Financial Data and Key Metrics Changes - Quarterly adjusted gross profit decreased by $1.2 million or 1.6%, despite contributions from pricing actions and lower raw material costs, with adjusted gross margin increasing by 90 basis points to 33% compared to 32.1% in the first quarter of 2022 [1][3] - Adjusted operating income decreased by $5.5 million or 21.4% year-over-year due to lower gross profit and higher SG&A expenses, which increased by $4.1 million or 8.5% to $52.1 million [2] - Adjusted EBITDA was $25.9 million, a decrease of $5.1 million or 16.5% compared to the prior year, with adjusted EBITDA margin decreasing by 180 basis points to 12% [3] Business Line Data and Key Metrics Changes - Material Handling segment net sales decreased by $24 million or 13.6% year-over-year, with lower sales volume and a change in sales mix impacting performance [4][5] - Distribution segment net sales increased by $14.3 million or 29.3% year-over-year, with organic net sales increasing by 0.9% when excluding the Mohawk Rubber acquisition [5][6] - Material Handling adjusted EBITDA decreased by $6 million or 16.5% to $30.4 million, while Distribution's adjusted EBITDA decreased by $0.5 million or 11.9% to $3.4 million [5][6] Market Data and Key Metrics Changes - The company experienced strong demand in the food and beverage end market, while mixed demand was noted in the industrial end market, with reduced demand in recreational vehicle, marine, and consumer end markets [59][41] - The company anticipates mid to high single-digit growth in both Q3 and Q4, driven by price increases and new business wins [29][9] Company Strategy and Development Direction - The company is focused on four strategic pillars: organic growth, strategic M&A, operational excellence, and a high-performing culture, aiming to accelerate growth in future horizons [13][16] - The Mohawk Rubber acquisition is expected to enhance channel power and customer service, with ongoing integration efforts anticipated to improve EBITDA margins [16][18] - The company is pursuing growth in higher-end markets, including food and beverage, industrial, and military applications, with a focus on customer-driven innovation [45][83] Management's Comments on Operating Environment and Future Outlook - Management noted that while the first quarter faced economic challenges, self-help initiatives and operational excellence efforts are yielding positive results [44][47] - The company expects sales to be sequentially higher in Q2 but lower year-over-year due to continued soft demand, with an optimistic outlook for organic growth in the back half of the year [9][38] - Management expressed confidence in the strategic progress and future direction of the company, highlighting the importance of maintaining a strong balance sheet for future acquisitions [65][86] Other Important Information - Free cash flow for Q1 2023 was $16.7 million, significantly higher than $2.2 million in Q1 2022, primarily due to a decrease in working capital [7][8] - Capital expenditures for Q1 2023 were $9.1 million, with cash on hand totaling $28.2 million, indicating a strong balance sheet [8] Q&A Session Summary Question: Trends in April and May - Management noted continued strength in food and beverage, with RV and consumer markets remaining weak, but expectations for lawn and garden season are being met [26][28] Question: Impact of Food and Beverage on Other Markets - Management indicated that food and beverage growth, driven by seed box sales, is expected to help offset weaknesses in other markets, with an upward trend anticipated [27][29] Question: Capital Expenditures and Acquisitions - Management explained that higher CapEx is partly due to catch-up capital from previous years and growth capital for food and beverage and industrial markets [32] Question: Readiness for Larger Acquisitions - Management confirmed readiness for larger acquisitions, emphasizing the importance of finding the right deals with favorable economics [77][86] Question: Military Program Details - Management discussed ongoing military projects related to munitions, highlighting favorable testing results and increased demand for plastic solutions [82][83]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 001-08524 Myers Industries, Inc. (Exact name of registrant as specified in its charter) incorporation or organization) Number) 1293 South Main ...

Our Long-Term Vision Continued execution of Horizons 1 & 2 + | --- | --- | --- | --- | --- | --- | |-----------|-----------------------------------------|-------|------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------| | | Organic Growth | 2 | Strat ...

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) Myers Industries, Inc., founded in 1933 and headquartered in Akron, Ohio, has evolved into an international manufacturing and distribution enterprise. The company operates in two distinct segments: Material Handling and Distribution. Its business strategy focuses on transforming the Material Handling Segment into a high-growth, customer-centric innovator of engineered plastic solutions, while optimizing and growing the Distribution Segment. Key strategic pillars include driving organic growth, operational excellence, bolt-on acquisitions, and developing a high-performance culture - Myers Industries, Inc. was founded in 1933 and went public in 1971, trading on the NYSE under **MYE**[16](index=16&type=chunk) - The company is a leader in manufacturing plastic reusable material handling containers and pallets, plastic fuel tanks, and is the **largest distributor** of tools, equipment, and supplies for the tire, wheel, and under-vehicle service industry in the U.S[17](index=17&type=chunk) - As of December 31, 2022, Myers Industries operated **17 manufacturing facilities**, **7 sales offices**, **9 distribution centers**, and **3 distribution branches** across North and Central America, employing approximately **2,500 people**[18](index=18&type=chunk)[51](index=51&type=chunk) - The company's business strategy is focused on transforming its Material Handling Segment into a **high-growth, customer-centric innovator** and optimizing/growing its Distribution Segment, with a long-term plan comprising three, three-year horizons[20](index=20&type=chunk) - Strategic pillars include driving **organic growth** (sales, pricing, innovation, e-commerce), **operational excellence** (continuous improvement, purchasing, SG&A optimization), **bolt-on acquisitions**, and developing a **high-performance culture** (safety, talent, inclusion, leadership, community)[20](index=20&type=chunk)[23](index=23&type=chunk) - **No single customer accounted for more than 10% of total net sales** in 2022, 2021, or 2020, indicating a diversified customer base[50](index=50&type=chunk) - The backlog of orders was approximately **$102 million** at December 31, 2022, and **$109 million** at December 31, 2021, with most orders expected to be delivered within 90 days[57](index=57&type=chunk) [General Development of Business](index=4&type=section&id=General%20Development%20of%20Business) Myers Industries, Inc. has grown from a tire service supplies distributor into an international manufacturing and distribution enterprise since its founding in 1933 - Myers Industries, Inc. was founded in 1933 and went public in 1971, with its stock traded on the New York Stock Exchange under the ticker symbol **MYE**[16](index=16&type=chunk) - The company has grown from a small tire service supplies distributor into an international manufacturing and distribution enterprise[16](index=16&type=chunk) [Description of Business](index=4&type=section&id=Description%20of%20Business) The company operates in two distinct segments: Material Handling, focusing on plastic solutions, and Distribution, providing tire and automotive service supplies - The company operates in **two distinct business segments**: Material Handling and Distribution[21](index=21&type=chunk) - The Material Handling Segment manufactures durable plastic reusable containers, pallets, small parts bins, bulk shipping containers, storage and organization products, OEM parts, custom plastic products, consumer fuel containers, and tanks for water, fuel, and waste handling[22](index=22&type=chunk) - The Distribution Segment distributes tools, equipment, and supplies for tire servicing, wheel, and automotive under-vehicle service, and manufactures tire repair materials and custom rubber products, including reflective highway marking tape[23](index=23&type=chunk)[24](index=24&type=chunk) - Recent acquisitions include **Mohawk Rubber Sales** (May 2022, Distribution Segment, **~$65 million annual sales**), **Trilogy Plastics** (July 2021, Material Handling Segment, **~$35 million annual sales**), and **Elkhart Plastics** (November 2020, Material Handling Segment, **~$100 million annual sales**)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Material Handling Segment](index=6&type=section&id=Material%20Handling%20Segment) This segment focuses on manufacturing highly engineered polymer packaging, storage, and specialty molded parts for diverse industrial and consumer markets Material Handling Segment Key Attributes (Year Ended December 31, 2022) | Attribute | Details | | :--- | :--- | | Net Sales | $647.6 million (72% of total) | | Key Product Areas | Plastic Reusable Containers & Pallets, Plastic Storage & Organizational Products, Plastic and Metal Carts, Metal Cabinets, Custom Products | | Product Brands | Akro-Mils®, Jamco®, Buckhorn®, Ameri-Kart®, Scepter®, Elkhart Plastics™, Trilogy Plastics | | Key Capabilities & Services | Plastic Rotational Molding, Plastic Injection Molding, Structural Foam Molding, Plastic Blow Molding, Material Regrind & Recycling, Product Design, Prototyping, Product Testing, Material Formulation, Plastic Thermoforming, Infrared Welding, Metal Forming, Stainless Steel Forming | | Representative Markets | Agriculture, Automotive, Food Processing, Food Distribution, Healthcare, Industrial, Manufacturing, Retail Distribution, Wholesale Distribution, Consumer, Recreational Vehicle, Marine, Military | - The segment manufactures highly engineered polymer packaging containers, storage and safety products, and specialty molded parts[34](index=34&type=chunk) - Products are primarily injection molded, rotationally molded, or blow molded, serving diverse markets including industrial manufacturing, food processing, and automotive[22](index=22&type=chunk) [Distribution Segment](index=6&type=section&id=Distribution%20Segment) This segment is the largest U.S. distributor of tire, wheel, and under-vehicle service tools and supplies, also manufacturing tire repair and highway marking products Distribution Segment Key Attributes (Year Ended December 31, 2022) | Attribute | Details | | :--- | :--- | | Net Sales | $252.0 million (28% of total) | | Key Product Areas | Tire Valves & Accessories, Tire Changing & Balancing Equipment, Lifts & Alignment Equipment, Service Equipment, Hand Tools, Tire Repair & Retread Equipment & Supplies, Brake, Transmission & Allied Service Equipment & Supplies, Highway Markings, Industrial Rubber, General Shop Supplies, Tire Pressure Monitoring System | | Product Brands | Myers Tire Supply®, Myers Tire Supply International, Patch Rubber Company®, Elrick, Fleetline, MTS, Mohawk Rubber Sales, Seymoure, Tuffy, Advance Traffic Markings, MXP™ | | Key Capabilities & Services | Broad Sales Coverage, Local Sales, Nine Strategically Placed Distribution Centers, International Distribution, Personalized Service, National Accounts, Product Training, Repair/Service Training, "Speed to Market", Rubber Mixing, Rubber Compounding, Rubber Calendaring, Tiered Product Offerings, Powder Coating, Custom | | Representative Markets | Retail Tire Dealers, Truck Tire Dealers, Auto Dealers, Commercial Auto & Truck Fleets, General Repair & Services Facilities, Tire Re-treaders, Tire Repair Products/Services, Governmental Agencies, Telecommunications, Industrial, Road Construction, Mining, Truck Stop Operations | - The Distribution Segment is the **largest U.S. distributor** and single source for tire, wheel, and under-vehicle service tools, equipment, and supplies, offering over **30,000 unique items**[43](index=43&type=chunk) - Patch Rubber Company manufactures comprehensive lines of tire repair and retreading products, and also uses its rubber expertise for products like reflective highway marking tape[45](index=45&type=chunk) [Raw Materials & Suppliers](index=8&type=section&id=Raw%20Materials%20%26%20Suppliers) The company sources commodity raw materials like plastic resins, steel, and rubber from diverse suppliers, mitigating single-source risk but facing potential disruptions for specialized grades - The company primarily purchases polyethylene, polypropylene, polystyrene plastic resins, steel, synthetic, and natural rubber from a wide range of third-party suppliers[46](index=46&type=chunk) - Most raw materials are commodity products available from several domestic suppliers, mitigating the risk of losing any single supplier, though limited suppliers for certain plastic resin grades can cause temporary disruptions[46](index=46&type=chunk) [Competition](index=8&type=section&id=Competition) The company faces substantial competition in both segments, with the Material Handling segment competing with manufacturers of similar products and the Distribution segment competing with various