industries first quarter 2024 earnings call. My name is Alex and I'll be course, Nike or cold stacked.

Alex: We'd like to register a question Jones day's events. Please press star followed by one on the telephone keypad.

Alex: I would now like to hand over to Meghan Beringer.

Meghan Beringer: Yours. Please go ahead.

Meghan Beringer: Thank you, Elliot. Good morning, everyone, and thank you for joining Myers Industries' conference call to review its 2024 first quarter results. I'm Meghan Beringer, Senior Director of Investor Relations at Myers Industries. Joining me today is Mike McGaugh, our President and Chief Executive Officer, and Grant Fitz, Executive Vice President and Chief Financial Officer.

Meghan Beringer: Thank you Elliot and good morning, everyone and thank you for joining <unk> conference call to either 2024 first quarter result.

Meghan Beringer: And Meghan Beringer senior director of Investor Relations at Myers Industries.

Meghan Beringer: Joining me today is Mike Mcgaugh, President and Chief Executive Officer, and Greg Butz, Executive Vice President and Chief Financial Officer.

Meghan Beringer: Earlier this morning, we issued a press release outlining our financial results for the first quarter of 2024. We have also posted a presentation to accompany today's prepared remarks, which is available under the Investor Relations tab at www.myersindustries.com. This call is being webcast on our website and will be archived along with a transcript of the call shortly after this event. After the prepared remarks, we will host a question and answer session. Please turn to slide two of the presentation for our Safe Harbor disclosures.

Meghan Beringer: Earlier. This morning, we issued a press release outlining our financial results for the first quarter of 2024.

Meghan Beringer: We have also posted a presentation to accompany today's prepared remarks, which is available under the Investor Relations tab at Www Dot Myers industries Dot com.

Meghan Beringer: This call is being webcast on our website and will be archived along with the transcript of the call. Shortly after this event.

Meghan Beringer: After the prepared remarks, we will host a question and answer session.

Meghan Beringer: Please turn to slide two of the presentation for our Safe Harbor disclosures.

Meghan Beringer: 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 1995. 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 Profit, Adjusted Operating Income, Adjusted EBITDA, and Adjusted EPS, may be discussed on this call.

Meghan Beringer: I would like to remind you that we may make some forward looking statements during this call.

Meghan Beringer: These comments are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.

Meghan Beringer: Such statements are based on management's current expectations and involve risks uncertainties and other factors.

Meghan Beringer: May cause results to differ materially from those expressed or implied in these statements.

Meghan Beringer: Also please be advised that certain non-GAAP financial measures such as adjusted gross profit adjusted operating income adjusted EBITDA and adjusted EPS may be discussed on this call.

Meghan Beringer: Further information concerning these risks uncertainties and other factors are set forth in the company's periodic SEC filings.

Meghan Beringer: And may be found in the company's 10-Q filings.

Meghan Beringer: Furthermore, information concerning these risks, uncertainties, and other factors is set forth in the company's periodic SEC filings and may be found in the company's 10-Q filings. With that, I'm now pleased to turn the call over to Mike McGaugh.

Meghan Beringer: With that I'm now pleased to turn the call over to Mike Mcgaugh.

Michael P. McGaugh: Thank you, Meghan. Good morning, everyone, and welcome to our first quarter 2024 earnings call. Before I begin, I'd like to thank everyone who joined us, either in person or virtually, for our Investor Day event in New York City on March 19th. At this event, we rolled out our plans and strategy for the next five years and were able to have a great discussion with several current and prospective investors. If you have not already, I'd encourage you to view the webcast and the materials from this event as it provides great context and clarity on where we're headed.

Michael P. McGaugh: Thank you Meghan good morning, everyone and welcome to our first quarter 2024 earnings call.

Michael P. McGaugh: Before I begin I'd like to thank everyone, who joined us either in person or virtually for our Investor Day event in New York City on March 19.

Michael P. McGaugh: At this event, we rolled out our plans and strategy for the next five years.

Mike McGaugh: Well to have a great discussion with several current and prospective investors.

Mike McGaugh: If you have not already I'd encourage you to view the webcast in the materials from this event as it provides great context and clarity on where we're headed.

Michael P. McGaugh: In today's call, I'll spend a few minutes discussing our progress in the first quarter, and then I'll pass the call to Grant for his detailed review of our first quarter financials and our outlook. Please turn to slide three.

Mike McGaugh: In today's call I'll spend a few minutes discussing our progress over first quarter and then I'll pass the call to grant for his detailed review of our first quarter financials and our outlook.

Grant: Please turn to slide three.

Mike McGaugh: Yeah.

Michael P. McGaugh: The Three Horizons Strategy has served as an effective roadmap for the company over the last four years. At our investor day, we described how we've used Horizon One to strengthen our fundamentals to learn and grow and improve the quality of our company. Through Horizon One, we built a strong foundation of operational and commercial excellence. We gained experience and scale through small bolt-on acquisitions.

Mike McGaugh: Three horizons strategy has served as an effective roadmap for the company over the last four years.

Grant: At our Investor Day, we described how we've used horizon, one to strengthen our fundamentals to learn and grow and improve the quality of our company.

Grant: Through horizon, one we built a strong foundation of operational and commercial excellence.

Grant: <unk> experience and scale through small bolt on acquisitions and as a result, we are well positioned to announce our acquisition of signature systems, largely accomplishing our horizon one goals by our 2023 target date.

Michael P. McGaugh: And as a result, we are well positioned to announce our acquisition of signature systems, largely accomplishing our Horizon One goals by our 2023 target date. We're now shifting into Horizon Two of our strategy and accelerating our transformation into a new Myers Industries. While our roadmap remains the same, the targets for Horizons 2 and 3 have now shifted from revenue targets to earnings per share targets. We feel that using EPS is more reflective of our focus on improving the quality of the company as we grow it. Turning to slide four, as we enter horizon two of our strategy, we're also shifting how we think about our company. Keeping it simple, we have two operating models.

Grant: We are now shifting into horizon, two of our strategy and accelerating our transformation into a new Myers industries.

Grant: Our roadmap remains the same the targets for horizon, two and three have now shifted from revenue targets to earnings per share targets.

Grant: We feel that using EPS is more reflective of our focus on improving the quality of the company as we grow it.

Grant: Turning to slide four as we enter horizon two of our strategy. We're also shifting how we think about our company keeps.

Grant: Keeping it simple we have two operating models and the grow model, our focus is to invest and expand our portfolio of branded differentiated products, both organically and through acquisitions.

Michael P. McGaugh: In the GROW model, our focus is to invest in and expand our portfolio of branded, differentiated products, both organically and through acquisitions. In the maximized value model, our focus is on driving efficiency and reducing costs while we maximize the value of these businesses. Aligned with these two operating models, we have a strategic lens through which we see three portfolios: Storage, Handling & Protection, Engineered Solutions, and Automotive Aftermarket. We continue to report our financial results as material handling and distribution.

Grant: And the maximized value model, our focus is on driving efficiency and reducing costs, while we maximize the value of these businesses.

Grant: Aligned with these two operating models, we have a strategic lens through which we see three portfolios.

Grant: Storage handling and protection engineered solutions and automotive aftermarket.

Grant: We continue to report our financial results as material handling and distribution.

Michael P. McGaugh: However, as we transition to Horizon 2 and accelerate the transformation of Myers Industries, we believe this simple framework provides a clear roadmap with regard to how we will treat these different parts of the company. Turning to slide 5, I'll walk through this framework in a bit more detail, just as I did at Investor Day.

Grant: However, as we transition to a horizon, two and accelerate the transformation of Myers industries. We believe the simple framework provides a clear roadmap with regard to how we would treat these different parts of the company.

Grant: Turning to slide five I'll walk through this framework in a bit more detail just as I did at Investor day.

Michael P. McGaugh: The portfolio that focuses on storage, handling, and protection includes branded, differentiated, high-performance products that move, store, and protect. This is an area where we will seek to grow the company. We believe we have a lot of runway to build and grow the company in this direction. This portfolio includes what we are calling our four power brands, Buckhorn, Acro Mills, Scepter, and our recently acquired Signature Systems.

Grant: The portfolio that focuses on storage handling of protection contains branded differentiated high performance products that move store and protect.

Grant: This is an area, where we will seek to grow the company.

Grant: We believe we have a lot of runway to build and grow the company in this direction.

