Myers Industries(MYE) - 2025 Q2 - Quarterly Report

Part I — Financial Information This section presents Myers Industries' unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting periods Item 1. Financial Statements This section presents Myers Industries' unaudited condensed consolidated financial statements and detailed notes for Q2 and YTD June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Unaudited) This statement details the company's revenues, expenses, and net income for the quarter and six months ended June 30, 2025 and 2024 For the Quarter Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $209,583 | $220,236 | $(10,653) | -4.8% | | Gross profit | $70,662 | $75,517 | $(4,855) | -6.4% | | Operating income | $19,979 | $23,728 | $(3,749) | -15.8% | | Net income | $9,705 | $10,279 | $(574) | -5.6% | | Basic EPS | $0.26 | $0.28 | $(0.02) | -7.1% | | Diluted EPS | $0.26 | $0.28 | $(0.02) | -7.1% | For the Six Months Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $416,333 | $427,338 | $(11,005) | -2.6% | | Gross profit | $139,740 | $139,786 | $(46) | -0.03% | | Operating income | $36,629 | $34,607 | $2,022 | 5.8% | | Net income | $16,510 | $13,782 | $2,728 | 19.8% | | Basic EPS | $0.44 | $0.37 | $0.07 | 18.9% | | Diluted EPS | $0.44 | $0.37 | $0.07 | 18.9% | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) This statement presents net income and other comprehensive income components for the quarter and six months ended June 30, 2025 and 2024 For the Quarter Ended June 30 (Dollars in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net income | $9,705 | $10,279 | $(574) | | Foreign currency translation adjustment | $1,915 | $(360) | $2,275 | | Unrealized gain (loss) on interest rate swap contracts | $(891) | $(1,976) | $1,085 | | Total other comprehensive income (loss) | $2,212 | $(2,478) | $4,690 | | Comprehensive income | $11,917 | $7,801 | $4,116 | For the Six Months Ended June 30 (Dollars in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net income | $16,510 | $13,782 | $2,728 | | Foreign currency translation adjustment | $1,907 | $(1,191) | $3,098 | | Unrealized gain (loss) on interest rate swap contracts | $(2,341) | $(1,976) | $(365) | | Total other comprehensive income (loss) | $839 | $(3,309) | $4,148 | | Comprehensive income | $17,349 | $10,473 | $6,876 | Condensed Consolidated Statements of Financial Position (Unaudited) This statement provides a snapshot of assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 As of June 30, 2025 vs. December 31, 2024 (Dollars in thousands) | Asset | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $41,290 | $32,222 | $9,068 | | Total Current Assets | $276,062 | $259,307 | $16,755 | | Total Assets | $862,714 | $860,815 | $1,899 | | Liability/Equity | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Current Liabilities | $155,738 | $147,112 | $8,626 | | Long-term debt | $346,221 | $355,310 | $(9,089) | | Total Liabilities | $578,074 | $583,303 | $(5,229) | | Total Shareholders' Equity | $284,640 | $277,512 | $7,128 | Condensed Consolidated Statements of Shareholders' Equity (Unaudited) This statement details changes in shareholders' equity, including net income, dividends, and stock transactions, for Q2 and YTD June 30, 2025 Changes in Shareholders' Equity for the Quarter Ended June 30, 2025 (Dollars in thousands) | Item | Common Shares | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Deficit | Total Shareholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at April 1, 2025 | $23,015 | $324,631 | $(23,483) | $(46,740) | $277,423 | | Net income | — | — | — | $9,705 | $9,705 | | Foreign currency translation adjustment | — | — | $1,915 | — | $1,915 | | Interest rate swap, net of tax | — | — | $(804) | — | $(804) | | Pension liability, net of tax | — | — | $1,101 | — | $1,101 | | Shares issued under incentive plans, net | $47 | $174 | — | — | $221 | | Repurchase of common stock | $(24) | $(483) | — | — | $(507) | | Stock compensation expense | — | $649 | — | — | $649 | | Declared dividends - $0.135 per share | — | — | — | $(5,063) | $(5,063) | | Balance at June 30, 2025 | $23,038 | $324,971 | $(21,271) | $(42,098) | $284,640 | Changes in Shareholders' Equity for the Six Months Ended June 30, 2025 (Dollars in thousands) | Item | Common Shares | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Deficit | Total Shareholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at January 1, 2025 | $22,923 | $325,163 | $(22,110) | $(48,464) | $277,512 | | Net income | — | — | — | $16,510 | $16,510 | | Foreign currency translation adjustment | — | — | $1,907 | — | $1,907 | | Interest rate swap, net of tax | — | — | $(2,169) | — | $(2,169) | | Pension liability, net of tax | — | — | $1,101 | — | $1,101 | | Shares issued under incentive plans, net | $186 | $(498) | — | — | $(312) | | Repurchase of common stock | $(71) | $(1,444) | — | — | $(1,515) | | Stock compensation expense | — | $1,750 | — | — | $1,750 | | Declared dividends - $0.27 per share | — | — | — | $(10,144) | $(10,144) | | Balance at June 30, 2025 | $23,038 | $324,971 | $(21,271) | $(42,098) | $284,640 | Condensed Consolidated Statements of Cash Flows (Unaudited) This statement summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 For the Six Months Ended June 30 (Dollars in thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $38,442 | $34,617 | $3,825 | | Net cash provided by (used for) investing activities | $(11,529) | $(358,352) | $346,823 | | Net cash provided by (used for) financing activities | $(17,519) | $330,953 | $(348,472) | | Net increase (decrease) in cash | $9,068 | $7,055 | $2,013 | | Cash at June 30 | $41,290 | $37,345 | $3,945 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures on accounting policies, acquisitions, restructuring, and other financial details for the reporting periods 1. Summary of Significant Accounting Policies This note outlines the company's key accounting policies, recent accounting standard updates, and financial instrument details - The Company updated its presentation of Depreciation and amortization expenses and third-party Freight out costs, previously included in Selling, general and administrative expenses, in the first quarter of 2025. Prior year amounts have been conformed[30] - The FASB issued ASU 2023-09 (Income Tax Disclosures) effective for annual periods after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective for annual periods after December 15, 2026. The Company is evaluating the impact of these new standards[31][32] - The Company uses an interest rate swap contract, designated as a cash flow hedge, to reduce exposure to variable interest rates on a portion of its floating rate indebtedness. At June 30, 2025, the remaining notional value was $187.5 million, with an estimated unrealized loss of $6.2 million[38][39] - On April 22, 2025, the Company terminated its defined benefit pension plan by purchasing a group annuity contract, recognizing a pre-tax pension settlement charge of $1.6 million in Q2 2025[44] Changes in Allowance for Credit Losses (Dollars in thousands) | Metric | 2025 (Six Months) | 2024 (Six Months) | | :--- | :--- | :--- | | Balance at January 1 | $4,183 | $2,989 | | Provision for expected credit loss, net of recoveries | $119 | $1,147 | | Write-offs and other | $(619) | $(358) | | Balance at June 30 | $3,683 | $3,778 | 2. Revenue Recognition This note describes the company's policies for recognizing revenue, including variable consideration and related balances - Revenue is recognized when control of products is transferred, typically at shipment or delivery, and obligations are usually fulfilled within 90 days. Variable consideration like rebates and discounts are estimated each period[47][48] Revenue Recognition Related Balances (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Returns, discounts and other allowances | $(1,022) | $(1,051) | | Right of return asset | $485 | $456 | | Customer deposits | $(1,324) | $(2,565) | | Accrued rebates | $(3,767) | $(4,196) | Freight Out Expenses (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Quarter Ended June 30 | $2,800 | $2,700 | | Six Months Ended June 30 | $5,600 | $5,100 | Cost of Sales Freight (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Quarter Ended June 30 | $2,700 | $2,700 | | Six Months Ended June 30 | $5,300 | $5,600 | 3. Acquisitions This note details the acquisition of Signature Systems in 2024, including its financial impact and intangible assets - On February 8, 2024, the Company acquired Signature Systems for $348.3 million (net of cash acquired), a manufacturer and distributor of composite matting ground protection, included in the Material Handling Segment[51] Final Allocation of Consideration for Signature Acquisition (Dollars in thousands) | Item | Final Allocation | | :--- | :--- | | Assets acquired: Accounts receivable | $18,854 | | Assets acquired: Inventories | $17,373 | | Assets acquired: Intangible assets | $136,700 | | Assets acquired: Goodwill | $183,098 | | Total Assets acquired | $394,126 | | Total Liabilities assumed | $45,814 | | Net acquisition cost | $348,312 | - In May 2025, the customer prepaid the remaining $8.3 million balance of long-term notes receivable acquired from Signature. This resulted in a $3.2 million reversal of allowance for credit loss (reducing bad debt expense) and acceleration of a $0.3 million noncredit discount into interest income[54] Signature Intangible Assets (Dollars in thousands) | Asset | Fair Value | Estimated Useful Life | | :--- | :--- | :--- | | Customer relationships | $83,800 | 10.0 years | | Technology | $31,300 | 12.0 years | | Trademarks and trade names | $21,600 | Indefinite | 4. Restructuring This note outlines the 'Focused Transformation' initiative, associated restructuring charges, and future strategic plans - The Company launched a 'Focused Transformation' initiative in Q1 2025, targeting $20 million in annualized SG&A cost savings by year-end 2025. Restructuring charges of $2.1 million (Q2 2025) and $2.4 million (YTD Q2 2025) were incurred[57] - Restructuring charges for the Distribution Segment totaled $1.7 million (Q2 2025) and $2.5 million (YTD Q2 2025), including $1.6 million for exiting two idled lease facilities. This initiative is now complete[58] - Subsequent to June 30, 2025, the Board approved a strategic review of Myers Tire Supply (Distribution segment, $189 million LTM revenue) and a plan to idle two rotational molding facilities, expecting $3 million in additional annual savings and up to $14 million in restructuring costs[63][64] Restructuring Charges by Segment (Dollars in thousands) | Segment | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $1,051 | $2,223 | $1,159 | $2,464 | | Distribution | $2,169 | $755 | $2,980 | $755 | | Corporate | $1,197 | $0 | $2,306 | $0 | | Total | $4,417 | $2,978 | $6,445 | $3,219 | 5. Inventories This note details the valuation methods and composition of the company's inventories as of June 30, 2025 - Approximately 30% of inventories are valued using the LIFO method, with the remainder using FIFO. No adjustment to the LIFO reserve was recorded for the quarters ended June 30, 2025 or 2024[65] Inventories (Dollars in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished and in-process products | $64,672 | $62,601 | | Raw materials and supplies | $37,297 | $34,400 | | Total Inventories, net | $101,969 | $97,001 | 6. Other Liabilities This note provides a breakdown of other current and long-term liabilities, including environmental reserves and hedge contracts Other Current Liabilities (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Customer deposits and accrued rebates | $5,091 | $6,761 | | Dividends payable | $5,373 | $5,613 | | Current portion of environmental reserves | $6,605 | $6,605 | | Hedge contract liability | $1,257 | $753 | | Other accrued expenses | $4,990 | $6,952 | | Total Other Current Liabilities | $23,440 | $26,794 | Other Long-Term Liabilities (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Environmental reserves | $8,856 | $9,984 | | Pension liability | $0 | $79 | | Hedge contract liability | $4,916 | $2,490 | | Total Other Liabilities (long-term) | $16,140 | $15,303 | 7. Goodwill and Intangible Assets This note presents the carrying value of goodwill by segment and indefinite-lived intangible assets Goodwill by Segment (Dollars in thousands) | Segment | January 1, 2025 | Foreign Currency Translation | June 30, 2025 | | :--- | :--- | :--- | :--- | | Distribution | $14,730 | — | $14,730 | | Material Handling | $240,802 | $525 | $241,327 | | Total Goodwill | $255,532 | $525 | $256,057 | - Indefinite-lived trade names had a carrying value of $31.4 million at both June 30, 2025, and December 31, 2024[68] 8. Stockholders' Equity This note details weighted average common shares outstanding, share repurchase programs, and related activities Weighted Average Common Shares Outstanding | Period | Basic (2025) | Basic (2024) | Diluted (2025) | Diluted (2024) | | :--- | :--- | :--- | :--- | :--- | | Quarter Ended June 30 | 37,391,097 | 37,179,658 | 37,412,937 | 37,312,394 | | Six Months Ended June 30 | 37,345,032 | 37,043,913 | 37,429,514 | 37,257,302 | - On February 27, 2025, the Board authorized a new $10.0 million share repurchase program, replacing the 2013 program. As of June 30, 2025, $8.5 million remained authorized[70][71] Share Repurchases under 2025 Program (Quarter Ended June 30, 2025) | Period | Shares Purchased | Average Price Paid per Share | Total Value (millions) | | :--- | :--- | :--- | :--- | | Quarter Ended June 30, 2025 | 40,084 | $12.51 | $0.5 | | Six Months Ended June 30, 2025 | 116,884 | $12.83 | $1.5 | 9. Stock Compensation This note describes the company's long-term incentive plans, stock award authorizations, and compensation expenses - The 2021 Long-Term Incentive Plan authorized up to 2,000,000 stock awards, with no new awards after March 16, 2024. The 2024 Long-Term Incentive Plan, approved by shareholders in April 2024, authorizes up to 2,500,000 additional stock awards[72][73] Stock Compensation Expense (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Quarter Ended June 30 | $600 | $(100) | | Six Months Ended June 30 | $1,700 | $500 | - Total unrecognized compensation cost related to non-vested stock-based compensation arrangements at June 30, 2025, was approximately $6.0 million, to be recognized over the next three years[74] 10. Contingencies This note discloses the company's involvement in environmental liabilities and product liability lawsuits - The Company is a Potentially Responsible Party (PRP) for the New Idria Mercury Mine site, with an Administrative Order of Consent (AOC) requiring a $2 million letter of credit for the Remedial Investigation/Feasibility Study (RI/FS)[77] New Idria Mercury Mine Environmental Liability and Insurance Recovery (Dollars in thousands) | Item | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--- | :--- | :--- | :--- | :--- | | Beginning reserve balance | $11,719 | $12,315 | $12,425 | $13,182 | | Changes in estimated environmental liability | — | $800 | — | $800 | | Payments made | $(478) | $(623) | $(1,184) | $(1,490) | | Ending reserve balance | $11,241 | $12,492 | $11,241 | $12,492 | | Beginning receivable balance | $7,487 | $7,020 | $8,404 | $7,245 | | Changes in estimated insurance recovery | — | $700 | — | $1,000 | | Insurance recovery reimbursements | $(437) | $(606) | $(1,354) | $(1,131) | | Ending receivable balance | $7,050 | $7,114 | $7,050 | $7,114 | - For the New Almaden Mine, Buckhorn has a total reserve of $4.4 million as of June 30, 2025, related to an environmentally beneficial project, with the Company intending to challenge cost increases[83] - The Company is a defendant in two product liability lawsuits related to portable fuel containers, with Scepter maintaining insurance policies expected to cover a substantial portion of defense costs[85][86] 11. Long-Term Debt and Loan Agreements This note details the company's long-term debt, loan agreements, interest rates, and compliance with debt covenants Long-Term Debt (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving Credit Facility | $5,000 | $0 | | Term Loan A | $372,000 | $382,000 | | Less unamortized deferred financing costs | $(6,195) | $(7,041) | | Less current portion long-term debt | $(24,584) | $(19,649) | | Long-term debt | $346,221 | $355,310 | - The Company entered into Amendment No. 1 to its Loan Agreement on February 8, 2024, providing a new 5-year $400 million Term Loan A to fund the Signature acquisition. Term Loan A amortizes quarterly, with $10 million payments thereafter[87] - The weighted average interest rate on borrowings was 7.75% for Q2 2025 (down from 8.60% in Q2 2024) and 7.67% for YTD Q2 2025 (down from 8.73% in YTD Q2 2024)[91] - As of June 30, 2025, the Company was in compliance with all debt covenants, with an Interest Coverage Ratio of 3.90 (minimum 3.00) and a Net Leverage Ratio of 2.78 (maximum 3.25)[92][148] 12. Income Taxes This note provides details on the company's effective tax rates and the factors influencing changes in tax expense Effective Tax Rate | Period | 2025 | 2024 | | :--- | :--- | :--- | | Quarter Ended June 30 | 23.1% | 30.2% | | Six Months Ended June 30 | 24.5% | 29.4% | - The decrease in the effective tax rate for both periods in 2025 was primarily due to a benefit related to the termination of the Company's pension plan[94] 13. Leases This note outlines the company's lease assets, liabilities, total lease costs, and maturity schedules Lease Assets and Liabilities (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Right of use asset - operating leases | $26,816 | $30,561 | | Finance lease assets | $7,556 | $7,927 | | Total lease assets | $34,372 | $38,488 | | Operating lease liability - short-term | $6,396 | $6,597 | | Operating lease liability - long-term | $20,306 | $23,700 | | Finance lease liability - short-term | $633 | $621 | | Finance lease liability - long-term | $7,673 | $7,994 | | Total lease liabilities | $35,008 | $38,912 | Total Lease Cost (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Quarter Ended June 