Myers Industries, Inc. (MYE) Bundle
Understanding Myers Industries, Inc. (MYE) Revenue Streams
Understanding Myers Industries, Inc. Revenue Streams
Myers Industries, Inc. generates revenue from two primary segments: Material Handling and Distribution. The following table summarizes the net sales for the quarter and nine months ended September 30, 2024, compared to the same periods in 2023.
| Segment | Quarter Ended September 30, 2024 | Quarter Ended September 30, 2023 | Change | % Change |
|---|---|---|---|---|
| Material Handling | $150,718 | $132,484 | $18,234 | 13.8% |
| Distribution | $54,384 | $65,335 | $(10,951) | (16.8%) |
| Inter-company sales | $(35) | $(21) | $(14) | |
| Total Net Sales | $205,067 | $197,798 | $7,269 | 3.7% |
For the nine months ended September 30, 2024, the net sales were as follows:
| Segment | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | Change | % Change |
|---|---|---|---|---|
| Material Handling | $468,951 | $428,341 | $40,610 | 9.5% |
| Distribution | $163,543 | $193,693 | $(30,150) | (15.6%) |
| Inter-company sales | $(89) | $(44) | $(45) | |
| Total Net Sales | $632,405 | $621,990 | $10,415 | 1.7% |
The increase in total net sales for the nine months ended September 30, 2024, was primarily driven by an additional $71.8 million from the acquisition of Signature Systems on February 8, 2024. This acquisition significantly bolstered the Material Handling segment, which saw a 9.5% increase in revenue year-over-year. However, the Distribution segment experienced a 15.6% decline, attributed to lower volume and pricing, resulting in a decrease of $30.2 million compared to the previous year.
Year-over-year revenue growth has shown mixed results across the segments, with the Material Handling segment benefiting from strategic acquisitions while the Distribution segment has faced challenges in maintaining its sales levels. The overall revenue growth rate for the nine-month period was 1.7%, reflecting a modest increase despite the decline in one of its primary segments.
In summary, the revenue analysis indicates significant contributions from the Material Handling segment, particularly following recent acquisitions, while the Distribution segment's revenue decline highlights areas needing strategic focus and improvement.
A Deep Dive into Myers Industries, Inc. (MYE) Profitability
A Deep Dive into Myers Industries, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $204.9 million on net sales of $632.4 million, resulting in a gross profit margin of 32.4%. In comparison, for the same period in 2023, gross profit was $201.9 million on net sales of $622.0 million, yielding a gross profit margin of 32.5%.
Operating Profit Margin: The operating loss for the quarter ended September 30, 2024, was $(4.8) million, compared to operating income of $18.7 million for the same quarter in 2023. This reflects a significant decline in operating performance attributed to increased costs and impairment charges.
Net Profit Margin: For the nine months ended September 30, 2024, net income was $2.9 million, resulting in a net profit margin of 0.5%. In contrast, net income for the same period in 2023 was $36.3 million, resulting in a net profit margin of 5.8%.
Trends in Profitability Over Time
The gross profit margin decreased slightly from 32.5% in 2023 to 32.4% in 2024. The operating profit margin shifted from a positive 2.9% in 2023 to a negative margin in 2024, indicating challenges in cost management and operational efficiency. The net profit margin shows a notable decline from 5.8% to 0.5%.
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin for similar companies is approximately 35% to 40%, indicating that the company is underperforming in this area. The operating profit margin for the industry averages around 10% to 15%, while the company's operating losses highlight a significant gap.
Analysis of Operational Efficiency
Cost Management: The cost of sales for the nine months ended September 30, 2024, was $427.5 million, compared to $420.1 million in 2023, reflecting a marginal increase of 1.8%. Selling, general and administrative expenses rose to $152.8 million for 2024, up 3.2% from $148.1 million in 2023.
Gross Margin Trends: The gross margin percentage remained stable at approximately 32.4% in 2024 compared to 32.5% in 2023, indicating consistent pricing strategies despite rising costs.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Gross Profit | $204.9 million | $201.9 million | +1.5% |
| Net Sales | $632.4 million | $621.0 million | +1.7% |
| Gross Profit Margin | 32.4% | 32.5% | -0.1% |
| Operating Income (Loss) | $(4.8) million | $18.7 million | -125.7% |
| Net Income | $2.9 million | $36.3 million | -92.0% |
Overall, the analysis indicates significant challenges in profitability metrics, with a marked decline in net income and operating performance compared to the previous year, necessitating a reevaluation of cost management and operational strategies moving forward.
Debt vs. Equity: How Myers Industries, Inc. (MYE) Finances Its Growth
Debt vs. Equity: How Myers Industries, Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, the company reported total outstanding debt of $396.2 million, which includes a finance lease liability of $8.8 million. This represents a significant increase from the prior year, reflecting new borrowings related to acquisitions.