Grant: This portfolio includes what we're calling our four power brands Buckhorn, Acro Mills Scepter and our recently acquired signature systems.

Michael P. McGaugh: As I highlighted in Investor Day, the current markets for storage, handling, and protection include agriculture and food, consumer, industrial, infrastructure, and military. Moving to the right, we also have a portfolio of engineered solutions, where products are designed and tailored to meet our customers' unique needs. As we have discussed, this portfolio consists of some branded products, but mostly it's a contract manufacturing business, and as a result, the focus is to be lean and low cost, hence its placement in the maximized value operating model.

Grant: As I highlighted at Investor day, the current markets for storage handling of protection include agriculture and food.

Grant: Sumer industrial infrastructure and military moving.

Grant: Moving to the right. We also have a portfolio of engineered solutions, and which products are designed and tailored to meet our customers' unique needs.

Grant: As we have discussed this portfolio consists of some branded products, but mostly it's a contract manufacturing business and as a result, the focus has to be lean and low cost hence its placement in the maximized value operating model.

Grant: Yeah.

Michael P. McGaugh: This portfolio has exposure to RV and marine, as well as outdoor and leisure markets, most of which are experiencing softer demand at this time. What we currently refer to as our distribution business, strategically, we now think of as our automotive aftermarket portfolio. This portfolio includes high-quality repair and replacement parts for passenger cars, for commercial vehicles, and for heavy equipment.

Grant: This portfolio has exposure to RV and marine as well as outdoor in leisure end markets most of which are experiencing softer demand at this time.

Grant: While we currently refer to as our distribution business strategically, we now think of as our automotive aftermarket portfolio.

Grant: This portfolio includes high quality repair and replacement parts for passenger cars for commercial vehicles and for heavy equipment.

Michael P. McGaugh: Similar to engineered solutions, this business must also be operated for efficiency and low cost. As of the past few quarters, this business has faced some growing pains related to a recent acquisition and is also facing some demand headwinds. I'll talk later about the actions we're taking to improve the performance of the businesses in the Maximized Value Operating Model. Before we turn to a review of our first quarter highlights, slide six illustrates an additional key message that I want to share from our investor day. The four power brands I mentioned above in the Storage, Handling, and Protection portfolio represent approximately 80% of our pro forma profit.

Grant: Over to engineered solutions. This business must also be operated for efficiency and low cost.

Grant: As of the past few quarters. This business has faced some growing pains related to our recent acquisition and is also facing some demand headwinds.

Grant: I'll talk later about the actions, we're taking to improve the performance of the businesses in the maximize value operating model.

Grant: Before we turn to a review of our first quarter highlights slide six illustrates an additional key message that I want to share from our Investor day.

Grant: For power brands, I mentioned above and the storage and handling of protection portfolio represent approximately 80% of our pro forma profits.

Grant: Within this portfolio and across these power brands, we see a number of attractive platforms for future growth.

Michael P. McGaugh: Within this portfolio and across these power brands, we see a number of attractive platforms for future growth. In particular, the signature acquisition represents an important pivot point in our growth story and will help accelerate our transformation into a faster-growing, higher-margin company. Now, please turn to slide 7 for a summary of our first quarter highlights.

Grant: In particular, the signature acquisition represents an important pivot point in our growth story and will help accelerate our transformation into a faster growing higher margin company.

Grant: Now please turn to slide seven for a summary of our first quarter highlights.

Michael P. McGaugh: Our acquisition of Signature Systems closed on February 8th and has delivered strong results. We had roughly nine weeks of signatures, contributions, and our reported results for the quarter, which equated to $19.3 million in revenue. We were pleased to see Signature's business drive strong gross margin and even down margin expansion during the first quarter due to tailwinds in the infrastructure and market. The high quality results from Signature helped offset first quarter sales declines in other parts of our material handling segment.

Grant: Our acquisition of things your systems closed on February eight and has delivered strong results.

Grant: We had roughly nine weeks of signatures contributions in our reported results for the quarter, which equated to $19 $3 million in revenue.

Grant: We were pleased to see signatures business drive strong gross margin and EBITDA margin expansion during the first quarter due to tell winds in the infrastructure end market.

Grant: The high quality results from signature helped offset first quarter sales declines in other parts of our material handling segment.

Michael P. McGaugh: At Investor Day, we discussed anticipated near-term challenges in key end markets. We discussed that we are seeing trough levels of demand in some of our end markets, particularly in RV, marine, and consumer discretionary. And as I said, where the consumer can defer the purchase of a product or a discretionary item, they are indeed deferring that purchase.

Grant: At Investor Day, we discussed anticipated near term challenges in key end markets. We discussed that we are seeing trough levels of demand in some of our end markets, particularly in RV marine and consumer discretionary.

Grant: And as I said, where the consumer can defer the purchase of a product or a discretionary item they R&D deferring that purchase.

Michael P. McGaugh: As quarter one wound to a close, we were also seeing some slowing in the automotive aftermarket as well. Weakened demand in these end markets resulted in sales declines in both material handling and distribution. In total, our first quarter performance was below our expectations, and we are taking immediate action with additional self-help initiatives to further reduce costs and improve performance. Although we started the year slow, we are maintaining guidance for the full year of $1.30 to $1.45 adjusted earnings per share, though we are guiding to the lower end of the range.

Grant: As quarter, one wound to a close we're also seeing some slowing in the automotive aftermarket as well.

Grant: Weakened demand in these end markets resulted in sales declines in both material handling and distribution.

Grant: In total our first quarter performance was below our expectations and we are taking immediate actions with additional self help initiatives to further reduce costs and improve performance.

Grant: Although we started the year slow we are maintaining guidance for the full year of $1 30 to $1 45 adjusted earnings per share that we are guiding to the lower end of the range.

Michael P. McGaugh: With three quarters remaining in the year, we plan to take additional actions in the near term to improve EBITDA while executing our five-year roadmap as outlined at Investor Day. I'll now speak to our action plans and progress using the lens of our two operating models, the maximized value model and the growth model. Turning to slide eight.

Grant: With three quarters remaining in the year, we plan to take additional actions in the near term to improve EBITDA, while executing our five year road map as outlined at Investor Day.

Grant: I'll now speak to our action plans and progress using the lens of our two operating models the maximize value model and the grow model turning to slide eight I'll.

Michael P. McGaugh: I'll start with the portfolios under the maximized value model, where our focus is on efficiency improvement and cost reduction. In our automotive aftermarket portfolio, we continue to integrate the Mohawk acquisition into Myers Tire Supply, and we have communicated that this integration has been tougher than anticipated. In our fourth-quarter call, as well as at our Investor Day, I described these challenges, and I shared the actions we are taking to improve them, such as merging the ERP systems into a single system to provide better data and visibility.

Grant: Start with the portfolios under the maximize value model, where our focus is on efficiency improvement and cost reduction.

Grant: In our automotive aftermarket portfolio, we continue to integrate the Mohawk acquisition into Myers tire supply.

Grant: As communicated this integration has been tougher than anticipated.

Grant: And our fourth quarter call as well as at our Investor Day I described these challenges and I shared the actions, we're taking to improve such as merging the ERP systems into a single system to provide better data and visibility.

Michael P. McGaugh: I've also talked about the work we are doing with key personnel and with customers to regain the momentum that declined during the transition. We are making progress, but this work is still underway. As you recall, a key part of our Horizon 1 strategy was a deliberate effort to make small bolt-on acquisitions so that while we build scale and create value, we also learn and build our capabilities before advancing to larger, more impactful acquisitions. The Mohawk acquisition was one of those small bolt-ons.

Grant: I've also talked about the work, we're doing with key personnel and with customers to regain our sales momentum that declined during the transition.

Grant: We are making progress, but this work is still underway.

Grant: As you recall, a key part of our horizon, one strategy was a deliberate effort to make small bolt on acquisitions, so that while we build scale and create value. We also learn and build our capabilities before advancing to larger more impactful acquisitions.

Grant: The <unk> acquisition was one of those small bolt ons.

Michael P. McGaugh: When we acquired Mohawk, the business had approximately $60 million in revenue and $3 million in EBITDA. We bought the business for approximately $25 million. It was a small tuck-in acquisition designed to give our distribution business scale. Over the past two years, we've experienced many of the challenges that often occur when acquiring a lower performing business and rapidly attempting to convert it into a higher performing one. We're still confident that the acquisition will bear fruit; it's just taking longer and requiring more work than we had expected.