30 | $4,568 | $4,852 | | Six Months Ended June 30 | $7,607 | $7,816 | Maturity of Lease Liabilities as of June 30, 2025 (Dollars in thousands) | Year | Operating Leases | Finance Leases | Total | | :--- | :--- | :--- | :--- | | 2025 (after June 30) | $3,939 | $462 | $4,401 | | 2026 | $7,684 | $924 | $8,608 | | 2027 | $6,465 | $945 | $7,410 | | 2028 | $4,900 | $950 | $5,850 | | 2029 | $3,343 | $950 | $4,293 | | After 2029 | $4,018 | $5,758 | $9,776 | | Total lease payments | $30,349 | $9,989 | $40,338 | | Less: interest | $(3,647) | $(1,683) | $(5,330) | | Present value of lease liabilities | $26,702 | $8,306 | $35,008 | 14. Segments This note provides financial information by operating segment, including net sales and operating income (loss) - The Company operates under two segments: Material Handling (durable plastic reusable products, ground protection matting, fuel containers) and Distribution (tire servicing equipment, tools, supplies, and tire repair/retreading products)[100][101][102] Net Sales by Segment (Dollars in thousands) | Segment | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $158,627 | $166,008 | $316,299 | $318,233 | | Distribution | $50,989 | $54,265 | $100,235 | $109,159 | | Consolidated Net Sales | $209,583 | $220,236 | $416,333 | $427,338 | Operating Income (Loss) by Segment (Dollars in thousands) | Segment | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $29,472 | $28,701 | $56,853 | $50,957 | | Distribution | $(537) | $2,179 | $(1,718) | $2,784 | | Corporate | $(8,956) | $(7,152) | $(18,506) | $(19,134) | | Consolidated Operating Income | $19,979 | $23,728 | $36,629 | $34,607 | - Total sales from foreign business units increased to $15.5 million for Q2 2025 (from $12.0 million in Q2 2024) and $26.6 million for YTD Q2 2025 (from $21.9 million in YTD Q2 2024)[103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial performance, condition, and liquidity, including key drivers and strategic initiatives for Q2 and YTD June 30, 2025 Forward-Looking Statements This section highlights the inherent uncertainties and risks associated with the company's future financial outlook and plans - The report contains forward-looking statements regarding financial outlook, future plans, and business prospects, which are subject to uncertainties, risks, and changes in circumstances[113] - Specific risk factors include raw material costs, competitive environment, trade policy, production disruptions, intellectual property, strategic growth initiatives, economic downturns, foreign business risks, and access to credit financing[114] Executive Overview This overview describes Myers Industries' operating segments and its position within the current economic environment - Myers Industries operates in two reportable segments: Material Handling (plastic reusable products, ground protection matting, fuel containers) and Distribution (tire servicing tools, equipment, and supplies)[116][117] - The current economic environment presents risks from tariffs, inflation, interest rates, volatile commodity costs, supply chain disruptions, and labor availability. The Company believes it is well-positioned due to a strong balance sheet, liquidity, and diverse product offerings[118] Results of Operations: Comparison of the Quarter Ended June 30, 2025 to the Quarter Ended June 30, 2024 This section analyzes the company's financial performance for the second quarter of 2025 compared to the same period in 2024 Net Sales This subsection details the changes in net sales by segment for the quarter ended June 30, 2025 versus 2024 Net Sales (Quarter Ended June 30, Dollars in thousands) | Segment | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $158,627 | $166,008 | $(7,381) | (4.4)% | | Distribution | $50,989 | $54,265 | $(3,276) | (6.0)% | | Total Net Sales | $209,583 | $220,236 | $(10,653) | (4.8)% | - Total net sales decreased by $10.7 million (4.8%) due to lower pricing ($4.2 million), lower volume ($6.4 million), and unfavorable currency translation ($0.1 million)[119] Cost of Sales & Gross Profit This subsection analyzes the changes in cost of sales and gross profit for the quarter ended June 30, 2025 versus 2024 Cost of Sales & Gross Profit (Quarter Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $138,921 | $144,719 | $(5,798) | (4.0)% | | Gross profit | $70,662 | $75,517 | $(4,855) | (6.4)% | | Gross profit as a percentage of sales | 33.7% | 34.3% | -0.6% pts | | - Gross profit decreased by $4.9 million (6.4%) due to lower volume and pricing, unfavorable mix, and