distributors - The Material Handling Segment faces substantial competition from manufacturers of similar and substitute products, primarily from private entities, maintaining strong brand presence in niche sectors[48](index=48&type=chunk) - The Distribution Segment competes with small companies, regional distributors, and national auto parts chains, and is the **largest U.S. distributor** of tire, wheel, and under-vehicle service tools, equipment, and supplies based on national coverage[49](index=49&type=chunk) [Customer Dependence](index=8&type=section&id=Customer%20Dependence) The company maintains a diversified customer base, with no single customer accounting for more than 10% of total net sales in recent years - No single customer accounted for more than **10% of total net sales** in 2022, 2021, or 2020, indicating a diversified customer base[50](index=50&type=chunk) [Human Capital Management](index=9&type=section&id=Human%20Capital%20Management) As of December 31, 2022, the company employed approximately 2,500 people globally, emphasizing core values, safety, talent development, and community involvement - As of December 31, 2022, the company employed approximately **2,500 people globally**, with **1,800** in Material Handling, **600** in Distribution, and **100** in Corporate/shared services[51](index=51&type=chunk) - Approximately **120 employees** were represented by a labor union, with the collective bargaining agreement expiring on June 30, 2025[51](index=51&type=chunk) - Core values include Integrity, Optimism, Customer Focus, and Can-do Spirit, emphasizing safety, collaboration, continuous improvement, talent development, and community involvement[52](index=52&type=chunk)[57](index=57&type=chunk) - The company has health and safety programs, initiatives for diversity and inclusion, and talent development programs including competitive wages/benefits, employee engagement surveys, and professional training[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Available Information](index=10&type=section&id=Available%20Information) The company files various reports with the SEC, including annual, quarterly, and current reports, all accessible on sec.gov and its corporate website - The company files annual reports (10-K), quarterly reports (10-Q), current reports (8-K), and proxy statements (Schedule 14A) with the SEC, available on sec.gov and myersindustries.com[58](index=58&type=chunk)[59](index=59&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) Myers Industries faces a range of risks that could materially affect its financial performance and operations. These include significant increases in raw material costs or supply disruptions, intense competition, potential production interruptions at manufacturing facilities, challenges in developing and marketing new products, and difficulties in protecting intellectual property. The company's strategic growth initiatives may not achieve anticipated benefits, and economic downturns or inflationary conditions could adversely impact results. Furthermore, international operations expose the company to foreign currency and regulatory risks. Financial risks include maintaining access to credit and managing debt covenants, while data privacy and information security breaches pose operational and reputational threats. Legal, compliance, and environmental regulations, including potential liabilities from contaminated sites, also present significant challenges - Significant increases in raw material costs (e.g., plastic resins, steel, rubber) or disruptions in their availability could adversely affect financial performance, as market conditions may limit the ability to offset these costs with price increases[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - Operating in a highly competitive business environment, with ongoing industry consolidation, could prevent the company from achieving sales, pricing, and income goals[68](index=68&type=chunk)[69](index=69&type=chunk) - Production disruptions due to physical risks (accidents, natural disasters), equipment failures, or difficulties in securing skilled labor could adversely affect operations, revenue, and profitability[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Failure to successfully develop and market new products or protect intellectual property rights could negatively impact future performance and competitive position[73](index=73&type=chunk)[74](index=74&type=chunk) - The company's strategic growth initiatives, including organic growth, market expansion, technology investments, and acquisitions, have inherent risks and may not achieve anticipated benefits or successful integration[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Economic downturns, inflationary conditions, and fluctuations in currency exchange rates (especially for international operations, which accounted for **~6% of net sales in 2022**) could adversely affect results[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - Inability to maintain access to credit financing or comply with debt covenants could adversely affect liquidity and financial obligations[84](index=84&type=chunk)[86](index=86&type=chunk) - Information technology system interruptions or security breaches, and changes in privacy laws, could lead to misuse of confidential information, operational disruptions, and significant compliance costs[89](index=89&type=chunk)[90](index=90&type=chunk) - Exposure to future claims, litigation, regulatory actions (including environmental liabilities like the **New Idria Mercury Mine Superfund site**), and inadequate insurance coverage could adversely affect financial condition[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk) - General risk factors include failure to maintain effective internal control over financial reporting, and impacts from unforeseen events like natural disasters, public health crises (e.g., COVID-19), and geopolitical crises[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Risks Relating to Our Business and Operations](index=10&type=section&id=Risks%20Relating%20to%20Our%20Business%20and%20Operations) The company faces operational risks including raw material cost increases, intense competition, production interruptions, new product development challenges, and intellectual property protection issues - Significant increases in raw material costs (e.g., plastic resins, colorants, steel, natural/synthetic rubbers) or disruptions in their availability could adversely affect financial performance, as market conditions may limit the ability to offset these costs with price increases[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - The company operates in highly competitive markets, which could prevent it from achieving sales, product pricing, and income goals, especially with ongoing industry consolidation creating competitors with greater resources[68](index=68&type=chunk)[69](index=69&type=chunk) - Operations depend on continuous, uninterrupted production at manufacturing facilities, which are subject to physical risks (accidents, natural disasters), equipment failures, and difficulties in hiring/retaining skilled labor, potentially leading to production delays, revenue loss, and increased costs[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Future performance depends on the ability to develop and market new products in response to changes in technology, regulatory requirements, or competitive processes; delays or lack of market acceptance could adversely affect operating performance[73](index=73&type=chunk) - Inability to protect intellectual property rights (patents, trademarks, know-how, trade secrets) or avoid claims of infringement by others could result in litigation, damages, and adverse effects on business and results of operations[74](index=74&type=chunk) - The loss of key employees or senior management team members could adversely impact business and operations, including the ability to successfully implement business strategy and achieve objectives[75](index=75&type=chunk) [Risks Relating to the Execution of Our Strategy](index=12&type=section&id=Risks%20Relating%20to%20the%20Execution%20of%20Our%20Strategy) Strategic growth initiatives, including organic growth and acquisitions, carry inherent risks and may not achieve anticipated benefits or successful integration, potentially impacting financial results - The company's strategic growth initiatives, including organic growth, market expansion, strengthened customer relationships, technology investments, consolidation, and strategic acquisitions/divestitures, have inherent risks and may not achieve anticipated benefits or produce significant revenues/profits[76](index=76&type=chunk)[77](index=77&type=chunk) - Past and future acquisitions (e.g., Mohawk, Trilogy) may not realize anticipated improved operating results, and the company may experience difficulties in integrating acquired businesses or inherit significant liabilities[78](index=78&type=chunk)[82](index=82&type=chunk) [Risks Relating to Economic Conditions and Currency Exchange Rates](index=13&type=section&id=Risks%20Relating%20to%20Economic%20Conditions%20and%20Currency%20Exchange%20Rates) Economic downturns, inflationary pressures, and foreign currency fluctuations, particularly from international operations, could adversely impact the company's financial results and condition - A downturn or inflationary conditions in the U.S. economy or global markets could adversely impact results of operations and financial condition, affecting labor costs, raw material prices, and customer demand[79](index=79&type=chunk)[80](index=80&type=chunk) - Operations in foreign countries (primarily Canada and Central America), which accounted for approximately **6% of total net sales in 2022**, expose the company to risks such as currency exchange rate fluctuations, limitations on remittances, foreign investment restrictions, and higher inflation rates[81](index=81&type=chunk)[83](index=83&type=chunk) [Risks Relating to Our Debt and Capital Structure](index=14&type=section&id=Risks%20Relating%20to%20Our%20Debt%20and%20Capital%20Structure) The company faces risks related to maintaining credit access, complying with debt covenants, and potential influence from significant equity ownership concentrations - Inability to maintain access to credit financing could adversely affect the company's ability to make debt payments, fund capital expenditures, finance acquisitions, and pay dividends[84](index=84&type=chunk)[85](index=85&type=chunk) - Breach of financial ratio covenants in credit facilities could result in default, leading lenders to declare outstanding indebtedness immediately due and payable[86](index=86&type=chunk) - Significant equity ownership concentration by groups like **Gamco Group (14.7%)** and **Blackrock, Inc. (15.8%)** could influence actions requiring shareholder approval[87](index=87&type=chunk)[88](index=88&type=chunk) [Risks Related to Data Privacy and Information Security](index=14&type=section&id=Risks%20Related%20to%20Data%20Privacy%20and%20Information%20Security) Information technology systems are vulnerable to security breaches and evolving privacy laws, potentially leading to data misuse, operational disruptions, reputational damage, and increased compliance costs - Information technology systems are vulnerable to damage, interruption, or security breaches (e.g., viruses, unauthorized intrusion), which could lead to misuse of confidential information, data manipulation, production downtimes, and negative impacts on reputation and financial results[89](index=89&type=chunk) - Evolving privacy laws, regulations, and standards globally may require significant compliance costs, and any inability to adequately address privacy/security concerns could result in liability and damage to the business[90](index=90&type=chunk) [Risks Related to Legal, Compliance and Regulatory Matters](index=15&type=section&id=Risks%20Related%20to%20Legal%2C%20Compliance%20and%20Regulatory%20Matters) The company is exposed to various claims, litigation, and environmental liabilities, including potential costs from contaminated sites, and faces risks from evolving environmental and tax regulations - The company is exposed to various claims and litigation, including breach of contract, warranty, product liability, and environmental liabilities (e.g., **New Idria Mercury Mine Superfund site**), which can be costly to defend and divert management attention[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) - Current and future environmental laws and regulations, particularly those specific to plastic products, could increase production costs or adversely affect demand, potentially having a material adverse effect on the business[92](index=92&type=chunk)[96](index=96&type=chunk) - Insurance coverage may be inadequate against potential hazardous incidents, and changes in laws and regulations (including tax laws) could have an adverse impact on operations and financial results[97](index=97&type=chunk)[98](index=98&type=chunk) [General Risk Factors](index=16&type=section&id=General%20Risk%20Factors) General risks include ineffective internal controls over financial reporting and impacts from unforeseen events such as natural disasters, public health crises, or geopolitical instability - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reporting, harming business and stock price[99](index=99&type=chunk) - The COVID-19 pandemic, or similar future public health crises, could negatively affect business, financial position, results of operations, and liquidity through impacts on customer demand, supply chains, and labor availability[100](index=100&type=chunk) - Unforeseen events such as natural disasters, severe weather, public health crises, or geopolitical crises may negatively impact economic conditions by disrupting operations, affecting suppliers/customers, or impacting customer spending[101](index=101&type=chunk)[102](index=102&type=chunk) [Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC [Properties](index=18&type=section&id=Item%202.