Myers Industries Inc.’s (MYE) fourth-quarter 2014 adjusted earnings per share from continuing operations of 13 cents surpassed the Zacks Consensus Estimate of 11 cents. Following the better-than-expected results, shares of Myers grew 6% yesterday. Earnings, however, declined 13.3% from the prior-year figure of 15 cents.
Decreased demand in agricultural and food processing products of the Material Handling segment, soft agricultural commodity prices and a decline in Brazilian automotive production continues to hurt this Zacks Rank #3 (Hold) stock.
Including one-time items, the company reported earnings of 12 cents a share from continuing operations, down 36.8% year over year.
Net sales surged 9.4% during the quarter to $158.3 million, benefiting from the acquisition of Scepter. However, net sales fell short of the Zacks Consensus Estimate of $166 million.
Gross profit declined 2% to $39.2 million, whereas gross margin contracted 290 basis points to 24.7%.
Segmental Information
The company’s Material Handling segment net sales increased 15.1% to $110.1 million by virtue of the Scepter buyout.
Increase in sales was offset by dismal performance in the agricultural and food processing end market. Adjusted income prior to taxes increased 9.5% to $11.5 million.
Distribution segment sales declined 1.8% to $48.3 million, mainly affected by the shutdown of its outlets in Canada during the first quarter and fall in custom sales.
Adjusted net income before tax decreased 26.2% year over year to $3.1 million.
Financial Updates
The company ended the quarter with $4.7 million in cash. Its long-term debt stood at $236.4 million and total shareholders’ equity came in at $148.9 million.
During the fourth quarter, the company repurchased $6.6 million worth of shares and still has 4.4 million shares remaining under the authorized buyback plan.
During the twelve months ended Dec 31, 2014, Myers’ cash flow from continuing operations was $52.1 million. The company incurred capital expenditure of $24.2 million, repurchased shares worth $54.9 million and paid dividends of$15.7 million during the full year.
Going Forward
Management hinted that the Material Handling segment is facing similar issues, what it experienced in the quarter under review.
However, for the rest of the year, management expects Myers to be well positioned to capitalize on the strategic initiatives the company had untaken last year. These include structural changes, cross-selling opportunities, new products assortment and cost reduction initiatives across both the Material Handling and Distribution segments. These steps will enable the company to improve sales and earnings performance in 2015.
Stocks to Consider
A better-ranked stock in the same industry is Proto Labs, Inc. (PRLB), sporting a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the retail sector include Build-A-Bear Workshop Inc. (BBW) and Marinemax Inc. (HZO), both carrying a Zacks Rank #1.
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