unfavorable cost productivity, partially offset by lower material costs[122] Selling, General and Administrative Expenses This subsection examines the changes in SG&A expenses for the quarter ended June 30, 2025 versus 2024 SG&A Expenses (Quarter Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SG&A expenses | $43,370 | $44,148 | $(778) | (1.8)% | | SG&A expenses as a percentage of sales | 20.7% | 20.0% | 0.7% pts | | - SG&A expenses decreased by $0.8 million (1.8%), primarily due to a $3.2 million recovery of purchased credit deteriorated assets and $0.7 million lower acquisition costs, partially offset by $3.8 million higher restructuring costs and a $1.6 million pension settlement charge[123] Depreciation and amortization This subsection details the changes in depreciation and amortization expenses for the quarter ended June 30, 2025 versus 2024 - Depreciation and amortization decreased by $0.4 million to $4.4 million, primarily due to asset disposals related to facility consolidations[124] Freight out This subsection analyzes the changes in freight out costs for the quarter ended June 30, 2025 versus 2024 - Freight out costs increased by $0.1 million to $2.8 million, driven by higher overall freight costs partially offset by lower sales volume[125] (Gain) loss on disposal of fixed assets This subsection reports the gain or loss on disposal of fixed assets for the quarter ended June 30, 2025 versus 2024 - The Company recognized $0.1 million of losses on disposal of fixed assets in both Q2 2025 and Q2 2024[126] Net Interest Expense This subsection details the changes in net interest expense for the quarter ended June 30, 2025 versus 2024 Net Interest Expense (Quarter Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest expense | $7,364 | $9,006 | $(1,642) | (18.2)% | | Average outstanding borrowings, net | $408,247 | $427,505 | $(19,258) | (4.5)% | | Weighted-average borrowing rate | 7.75% | 8.60% | -0.85% pts | | - Net interest expense decreased by $1.6 million (18.2%) due to lower average outstanding borrowings and a lower weighted-average borrowing rate[127] Income Taxes This subsection analyzes the changes in income tax expense and effective tax rate for the quarter ended June 30, 2025 versus 2024 Income Taxes (Quarter Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Income before income taxes | $12,615 | $14,722 | | Income tax expense | $2,910 | $4,443 | | Effective tax rate | 23.1% | 30.2% | - The effective tax rate decreased to 23.1% from 30.2%, driven by a current year benefit from the pension plan termination and higher fixed non-deductible expenses in the prior year[128] Results of Operations: Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024 This section analyzes the company's financial performance for the six months ended June 30, 2025 compared to the same period in 2024 Net Sales This subsection details the changes in net sales by segment for the six months ended June 30, 2025 versus 2024 Net Sales (Six Months Ended June 30, Dollars in thousands) | Segment | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Material Handling | $316,299 | $318,233 | $(1,934) | (0.6)% | | Distribution | $100,235 | $109,159 | $(8,924) | (8.2)% | | Total Net Sales | $416,333 | $427,338 | $(11,005) | (2.6)% | - Total net sales decreased by $11.0 million (2.6%) due to lower pricing ($9.8 million), lower volume ($6.9 million), and unfavorable currency translation ($0.7 million), partially offset by $6.4 million incremental sales from the Signature acquisition[129] Cost of Sales & Gross Profit This subsection analyzes the changes in cost of sales and gross profit for the six months ended June 30, 2025 versus 2024 Cost of Sales & Gross Profit (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $276,593 | $287,552 | $(10,959) | (3.8)% | | Gross profit | $139,740 | $139,786 | $(46) | (0.0)% | | Gross profit as a percentage of sales | 33.6% | 32.7% | 0.9% pts | | - Gross profit was flat, as benefits from the Signature acquisition and lower material costs were offset by lower volume and pricing, unfavorable mix, and unfavorable cost productivity[132] Selling, General and Administrative Expenses This subsection examines the changes in SG&A expenses for the six months ended June 30, 2025 versus 2024 SG&A Expenses (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SG&A expenses | $88,125 | $91,261 | $(3,136) | (3.4)% | | SG&A expenses as a percentage of sales | 21.2% | 21.4% | -0.2% pts | | - SG&A expenses decreased by $3.1 million (3.4%), primarily due to a $3.2 million