%20Properties) Myers Industries owns and leases various properties across North and Central America for corporate administration, manufacturing, distribution, sales, and warehousing. As of December 31, 2022, the company utilized a mix of owned and leased facilities, with several leases expiring in 2023, 2024, and 2025. The company believes its properties, machinery, and equipment are well-maintained and adequate for their intended purposes Principal Properties Owned and Leased (as of December 31, 2022) | Business Location | Segment | Principal Use | Owned/Leased | Lease Expiration | | :--- | :--- | :--- | :--- | :--- | | Akron, Ohio | Corporate/Distribution | Administration and distribution center | Owned | N/A | | Akron, Ohio | Material Handling/Corporate | Administration and warehousing | Owned | N/A | | Miami, Oklahoma | Material Handling | Manufacturing and distribution | Owned | N/A | | Roanoke Rapids, North Carolina | Distribution | Manufacturing and distribution | Owned | N/A | | Scarborough, Ontario | Material Handling | Manufacturing and distribution | Owned | N/A | | Springfield, Missouri | Material Handling | Manufacturing and distribution | Owned | N/A | | Wadsworth, Ohio | Material Handling | Manufacturing and distribution | Owned | N/A | | Alpharetta, Georgia | Distribution | Sales and distribution center | Leased | 2023 | | Atlantic, Iowa | Material Handling | Manufacturing and distribution | Leased | 2023 | | Cuyahoga Falls, Ohio | Distribution | Distribution center | Leased | 2023 | | Milford, Ohio | Material Handling | Administration and sales | Leased | 2023 | | Mixco, Guatemala | Distribution | Distribution center | Leased | 2023 | | Salt Lake City, Utah | Distribution | Sales and distribution center | Leased | 2023 | | Southaven, Mississippi | Distribution | Distribution center | Leased | 2023 | | Springfield, Missouri | Material Handling | Warehousing | Leased | 2023 | | Littleton, Colorado | Material Handling | Manufacturing and distribution | Leased | 2024 | | Middlebury, Indiana | Material Handling | Manufacturing and distribution | Leased | 2024 | | San Salvador, El Salvador | Distribution | Distribution center | Leased | 2024 | | Alliance, Ohio | Material Handling | Warehousing | Leased | 2025 | | Houston, Texas | Distribution | Sales and distribution center | Leased | 2025 | | White Pigeon, Michigan | Material Handling | Manufacturing and distribution | Leased | 2025 | | Bristol, Indiana | Material Handling | Manufacturing and distribution | Leased | 2026 | | Juan Diaz, Panama | Distribution | Distribution center | Leased | 2026 | | Midland, Michigan | Corporate | Administration | Leased | 2026 | | Decatur, Georgia | Material Handling | Manufacturing and distribution | Leased | 2027 | | South Bend, Indiana | Material Handling | Manufacturing and distribution | Leased | 2027 | | Hingham, Massachusetts | Distribution | Sales and distribution center | Leased | 2028 | | Pomona, California | Distribution | Sales and distribution center | Leased | 2028 | | Ridgefield, Washington | Material Handling | Manufacturing and distribution | Leased | 2029 | | South Beloit, Illinois | Material Handling | Manufacturing and distribution | Leased | 2031 | | Alliance, Ohio | Material Handling | Manufacturing and distribution | Leased | 2032 | | Bristol, Indiana | Material Handling | Manufacturing and distribution | Leased | 2036 | - The company believes its properties, machinery, and equipment are generally well maintained and adequate for their purposes[105](index=105&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) Myers Industries is involved in various lawsuits and legal proceedings in the ordinary course of business, some covered by insurance. Management believes the ultimate outcome of these matters, including specific environmental and patent infringement cases, will not have a material adverse effect on its financial position, cash flows, or results of operations, though inherent uncertainties exist - The company is a defendant in various lawsuits and a party to other legal proceedings arising in the ordinary course of business, some covered by insurance[106](index=106&type=chunk) - Management believes the ultimate outcome of these matters, including the **New Idria Mercury Mine**, **New Almaden Mine**, and Patent Infringement cases, will not have a material adverse effect on financial position, cash flows, or overall trends in results of operations, but acknowledges inherent uncertainties[107](index=107&type=chunk)[108](index=108&type=chunk) [INFORMATION ABOUT OUR EXECUTIVE OFFICERS](index=19&type=section&id=INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) This section provides an overview of Myers Industries' executive officers as of February 24, 2023, detailing their current roles and prior experience. The executive team includes Michael P. McGaugh as President and CEO, Monica P. Vinay as Interim CFO, Jeffrey J. Baker as VP of Shared Services, James H. Gurnee as VP of Sales, Marketing, and Commercial Excellence, and Paul A. Johnson as VP of the Distribution Segment Executive Officers (as of February 24, 2023) | Name | Age | Title | | :--- | :--- | :--- | | Michael P. McGaugh | 49 | President and Chief Executive Officer | | Monica P. Vinay | 54 | Interim Chief Financial Officer | | Jeffrey J. Baker | 60 | Vice President, Shared Services | | James H. Gurnee | 65 | Vice President, Sales, Marketing, and Commercial Excellence | | Paul A. Johnson | 58 | Vice President, Distribution Segment | - Executive officers are appointed annually by the Board of Directors[109](index=109&type=chunk) PART II [Market for Registrant's Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Stock%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Myers Industries' common stock is traded on the New York Stock Exchange under the symbol MYE. As of December 31, 2022, there were 862 shareholders of record. The company maintained a consistent quarterly dividend of $0.135 per share in both 2021 and 2022. While the Board authorized share repurchases, no shares were purchased during the three months ended December 31, 2022. The company's cumulative total shareholder return for the five years ended December 31, 2022, was 132.18%, outperforming the Russell 2000 Index and S&P 600 Materials (Sector) Index, but trailing the S&P 500 Index - The Company's common stock is traded on the New York Stock Exchange under the symbol **MYE**[116](index=116&type=chunk) - As of December 31, 2022, there were **862 shareholders of record**[116](index=116&type=chunk) Dividends Declared Per Share | Quarter Ended | 2022 | 2021 | | :--- | :--- | :--- | | March 31 | $0.135 | $0.135 | | June 30 | $0.135 | $0.135 | | September 30 | $0.135 | $0.135 | | December 31 | $0.135 | $0.135 | - No shares were purchased under the stock repurchase plan during the three months ended December 31, 2022, with **2,452,335 shares** remaining available for repurchase[118](index=118&type=chunk) 5-Year Cumulative Total Return (Assumes Initial Investment of $100 on Dec 31, 2017) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Myers Industries Inc. (Cum $) | 100.00 | 79.61 | 90.63 | 117.21 | 115.91 | 132.18 | | S&P 500 Index - Total Return (Cum $) | 100.00 | 95.62 | 125.72 | 148.85 | 191.58 | 156.88 | | Russell 2000 Index (Cum $) | 100.00 | 88.99 | 111.70 | 134.00 | 153.85 | 122.41 | | S&P 600 Materials (Sector) Index (Cum $) | 100.00 | 77.75 | 93.74 | 115.00 | 136.18 | 127.88 | [Comparison of 5 Year Cumulative Total Return](index=22&type=section&id=Comparison%20of%205%20Year%20Cumulative%20Total%20Return) Myers Industries' five-year cumulative total return outperformed two benchmark indices but lagged the S&P 500 Index 5-Year Cumulative Total Return (Assumes Initial Investment of $100 on Dec 31, 2017) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Myers Industries Inc. (Cum $) | 100.00 | 79.61 | 90.63 | 117.21 | 115.91 | 132.18 | | S&P 500 Index - Total Return (Cum $) | 100.00 | 95.62 | 125.72 | 148.85 | 191.58 | 156.88 | | Russell 2000 Index (Cum $) | 100.00 | 88.99 | 111.70 | 134.00 | 153.85 | 122.41 | | S&P 600 Materials (Sector) Index (Cum $) | 100.00 | 77.75 | 93.74 | 115.00 | 136.18 | 127.88 | - Myers Industries' cumulative return of **$132.18** (from $100) for the five years ended December 31, 2022, outperformed the Russell 2000 Index (**$122.41**) and the S&P 600 Materials (Sector) Index (**$127.88**), but lagged the S&P 500 Index (**$156.88**)[122](index=122&type=chunk) [Reserved](index=22&type=section&id=Item%206.%20Reserved) This item is marked as 'Reserved' and is not applicable for this report [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Myers Industries reported strong financial performance for the year ended December 31, 2022, with total net sales increasing by 18.1% to $899.5 million, driven by higher pricing and strategic acquisitions. Gross profit significantly improved by 34.0% to $283.4 million, with the gross profit margin expanding to 31.5%. Operating income rose by 70.3% to $83.9 million, and net income increased by 79.7% to $60.3 million. The company maintained a strong liquidity position with $23.1 million cash on hand and $188.3 million available under its Loan Agreement, enabling it to manage working capital, fund capital expenditures, and pursue future growth. Key accounting policies and estimates, including contingencies, income taxes, and business combinations, are critical to financial reporting - The company operates in **two distinct segments**: Material Handling and Distribution, manufacturing plastic, metal, and rubber products[124](index=124&type=chunk)[125](index=125&type=chunk) - The economic environment in 2022 included heightened risks from inflation, interest rates, volatile commodity costs, supply chain disruptions, and labor availability, but the company believes it is well-positioned with a strong balance sheet and diverse offerings[126](index=126&type=chunk) [Results of Operations: 2022 Compared with 2021](index=23&type=section&id=Results%20of%20Operations%3A%202022%20Compared%20with%202021) In 2022, total net sales increased by 18.1% to $899.5 million, driven by pricing and acquisitions, leading to significant improvements in gross profit and net income Net Sales (Year Ended December 31) | Segment | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $647,619 | $564,068 | $83,551 | 14.8% | | Distribution | $251,966 | $197,427 | $54,539 | 27.6% | | Inter-company sales | $(38) | $(60) | $22 | - | | **Total net sales** | **$899,547** | **$761,435** | **$138,112** | **18.1%** | - Total net sales increased by **$138.1 million (18.1%)** in 2022, primarily due to higher pricing (**$95.8 million**) and incremental sales from acquisitions (**$63.8 million** from Mohawk and Trilogy), partially offset by lower volume/mix (**$19.7 million**) and unfavorable currency translation (**$1.8 million**)[127](index=127&type=chunk) Cost of Sales & Gross Profit (Year Ended December 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $616,181 | $550,014 | $66,167 | 12.0% | | **Gross profit** | **$283,366** | **$211,421** | **$71,945** | **34.0%** | | Gross profit as a percentage of sales | 31.5% | 27.8% | - | +3.7 pp | - Gross profit increased by **$71.9 million (34.0%)** in 2022, driven by higher pricing, acquisitions, and lower raw material costs (**$3.0 million**), despite cost inflation (**$5.9 million**) and unfavorable currency translation (**$0.8 million**); gross profit margin improved from **27.8% to 31.5%**[131](index=131&type=chunk) Selling, General and Administrative Expenses (Year Ended December 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | SG&A expenses | $199,489 | $163,502 | $35,987 | 22.0% | | SG&A expenses as a percentage of sales | 22.2% | 21.5% | - | +0.7 pp | - SG&A expenses increased by **$36.0 million (22.0%)** in 2022, primarily due to incremental SG&A from acquisitions (**$10.7 million**), higher salaries and benefits (**$3.8 million**), increased incentive compensation and commissions (**$12.1 million**), higher variable selling expenses (**$3.8 million**), and higher facility costs (**$3.1 million**)[132](index=132&type=chunk) - Gains on disposal of fixed assets decreased from **$1.4 million** in 2021 (related to a sale and leaseback) to **$0.7 million** in 2022[133](index=133&type=chunk) - A **$0.6 million** pre-tax impairment loss was recorded in 2022 for an investment in a Distribution segment joint venture in India[134](index=134&type=chunk) Net Interest Expense (Year Ended December 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest expense | $5,731 | $4,208 | $1,523 | 36.2% | | Average outstanding borrowings, net | $112,318 | $87,410 | $24,908 | 28.5% | | Weighted-average borrowing rate | 4.87% | 4.56% | - | +0.31 pp | - Net interest expense