Grant: When we acquired Mohawk business had approximately $60 million in revenue and $3 million in EBITDA.

Grant: We bought the business for approximately $25 million.

Grant: It was a small tuck in acquisition designed to give our distribution business scale.

Grant: Over the past two years, we've experienced many of the challenges that often occur when acquiring a lower performing businesses and rapidly attempting to converted into a higher performing one.

Grant: We're still confident that the acquisition will bear fruit, it's just taking longer and requiring more work than we had expected.

Michael P. McGaugh: We have an experienced team deployed to the business, and they are making the right improvements as we speak. This journey will continue throughout the year, and we expect continued improvement in EBITDA margins. Unfortunately, compounding the challenges of bringing Mohawk into Myers Tire Supply, we are also now seeing a slowdown in spending in the automotive aftermarket. Please see SOP59. With inflation, the consumer has less disposable income.

Grant: We have an experienced team deployed into the business and they are making the right improvements as we speak.

Grant: This journey will continue throughout the year and we expect continued improvement in EBITDA margins.

Grant: Unfortunately, compounded the challenges of bringing together Mohawk into Myers tire supply. We're also now seeing a slowdown in spending in the automotive aftermarket.

Grant: Please see slide nine.

Grant: With inflation, the consumer has less disposable income.

Michael P. McGaugh: Purchases across the board that can be deferred are indeed being deferred. This is also true for tires and tire supply products, both at the retail level as well as at the commercial level. I expect this slower pace of consumption to continue through the year.

Grant: <unk> across the board that can be deferred R&D being deferred.

Grant: This is also true for tires entire supply products, both at the retail level as well as at the commercial level I expect the slower pace of consumption to continue through the year. Please.

Michael P. McGaugh: Please turn to slide 10. We are taking action, and Myers, we say managers must manage. We operate our businesses with efficiency. We're improving year over year and quarter over quarter. These gains in efficiency allow us to reduce costs while we maintain our service level. We believe we can achieve an additional $7 to $9 million of annualized cost reduction as a result of our efficiency improvement. In the coming months, I'll have more to say about the specific actions we're currently evaluating.

Grant: Please turn to slide 10.

Grant: We are taking action.

Grant: And Myers, we say managers must manage we operate our businesses with efficiency, we are improving year over year and quarter over quarter. These gains in efficiency allow us to reduce cost while we maintain our service level.

Grant: We believe we can achieve an additional $7 million to $9 million of annualized.

Grant: <unk> cost reduction as a result of our efficiency improvements.

Grant: In the coming months I'll have more to say about the specific actions. We're currently evaluating.

Michael P. McGaugh: This targeted $7 to $9 million in cost reduction is in addition to the $8 million of cost synergies we expect to deliver with the integration of signature systems. In total, we expect $15 to $17 million in annual cost reduction and margin improvement from these combined initiatives.

Grant: This targeted $7 million to $9 million in cost reduction is in addition to the $8 million of cost synergies, we expect to deliver with the integration of signature systems.

Grant: In total, we expect $15 million to $17 million in annual cost reduction and margin improvement from these combined initiatives.

Michael P. McGaugh: Now turning to slide 11, moving on to the Storage Handling and Protection Portfolio that aligns with our GROW operating model. In this model, we also focus on efficiency and cost improvement. However, the overarching focus here is to grow through new product development and through acquisition. I have several recent and significant examples that I'd like to highlight, first on slide 12. On February 8th, we closed on the acquisition of Signature Systems, a leading manufacturer of ground protection and turf protection solutions.

Grant: Now turning to slide 11, moving on to the storage handling and protection portfolio that aligns with our grow operating model.

Grant: In this model, we also focus on efficiency and cost improvements. However, the overarching focus here is to grow through new product development and through acquisition.

Grant: Several recent and significant examples that I would like to highlight.

Grant: First on slide 12 on.

Grant: On February eight we closed on the acquisition of signature systems, a leading manufacturer of ground protection and turf protection solutions.

Michael P. McGaugh: This business has performed well, the integration into Myers has progressed smoothly, and we continue to be impressed with the quality and caliber of the people in the leadership team. Indeed, the learnings we made on our Horizon One bolt-ons enabled us to successfully transition to more impactful deals, like the acquisition of Signature Systems, where we acquired strong companies with great growth potential, strong brands, differentiated technology, and excellent leadership, all at an attractive price. We continue to believe that Signature will be a pivot point and an accelerator in Myers' transformation.

Grant: This business has performed well.

Grant: The integration and the Myers has progressed smoothly and we continue to be impressed with the quality and caliber of the people and the leadership team.

Grant: Indeed, the learnings we made on our horizon, one bolt ons enabled us to successfully transition to more impactful deals like the acquisition of signature systems, where we acquire strong companies with great growth potential strong brands differentiated.

Grant: <unk> technology and excellent leadership, all at an attractive price.

Grant: We continue to believe that signature will be a pivot point in an accelerator and Myers transformation.

Michael P. McGaugh: And while we will continue to pursue growth through acquisition, we also have a number of promising new product development innovations in our existing businesses. Today, I want to highlight two innovations under our Scepter business. Please advance to slide 13.

Grant: And while we will continue to pursue growth through acquisition. We also have a number of promising new product development innovations in our existing businesses today I want to highlight two innovations under our scepter business. Please advance to slide 13.

Michael P. McGaugh: One example I've spoken of before is our anticipated growth in military containers for ammunition and propellant. The SCEPTR team continues to gain traction with the U.S. military and with militaries around the world. We believe that global rearmament will be a growth driver for the Scepter military Case. The Scepter cases are lighter and easier to use, and we believe that over the next five to ten years, they will continue to gain traction as they replace wood and metal containers in militaries around the world. Please now turn to slide 14.

Grant: One example, I have spoken of before is our anticipated growth in military containers for ammunition and propel it.

Grant: The scepter team continues to gain traction with the U S military and with militaries around the world.

Grant: We believe that global rearmament will be a growth driver for the scepter military cases.

Grant: The scepter cases are lighter and easier to use and we believe that over the next five to 10 years. They will continue to gain traction as they replace wood and metal containers and militaries around the world.

Grant: Please now turn to slide 14.

Michael P. McGaugh: As you know, Scepter is a leading provider of portable fuel containers. Last month, we launched a product that we believe will be a success in the market. The Flow-N-Go Power Fuel Station is a 14-gallon container that gives the contractor or consumer the convenience of a gas pump on a job site, a construction site, or at home. The Flow & Go Power Fuel Station is ideal for construction sites, landscape work, or power sports.

Grant: As you know scepter is a leading provider of affordable fuel containers.

Grant: Last month, we launched a product that we believe will be a success in the market.

Grant: The flow and go power fuel station is a 14 gallon container that gives the contractor or consumer the convenience of a gas pump on a job site, a construction site or at home.

Grant: The flow and go power fuel station is ideal for construction sites.

Grant: Inscape work or power sports.

Michael P. McGaugh: Based on our consumer and market research, we believe the product is a winner and will complement our current Duramax offering. I have many other examples of new product development across the company. Several of these were reviewed at our Investor Day in March. We will continue to grow organically as well as through acquisition with a focus on branded, differentiated products. Now, I'll turn the call over to Grant for a detailed review of our first quarter financial results as well as our outlook.

Grant: Based on our consumer and market research. We believe the product is a winner and will complement our current duramax offering.

Grant: I have many other examples of new product development across the company. Several of these were reviewed at our Investor Day in March we will continue to grow organically as well as through us through acquisition with a focus on branded differentiated products now I'll turn the call over to grant for a detailed review of our first quarter financial.

Grant: <unk> as well as our outlook.

Grant E. Fitz: Thank you, Mike. Please turn to slide 15 for a complete summary of the first quarter 2024 financial results. Net sales were $207.1 million, which decreased $8.6 million, or 4% compared to 2023, with a decline primarily driven by lower volume in the distribution segment, with the material handling segment basically flat to a slight decline year over year, as the inorganic revenue from the Signature Systems acquisition was offset by declines in key end markets for RV and Marine, secular declines in consumer spending on gas cans, as well as the timing of agricultural owners.

Grant: Thank you Mike Please turn to slide 15 for a complete summary of the first quarter 2024 financial results.

