MYERS INDUSTRIES INC Q1 FY2025 earnings call

• Focused Transformation program: 4 objectives include establishing a culture of execution, creating clear strategies, delivering consistent results, and optimizing cash flow. Early progress includes adjusted core values, completed business workshops, and achieving SG&A cost savings. - Tariffs: Supply chain is predominantly US-based. Material Handling has over 90% of revenue manufactured in US, Distribution has less than 15% sourced from China. Plan to use pricing to offset tariffs and secured secondary suppliers. - First quarter highlights: Revenue flat, margins improved, SG&A lower as percent of sales, EPS increased. - CapEx: Allocated $8.1 million for organic growth. - Share repurchase: Repurchased $1 million in shares, $9 million remaining under authorization.

Material Handling: Net sales increased 3.6% year-over-year, primarily due to the Signature acquisition. Adjusted EBITDA increased 11.7% to $36.3 million, with a 23% adjusted EBITDA margin. Distribution: Net sales decreased 10.3% on lower volume and pricing. Adjusted EBITDA decreased to $0.5 million. First quarter net sales were $206.8 million, flat year-over-year. Adjusted gross margin expanded 80 basis points to 33.5%, adjusted operating income improved to $18.7 million with a 9% margin, and adjusted EBITDA margin expanded 170 basis points.

• Industrial: Moderate growth driven by global inventory replenishment for military applications. - Infrastructure: Strong growth due to project spending and material conversion. - Vehicle end market: Down due to economic uncertainty from tariffs. - Consumer: Stable sales of fuel containers and expected return to normal storm season. - Food & Beverage: Stable. - Automotive Aftermarket Distribution: Slightly down, working to stabilize with cost structure, sales territory, and digital strategy improvements.

• Tariff impacts on supply chain and end market demand. - Working capital issues due to accounts receivable timing and inventory build. - Economic uncertainty affecting vehicle end market and some Distribution business segments.

Q: Regarding tariffs, are Central American facilities for Distribution subject to tariffs and how price-sensitive are customers?

A: Central America piece is small, no material effect. Customers are price-sensitive, and company will push price as needed.

Q: Why was free cash flow low in Q1?

A: Due to accounts receivable timing and opportunistic inventory purchases ahead of tariff details. Anticipates recovery throughout the year.

Q: Uptake in Military orders for Signature and Scepter?

A: Strong order flow in both, with growth expected into future years and opportunities in Europe.

Q: Vehicle group outlook change?

A: Economic uncertainty, tariff hesitancy, and customer pause mode due to not knowing economic direction.

Q: Needed to turn around Distribution business?

A: Understand customer needs, provide right services, and create value from services.

Q: Learnings from Signature acquisition?

A: Good cultural fit, achieved more synergies than expected, leveraged processes and expertise, strong end market with upside potential.

Q: Pricing decisions in Material Handling?

A: Strategic pricing adjustments to be competitive, drive volume, and price to value provided to customers.