increased by **$1.5 million (36.2%)** in 2022 due to higher average outstanding borrowings (mainly from the Mohawk acquisition) and a higher weighted-average borrowing rate[136](index=136&type=chunk) Income Taxes (Year Ended December 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :--- | :--- | :--- | | Income from continuing operations before income taxes | $78,210 | $45,093 | | Income tax expense | $17,943 | $11,555 | | Effective tax rate | 22.9% | 25.6% | - The effective tax rate decreased to **22.9%** in 2022 from **25.6%** in 2021, primarily due to the recognition of a previously unrecognized tax benefit and a reduction in state income taxes from income earned in lower-taxed jurisdictions[137](index=137&type=chunk) [Financial Condition & Liquidity and Capital Resources](index=25&type=section&id=Financial%20Condition%20%26%20Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position in 2022 with $23.1 million cash and $188.3 million available credit, supporting operations, capital expenditures, and growth initiatives - As of December 31, 2022, the company had **$23.1 million in cash**, **$188.3 million available** under its Loan Agreement, and outstanding debt with a face value of **$103.4 million**, indicating a strong liquidity position[138](index=138&type=chunk) - Cash provided by operating activities increased to **$72.6 million** in 2022 from **$44.9 million** in 2021, primarily due to higher net income[139](index=139&type=chunk) - Net cash used by investing activities was **$50.4 million** in 2022, including **$27.6 million** for the Mohawk acquisition and **$24.3 million** in capital expenditures[140](index=140&type=chunk) - Net cash used by financing activities was **$16.3 million** in 2022, including **$19.8 million** in dividends paid and **$0.9 million** in deferred financing fees, partially offset by **$3.0 million** net borrowings on the credit facility[141](index=141&type=chunk) - The Loan Agreement was amended in September 2022, extending the maturity date to **September 2027** and maintaining a **$250 million borrowing limit**[142](index=142&type=chunk)[144](index=144&type=chunk) - As of December 31, 2022, the company was in compliance with all debt covenants, with an interest coverage ratio of **20.34** (minimum 3.00) and a leverage ratio of **0.94** (maximum 3.25)[147](index=147&type=chunk)[276](index=276&type=chunk) - The company has no off-balance sheet arrangements expected to have a material current or future effect on its financial condition[148](index=148&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies and estimates involve contingencies, income taxes, and business combinations, requiring significant management judgment and assumptions for financial reporting - Contingencies: Estimates for probable losses from legal proceedings and environmental matters are recorded, with potential adjustments as new information becomes available[150](index=150&type=chunk) - Income Taxes: Inherent uncertainty in quantifying income tax positions, with evaluations based on facts, circumstances, and a more-likely-than-not recognition threshold[151](index=151&type=chunk) - Business Combinations: Acquisition method accounting allocates costs to acquired assets and liabilities at fair value, requiring significant management judgment and estimates for intangible assets and goodwill[152](index=152&type=chunk) [Recent Accounting Pronouncements](index=27&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU 2021-08, effective January 1, 2023, which did not materially impact its consolidated financial statements - The company adopted ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, effective January 1, 2023, which did not have a material impact on its consolidated financial statements[187](index=187&type=chunk) [Year Ended December 31, 2021 Compared to Year Ended December 31, 2020](index=27&type=section&id=Year%20Ended%20December%2031%2C%202021%20Compared%20to%20Year%20Ended%20December%2031%2C%202020) For a detailed comparison of the company's 2021 and 2020 operating results, refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - For a comparison of the company's results of operations for the fiscal years ended December 31, 2021, and December 31, 2020, refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Myers Industries is exposed to market risks from interest rate fluctuations on floating-rate debt, foreign currency exchange rate movements from international operations, and commodity price volatility for raw materials, with limited use of derivatives for hedging - The company's financial results are subject to changes in market interest rates due to floating-rate financing arrangements (Term SOFR, RFR, EURIBOR, CDOR-based rates); a **one percent increase** in market interest rates would increase variable interest expense by approximately **$0.6 million annually** based on current debt levels[156](index=156&type=chunk) - Foreign currency exchange risk arises from operations in Canada and Central America, with a systematic program to limit exposure to fluctuations in exchange rates related to U.S. dollar-denominated sales from Canadian businesses; foreign currency arrangements are typically three months or less, and no contracts were in place at December 31, 2022[157](index=157&type=chunk) - Commodity price risk stems from the use of plastic resins and natural rubber in manufacturing; the company does not use derivative contracts to hedge these risks and has no significant obligations to purchase fixed quantities of commodities in future periods[158](index=158&type=chunk) [Financial Statements and Supplementary Data](index=27&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements of Myers Industries, Inc. and Subsidiaries for the years ended December 31, 2022, 2021, and 2020, prepared in conformity with U.S. GAAP. The financial statements include the Consolidated Statements of Operations, Comprehensive Income (Loss), Financial Position, Shareholders' Equity, and Cash Flows, along with comprehensive notes detailing significant accounting policies, acquisitions, goodwill, stock compensation, contingencies, debt, income taxes, retirement plans, and segment information. The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on both the financial statements and the effectiveness of internal control over financial reporting - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2022, and on the effectiveness of internal control over financial reporting as of December 31, 2022[161](index=161&type=chunk)[162](index=162&type=chunk) - A critical audit matter identified was the **New Idria Mercury Mine Environmental Liability**, due to the high subjectivity of cost estimates for the Remedial Investigation/Feasibility Study (RI/FS)[166](index=166&type=chunk)[167](index=167&type=chunk) [Report of Independent Registered Public Accounting Firm](index=28&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting - Ernst & Young LLP provided an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2022, and on the effectiveness of internal control over financial reporting as of December 31, 2022[161](index=161&type=chunk)[162](index=162&type=chunk) - The critical audit matter identified was the **New Idria Mercury Mine Environmental Liability**, specifically the determination of the RI/FS liability, due to the high degree of subjectivity in estimates[166](index=166&type=chunk)[167](index=167&type=chunk) [Consolidated Statements of Operations](index=30&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show significant increases in net sales, gross profit, operating income, and net income for the year ended December 31, 2022 Consolidated Statements of Operations (Dollars in thousands, except per share data) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net sales | $899,547 | $761,435 | $510,369 | | Cost of sales | $616,181 | $550,014 | $338,409 | | Gross profit | $283,366 | $211,421 | $171,960 | | Selling, general and administrative expenses | $199,489 | $163,502 | $130,331 | | (Gain) loss on disposal of fixed assets | $(667) | $(1,382) | $3 | | Other (income) expenses | $603 | $0 | $(11,924) | | Operating income | $83,941 | $49,301 | $53,550 | | Interest expense, net | $5,731 | $4,208 | $4,688 | | Income before income taxes | $78,210 | $45,093 | $48,862 | | Income tax expense | $17,943 | $11,555 | $12,093 | | **Net income** | **$60,267** | **$33,538** | **$36,769** | | Net income per common share: Basic | $1.66 | $0.93 | $1.03 | | Net income per common share: Diluted | $1.64 | $0.92 | $1.02 | | Dividends declared per share | $0.54 | $0.54 | $0.54 | - Net income increased significantly by **79.7%** from **$33.5 million** in 2021 to **$60.3 million** in 2022[172](index=172&type=chunk) - Diluted EPS increased from **$0.92** in 2021 to **$1.64** in 2022[172](index=172&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=31&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income increased to $57.9 million in 2022, despite a negative foreign currency translation adjustment, reflecting overall financial performance Consolidated Statements of Comprehensive Income (Loss) (Dollars in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income | $60,267 | $33,538 | $36,769 | | Other comprehensive income (loss): Foreign currency translation adjustment | $(2,475) | $39 | $628 | | Other comprehensive income (loss): Pension liability, net of tax | $83 | $333 | $(52) | | Total other comprehensive income | $(2,392) | $372 | $576 | | **Comprehensive income** | **$57,875** | **$33,910** | **$37,345** | - Comprehensive income increased from **$33.9 million** in 2021 to **$57.9 million** in 2022, despite a negative foreign currency translation adjustment of **$(2.5) million** in 2022[175](index=175&type=chunk) [Consolidated Statements of Financial Position](index=32&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) Total assets increased by $58.1 million to $542.6 million in 2022, driven by growth in current assets, property, plant, and equipment, goodwill, and intangible assets Consolidated Statements of Financial Position (Dollars in thousands) | Asset/Liability/Equity | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Current Assets | $257,207 | $219,914 | | Property, plant, and equipment, net | $101,566 | $92,049 | | Right of use asset - operating leases | $28,908 | $29,285 | | Goodwill | $95,157 | $88,778 | | Intangible assets, net | $51,752 | $50,181 | | Deferred income taxes | $129 | $106 | | Other Assets | $7,915 | $4,236 | | **Total Assets** | **$542,634** | **$484,549** | | **Liabilities** | | | | Current Liabilities | $137,762 | $132,500 | | Long-term debt | $93,962 | $90,945 | | Operating lease liability - long-term | $22,786 | $23,815 | | Finance lease liability - long-term | $8,919 | $9,437 | | Other liabilities | $15,270 | $13,086 | | Deferred income taxes | $7,508 | $5,441 | | **Total Liabilities** | **$286,207** | **$275,224** | | **Shareholders' Equity** | | | | Common Shares | $22,332 | $22,172 | | Additional paid-in capital | $315,865 | $306,720 | | Accumulated other comprehensive loss | $(17,793) | $(15,401) | | Retained deficit | $(63,977) | $(104,166) | | **Total Shareholders' Equity** | **$256,427** | **$209,325** | | **Total Liabilities and Shareholders' Equity** | **$542,634** | **$484,549** | - Total assets increased by **$58.1 million (11.9%)** to **$542.6 million** in 2022, driven by increases in accounts receivable, property, plant, and equipment, goodwill, and intangible assets[178](index=178&type=chunk) - Total shareholders' equity increased by **$47.1 million (22.5%)** to **$256.4 million** in 2022, primarily due to net income and additional paid-in capital, despite an increase in accumulated other comprehensive loss[178](index=178&type=chunk) [Consolidated Statements of Shareholders' Equity](index=33&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to $256.4 million in 2022, primarily due to net income and stock compensation, partially offset by dividends and foreign currency adjustments Consolidated Statements of Shareholders' Equity (Dollars in thousands, except share data) | Metric | January 1, 2020 | December 31, 2020 | December 31, 2021 | December 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $166,682 | $189,100 | $209,325 | $256,427 | | Net income | $36,769 | $33,538 | $60,267 | | Declared dividends | $(19,570) | $(19,786) | $(20,078) | | Foreign currency translation adjustment | $628 | $39 | $(2,475) | | Pension liability, net of tax | $(52) | $333 | $83 | | Issuances under option plans | $1,631 | $3,696 | $2,235 | | Stock compensation expense | $3,534 | $3,196 | $7,436 | | Shares outstanding (end of period) | 35,921,025 | 36,262,259 | 36,500,020 | - Total shareholders' equity increased from **$209.3 million** in 2021 to **$256.4 million** in 2022, driven by net income of **$60.3 million** and stock compensation expense of **$7.4 million**, partially offset by declared dividends of **$20.1 million** and a negative foreign currency translation adjustment of **$2.5 million**[180](index=180&type=chunk) [Consolidated Statements of Cash Flows](index=34&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to $72.6 million in 2022, while investing and financing activities used $50.4 million and $16.3 million, respectively Consolidated Statements of Cash Flows (Dollars in thousands) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $72,621 | $44,914 | $46,507 | | Net cash provided by (used for) investing activities | $(50,381) | $(50,289) | $(75,553) | | Net cash provided by (used for) financing activities | $(16,317) | $(5,188) | $(18,316) | | Foreign exchange rate effect on cash | $(439) | $(83) | $136 | | Net increase (decrease) in cash | $5,484 | $(10,646) | $(47,226) | | Cash at December 31 | $23,139 | $17,655 | $28,301 | - Net cash provided by operating activities increased to **$72.6 million** in 2022 from **$44.9 million** in 2021, primarily due to higher net income[183](index=183&type=chunk) - Net cash used by investing activities remained stable at approximately **$50.4 million** in 2022, including **$27.6 million** for acquisitions and **$24.3 million** for capital expenditures[183](index=183&type=chunk) - Net cash used by financing activities increased to **$16.3 million** in 2022 from **$5.2 million** in 2021, mainly due to higher dividend payments and deferred financing fees, partially offset by net borrowings[183](index=183&type=chunk) [Notes to Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on significant accounting policies, acquisitions, goodwill, stock compensation, contingencies, debt, income taxes, retirement plans, and segment information [1. Summary of Significant Accounting Policies](index=35&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's key accounting principles, including revenue recognition, fair value measurements, inventory valuation, and treatment of long-lived assets and income taxes - The consolidated financial statements are prepared in conformity with U.S. GAAP, requiring management estimates and assumptions[185](index=185&type=chunk) - In January 2020, the company recognized an **$11.9 million** pre-tax gain from selling fully-reserved promissory notes and being released from a lease guarantee related to the 2015 sale of its Lawn and Garden business[186](index=186&type=chunk) - The company adopted ASU 2021-08, Business Combinations (Topic 805), effective January 1, 2023, with no material impact[187](index=187&type=chunk) - Foreign currency translation adjustments for consolidated foreign subsidiaries are recorded in other comprehensive income (loss)[188](index=188&type=chunk) - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs); the fair value of fixed rate senior unsecured notes was estimated at **$37.4 million** in 2022 and **$41.0 million** in 2021 using Level 2 inputs[189](index=189&type=chunk)[190](index=190&type=chunk) - Goodwill and indefinite-lived intangible asset impairment testing, and purchase price allocations for acquisitions, involve Level 3 fair value inputs[193](index=193&type=chunk) - Credit risk concentration is limited due to diversified operations and customers; no single customer accounted for more than **10% of net sales** in 2022[194](index=194&type=chunk) Allowance for Credit Losses (Dollars in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Balance at January 1 | $2,173 | $2,335 | | Provision for expected credit loss, net of recoveries | $540 | $737 | | Write-offs and other | $(440) | $(899) | | Balance at December 31 | $2,273 | $2,173 | Inventories at December 31 (Dollars in thousands) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Finished and in-process products | $54,991 | $56,684 | | Raw materials and supplies | $38,360 | $36,867 | | **Total Inventories** | **$93,351** | **$93,551** | - Approximately **35% of inventories** are valued using the LIFO method, with the remainder using FIFO; if FIFO were used exclusively, inventories would be **$8.6 million higher** in 2022 and **$7.0 million higher** in 2021[197](index=197&type=chunk)[198](index=198&type=chunk) Property, Plant and Equipment at December 31 (Dollars in thousands) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Land | $6,907 | $6,733 | | Buildings and leasehold improvements | $60,982 | $59,199 | | Machinery and equipment | $311,822 | $296,809 | | Less allowances for depreciation and amortization | $(278,145) | $(270,692) | | **Net Property, Plant and Equipment** | **$101,566** | **$92,049** | - Long-lived assets and identifiable intangible assets with finite lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable[201](index=201&type=chunk) Accumulated Other Comprehensive Income (Loss) at December 31 (Dollars in thousands) | Component | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | | Foreign Currency Translation Adjustment | $(13,974) | $(13,935) | $(16,410) | | Defined Benefit Pension Plans | $(1,799) | $(1,466) | $(1,383) | | **Total Accumulated Other Comprehensive Income (Loss)** | **$(15,773)** | **$(15,401)** | **$(17,793)** | - Stock compensation expense was **$7.4 million** in 2022, **$3.2 million** in 2021, and **$3.5 million** in 2020, recognized over the requisite service period[204](index=204&type=chunk)[246](index=246&type=chunk) - Income taxes are accounted for under the liability method, recognizing deferred tax assets and liabilities for temporary differences and carryforwards, with a valuation allowance if realization is not more likely than not[205](index=205&type=chunk)[206](index=206&type=chunk) - Cash and cash equivalents include highly liquid instruments purchased with a maturity of three months or less[208](index=208&type=chunk) - An investment in a joint venture in India was fully impaired in Q4 2022, resulting in a **$0.6 million** pre-tax impairment loss[209](index=209&type=chunk) [2. Revenue Recognition](index=39&type=section&id=2.%20Revenue%20Recognition) Revenue is recognized upon transfer of control, typically at shipment or delivery, with variable consideration like rebates and discounts estimated based on historical experience Revenue by Major Market (Dollars in thousands) | Major Market | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Consumer | $113,339 | $116,707 | $92,301 | | Vehicle | $165,139 | $170,322 | $77,085 | | Food and beverage | $125,111 | $83,817 | $54,752 | | Industrial | $243,992 | $193,162 | $119,687 | | Auto aftermarket | $251,966 | $197,427 | $166,544 | | **Total net sales** | **$899,547** | **$761,435** | **$510,369** | - Revenue is recognized when control of products is transferred to customers, typically at shipment or delivery, and obligations are usually fulfilled within **90 days**[211](index=211&type=chunk) - Variable consideration, such as rebates and discounts, is estimated each period based on the most likely amount to be paid; expected returns are estimated based on historical experience[212](index=212&type=chunk) Revenue Recognition Related Balances (Dollars in thousands) | Item (as of Dec 31) | 2022 | 2021 | Statement of Financial Position Classification | | :--- | :--- | :--- | :--- | | Returns, discounts and other allowances | $(986) | $(1,056) | Accounts receivable | | Right of return asset | $350 | $361 | Inventories, net | | Customer deposits | $(5,896) | $(1,816) | Other current liabilities | | Accrued rebates | $(4,711) | $(3,378) | Other current liabilities | - Costs for shipments to customers were **$13.1 million** (SG&A) and **$10.5 million** (cost of sales) in 2022[214](index=214&type=chunk) [3. Acquisitions](index=40&type=section&id=3.%20Acquisitions) This section details recent acquisitions, including Mohawk Rubber Sales and Trilogy Plastics, outlining their purchase prices, segment inclusion, and preliminary purchase price allocations - On May 31, 2022, the company acquired **Mohawk Rubber Sales of New England Inc.** for **$27.6 million cash**, net of cash acquired, including a **$3.3 million** working capital adjustment; Mohawk is included in the Distribution Segment[216](index=216&type=chunk) Mohawk Acquisition: Preliminary Purchase Price Allocation (Dollars in thousands) | Category | Updated Preliminary Allocation | | :--- | :--- | | Accounts receivable | $10,482 | | Inventories | $8,193 | | Property, plant and equipment | $1,171 | | Intangible assets | $7,810 | | Goodwill | $7,082 | | Total Assets acquired | $36,239 | | Total Liabilities assumed | $8,516 | | **Net acquisition cost** | **$27,723** | - Mohawk's acquired intangible assets include customer relationships (**$5.5 million**, **12.0 years** useful life), trade name (**$2.0 million**, **5.0 years**), and non-competition agreements (**$0.31 million**, **5.0 years**)[222](index=222&type=chunk) - On July 30, 2021, the company acquired **Trilogy Plastics, Inc.** for **$34.5 million**, including a **$0.3 million** working capital adjustment; Trilogy is included in the Material Handling Segment[223](index=223&type=chunk) Trilogy Plastics Acquisition: Purchase Price Allocation (Dollars in thousands) | Category | Allocation | | :--- | :--- | | Accounts receivable | $3,929 | | Inventories | $2,752 | | Property, plant and equipment | $4,903 | | Intangible assets | $14,333 | | Goodwill | $10,003 | | Total Assets acquired | $44,761 | | Total Liabilities assumed | $10,226 | | **Net acquisition cost** | **$34,535** | - Trilogy's acquired intangible assets include customer relationships (**$12.46 million**, **18.0 years** useful life) and trade name (**$1.87 million**, **10.0 years**)[228](index=228&type=chunk) - On November 10, 2020, the company acquired **Elkhart Plastics, Inc.** for **$63.8 million**, including a **$1.2 million** working capital adjustment; Elkhart Plastics is included in the Material Handling Segment[229](index=229&type=chunk) [4. Goodwill and Intangible Assets](index=42&type=section&id=4.%20Goodwill%20and%20Intangible%20Assets) The company performs annual impairment assessments for goodwill and indefinite-lived intangible assets, using quantitative methods that rely on significant estimates and Level 3 fair value inputs - The company performs annual goodwill and indefinite-lived intangible asset impairment assessments as of October 1, finding no impairment in 2022, 2021, or 2020[230](index=230&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - Effective October 1, 2022, the Trilogy, Elkhart, and Ameri-Kart reporting units were combined into a single reporting unit following structural and organizational changes[232](index=232&type=chunk) - Quantitative impairment assessments use income and/or market approaches, relying on significant estimates and Level 3 fair value inputs such as future revenues, EBITDA, discount rates, and long-term growth rates[234](index=234&type=chunk)[235](index=235&type=chunk) Changes in Goodwill Carrying Amount (Dollars in thousands) | Segment | January 1, 2021 | December 31, 2021 | December 31, 2022 | | :--- | :--- | :--- | :--- | | Distribution | $7,648 | $7,648 | $14,730 | | Material Handling | $71,608 | $81,130 | $80,427 | | **Total Goodwill** | **$79,256** | **$88,778** | **$95,157** | - Goodwill increased by **$6.4 million** in 2022, primarily due to the Mohawk acquisition (**$7.485 million**), partially offset by purchase accounting adjustments and foreign currency translation[236](index=236&type=chunk) Intangible Assets at December 31, 2022 (Dollars in thousands) | Category | Weighted Average Remaining Useful Life (years) | Gross | Accumulated Amortization | Net | | :--- | :--- | :--- | :--- | :--- | | Trade names - indefinite lived | - | $9,782 | $0 | $9,782 | | Trade names | 7.0 | $10,267 | $(2,142) | $8,125 | | Customer relationships | 13.0 | $75,110 | $(45,621) | $29,489 | | Technology | 1.6 | $24,980 | $(21,441) | $3,539 | | Non-competition agreements | 2.7 | $1,510 | $(693) | $817 | | Patents | - | $11,730 | $(11,730) | $0 | | **Total Intangible Assets** | | **$133,379** | **$(81,627)** | **$51,752** | - Intangible amortization expense was **$6.2 million** in 2022, with estimated annual amortization expense for finite-lived intangible assets projected at **$6.6 million** in 2023[238](index=238&type=chunk) [5. Net Income Per Common Share](index=44&type=section&id=5.%20Net%20Income%20Per%20Common%20Share) This section details the calculation of basic and diluted net income per common share, including the impact of dilutive stock options and restricted stock Weighted Average Common Shares Outstanding (Year Ended December 31) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Weighted average common shares outstanding basic | 36,411,389 | 36,138,571 | 35,785,798 | | Dilutive effect of stock options and restricted stock | 379,450 | 220,398 | 130,832 | | **Weighted average common shares outstanding diluted** | **36,790,839** | **36,358,969** | **35,916,630** | - Options to purchase **114,540 shares** of common stock were anti-dilutive and excluded from diluted EPS computation in 2022[239](index=239&type=chunk) [6. Rest