Grant E. Fitz: Adjusted gross profit was $67.6 million, and adjusted gross profit margin was 32.7% compared to $71.2 million and 33% in 2023. On a valid basis, the gross margin decrease was a result of lower volume and mix and increased pricing pressures in the material handling segment, partially offset by lower material costs and the contributions from the signature acquisition. SG&A expenses were $53.5 million, which increased $1.4 million or 2.6% compared to 2023, primarily due to the addition of signature, which included $3.2 million in higher acquisition and integration costs year over year and $1.7 million of intangible asset amortization. SG&A as a percentage of sales increased to 25.8% compared to 24.1%.

Grant: Net sales were $207 $1 million, which decreased $8 6 million or 4% compared to 2023 with the decline primarily driven by lower volume in the distribution segment with the material handling segment basically flat to a slight decline year over year as the inorganic revenue from our signature systems.

Grant: Acquisition was offset by declines in key end markets for RV and marine secular declines in consumer with gas cans as well as the timing of agriculture owners.

Grant: Adjusted gross profit was $67 6 million and adjusted gross profit margin was 32, 7% compared to $71 2 million and 33% in 2023 on a dollar basis. The gross margin decrease was a result of lower volume and mix and increased pricing pressures and material hammer.

Grant: <unk> segment, partially offset by lower material costs and the contributions from the signature acquisition.

Grant: G&A expenses were $53 5 million.

Grant: Which increased $1 4 million or two 6% compared to 2023.

Grant: Primarily due to the addition of signature which included $3 2 million in higher acquisition and integration costs year over year, and $1 7 million of intangible asset amortization.

Grant: G&A as a percentage of sales increased to 25, 8% compared to 24, 1%.

Grant E. Fitz: First quarter adjusted operating income decreased to $16.6 million compared to $20.3 million in 2023. First quarter adjusted EBITDA was $25.1 million, which decreased 3% compared to the prior year quarter, despite an even a margin increase 10 basis points to 12.1% from 12.0% in the first quarter of last year. Lastly, adjusted earnings per share was 21 cents compared to 38 cents in 2023. The variance compared to the first quarter of last year was driven by lower sales and operating margins, as well as increased interest expenses related to our new term loan A, which was used to finance our acquisition of Signature Systems. Now on to slide 16 for an overview of our segment's performance for the first quarter.

Grant: First quarter, adjusted operating income decreased to $16 $6 million compared to $23 million in 2023.

Grant: First quarter, adjusted EBITDA was $25 1 million, which decreased 3% compared to the prior year quarter.

Grant: Adjusted EBITDA margin increased 10 basis points to 12, 1% from 12.0% in the first quarter of last year.

Grant: Lastly, adjusted earnings per share was 21 compared to 38 in 2023.

Grant: The variance compared to the first quarter of last year was driven by lower sales and operating margins as well as increased interest expenses related to our new term loan a which was used to finance our acquisition of signature systems.

Grant: Now onto slide 16 for an overview of our segments performance for the first quarter.

Grant E. Fitz: For the material handling segment, net sales decreased by 0.3 million, or 0.2% compared to the prior year. This slight decrease was the result of lower volumes in the vehicle end market due to continued truck conditions in the marine and RV markets, secular decline in gas can sales, and timing of agriculture, largely offset by $19.3 million in infrastructure sales from the recent signature systems acquisition. Material Handling's adjusted EBITDA increased $2.2 million, or 7.1%, to $32.5 million.

Grant: So the material handling segment net sales decreased by <unk> 3 million or 2% compared to the prior year.

Grant: This slight decrease was a result of lower volumes in the vehicle end market due to continued trough conditions in the marine and RV markets secular decline in gas can sales and order timing of agriculture, largely offset by $19 $3 million in infrastructure sales from the recent signature systems acquisition.

Grant E. Fitz: An adjusted EBITDA margin increased to 21.4%, or 150 basis points compared to the year-ago period. The positive deltas were primarily driven by signatures revenue that was partially dampened by a decrease in sales volume and pricing in the other business units. That sales for the distribution segment decreased $8.3 million, or 13.1% year over year, driven by lower sales volumes, partially offset by higher prices. Distributions adjusted EBITDA decreased $2 million, or 59.4%, to $1.4 million.

Grant: Material handling is adjusted EBITDA increased $2 2 million or seven 1% to $32 $5 million and adjusted net adjusted EBITDA margin increased to 21, 4% or 150 basis points compared to the year ago period.

Grant: The Delta is were primarily driven by signatures contribution that was partially dampened by a decrease in sales volume and pricing and the other business units.

Grant: Net sales for the distribution segment decreased $8 $3 million or 13, 1% year over year, driven by lower sales volumes, partially offset by higher pricing distributions adjusted EBITDA decreased $2 million or <unk> 59, 4% to $1 4 million distributions.

Grant E. Fitz: The distribution segment adjusted EBITDA margin was 2.5% as compared to the 5.4% in the prior year quarter. The variances and EBITDA margin performance as compared to Q1 of last year were driven by the decline in sales volume. Turning to slide 17.

Grant: Segment, adjusted EBITDA margin was two 5% as compared to the five 4% in the prior year quarter.

Grant: The variances and EBITA margin performance as compared to Q1 of last year was driven by the decline in sales volumes.

Grant: Turning to slide 17 free.

Grant E. Fitz: Free cash flow for the first quarter of 2024 was $14.6 million, compared to $16.7 million for the first quarter of 2023. Working capitalists' percentage of net sales was up 360 basis points compared to the first quarter of 2023 due to the acquisition of signature systems. Capital expenditures for the first quarter of 2024 were $5.7 million, and cash on hand at the quarter end totaled $32.7 million. We entered the first quarter with a debt-to-adjusted-unit ratio of 4.2 times due largely to the debt we took on to finance our Signature Systems acquisition with our new term loan A.

Grant: Free cash flow for the first quarter of 2024 was $14 6 million compared to $16 7 million for the first quarter of 2023.

Grant: Working capital as a percentage of net sales was up 360 basis points compared to the first quarter of 2023 due to this the acquisition of signature system.

Grant: Capital expenditures for the first quarter of 2024 or five.

Grant: $5 $7 million in cash on hand at quarter end totaled $32 $7 million.

Grant: We ended the first quarter when the debt to adjusted EBITDA ratio of four two times due largely to the debt. We took on to finance our signature systems acquisition with a new term loan a.

Grant E. Fitz: Under the terms of our loan agreement, net leverage is 2.6 times, which is in line with our previously communicated acquisition strategy of having a net debt leverage ratio of approximately three times at the time of a major acquisition, with the target to be under two times within two years of the acquisition, assuming no new acquisitions. Now please turn to slide 18, where we've provided our outlook for the fiscal year 2024. For the full year 2024 guidance, we are maintaining our current outlook, while also adding that the outlook for net sales growth, earnings per share, and adjusted earnings per diluted share is likely to be at the low end of the previously communicated ranges as we incorporate the first quarter results into the full year guidance.

Grant: Under the terms of our loan agreement net leverage is two six times, which is in line with our previously communicated acquisition strategy of having a net debt leverage ratio of approximately three times at the time of a major acquisition with a target to be under two times within two years of acquisition.

Grant: Assuming no new acquisitions.

Grant: Now please turn to slide 18, where we provided our outlook for the fiscal year 2024.

Grant: For the full year 2024 guidance, we are maintaining our current outlook I'll also add in that the outlook for net sales growth earnings per share and adjusted earnings per diluted share are likely to be at the low end of the previously communicated ranges as we incorporate the first quarter results ended the full year guidance.

Grant E. Fitz: Additionally, as Mike previously mentioned, given the continued headwinds in some of our key end markets, in the near term, we are identifying additional annualized cost actions of $7 million to $9 million to help mitigate some of these headwinds as part of our self-health initiatives, driven by our DNA to increase efficiency and maximize value. We are also working to implement $8 million in annualized signature cost centers. These two initiatives, one combined, are anticipated to improve the virus cost structure by $15 million to $17 million on an annualized basis from the current run rate.

Grant: Additionally, as Mike had previously mentioned given the continued headwinds in some of our key end markets in the near term we are identifying additional annualized cost actions of 7 million to $9 million to help mitigate some of these headwinds as part of our self help initiatives driven by our G&A to increase efficiency and to maximize value.

Grant: We are also working to implement the $8 million of annualized signature cost synergies. These two initiatives. One combined are anticipated to improve the buyers cost structure by 15 million to $17 million on an annualized basis from the current run rates.