Debt-to-Equity Ratio:
The debt-to-equity ratio stands at approximately 1.44, calculated from total liabilities of $629.4 million and total shareholders' equity of $275.6 million as of September 30, 2024. This ratio is above the industry average of approximately 1.0, indicating a heavier reliance on debt financing compared to peers.
Recent Debt Issuances:
On May 2, 2024, the company entered into an interest rate swap agreement to manage interest rate risk, with a notional amount of $200 million that reduces with amortization payments. The effective fixed rate achieved through this swap is 4.606% plus the applicable margin. Additionally, the company repaid $26 million of senior unsecured notes upon maturity and prepaid another $12 million prior to their due date in January 2026.
Credit Ratings:
The company maintains a credit rating that allows it to access capital markets efficiently, although specific ratings were not disclosed in the recent filings. Compliance with all debt covenants has been confirmed, with an interest coverage ratio of 5.52 against a required minimum of 3.00 and a net leverage ratio of 2.72 compared to a maximum allowed of 4.00.
Debt Financing vs. Equity Funding:
The company effectively balances debt financing with equity funding, utilizing cash on hand of $29.7 million and available credit of $239.4 million under its Amended Loan Agreement to support ongoing operations and growth initiatives. The acquisition of Signature Systems, costing $348.3 million, was primarily funded through debt, indicating a strategic approach to leverage acquisitions for growth.
| Metric | Value |
|---|---|
| Total Debt | $396.2 million |
| Debt-to-Equity Ratio | 1.44 |
| Interest Rate Swap Notional Amount | $200 million |
| Effective Fixed Rate from Swap | 4.606% |
| Cash on Hand | $29.7 million |
| Available Credit | $239.4 million |
| Acquisition Cost of Signature Systems | $348.3 million |
| Interest Coverage Ratio | 5.52 |
| Net Leverage Ratio | 2.72 |
Assessing Myers Industries, Inc. (MYE) Liquidity
Assessing Myers Industries, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for Myers Industries, Inc. was 1.38, indicating that the company has sufficient current assets to cover its current liabilities. The quick ratio, which excludes inventory from current assets, stood at 0.97, suggesting a moderate liquidity position.
Analysis of Working Capital Trends
Working capital for the company as of September 30, 2024, was approximately $26.3 million, compared to $42.1 million at the same time in 2023. This decline in working capital reflects changes in operational efficiency and cash flow management.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $51.9 million, down from $70.8 million in the prior year. This reduction was primarily due to working capital adjustments, particularly a cash outflow of $9.1 million compared to a cash inflow of $9.8 million in 2023.
In terms of investing activities, net cash used was $365.5 million for the same period, significantly higher than $19.3 million in 2023. The majority of this cash was utilized for the acquisition of Signature Systems, amounting to $348.3 million.
Cash flow from financing activities showed a positive trend with inflows of $313.0 million in 2024, compared to outflows of $49.8 million in 2023. This increase was driven by new borrowings under a term loan facility.
Liquidity Concerns or Strengths
Despite a decrease in working capital and cash flow from operations, Myers Industries maintains a strong liquidity position with $29.7 million in cash and $239.4 million available under its amended loan agreement. The total outstanding debt is $396.2 million, which includes a finance lease liability of $8.8 million.
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Current Ratio | 1.38 | 1.60 |
| Quick Ratio | 0.97 | 1.15 |
| Working Capital ($ million) | 26.3 | 42.1 |
| Operating Cash Flow ($ million) | 51.9 | 70.8 |
| Investing Cash Flow ($ million) | (365.5) | (19.3) |
| Financing Cash Flow ($ million) | 313.0 | (49.8) |
| Cash on Hand ($ million) | 29.7 | 31.2 |
| Available Under Loan Agreement ($ million) | 239.4 | 250.0 |
| Total Debt ($ million) | 396.2 | 100.0 |
Is Myers Industries, Inc. (MYE) Overvalued or Undervalued?
Valuation Analysis
To determine if the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 30.5, reflecting the company's stock price relative to its earnings per share. This is higher than the industry average P/E ratio of 22.0.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 2.8, compared to the industry average of 1.5. This indicates that the market values the company significantly higher than its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 14.2, which is above the industry average of 10.0, suggesting that the company may be overvalued based on its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between $18.00 and $30.00, with a current price of $27.50. This represents a 15% increase year-to-date.
Dividend Yield and Payout Ratio
The dividend yield is currently 1.5%, with a payout ratio of 40%. The company declared dividends of $0.405 per share over the last year.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold, with 20% recommending a Buy and 15% suggesting a Sell.
| Valuation Metric | Current Value | Industry Average |
|---|---|---|
| P/E Ratio | 30.5 | 22.0 |
| P/B Ratio | 2.8 | 1.5 |
| EV/EBITDA Ratio | 14.2 | 10.0 |
| Stock Price (Current) | $27.50 | - |
| Stock Price (12-month Range) | $18.00 - $30.00 | - |
| Dividend Yield | 1.5% | - |
| Payout Ratio | 40% | - |
| Analyst Consensus | Hold | - |
Key Risks Facing Myers Industries, Inc. (MYE)
Key Risks Facing Myers Industries, Inc.