Financial Data and Key Metrics Changes - The company achieved annual revenue growth of 18%, with a 10% increase on an organic basis, adjusted EBITDA growth of 51%, and adjusted EPS growth of 73% [3][4] - For the full year, net sales reached $900 million, an 18% increase compared to the prior year, with adjusted gross profit up 34% to $284.1 million [7][8] - Adjusted gross margin expanded by 370 basis points during the year [7] Business Line Data and Key Metrics Changes - In the Material Handling segment, net sales decreased by $5.1 million or 3.4% due to decreased demand in vehicle and industrial markets [69] - The Distribution segment saw net sales increase by $18.3 million or 35% year-over-year, with organic net sales up 2% primarily due to higher pricing [71] - Adjusted operating income for the Material Handling segment increased by 58.4% to $21 million, while the Distribution segment's adjusted operating income decreased by 24% to $4.1 million [70][71] Market Data and Key Metrics Changes - The company anticipates sales in the Material Handling segment to be comparable to last year due to continued soft demand in certain markets [27] - The outlook for 2023 includes expected net sales growth in the low to mid-single-digit range, primarily driven by the Mohawk Rubber acquisition [75] Company Strategy and Development Direction - The company is focused on completing Horizon 1 of its strategy, aiming for $1 billion in revenue and a 15% EBITDA margin [4] - The company plans to institutionalize advancements into the Myers operating system, which will standardize work processes across all business units [39][40] - The M&A strategy has been refined, with a focus on acquiring smaller companies to improve integration processes before pursuing larger targets [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a choppy macroeconomic environment, citing strong performance in agriculture and expectations for recovery in the vehicle market [53][55] - The company remains optimistic about achieving the $2 billion sales target by 2026, despite current market uncertainties [58] Other Important Information - Free cash flow for the full year of 2022 was $48.3 million, an increase from $27 million in 2021 [73] - Capital expenditures for 2022 were $24.3 million, with cash on hand at year-end totaling $23.1 million [74] Q&A Session Summary Question: Outlook for organic sales growth in 2023 - Management acknowledged a softening economy impacting organic sales growth but remains confident in the company's overall direction and market positioning [51][52] Question: M&A opportunities and operational bandwidth for integration - Management confirmed readiness for further acquisitions, emphasizing a disciplined approach to M&A and integration processes [60][57] Question: Expected changes in gross margins for 2023 - Management aims to further expand gross margins in 2023 through price holding and operational efficiencies, despite potential challenges [86]

Financial Performance & Outlook - Q4 2022 net sales increased by 6.6% to $212.8 million, compared to $199.6 million in Q4 2021[17] - Adjusted diluted EPS for Q4 2022 was $0.32, a 39.1% increase from $0.23 in Q4 2021[17] - Full year 2022 net sales reached $899.5 million, an 18.1% increase from $761.4 million in 2021[26] - Adjusted diluted EPS for full year 2022 was $1.68, a 73.2% increase from $0.97 in 2021[26] - The company initiates adjusted EPS guidance of $1.55 to $1.85 for FY2023[5] - Net sales growth for full year fiscal 2023 is expected to be in the low to mid single digits[11] Segment Results - Material Handling segment net sales declined by 3.4% to $142.2 million in Q4 2022, compared to $147.3 million in Q4 2021[20] - Distribution segment net sales increased by 35.0% to $70.6 million in Q4 2022, compared to $52.3 million in Q4 2021[20] Cash Flow & Debt - Quarterly free cash flow was $15.2 million, with capital expenditures of $6.7 million[3] - Debt to adjusted EBITDA stood at 0.9x[22]

Financial Data and Key Metrics Changes - The company reported a net sales increase of 14% year-over-year, reaching $228.1 million, marking the eighth consecutive quarter of double-digit growth [8][10] - Adjusted earnings per share (EPS) rose by 78% to $0.41, while adjusted EBITDA increased by 57% to $27.2 million [9][13] - Adjusted gross profit increased by 32% to $72 million, with adjusted gross margin expanding by 430 basis points to 31.5% [12][13] Business Line Data and Key Metrics Changes - In the Material Handling segment, net sales increased by 4%, with organic net sales growth of 2% after excluding acquisitions [14] - The Distribution segment saw a significant net sales increase of 44%, with organic net sales growing by 11% [16] - Adjusted operating income for the Material Handling segment rose by 59% to $24 million, while the Distribution segment's adjusted operating income increased by 18% to $5.2 million [15][16] Market Data and Key Metrics Changes - Sales in agriculture, auto aftermarket, and industrial end-markets showed healthy momentum, offsetting weaker demand in consumer and recreational vehicle markets [8] - The consumer market experienced a decline of 27% year-over-year, attributed to inflation affecting consumer discretionary spending [40] Company Strategy and Development Direction - The company is focused on its three Horizon strategy, emphasizing self-help, organic growth, and bolt-on M&A, with significant progress noted in operational excellence and commercial capabilities [22][24] - The company plans to transition to Horizon 2, which will focus on larger, potentially transformational acquisitions, while continuing to build scale through smaller acquisitions [25][34] - The strategy includes a focus on durable plastics with competitive moats, targeting large-format products that are difficult to replicate [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite macroeconomic challenges, highlighting strong performance in key segments [34] - The outlook for 2023 anticipates continued strength in agriculture, construction, and industrial markets, while consumer and recreational vehicle segments may remain problematic [44][52] - The company raised its full-year adjusted EPS guidance to a range of $1.50 to $1.70, reflecting confidence in ongoing performance [19] Other Important Information - Free cash flow improved to $9.8 million compared to negative cash flow of $13.8 million in the prior year [18] - Capital expenditures for the quarter were $6.7 million, with a strong balance sheet indicated by a debt-to-adjusted EBITDA ratio of 1x [19] Q&A Session Summary Question: Long-term vision and Horizon 2 focus - Management clarified that Horizon 2 will focus on domestic transformational deals and global expansion opportunities, with a strong emphasis on durable plastics [37][38] Question: Organic growth slowdown - The slowdown in organic growth was attributed to a significant decline in the consumer market and inflation affecting discretionary spending [39][40] Question: Margin sustainability - Management indicated that while margins are expected to remain strong, lower sales volume could impact overall margins in the fourth quarter [41][43] Question: Pricing strategy amidst cost fluctuations - The company believes it can maintain pricing due to its market position and the value provided to customers, despite some competitive pressures [49] Question: Plant utilization and footprint - Management is evaluating the need for potential asset consolidations and expansion into the Southern U.S. to enhance market presence [50] Question: End market strength - Continued strength is expected in auto and industrial markets, while consumer discretionary spending remains a concern [51][52] Question: Definition of competitive moats - Competitive moats are defined by the difficulty of replicating manufacturing processes and the ability to produce large-format products that are less susceptible to offshore competition [54][55] Question: Nearshoring trend - Management noted an increase in requests for quotes from customers seeking to source products closer to home due to supply chain concerns [56]

| --- | --- | |-------|----------------------------| | | Earnings Call Presentation | | | Third Quarter 2022 | | | October 27, 2022 | Safe Harbor Statement & Non-GAAP Measures Statements in this presentation include "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that is not of historical fact may be deemed "forward-looking". Words such as "will", "expect", "believe", "project", "plan", "anticipate", "intend", "objective", "outlook", "ta ...

[Part I — Financial Information](index=3&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) This part presents the company's unaudited financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the periods ended September 30, 2022 and 2021 [Condensed Consolidated Statements of Operations (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) This statement details the company's revenues, expenses, and net income for the reported periods **Condensed Consolidated Statements of Operations (Unaudited)** | Metric (in thousands) | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :-------------------- | :------ | :------ | :------ | :------ | | Net sales | $228,065 | $200,058 | $686,707 | $561,856 | | Cost of sales | $156,417 | $145,860 | $468,415 | $402,251 | | Gross profit | $71,648 | $54,198 | $218,292 | $159,605 | | Operating income | $19,897 | $11,817 | $66,919 | $38,551 | | Net income | $13,671 | $7,903 | $46,839 | $26,283 | | Basic EPS | $0.37 | $0.22 | $1.29 | $0.73 | | Diluted EPS | $0.37 | $0.22 | $1.28 | $0.72 | - Net sales increased by **14.0% for Q3 2022** compared to Q3 2021, and by **22.2% for the nine months** ended September 30, 2022, driven by higher pricing and incremental sales from acquisitions[9](index=9&type=chunk)[100](index=100&type=chunk)[107](index=107&type=chunk) - Net income significantly increased by **73.0% for Q3 2022** and **77.9% for the nine months** ended September 30, 2022, reflecting improved operating performance[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) This statement reports net income and other comprehensive income items like foreign currency adjustments **Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)** | Metric (in thousands) | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :-------------------- | :------ | :------ | :------ | :------ | | Net income | $13,671 | $7,903 | $46,839 | $26,283 | | Foreign currency translation adjustment | $(2,376) | $(874) | $(2,985) | $7 | | Comprehensive income | $11,295 | $7,029 | $43,854 | $26,290 | - Foreign currency translation adjustments resulted in a **loss of $2.4 million for Q3 2022** and **$3.0 million for the nine months** ended September 30, 2022, negatively impacting comprehensive income[12](index=12&type=chunk) [Condensed Consolidated Statements of Financial Position (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position%20(Unaudited)) This statement presents a snapshot of the company's assets, liabilities, and shareholders' equity **Condensed Consolidated Statements of Financial Position (Unaudited)** | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Total Current Assets | $267,912 | $219,914 | | Total Assets | $549,724 | $484,549 | | Total Current Liabilities | $153,327 | $132,500 | | Total Liabilities | $304,747 | $275,224 | | Total Shareholders' Equity | $244,977 | $209,325 | - Total assets increased by **$65.2 million (13.4%)** from December 31, 2021, to September 30, 2022, primarily driven by increases in accounts receivable, inventories, and goodwill from acquisitions[15](index=15&type=chunk) - Shareholders' equity increased by **$35.7 million (17.0%)** over the same period, indicating improved financial health[15](index=15&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)) This statement details the changes in the company's equity accounts over the period **Condensed Consolidated Statements of Shareholders' Equity (Unaudited)** | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Common Shares | $22,321 | $22,172 | | Additional Paid-In Capital | $313,348 | $306,720 | | Accumulated Other Comprehensive Loss | $(18,386) | $(15,401) | | Retained Deficit | $(72,306) | $(104,166) | | Total Shareholders' Equity | $244,977 | $209,325 | - Retained deficit decreased significantly from **$(104.2) million** at January 1, 2022, to **$(72.3) million** at September 30, 2022, primarily due to net income of $46.8 million[19](index=19&type=chunk) - Accumulated other comprehensive loss increased by **$2.985 million** for the nine months ended September 30, 2022, mainly due to foreign currency translation adjustments[19](index=19&type=chunk)[30](index=30&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This statement outlines the sources and uses of cash from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (Unaudited)** | Metric (in thousands) | 9M 2022 | 9M 2021 | | :-------------------- | :------ | :------ | | Net cash provided by operating activities | $50,759 | $13,544 | | Net cash used for investing activities | $(40,343) | $(46,686) | | Net cash used for financing activities | $(7,355) | $19,705 | | Net increase (decrease) in cash | $2,769 | $(13,472) | | Cash at September 30 | $20,424 | $14,829 | - Operating cash flows significantly increased to **$50.8 million** for the nine months ended September 30, 2022, from $13.5 million in the prior year, driven by higher net income[21](index=21&type=chunk)[117](index=117&type=chunk) - Investing activities primarily involved capital expenditures and business acquisitions (Mohawk in 2022, Trilogy in 2021), with net cash used decreasing from **$46.7 million in 2021 to $40.3 million in 2022**[21](index=21&type=chunk)[118](index=118&type=chunk) - Financing activities shifted from providing **$19.7 million in 2021 to using $7.4 million in 2022**, mainly due to lower net borrowings from the revolving credit facility[21](index=21&type=chunk)[119](index=119&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies and figures presented in the financial statements [1. Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies applied in preparing the financial statements - The financial statements are prepared in accordance with GAAP and SEC rules, with certain information condensed or omitted for interim reporting[24](index=24&type=chunk) - The Company adopted ASU 2021-08 for business combinations effective January 1, 2023, which impacts accounting for acquired contract assets and liabilities[26](index=26&type=chunk) - Fair value of debt under the Loan Agreement approximates carrying value due to floating rates and short maturity of revolving borrowings; fixed rate senior unsecured notes had an aggregate fair value of **$37.3 million** at September 30, 2022[28](index=28&type=chunk) **Changes in Accumulated Other Comprehensive Income (Loss) (in thousands):** | Item | Balance at July 1, 2022 | Other Comprehensive Income (Loss) before Reclassifications | Net Current-Period Other Comprehensive Income (Loss) | Balance at September 30, 2022 | | :-------------------------------- | :---------------------- | :------------------------------------------------------- | :------------------------------------------- | :---------------------------- | | Foreign Currency Translation | $(14,544) | $(2,376) | $(2,376) | $(16,920) | | Defined Benefit Pension Plans | $(1,466) | — | — | $(1,466) | | **Total** | **$(16,010)** | **$(2,376)** | **$(2,376)** | **$(18,386)** | [2. Revenue Recognition](index=11&type=section&id=2.%20Revenue%20Recognition) This note details how revenue is recognized and provides a breakdown of net sales by market **Net Sales by Major Market (in thousands):** | Market | Q3 2022 (Material Handling) | Q3 2022 (Distribution) | Q3 2022 (Consolidated) | 9M 2022 (Material Handling) | 9M 2022 (Distribution) | 9M 2022 (Consolidated) | | :---------------- | :-------------------------- | :--------------------- | :--------------------- | :-------------------------- | :--------------------- | :--------------------- | | Consumer | $24,476 | — | $24,476 | $90,989 | — | $90,989 | | Vehicle | $38,158 | — | $38,158 | $134,036 | — | $134,036 | | Food and beverage | $31,126 | — | $31,126 | $88,960 | — | $88,960 | | Industrial | $61,898 | — | $61,889 | $191,399 | — | $191,370 | | Auto aftermarket | — | $72,416 | $72,416 | — | $181,352 | $181,352 | | **Total Net Sales** | **$155,658** | **$72,416** | **$228,065** | **$505,384** | **$181,352** | **$686,707** | - Revenue is recognized when control of products transfers to customers, typically within 90 days of a purchase order, with no significant long-term contracts[34](index=34&type=chunk) - Variable consideration like rebates and discounts are estimated and recognized each period, and allowances for returns are based on historical experience[35](index=35&type=chunk) [3. Acquisitions](index=12&type=section&id=3.%20Acquisitions) This note describes the recent business acquisitions of Mohawk Rubber Sales and Trilogy Plastics - On May 31, 2022, the Company acquired Mohawk Rubber Sales of New England Inc. for **$24.3 million cash**, net of cash acquired, to optimize its Distribution Segment[38](index=38&type=chunk) **Mohawk Acquisition - Preliminary Purchase Price Allocation (in thousands):** | Assets Acquired / Liabilities Assumed | Amount | | :------------------------------------ | :----- | | Accounts receivable | $10,347 | | Inventories | $8,209 | | Property, plant and equipment | $1,171 | | Intangible assets | $7,810 | | Goodwill | $7,359 | | Total Assets Acquired | $36,397 | | Total Liabilities Assumed | $8,809 | | **Net Acquisition Cost** | **$27,588** | - On July 30, 2021, the Company acquired Trilogy Plastics, Inc. for **$34.5 million** to enhance its Materials Handling Segment with value-added engineered plastic solutions[43](index=43&type=chunk) [4. Restructuring](index=14&type=section&id=4.%20Restructuring) This note details the ongoing Ameri-Kart manufacturing consolidation plan and associated costs - The Ameri-Kart Plan, initiated in March 2019, involves consolidating manufacturing operations into a new facility in Bristol, Indiana, with substantial completion expected in 2022[48](index=48&type=chunk)[49](index=49&type=chunk) - Restructuring charges incurred were **$0.3 million for Q3 2022** and **$0.7 million for the nine months** ended September 30, 2022, primarily for equipment relocation and facility shutdown costs[49](index=49&type=chunk) [5. Inventories](index=15&type=section&id=5.%20Inventories) This note provides a breakdown of inventory components and explains the valuation methods used - Inventories are valued at the lower of cost or market (LIFO for 40%, FIFO for others)[50](index=50&type=chunk) **Inventories (in thousands):** | Category | Sep 30, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Finished and in-process products | $65,576 | $56,684 | | Raw materials and supplies | $42,582 | $36,867 | | **Total Inventories** | **$108,158** | **$93,551** | - An adjustment of **$1.1 million** was made to increase the LIFO reserve and cost of sales for Q3 and 9M 2022 due to increased commodity and other costs[50](index=50&type=chunk) [6. Other Liabilities](index=15&type=section&id=6.%20Other%20Liabilities) This note presents a detailed breakdown of other current and long-term liabilities **Other Current Liabilities (in thousands):** | Category | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Customer deposits and accrued rebates | $6,541 | $5,194 | | Dividends payable | $5,549 | $5,441 | | Current portion of environmental reserves | $1,429 | $1,429 | | **Total Other Current Liabilities** | **$20,463** | **$19,628** | **Other Long-Term Liabilities (in thousands):** | Category | Sep 30, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Environmental reserves | $10,614 | $8,298 | | Supplemental executive retirement plan liability | $958 | $1,176 | | Pension liability | $276 | $421 | | **Total Other Liabilities** | **$13,691** | **$13,086** | [7. Goodwill and Intangible Assets](index=16&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) This note details the changes in goodwill by segment and describes the company's intangible assets **Goodwill by Segment (in thousands):** | Segment | Jan 1, 2022 | Acquisition | Foreign Currency Translation | Sep 30, 2022 | | :-------------- | :---------- | :---------- | :--------------------------- | :----------- | | Distribution | $7,648 | $7,359 | — | $15,007 | | Material Handling | $81,130 | — | $(854) | $80,276 | | **Total** | **$88,778** | **$7,359** | **$(854)** | **$95,283** | - Goodwill increased by **$7.359 million** due to the Mohawk acquisition in the Distribution Segment, partially offset by a foreign currency translation loss of **$0.854 million** in Material Handling[53](index=53&type=chunk) - Intangible assets primarily include trade names, customer relationships, patents, and non-competition agreements, with indefinite-lived trade names valued at **$9.8 million**[53](index=53&type=chunk) [8. Net Income per Common Share](index=16&type=section&id=8.%20Net%20Income%20per%20Common%20Share) This note provides the calculation of basic and diluted earnings per share **Weighted Average Common Shares Outstanding:** | Metric | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Basic | 36,472,378 | 36,195,560 | 36,383,398 | 36,103,894 | | Dilutive effect of stock options and restricted stock | 244,775 | 206,716 | 295,557 | 224,871 | | Diluted | 36,717,153 | 36,402,276 | 36,678,955 | 36,328,765 | - Options to purchase **114,540 shares in Q3 and 9M 2022**, and **42,945 shares in Q3 2021**, were anti-dilutive and excluded from diluted EPS calculation[54](index=54&type=chunk) [9. Stock Compensation](index=16&type=section&id=9.%20Stock%20Compensation) This note describes the company's stock-based compensation plans and related expenses - The 2021 Long-Term Incentive Plan authorizes the issuance of up to **2,000,000 stock awards** to key employees and directors[55](index=55&type=chunk) **Stock Compensation Expense (in thousands):** | Period | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :----- | :------ | :------ | :------ | :------ | | Expense | $1,300 | $800 | $5,200 | $2,600 | - Total unrecognized compensation cost related to non-vested stock-based awards was approximately **$9.3 million** at September 30, 2022, to be recognized over the next three years[56](index=56&type=chunk) [10. Contingencies](index=16&type=section&id=10.%20Contingencies) This note discusses significant legal proceedings and environmental contingencies, including the New Idria Mine - The Company is involved in various lawsuits and legal proceedings, with management believing the ultimate outcome will not have a material adverse effect on financial position or cash flows[57](index=57&type=chunk)[58](index=58&type=chunk) - Regarding the New Idria Mercury Mine, Buckhorn (a subsidiary) is a potentially responsible party; an Administrative Order of Consent (AOC) for Remedial Investigation/Feasibility Study (RI/FS) was finalized in 2018, requiring **$2 million financial assurance**[59](index=59&type=chunk)[60](index=60&type=chunk) - Buckhorn has recognized **$13.9 million in costs** for the New Idria Mine since October 2011, with **$1.5 million and $2.8 million** recorded for Q3 and 9M 2022, respectively, primarily for updated RI/FS estimates; a total reserve of **$10.5 million** is held[62](index=62&type=chunk) - A patent infringement lawsuit against Scepter Manufacturing LLC is ongoing, with trial scheduled for March 2023; an unfavorable outcome is not considered probable, and potential losses are not reasonably estimable[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) [11. Long-Term Debt and Loan Agreements](index=19&type=section&id=11.%20Long-Term%20Debt%20and%20Loan%20Agreements) This note details the company's long-term debt structure and key terms of its loan agreements **Long-Term Debt (in thousands):** | Debt Type | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Loan Agreement | $60,000 | $53,000 | | 5.25% Senior Unsecured Notes due Jan 2024 | $11,000 | $11,000 | | 5.30% Senior Unsecured Notes due Jan 2024 | $15,000 | $15,000 | | 5.45% Senior Unsecured Notes due Jan 2026 | $12,000 | $12,000 | | **Total Long-Term Debt** | **$97,961** | **$90,945** | - The Seventh Amended and Restated Loan Agreement, effective September 29, 2022, extended the maturity date to September 2027, maintaining a **$250 million borrowing limit**[70](index=70&type=chunk)[71](index=71&type=chunk) - At September 30, 2022, **$184.3 million was available** under the Loan Agreement, with existing borrowings primarily LIBOR-based and new borrowings transitioning to Term SOFR, RFR, EURIBOR, and CDOR-based rates[72](index=72&type=chunk) - The weighted average interest rate on long-term debt increased to **5.50% for Q3 2022** from 4.24% for Q3 2021, and decreased to **4.55% for 9M 2022** from 4.84% for 9M 2021[74](index=74&type=chunk) [12. Income Taxes](index=20&type=section&id=12.%20Income%20Taxes) This note explains the components of the company's income tax expense and effective tax rate **Effective Tax Rate:** | Period | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :----- | :------ | :------ | :------ | :------ | | Rate | 24.8% | 26.6% | 25.5% | 26.0% | - The decrease in the effective tax rate for both periods was primarily due to lower state taxes and estimated non-deductible expenses[77](index=77&type=chunk)[106](index=106&type=chunk)[115](index=115&type=chunk) - Gross unrecognized tax benefits that would reduce the effective tax rate totaled **$0.8 million** at September 30, 2022[78](index=78&type=chunk) [13. Leases](index=20&type=section&id=13.%20Leases) This note provides details on the company's operating and finance lease assets, liabilities, and costs - The Company leases manufacturing facilities, distribution centers, warehouses, office space, and equipment with terms ranging from one to fourteen years[80](index=80&type=chunk) **Lease Assets and Liabilities (in thousands):** | Category | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Operating lease assets | $29,809 | $29,285 | | Finance lease assets | $9,248 | $9,765 | | Total lease assets | $39,057 | $39,050 | | Total operating lease liabilities | $29,821 | $29,156 | | Total finance lease liabilities | $9,563 | $9,937 | | Total lease liabilities | $39,384 | $39,093 | **Total Lease Cost (in thousands):** | Period | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :----- | :------ | :------ | :------ | :------ | | Total Lease Cost | $2,500 | $2,254 | $7,026 | $5,944 | - Weighted-average remaining lease terms are **6.62 years for operating leases** and **13.42 years for finance leases** at September 30, 2022[83](index=83&type=chunk) [14. Segments](index=22&type=section&id=14.