Grant E. Fitz: As discussed at our end yesterday, we are very positive about the future at Myers and the strategic direction that we are taking to drive continued profitable growth. Now I will turn the call back over to Mike for some closing comments. Mike. Thank you, Grant.

Grant: As was discussed at our Investor Day, we are very positive about the future at Myers and the strategic direction that we are taking to drive continued profitable growth now.

Grant: Now I will turn the call back over to Mike for some closing comments, Mike. Thank you grant I'd like to close with the summary, slide that I used at our Investor day, a few weeks ago.

Michael P. McGaugh: Thank you, Grant. I'd like to close with the summary slide that I used there on investor day a few weeks ago. Please turn to slide 19.

Mike: Please turn to slide 19.

Michael P. McGaugh: Without a doubt, our first quarter results were disappointing. We continue to face trough and trough-like conditions in a few of our end markets. As I said at Investor Day, I expect that these conditions will persist in the near term and that we're not out of the woods yet. That being said, we are taking more aggressive action on cost reduction. We can tap into the efficiency gains we've made over the past years.

Mike: Without a doubt our first quarter results were disappointing.

Mike: We continue to face trough in trough like conditions in a few of our end markets.

Mike: As I said at Investor Day, I expect that these conditions will persist in the near term and that we're not out of the woods yet.

Mike: That being said, we are taking more aggressive action on cost reduction.

Mike: You can tap into the efficiency gains we've made over the past years.

Michael P. McGaugh: I've spoken to the concept of unearthing a hidden factory that we can take costs out without impacting capacity or service level. We're going to do that. But I don't want to speak to the specifics or the specific sites at this point.

Mike: I've spoken to the concept of unearthing, a hidden factory and we can take cost out without impacting capacity or service level, we're going to do that.

Mike: I don't want to speak to the specifics of the specific sites at this point, we will communicate that later.

Michael P. McGaugh: We will communicate that later. We are addressing the short term, and that's why we are maintaining our guidance, though guiding to the lower end of the range based upon our first quarter results. I'd ask you to keep your focus on the next years while we manage through the next quarters.

Mike: We are addressing the short term and Thats why we are maintaining our guidance though.

Mike: So guiding to the lower end of the range based upon our first quarter results.

Mike: I'd ask you to keep focused on the next years, while we manage through the next quarters.

Michael P. McGaugh: The company has built a strong foundation over the past four years during Horizon One. We have the capability now and the levers of self-help to blunt the impact when a few of our cyclical end markets turn against us. With our foundation in place, we are accelerating into Horizon 2, driving the transformation of Myers Industries. We believe in and are seeing early proof points that signature systems will be a meaningful catalyst for our company.

Mike: The company has built a strong foundation over the past four years during horizon one.

Mike: We have the capability now and the levers of self help to blunt the impact when a few of our cyclical end markets turn against us.

Mike: With our foundation in place we are accelerating into horizon, two driving the transformation of Myers industries.

Mike: We believe and are seeing early proof points that signature systems will be a meaningful catalyst for our company.

Michael P. McGaugh: We also believe that the storage, handling, and protection portfolio represents an important part of the future direction of Myers and will be a cornerstone of our company. We are also confident in the engineered solutions in the automotive aftermarket portfolios. Both of these have sustainable competitive advantages: excellent products and services and excellent people. I continue to be enthusiastic and positive about the opportunities for our company to create value for our customers, our employees, our communities, and our shareholders. And with that, I'd like to turn the call over to the operator for questions, Operator.

Mike: We also believe that the storage handling of protection portfolio represents an important part of the future direction of Myers and will be a cornerstone of our company.

Mike: We are also confident in the engineered solutions in the automotive aftermarket portfolios.

Mike: Both of these have sustainable competitive advantages.

Mike: Excellent products and services and excellent people.

Mike: I continue to be enthusiastic and positive about the opportunities for our company to create value for our customers our employees our communities and our shareholders.

Speaker Change: And with that I'd like to turn the call over to the operator for questions operator.

Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Christian Zyla with Key Corp. Your line is open, please go ahead.

Speaker Change: Thank you.

Speaker Change: I'd like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: I would like to withdraw your question. Please press star followed by <unk>.

Speaker Change: When preparing to ask a question. Please ensure your devices on music Luckily.

Speaker Change: Our first question comes from Christian <unk> with <unk>. Your line is open. Please go ahead.

Christian Zyla: Good morning Mike, Grant, and Meghan. Thanks for taking the question. Were you guys seeing the slowdown at the time? Unknown Speaker. Were you seeing a slowdown at the time of your analyst day, or was that more pronounced? Unknown Speaker Yeah. Unknown Speaker I know you've already built the low end of the range, but given OneCue's results, what gives you confidence to maintain the current range? And what do you think

Christian: Good morning, Mike, Great and Megan Thanks for taking the questions.

Christian: Where are you guys seem to slow down at the 20 <unk>.

Christian: Where are you seeing a slowdown at the time of your analyst day or was that more pronounced.

Speaker Change: I know, you're probably still below end of the range, but given what <unk> results. What gives you confidence to maintain the current range and what are you seeing so far in <unk>.

Michael P. McGaugh: Yeah, one of the bigger impacts, Christian, was that we had a meaningful ag order that was pushed to later in the year and out of the first quarter. And that occurred after the investor day or, I think, largely after. On the distribution side, we saw the slowdown as the results came through.

Speaker Change: Yeah, what one of the bigger impacts Christian was that we had in AG meaningful AG order that was pushed to later in the year in out of first quarter and that occurred after the investor day or about them I think largely after on the distribution side, we saw the slowdown as the results come through and again that was more.

Michael P. McGaugh: And again, that was more of a post-investor day. What gives us confidence is you have more of a shift in some of our high-profit businesses, namely ag. We also continue to see some upticks in the consumer business, the gas can business, as well as the military. That's why we're sticking to the range. But we also have to recognize the first quarter miss, and that's why we're guiding to the lower end. Grant, do you want to add to that?

Speaker Change: More of our post Investor day.

Speaker Change: What gives us confidence is you have more of a shift in some of our <unk>.

Christian: The profit businesses, namely AG.

Christian: We also continue to see some upticks in the consumer business the gas can business as well as military.

Speaker Change: That's why we're sticking to the range that we also have to recognize that first quarter Miss and Thats why we are guiding to the lower end, Greg do you want to add.

Greg Butz: I mean, I do think Mike answer the question about the Investor day.

Grant E. Fitz: Yeah, I mean, I think Mike answered the question about investor day. The back half of the year is really where we start to see some of the ramp-up with the military orders that we've talked about. We are now in production with those orders, so that is starting to ramp up. And we should start to see that grow throughout the next three quarters.

Greg Butz: Back half of the year is really where we start to see some of the ramp with the military.

Greg Butz: The orders that we've talked about we are now in production with those orders. So that is starting to ramp up and we should start to see that grow throughout.

Greg Butz: Throughout the next three quarters, and we continue to get a lot of inbounds on just other opportunities for that business. So we really think that that could be as Mike mentioned, our longer term growth catalyst.

Grant E. Fitz: And then we continue to get a lot of inbound calls on just other opportunities for that business. So we really think that that could be, as Mike mentioned, a longer-term growth catalyst as we start to ramp up our production. The other thing is, just in general, we continue to see some strong e-commerce demand. We did have a little bit of a stumbling point in our first quarter where some of the demand was taken offline with Amazon due to some pricing issues that we had that have since been resolved.

Greg Butz: As we start to ramp up of production. The other thing is just in general we continue to see some strong strong E. Commerce demand, we did have a little bit of assembling pointed in our first quarter, where we had some of that demand was taken offline with.

Greg Butz: With Amazon due to some pricing issues that we have that.

Greg Butz: Has since been resolved and we now see that continuing to pick up throughout the year as well and then we don't have a significant storm activity in our current guidance range for Hurricanes as we've talked before.

Grant E. Fitz: And we now see that continue to pick up throughout the year as well. But then we don't have significant storm activity in our current guidance range for hurricanes. As we've talked before, that can drive anywhere from five to six cents per share with a meaningful storm.

Greg Butz: That can drive anywhere from five to six per share with a meaningful storm. So that so we do see that would typically be in them.

Michael P. McGaugh: So we do see that would typically be in the latter half of the year. Then lastly, as Mike said, this agricultural move from the first quarter into the latter part of the year was pretty significant for us. And we don't see any issue with that being something that would be delayed into 2025 as we do have per mortars. It's just more of a timing issue of when the customer wants delivery of those products.

