Myers Industries Inc. (MYE) reported third-quarter 2013 earnings of 25 cents per share, up 25% from the year-ago quarter, backed by gains at the Lawn and Garden Segment and disciplined cost management. However, earnings missed the Zacks Consensus Estimate by a penny.
On a GAAP basis, including one-time items, the company reported earnings per share of 19 cents compared with 17 cents earned in the year-ago quarter.
Net sales slipped 1.2% from the year-ago quarter to $194.9 million, while it missed the Zacks Consensus Estimate of $211 million. The downside resulted from a decline in sales at all of the company’s business segments. Engineered Products and Lawn & Garden segments were the most affected, while the Material Handling and Distribution segments posted only marginal declines.
Gross profit rose 1.7% to $53.6 million compared to $52.7 million in the prior-year quarter. Gross margin expanded 80 basis points to 27.5%, driven by cost savings that came from productivity enhancements and material substitution.
Operating income climbed 23.5% to $12.1 million due to improved gross profit and lower selling, general & administrative expenses.
Segmental Information
Material Handling segment posted a marginal decline of 0.2% with net sales reaching $76.0 million mainly due to diminished food processing sales that came on the back of weakened tomato crop season, offset largely by incremental sales from the Jamco acquisition. Based on the soft sales performance, the segment reported a 14.4% decline in adjusted earnings before tax of $10.7 million.
Net sales at Lawn and Garden segment inched down 1% from the year-ago quarter to $44.9 million, backed by delayed orders for the upcoming season. Adjusted earnings before tax for the Lawn and Garden segment was $2.5 million compared to break-even earnings before tax in the year-ago quarter. The whopping rise in earnings was driven by cost savings related to productivity gains and raw material substitution together with the benefits from the success of phase one of the company’s restructuring endeavor.
Distribution Segment net sales inched down 0.1% from the year-ago quarter to $45.0 million, while adjusted earnings before tax rose 26.5% to $4.3 million. The upside in earnings was due to a favorable product mix and lower selling, general and administrative expenses.
Engineered Products segment posted a sales decline of 5.2% to $33.8 million compared to $35.7 million in the year-ago quarter. Segment results were mainly impacted by a decline in custom sales due to increased focus on more profitable products and customers. Adjusted earnings before tax for the segment dipped 5.4% to $3.5 million mainly due to lower sales, offset by raw material related cost savings and improved productivity.
Other Financial Updates
The company ended the quarter with $7.0 million in cash as of Sep 30, 2013, compared with $3.9 million at Dec 31, 2012. During the nine months of 2013, the company generated operating cash flows of $46.8 million, a substantial improvement from $23.3 million in the year-ago period.
For the nine months ended Sep 30, 2013, the company spent $20.0 million toward capital expenditure.
Outlook
Going forward, the company expects sales and earnings to improve in the fourth quarter of 2013, driven by sale of new products, productivity gains, cost savings and gains from the Lawn and Garden Segment restructuring initiatives. These improved results will exclude restructuring and other unusual pre-tax charges.
Further, the company expects capital expenditures for 2013 to total nearly $35 million.
Other Stocks to Consider
Myers Industries carries a Zacks Rank #4 (Sell). However, companies worth considering in the Industrial Products sector include AGCO Corp. (AGCO), AO Smith Corp. (AOS) and Mobile Mini Inc. (MINI), all of which carry a Zacks Rank #1 (Strong Buy).
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