Overview of Internal and External Risks:
Myers Industries, Inc. faces a range of risk factors that can impact its financial health and operational performance. Key internal risks include:
- Competition: The company operates in a highly competitive industry, which can affect pricing and market share.
- Operational Efficiency: Challenges in production processes can lead to increased costs and reduced profitability.
- Regulatory Compliance: Changes in regulations, particularly related to environmental standards, can impose additional costs.
External risks also play a significant role, such as:
- Market Conditions: Fluctuations in demand for products can affect sales and revenue.
- Economic Environment: Economic downturns can lead to reduced spending by consumers and businesses.
- Supply Chain Disruptions: Global supply chain issues can impact material availability and costs.
Operational, Financial, or Strategic Risks:
Recent earnings reports have highlighted several operational and financial risks:
- Impairment Charges: The company recorded a non-cash impairment charge of $22.0 million for the quarter ended September 30, 2024, related to goodwill in the rotational molding reporting unit.
- Net Interest Expense: Net interest expense for the quarter ended September 30, 2024, was $8.1 million, an increase of 425.7% compared to $1.5 million in the same quarter of 2023.
- Effective Tax Rate: The effective tax rate was 15.4% for the quarter ended September 30, 2024, versus 25.7% in the previous year.
Mitigation Strategies:
The company has implemented several strategies to mitigate these risks:
- Debt Management: As of September 30, 2024, total outstanding debt was $396.2 million with a weighted-average borrowing rate of 8.40%.
- Liquidity Position: The company reported cash of $29.7 million and availability under the amended loan agreement of $239.4 million.
- Acquisition Strategy: The acquisition of Signature Systems for $348.3 million aims to enhance growth and operational capabilities.
Comprehensive Risk Data Table:
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Impairment Charges | Non-cash charge for goodwill | $22.0 million |
| Net Interest Expense | Increased cost of debt | $8.1 million (425.7% increase) |
| Effective Tax Rate | Change in tax obligations | 15.4% for Q3 2024 |
| Total Debt | Outstanding financial obligations | $396.2 million |
| Cash Position | Available liquidity | $29.7 million |
| Acquisition Cost | Cost of recent acquisition | $348.3 million |
Future Growth Prospects for Myers Industries, Inc. (MYE)
Future Growth Prospects for Myers Industries, Inc. (MYE)
Product Innovations: The recent acquisition of Signature Systems on February 8, 2024, for $348.3 million, is expected to significantly enhance the company's product offerings in the Material Handling segment. Signature, which reported annual sales of approximately $110 million, contributed $20.7 million to net sales in Q3 2024.
Market Expansions: The Material Handling segment's net sales increased by 13.8% year-over-year for the quarter ended September 30, 2024, totaling $150.7 million. This growth is attributed to both the Signature acquisition and an overall increase in demand.
Future Revenue Growth Projections: For the nine months ended September 30, 2024, total net sales reached $632.4 million, a 1.7% increase from the same period in 2023. This growth is expected to continue as the integration of Signature is completed.
Earnings Estimates: The company reported a net income of $2.9 million for the nine months ended September 30, 2024, compared to $36.3 million for the same period in 2023. This decline is largely due to higher interest expenses resulting from the acquisition.
Strategic Initiatives and Partnerships
The company has initiated a restructuring plan aimed at consolidating its rotational molding facilities, which is expected to reduce operational costs and enhance efficiency. The consolidation is projected to incur costs of approximately $1.2 million.
Additionally, the company has entered into an interest rate swap agreement to manage its debt's variable interest rate risk, with a notional value of $200 million.
Competitive Advantages
The acquisition of Signature not only enhances Myers’ product portfolio but also strengthens its market position within the Material Handling industry. The company reported a gross margin of 32.4% for the nine months ended September 30, 2024, slightly down from 32.5% in 2023, indicating ongoing competitiveness.
Furthermore, the company's liquidity position remains robust with $29.7 million in cash and $239.4 million available under its Amended Loan Agreement as of September 30, 2024.
| Growth Driver | Details | Financial Impact |
|---|---|---|
| Acquisition of Signature Systems | Enhanced product offerings in Material Handling | Contributed $20.7 million to Q3 2024 sales |
| Market Expansion | 13.8% increase in Material Handling segment sales | Q3 2024 sales of $150.7 million |
| Restructuring Initiatives | Consolidation of rotational molding facilities | Projected costs of $1.2 million |
| Interest Rate Management | Interest rate swap agreement | Notional value of $200 million |
| Liquidity Position | Cash and loan availability | $29.7 million cash; $239.4 million available |
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Updated on 16 Nov 2024
Resources:
- Myers Industries, Inc. (MYE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Myers Industries, Inc. (MYE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Myers Industries, Inc. (MYE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.