Greg Butz: Half of the year and then lastly, as Mike said this agriculture move from the first quarter into the latter part of the year was pretty significant for us and that we don't see any issue with that being something that would be July delayed into 2025 as we do have firm orders. It's just more of a timing of when the customer wants to have delivery those probably.

Greg Butz: Christian if I can add is that it really was the big push on the AG seed boxes for GMO seed.

Michael P. McGaugh: Yeah, Christian, if I can add, there really was a big push on the ag seed boxes for GMO seed, but that was delayed until later in the year. Some of those larger GMO seed companies are also trying to control their CapEx, and so there was a delay there. The other piece is on the military. We did have a significant project that is scaling up. And as a part of that scale-up, the orders were pushed into the second quarter and third quarter and out of the first quarter. So those are really the two big chunks.

Greg Butz: That was delayed to later in the year as some of those larger GMO seed companies are also trying to control their capex and so there was a deferred there the other pieces on the military we did have a <unk>.

Greg Butz: A difficult project that is scaling up and as part of that scale up the orders were pushed.

Greg Butz: Into second quarter, and third quarter and out of first quarter. So those are really the two big chunks.

Michael P. McGaugh: Great, thanks, Zach Heller. Just to follow up, since you maintained the guide, do you have more visibility or just confidence in the double-digit revenue growth or in the EPS range?

Speaker Change: Great. Thanks for that color just I guess, a follow up since you maintain the guide do you have more visibility or confidence in the double digit revenue growth and the EPS range.

Grant E. Fitz: I would say they're equally competent. I think revenue obviously helps drive the EPS range for us, but we do have, you know, we do see, quite frankly, an opportunity at the high end of the range of, you know, things, everything falls in play. But just given the first quarter, we wanted to be a little bit more conservative on guiding towards the lower end of the range, but I do think that we have opportunities here.

Greg Butz: I would say that they.

Greg Butz: They are equally equal confidence I think the revenue obviously helps drive the EPS range.

Greg Butz: For us, but we do have we do see.

Greg Butz: Quite frankly, we see an opportunity at the high end of the range of things everything falls in place, but just given the first quarter, we wanted to be a little bit more conservative on guiding towards the lower end of the range, but I do think that we have opportunities here. Obviously, we've talked a lot Mike talked a lot about the distribution business. That's one that we're really very focused on just improving the <unk>.

Grant E. Fitz: Obviously, you know, we talked a lot; Mike talked a lot about the distribution business. That's one that we're really very focused on just improving the overall performance, but it has been helpful that we do see overall that the automotive aftermarket does seem to be taking a little bit of a pause on the trends that we're seeing, although for the longer term, you know, we see the automotive market continue to have good tailwinds.

Greg Butz: Our performance, but it hasnt been helpful that we do see overall that that automotive aftermarket does seem to be taking a little bit of a pause on.

Greg Butz: The trends that we're seeing although for the long term, we see the automotive market continues to have good tailwind so.

Grant E. Fitz: Thanks. I guess what you expect for organic growth in both material handling and distribution for the year will be flat to down mid single digits?

Greg Butz: Thanks.

Greg Butz: Do you expect for organic growth.

Greg Butz: Material handling and distribution for the year is flat to down mid single digits reasonable.

Greg Butz: Okay.

Grant E. Fitz: Yeah, I mean, I think we have, in general, you know, the distribution business, we are, you know, we are pushing the team to get back to growth, and our material handling, kind of our core business outside of Signature, we've been, you know, we've been looking at probably low single-digit potential growth opportunities there. As for Signature, we continue to maintain, we'll be at 10 to 15% growth on an annualized basis. And that really lines up, you know, with the guidance that we've provided.

Speaker Change: What's your name.

Speaker Change: I mean, I think we have in general the distribution business. We are we are pushing the team to get back to growth.

Speaker Change: Material handling kind of our core business outside of the signature we've been we've been.

Speaker Change: I'm looking at probably low single digit potential growth opportunities. There signature we continue to maintain will be at 10%, 15% growth on an annualized basis and that really lines up with the guidance that we've provided.

Michael P. McGaugh: Yeah, that's right. It is early in the year, and what we've learned with this business, because we have so much exposure to so many different end markets, it is challenging to get our arms around it. Now, as Grant mentioned, we could very well be at the high end of the range, but again, we wanted to be more conservative and guide to the lower end. Christian, we've got a number of bright spots on volume.

Speaker Change: Yes.

Speaker Change: Right.

Speaker Change: It is early in the year.

Speaker Change: And what we've learned with this business because we have so much exposure to so many different end markets.

Speaker Change: It is challenging to get our to get our arms around it now as Greg mentioned, we could very well be at the high end of the range, but again, we wanted to be more conservative and guide to the lower end.

Michael P. McGaugh: We've got a number of new product innovations that are delivering. We've talked about how it looks like it's going to be a robust hurricane season. You know, that's good for our sector business. The military continues to get more qualified and get traction. That's a good thing.

Greg Butz: Christian we've got a number of bright spots on volume, we've got a number of new product innovations that are delivering we've talked about.

Speaker Change: It looks like it's going to be a robust hurricane season.

Christian: Yeah, that's good for our scepter business. The military continues to get qualified and get traction that's a good thing.

Michael P. McGaugh: However, we're still dealing with, you know, RV sales. Marine sales have now followed RVs and are off meaningfully. We make water tanks and fuel tanks for boats. And then also, consumer discretionary, as I've mentioned before, we make, you know, high-ticket discretionary items. I talked about mailbox sheets, flowerpots, and hardscape items. And what we're seeing is the consumer is slowing down their discretionary purchases where they can. That's a trend that we saw in 23 that just continued into 24, so it's a bit of a mixed bag. The numbers that Grant had given on overall revenue are good numbers and accurate numbers.

Christian: However, we're still dealing with RV sales.

Christian: Marine sales have now followed RV and our off meaningfully we make water tanks and fuel tanks for boats.

Christian: And then also the consumer discretionary as I've mentioned before we make.

Christian: A high ticket discretionary items I talked about mailbox sheet, Flowerpots hardscape items and what we're seeing is the consumer.

Christian: As slowing down their discretionary purchases, where they can that's a trend that we saw in 'twenty three that just contained into 24. So it is a bit of a mixed bag the numbers that granted given on overall revenue.

Christian: Our good numbers and accurate numbers.

Michael P. McGaugh: We see a number of bright spots and green shoots. We also have some in-market exposure that for the next six to nine months, I think we're going to really have to focus on taking cost out, and that's why we spoke about that. Again, I don't want to talk about specific plans at this point, but we've got a lot of efficiency. We can get more units of output out of our plants, and that gives us the opportunity to reduce our footprint and reduce our fixed costs, and that's what we're going to do.

Christian: We see a number of bright spots and green shoots. We also have some end market exposure that for the next six months to nine months I think.

Christian: We're going to really have to focus on taking cost out and that's why we spoke to that again I don't want to talk about specific plans at this point, but we've.

Christian: We've got a lot of efficiency, we can get more units of output out of our plants and.

Christian: It gives us the opportunity to.

Christian: To reduce our footprint and reduce our fixed cost and that's what we're going to do.

Grant E. Fitz: And just with that, Christian, that is a mitigating factor as well, too, in some of these markets. We continue to have the headwinds that we're experiencing. We have not yet incorporated any of these additional cost initiatives into the guidance range that we have to a large extent yet, so we're still identifying those initiatives and getting ready to work on the timing of that. Got it. That's helpful.

Christian: With that Christian that is mitigating factor as well too.

Christian: Is some of these end markets. We continue to have the headwinds that we're experiencing we have not yet incorporated any of these additional cost initiatives into our guidance.

Christian: A guidance range that we have to large extent, yet so were still identifying those initiatives and getting ready to work on.

Christian: The timing of that so.

Grant E. Fitz: Got it. That's helpful. And then it looks like Signature had about $16 million in free cash flow last year. I know you don't guide to free cash flow, but based on Cormier's and the addition of Signature, is $80 million reasonable, or is there something else we should think about for free cash flow?

Speaker Change: Got it that's helpful. And then it looks like signature had about $16 million in free cash flow last year. I know you don't guide to free cash flow based on core Meyers and the addition of signature is $80 million is reasonable or is there something we should think about for free cash flow.