%20Segments) This note presents financial information for the company's two operating segments: Material Handling and Distribution - The Company operates under two segments: Material Handling (durable plastic reusable containers, OEM parts, custom plastic products) and Distribution (tire servicing equipment, tools, supplies, tire repair products, traffic markings)[86](index=86&type=chunk)[87](index=87&type=chunk) **Net Sales by Segment (in thousands):** | Segment | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :---------------- | :------ | :------ | :------ | :------ | | Material Handling | $155,658 | $149,664 | $505,384 | $416,784 | | Distribution | $72,416 | $50,413 | $181,352 | $145,119 | | **Total Net Sales** | **$228,065** | **$200,058** | **$686,707** | **$561,856** | **Operating Income by Segment (in thousands):** | Segment | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :---------------- | :------ | :------ | :------ | :------ | | Material Handling | $23,962 | $15,066 | $83,216 | $49,895 | | Distribution | $4,899 | $4,377 | $12,469 | $10,029 | | Corporate | $(8,964) | $(7,626) | $(28,766) | $(21,373) | | **Total Operating Income** | **$19,897** | **$11,817** | **$66,919** | **$38,551** | - Material Handling net sales increased **4.0% in Q3 2022** and **21.3% in 9M 2022**, driven by pricing and the Trilogy acquisition, despite lower volume/mix[101](index=101&type=chunk)[108](index=108&type=chunk) - Distribution net sales increased **43.6% in Q3 2022** and **25.0% in 9M 2022**, primarily due to the Mohawk acquisition and higher pricing[102](index=102&type=chunk)[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the Company's financial performance, condition, and liquidity for the quarter and nine months ended September 30, 2022 [Forward-Looking Statements](index=24&type=section&id=Forward-Looking%20Statements) This section cautions readers about the risks and uncertainties associated with forward-looking statements - The report contains forward-looking statements regarding financial outlook, future plans, and performance, which are subject to inherent uncertainties, risks, and changes in circumstances[94](index=94&type=chunk) - Specific risk factors include impacts from COVID-19, raw material availability and costs, strategic growth initiatives, competitive pressures, operational problems, and changes in laws and regulations[95](index=95&type=chunk) [Executive Overview](index=24&type=section&id=Executive%20Overview) This section provides a high-level overview of the company's business segments and the current economic environment - Myers Industries operates in two segments: Material Handling (plastic reusable containers, OEM parts) and Distribution (tire servicing equipment, tire repair products)[96](index=96&type=chunk)[97](index=97&type=chunk) - The current economic environment presents risks from inflation, interest rates, volatile commodity costs, supply chain disruptions, and labor availability, exacerbated by geopolitical events[98](index=98&type=chunk) - The Company believes it is well-positioned to manage these uncertainties due to a strong balance sheet, sufficient liquidity, and a diverse product offering and customer base[98](index=98&type=chunk) [Results of Operations: Comparison of the Quarter Ended September 30, 2022 to the Quarter Ended September 30, 2021](index=25&type=section&id=Results%20of%20Operations%3A%20Comparison%20of%20the%20Quarter%20Ended%20September%2030%2C%202022%20to%20the%20Quarter%20Ended%20September%2030%2C%202021) This section analyzes the year-over-year changes in financial results for the third quarter **Net Sales (Q3 YoY Change, in thousands):** | Segment | 2022 | 2021 | Change | % Change | | :---------------- | :------ | :------ | :------ | :------- | | Material Handling | $155,658 | $149,664 | $5,994 | 4.0% | | Distribution | $72,416 | $50,413 | $22,003 | 43.6% | | **Total Net Sales** | **$228,065** | **$200,058** | **$28,007** | **14.0%** | - Total net sales increased by **$28.0 million (14.0%)** due to $21.1 million from higher pricing and $19.4 million from acquisitions (Mohawk and Trilogy), partially offset by $12.1 million lower volume/mix[100](index=100&type=chunk) **Gross Profit (Q3 YoY Change, in thousands):** | Metric | 2022 | 2021 | Change | % Change | | :-------------------------- | :------ | :------ | :------ | :------- | | Cost of sales | $156,417 | $145,860 | $10,557 | 7.2% | | Gross profit | $71,648 | $54,198 | $17,450 | 32.2% | | Gross profit as a percentage of sales | 31.4% | 27.1% | | | - SG&A expenses increased by **$9.2 million (21.7%) to $51.8 million**, driven by higher salaries, benefits, incentive compensation, variable selling expenses, facility costs, and environmental charges, as well as incremental costs from acquisitions[104](index=104&type=chunk) - Net interest expense increased by **$0.7 million (62.8%) to $1.7 million** due to higher average outstanding borrowings and a higher weighted-average borrowing rate (5.50% vs 4.24%)[105](index=105&type=chunk) [Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021](index=26&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030%2C%202022%20to%20the%20Nine%20Months%20Ended%20September%2030%2C%202021) This section analyzes the year-over-year changes in financial results for the first nine months **Net Sales (9M YoY Change, in thousands):** | Segment | 2022 | 2021 | Change | % Change | | :---------------- | :------ | :------ | :------ | :------- | | Material Handling | $505,384 | $416,784 | $88,600 | 21.3% | | Distribution | $181,352 | $145,119 | $36,233 | 25.0% | | **Total Net Sales** | **$686,707** | **$561,856** | **$124,851** | **22.2%** | - Total net sales increased by **$124.9 million (22.2%)** due to $86.7 million from higher pricing and $46.6 million from acquisitions (Mohawk and Trilogy), partially offset by $7.6 million lower volume/mix[107](index=107&type=chunk) **Gross Profit (9M YoY Change, in thousands):** | Metric | 2022 | 2021 | Change | % Change | | :-------------------------- | :------ | :------ | :------ | :------- | | Cost of sales | $468,415 | $402,251 | $66,164 | 16.4% | | Gross profit | $218,292 | $159,605 | $58,687 | 36.8% | | Gross profit as a percentage of sales | 31.8% | 28.4% | | | - SG&A expenses increased by **$29.9 million (24.4%) to $152.1 million**, primarily due to higher compensation, variable selling expenses, facility costs, environmental charges, and acquisition-related expenses[111](index=111&type=chunk) - Net interest expense increased by **$1.0 million (33.7%) to $4.1 million**, driven by higher average outstanding borrowings ($113.8 million vs $79.9 million), partially offset by a slightly lower weighted-average borrowing rate (4.55% vs 4.84%)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity, cash flows, and capital resources - At September 30, 2022, the Company had **$20.4 million cash**, **$184.3 million available** under the Loan Agreement, and **$107.5 million outstanding debt**, indicating strong liquidity[116](index=116&type=chunk) - Net cash provided by operating activities increased to **$50.8 million for 9M 2022** (vs. $13.5 million in 9M 2021) due to higher net income, partially offset by increased working capital[117](index=117&type=chunk) - Net cash used in investing activities decreased to **$40.3 million for 9M 2022** (vs. $46.7 million in 9M 2021), including $24.3 million for the Mohawk acquisition and $17.6 million in capital expenditures[118](index=118&type=chunk) - Net cash used in financing activities was **$7.4 million for 9M 2022** (vs. $19.7 million provided in 9M 2021), reflecting lower net borrowings from the credit facility and dividend payments of $14.9 million[119](index=119&type=chunk) [Credit Sources](index=29&type=section&id=Credit%20Sources) This section describes the company's primary sources of credit and compliance with debt covenants - The Seventh Amendment to the Loan Agreement extended the maturity to September 2027, maintaining a **$250 million borrowing limit**[121](index=121&type=chunk) - As of September 30, 2022, **$184.3 million was available** under the Loan Agreement, with **$38.0 million face value** of Senior Unsecured Notes outstanding, maturing between January 2024 and January 2026[123](index=123&type=chunk)[124](index=124&type=chunk) **Debt Covenants as of September 30, 2022:** | Covenant | Required Level | Actual Level | | :-------------------- | :------------- | :----------- | | Interest Coverage Ratio | 3.00 to 1 (minimum) | 21.31 | | Leverage Ratio | 3.25 to 1 (maximum) | 1.01 | - The Company was in compliance with all debt covenants as of September 30, 2022[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, specifically interest rate, foreign currency, and commodity price risk [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to fluctuations in interest rates - The Company is exposed to interest rate risk due to floating rate financing arrangements, primarily based on LIBOR, transitioning to Term SOFR, RFR, EURIBOR, and CDOR[126](index=126&type=chunk) - A **one percent increase** in market interest rates would increase annual variable interest expense by approximately **$0.6 million**, based on current debt levels[126](index=126&type=chunk) [Foreign Currency Exchange Risk](index=29&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section details the company's exposure to foreign currency exchange rate fluctuations - Operations in Canada expose the Company to foreign currency risk, mainly from U.S. dollar sales from Canadian businesses[127](index=127&type=chunk) - A systematic program is in place to limit exposure to exchange rate fluctuations, with net exposure generally ranging from **$1 million to $3 million**[127](index=127&type=chunk) - At September 30, 2022, the Company had no foreign currency arrangements or contracts in place[127](index=127&type=chunk) [Commodity Price Risk](index=29&type=section&id=Commodity%20Price%20Risk) This section outlines the company's exposure to volatility in commodity prices - The Company's operations are affected by changes in commodity prices, particularly plastic resins and natural gas[128](index=128&type=chunk) - No derivative contracts are currently used to hedge raw material pricing, though forward buy positions for utility costs may be used[128](index=128&type=chunk) - Significant future increases in plastic resin costs or adverse economic changes could materially impact financial results[129](index=129&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the Company's disclosure controls and procedures, confirming their effectiveness as of September 30, 2022 [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures - The Company maintains disclosure controls and procedures designed to ensure timely and accurate reporting of information required by the Securities Exchange Act of 1934[130](index=130&type=chunk) - The CEO and Interim CFO concluded that the Company's disclosure controls and procedures were **effective** as of September 30, 2022[131](index=131&type=chunk) [Changes in Internal Control Over Financial Reporting](index=30&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any changes to the company's internal control over financial reporting - The evaluation of internal control over financial reporting as of September 30, 2022, did not include the recently acquired Mohawk business, as permitted by SEC rules[132](index=132&type=chunk) - **No material changes** in internal control over financial reporting occurred during the nine months ended September 30, 2022[133](index=133&type=chunk) [Part II — Other Information](index=30&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) This part includes details on legal proceedings, equity security sales, filed exhibits, and report signatures [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed discussion of legal proceedings in Note 10 of the financial statements - Legal proceedings are discussed in Note 10, Contingencies, of the Unaudited Condensed Consolidated Financial Statements[134](index=134&type=chunk) - Management believes the outcome of these lawsuits and other proceedings will **not individually or in the aggregate have a future material adverse effect** on the Company's consolidated financial position, results of operations, or cash flows[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the Company's stock repurchase plan, indicating no shares were repurchased during the third quarter of 2022 **Stock Repurchase Plan Activity (Q3 2022):** | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that may yet be Purchased Under the Plans or Programs | | :-------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :----------------------------------------------------------------------------- | | 7/1/2022 to 7/31/2022 | — | $— | 5,547,665 | 2,452,335 | | 8/1/2022 to 8/31/2022 | — | — | 5,547,665 | 2,452,335 | | 9/1/2022 to 9/30/2022 | — | — | 5,547,665 | 2,452,335 | - **No shares were repurchased** under the Company's stock repurchase plan during the quarter ended September 30, 2022[135](index=135&type=chunk) - As of September 30, 2022, **2,452,335 shares remained authorized** for repurchase under the plan[135](index=135&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, loan agreements, and certifications - Exhibits include the Second Amended and Restated Articles of Incorporation, Amended and Restated Code of Regulations, Seventh Amended and Restated Loan Agreement, and Fourth Amendment to Note Purchase Agreement[137](index=137&type=chunk) - Certifications from the President and CEO, and Interim CFO, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included[137](index=137&type=chunk) - Financial information formatted in inline XBRL, including consolidated statements and notes, is provided as Exhibit 101 and 104[137](index=137&type=chunk) [Signature](index=32&type=section&id=Signature) This section contains the signature of the Company's Interim Chief Financial Officer, certifying the filing of the report - The report was signed on October 27, 2022, by Monica P. Vinay, Interim Chief Financial Officer (Principal Financial and Accounting Officer) of Myers Industries, Inc[139](index=139&type=chunk)[140](index=140&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 001-08524 Myers Industries, Inc. (Exact name of registrant as specified in its charter) Ohio 34-0778636 (State or other jurisdiction of (IRS Emp ...