Grant E. Fitz: Let me just take a quick look here at the chart. Christian, just make sure. I think that's probably reasonable. Let me, let me take a look at this as if you have some other questions just to kind of calibrate to make sure I'm comfortable with that number. Yeah, I mean, Christian, just on that point.

Speaker Change: Let me just take a quick look here at Christmas make sure.

Speaker Change: I think probably reasonable let me let me take a look at this is if you have some other questions as to kind of.

Speaker Change: Calibrate to make sure I'm comfortable with that number so yes.

Grant E. Fitz: Yeah, I mean, Christian, just on that point, as Grant looks up the specific number, we are seeing really solid results from Signature. There's a lot of growth tailwind there. The infrastructure investment that's being put in place through the various government spending plans over the next decade will benefit from, and will continue to benefit from, those programs.

Speaker Change: Christian just on that point is great. It looks up the specific number we are seeing really solid results from signature theres a lot of growth tailwind there.

Christian: The infrastructure investment that's being put in place through the various government spending plans over the next decade Cigna.

Christian: Signatures is.

Michael P. McGaugh: We just continue to be very pleased with that acquisition. And, you know, as I said, look, our objective was to learn with some small ones, get our processes in place. We know we're not going to bat at 1000.

Christian: We'll benefit is benefiting and will continue to benefit from those programs. We just we continue to be very pleased with that acquisition and as I've said look our objective was to learn with some small ones.

Christian: Get our processes in place.

Christian: We know we're not going to about 1000.

Michael P. McGaugh: The Mohawk acquisition, as I said, has been a bit of a cultural challenge, but we're working through that. We're bringing those businesses together. But a lot of the key learnings from the three or four prior acquisitions we did that were small, you know, and in the magnitude of $30 million, $25 million, they really allowed us to have excellent processes and to really improve our capability when we moved into the intermediate-sized acquisitions like a signature, where we spent $350 million. I think we got a great company with a lot of growth, great margins, and, quite frankly, I think we bought it at a very reasonable price.

Christian: The Mohawk acquisition as I said, it's been a bit of a challenge culturally we're working through that we're bringing those businesses together, but a lot of the key learnings from the 3% to four prior acquisitions, we did that were small and the magnitude of $30 million $25 million, they really allowed us to <unk>.

Christian: Excellent processes and to <unk>.

Christian: Really improve our capability when we moved into the intermediate sized acquisitions like our signature where we spent $350 million I think we've got a great company with a lot of growth great margins and quite frankly, I think I think we bought it at a very reasonable price.

Unknown Speaker: Great, I'll pass it back. Thanks.

Speaker Change: Great I'll pass it back thanks.

Christian: Okay.

Speaker Change: Thank you.

Operator: We now turn to Anna Jolly with Gabelli. Your line is open, please go ahead.

Speaker Change: We now turn to Jolly with Gabelli. Your line is open. Please go ahead.

Carolina Jolly: Hi, this is Carolina from Gabelli. So hopefully this doesn't repeat the prior question too much, but can you just talk a little bit about what surprised you on the material handling side of the business outside of the ag order more this quarter than expected and in the, and some of that in the discussion items. And then also, secondly, can you talk about what you kind of learned from Mohawk and Trilogy Plastics that you're applying to Signature?

Christian: Hi, This is Carol Leena from Gabelli.

Christian: So.

Carol Leena: Hopefully this doesn't repeat the prior question too much but can you just talk a little bit about what surprised you.

Carol Leena: In the material handling side of the business outside of the AG order.

Carol Leena: More this quarter than expected.

Carol Leena: And then.

Carol Leena: And some of that in the discretionary items and then also secondly.

Carol Leena: Can you talk about.

Carol Leena: What you're what you've kind of learned from Mohawk and <unk> plastic that you're applying to signature.

Carol Leena: Okay.

Michael P. McGaugh: Yeah, Carolina. Good question. You know, a large part of it was the shift in the agricultural seed box order. Another piece of it was, you know, in March, some of the gas can sales that we expected were more shifted to Q2, but the lion's share of it was the ag seed order. And that's why we stand by the guidance that's just shifted to later in the year.

Speaker Change: Yeah, Charlie good question.

Speaker Change: A large part of it was the shift of the agricultural Seedbox order.

Charlie: And another piece of it was in March some of the gas can sales that we expected were more shifted to Q2.

Speaker Change: But the lion's share of it was the AG seed order for and Thats why we stand by the guidance. It's just shifted to later in the year.

Michael P. McGaugh: On distribution, the sales came through weaker in March than we anticipated, and the key learnings there were the need to integrate swiftly and effectively and the need to integrate the cultures fast. The other thing I've learned, Quite frankly, as we said in the Q&A session at Investor Day, buying some fixer-uppers or some lower-performing businesses and trying to convert them to a higher-performing run rate and doing it in a very short period of time is a lot of work.

Speaker Change: On on distributions the sales came through weaker in in March than we anticipated and the key learnings there is the need to integrate.

Speaker Change: Swiftly and effectively and the need to integrate.

Speaker Change: The cultures fast.

Speaker Change: The other thing.

Speaker Change: The other learning is.

Speaker Change: Quite frankly is what we said when in the Q&A session at Investor Day.

Speaker Change: Buying.

Speaker Change: Some some fixer uppers or some lower performing businesses and trying to convert them to a higher performing run rate and doing it in a very short period of time.

Speaker Change: It's.

Speaker Change: It is a lot of work and doing that with some smaller acquisitions in particular several of them concurrently.

Michael P. McGaugh: And doing that with some smaller acquisitions, in particular several of them concurrently, you have your hands full. I do believe we will bring the performance of Mohawk up to the level of Myers Tire Supply. Mohawk was running at about one-half the EBITDA margin percent of Myers Tire Supply.

Speaker Change: You have your hands full I do believe we will bring the performance of Mohawk up to the level of Myers tire supply.

Speaker Change: <unk> was running at about one half the EBITDA margin percent as Myers tire supply.

Michael P. McGaugh: And our belief was that we could bring it up to the level of Mohawk Myers Tire, and in fact, just the complexity and bringing in the distribution centers, the IT systems that work with that, as well as the company cultures. We ultimately bought a complicated small business, and we knew we would learn what to do and what not to do and what the capabilities of Myers were. And that's where our focus is now.

Speaker Change: And our belief was we can bring it up to the level of Mohawk Myers tire and in fact, just the complexity and bringing in the distribution centers.

Speaker Change: The CIS.

Speaker Change: Systems that work with that as well as the company cultures.

Speaker Change: We.

Speaker Change: We ultimately bought a complicated small business and we knew we would learn.

Speaker Change:

Speaker Change: What to do or what not to do and what the capabilities are of Myers.

Speaker Change: And that's where our focus now is I'd much rather buy.

Michael P. McGaugh: I'd much rather buy a quality company that has branded and differentiated products. We're being much more careful about low barriers to entry businesses, and we bought some low barriers to entry businesses to give scale to our rotational molding, as well as our distribution. Those are the right things to do; those businesses need scale, but as we said at Investor Day, we now have a larger business in contract manufacturing and a larger business in industrial distribution. They're fine businesses, but they're not going to have the EBITDA profile that we seek, and that, ultimately, is more of the Buckhorn, Acro, Acro Mills, Scepter, and Signature model, where your EBITDAs are 30%

Speaker Change: Quality company that.

Speaker Change: It has branded and differentiated products.

Speaker Change: We are being much more careful about low barriers to entry businesses and.

Speaker Change: And we bought some lower barrier to entry businesses to give scale to our rotational molding as well as the distribution.

Speaker Change: Those are the right things to do those businesses needed scale.

Speaker Change: But as we said at Investor day.

Speaker Change: We now have a larger business in contract manufacturing and a larger business in industrial distribution, they're fine businesses, but theyre not going to have the EBITDA profile that we seek.

Speaker Change: And that ultimately is more of the Buckhorn Acro Acro Mills Scepter and signature model, where your Ebitdas are 30% plus.

Michael P. McGaugh: And that's why I say that it's the cornerstone of the company, and that's where we're taking the company. So hopefully, that addresses the question. Great. Thank you. Thank you, Caroline.

Speaker Change: And that's why I say that is the cornerstone of the company and that's where we're taking the company.

Speaker Change: So hopefully that addresses the question.

Speaker Change: Great. Thank you.

Grant E. Fitz: Grant, anything to add? Yeah, you may have mentioned, I apologize if you did, but I think the ERP piece is also just a technical piece of just making sure that we can get good visibility across the businesses with ERP consolidation. That's going to continue to be something that provides an infrastructure for growth for us as well, too. And so it's not just the Mohawk integration issue. It's also within the business. It will help us be more efficient and run the business more effectively.

Speaker Change: Thank you Carolyn grant anything to add.

Carolyn: You May have mentioned I apologize if you did but I think the ERP piece is also just the technical piece of just making sure that we can get good visibility.

Carolyn: Across our businesses with ERP consolidation, that's going to continue to be something that provides that infrastructure for growth for us as well too and so it's not just.

Speaker Change: The Mohawk integration issue. It's also within the business it will help us clearly being able to be more efficient and to run the business more.

Grant E. Fitz: Yeah, that's it. Caroline, the low barrier to entry businesses. As you would expect, they have lower margin profiles, and while they are easier for us to integrate and we can buy them for a lower price point, we've learned that focusing on differentiated branded businesses with a competitive moat is the right approach, and as a matter of fact, we were able to get all that with Signature, still at an eight times multiple, which we feel really good about.

Speaker Change: Effectively yes, that's correlated the low barrier to entry businesses.

Speaker Change: As you would expect have your large lower margin profiles and while they are easier for us to integrate.

Speaker Change: And we can buy them for a lower price point.

Speaker Change: We've learned.

Speaker Change: Focusing on the differentiated branded businesses with a competitive moat.

Speaker Change: Is the right approach in a matter of fact, we were able to get all of that was signature.

Speaker Change: Still at an eight times, multiple which which we feel really.

Speaker Change: We feel really good about.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now. We now turn to William Dezellem with Titan Capital Management. Your line is open, please go ahead.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad now.

Speaker Change: We now turn to William Sutherland with Titan Capital Management. Your line is open. Please go ahead.

William Dezellem: Thank you. I'd like to jump to the seven to nine million cost savings that you referenced here. Are those cost savings currently identified, or is that a target? And do you have some general idea of how you're going to get

William Sutherland: Thank you I'd like to jump to the $7 million to $9 million of cost savings that.

William Sutherland: You referenced here.

William Sutherland: Are those cost savings currently identified or is that a target and you have some general idea of how youre going to get there.

Michael P. McGaugh: Bill, we do have a general idea because, ultimately, it's going to be on some footprint reduction activities. And at this point, I want to be a little cautious because we've not yet locked those down and confirmed those with employees.

William Sutherland: We do have a general idea.

William Sutherland: Because.

William Sutherland: Ultimately, it's going to be on summit.

William Sutherland: Some footprint reduction activities.

William Sutherland: <unk>.

William Sutherland: At this point I want to be a little cautious because we have not yet lock those down and confirm those two employees, but we believe we can actually.

Michael P. McGaugh: But we believe we can actually decrease our footprint, decrease fixed costs without impacting our service level because of all these things I've spoken of the last three years, the improved scheduling, the improved operating efficiency. We have more capability now per fixed asset, and it's the right thing to do is to streamline those assets. It makes our business and our company more simple, and it also allows us to reduce some costs.

William Sutherland: Decrease our footprint decreased fixed cost without impacting our service level because of all these things I've spoken over the last three years the improved scheduling the improved operating efficiency, we have more capability now perfect perfect asset.

William Sutherland: And it's the right thing to do is to streamline those assets. It makes our business and our company more simple.

William Sutherland: And then it also allows us to reduce some costs. So we think that efficiency gains at the time too.

Michael P. McGaugh: So we think that efficiency gains, it's time to act on those, particularly in some of these areas where we have less differentiation, more on the maximized value side of the house, and we think there's some opportunities there. Grant, anything from your side?

William Sutherland: To act on those particularly in some of these areas, where we have <unk>.

William Sutherland: Less differentiation more on the maximized value side of the house and we think there's some opportunities there grant anything from your side I would just maybe provides my general philosophy on these bill.

Grant E. Fitz: Yeah, that would just maybe provide my general philosophy on these, Bill, is that I think it's important when we're going for, you know, a number that we've provided, that we have more initiatives than what, you know, essentially would be the information we've provided. So I typically try to make sure that we've got a pipeline of, you know, 125% of the numbers we might be discussing just because some will take longer, some will fall off the list.

Speaker Change: Is that I think it's important when we are going for a number that we've provided that we have more initiatives than what.

Speaker Change: Essentially it would be the information we've provided so I've typically to try to make sure that we've got a pipeline of 125.

Speaker Change: Percent of the <unk>.

Speaker Change: Numbers, we might be be discussing just because some will take longer some will fall off the list and so we truly are just identifying those and working on those and so we.

Grant E. Fitz: And so we truly are just identifying those and working on those. And so, you know, I would say that, just given our track record, we will be coming back with some further information on it, but I feel very comfortable that, you know, these are numbers that we are going to be able to achieve. We just don't have them fully identified yet, so yeah, that's right. Bill, just, you know, this is Mike. We've not confirmed any actions, such as lockdown actions. Once we do, clearly, we will be disclosing those, and we'll disclose them soon.

Speaker Change: I would say that just given the track record that we will be cut.

William Sutherland: Coming back with some further information on it but I feel very comfortable that.

Speaker Change: These are numbers that we are going to be able to achieve we just don't have them fully identified yet so yes, that's right bill.

Mike: This is Mike <unk>.

Speaker Change: We have not confirmed actions lockdown actions once we do clearly we will be disclosing those and we will disclose them soon.

Michael P. McGaugh: That is, that is helpful. And then relative to Signature, continuing on the cost front, you're all referencing the 8 million cost savings. And is that new? Because I was thinking that Signature would not have a lot of cost savings, just because there weren't weren't many synergies. And that would be essentially a standalone business. Did I just not remember correctly? Or did something change there?

Speaker Change: That is that is helpful and then relative to signature continuing on the cost front.

Speaker Change: <unk> front.

Speaker Change: Youre, all referencing the $8 million of cost savings and is that new because.

Speaker Change: I was thinking that.

Speaker Change: Signature there, we're not going to be a lot of cost savings just because there werent many synergies and that would be essentially a standalone business did I did I, just not remember correctly or did something change there.

Michael P. McGaugh: Yeah, no, Bill, nothing's changed. So we've said we believe we'll have $8 million, largely in cost synergies. And if you recall back to Investor Day, I think Carolina asked a question about clarifying those synergies. And they're really only in three or four buckets.

Speaker Change: No Bill.

Bill: Nothing has changed so we've said we believe we will have $8 million.

Speaker Change: Largely in cost synergies and if you recall back to Investor Day, I think currently and ask a question on clarifying those synergies and there's really they're really in only three or four buckets, we do have our arms around them.

Michael P. McGaugh: We do have our arms around them. If you recall from that session as well, Jeff Condino, who runs that business, affirmed his confidence in getting those synergies and having that as a run rate in 2025. So know that you've got $8 million there, and then $7 to $9 outside of signature. And we feel confident about that $15 to $17 million.

Speaker Change: If you recall from that session as well, Jeff Kadena, who runs that business affirmed his confidence in getting those synergies and having that as a run rate.

Speaker Change: In 2025 so.

Speaker Change: You've got 8 million there and then seven to nine outside of outside of signature and we feel confident about that 17 that fit.

Speaker Change: $15 million to $17 million.

Michael P. McGaugh: Okay, my apologies for not remembering that. Thank you.

Speaker Change: Okay, My apologies for not remembering that thank you.

Meghan Beringer: No problem. No problem. This concludes our Q&A, and I'll hand it back to Meghan Beringer for closing remarks.

Speaker Change: No problem no problem.

Speaker Change: This concludes our Q&A.

Speaker Change: Meghan Beringer for closing remarks.

Meghan Beringer: Thank you, Elliot, and thank you to everyone for attending our first quarter 2024 earnings call. We invite you to follow up with additional questions or meeting requests. To schedule time, please contact me using the information found on slide 29. Thanks again, and have a great day.

Meghan Beringer: Thank you Elliot and thank you for everyone for attending our first quarter 2024 earnings call. We invite you to follow up with additional questions there, meaning requests to schedule time. Please contact me using the information found on slide 29, Thanks, again and have a great day.

Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Speaker Change: Ladies and gentlemen, today's call is now concluded. Thank you for your participation.

Meghan Beringer: Now disconnect your lines.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yeah.

Q1 2024 Myers Industries Inc Earnings Call

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