recovery of purchased credit deteriorated assets and $4.1 million lower acquisition costs, partially offset by $3.1 million incremental SG&A from Signature, $5.6 million higher restructuring costs, and a $1.6 million pension settlement charge[133] Depreciation and amortization This subsection details the changes in depreciation and amortization expenses for the six months ended June 30, 2025 versus 2024 - Depreciation and amortization increased by $0.2 million to $8.9 million, primarily due to the Signature acquisition[134] Freight out This subsection analyzes the changes in freight out costs for the six months ended June 30, 2025 versus 2024 - Freight out costs increased by $0.5 million to $5.6 million, mainly due to higher overall freight costs partially offset by lower sales volume[135] (Gain) loss on disposal of fixed assets This subsection reports the gain or loss on disposal of fixed assets for the six months ended June 30, 2025 versus 2024 - The Company recognized $0.5 million of losses on disposal of fixed assets in YTD Q2 2025, primarily from fixed asset impairments and disposals related to facility consolidations, compared to $0.1 million in YTD Q2 2024[136] Net Interest Expense This subsection details the changes in net interest expense for the six months ended June 30, 2025 versus 2024 Net Interest Expense (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest expense | $14,750 | $15,085 | $(335) | (2.2)% | | Average outstanding borrowings, net | $406,618 | $351,430 | $55,188 | 15.7% | | Weighted-average borrowing rate | 7.67% | 8.73% | -1.06% pts | | - Net interest expense decreased by $0.3 million (2.2%) due to a lower weighted-average borrowing rate, offsetting higher average outstanding borrowings from the Signature acquisition[137] Income Taxes This subsection analyzes the changes in income tax expense and effective tax rate for the six months ended June 30, 2025 versus 2024 Income Taxes (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Income before income taxes | $21,879 | $19,522 | | Income tax expense | $5,369 | $5,740 | | Effective tax rate | 24.5% | 29.4% | - The effective tax rate decreased to 24.5% from 29.4%, driven by a current year benefit from the pension plan termination and higher fixed non-deductible expenses in the prior year[138] Liquidity and Capital Resources This section discusses the company's cash flows from operating, investing, and financing activities, credit sources, and overall liquidity position - As of June 30, 2025, the Company had $41.3 million in cash, $239.7 million available under its Amended Loan Agreement, and $379.1 million in outstanding debt. Management believes these resources are sufficient to meet expected business requirements[139] Operating Activities This subsection details the net cash provided by operating activities for the six months ended June 30, 2025 versus 2024 - Net cash provided by operating activities increased to $38.4 million for the six months ended June 30, 2025, from $34.6 million in the prior year, primarily due to favorable changes in working capital[140] Investing Activities This subsection details the net cash used for investing activities and capital expenditures for the six months ended June 30, 2025 versus 2024 - Net cash used for investing activities was $11.5 million for the six months ended June 30, 2025, a significant decrease from $358.4 million in 2024, which included the $348.3 million Signature acquisition[141] - Capital expenditures were $11.7 million for YTD Q2 2025, up from $10.1 million in YTD Q2 2024. Full year 2025 capital expenditures are expected to be approximately 3% of revenue[141] Financing Activities This subsection details the net cash provided by or used for financing activities for the six months ended June 30, 2025 versus 2024 - Cash used by financing activities was $17.5 million for YTD Q2 2025, a shift from $331.0 million provided in YTD Q2 2024, which included $400 million from a new term loan for the Signature acquisition[142] - Key financing activities in YTD Q2 2025 included $5.0 million net borrowings on the revolving credit facility, $10.0 million in Term Loan A repayments, $1.5 million for common stock repurchases, and $10.4 million in cash dividends paid[142] Credit Sources This subsection describes the company's credit facilities, loan agreements, and interest rate swap arrangements - In January and February 2024, the Company repaid $38.0 million of senior unsecured notes, terminating the Note Purchase Agreement[143] - The Amended Loan Agreement, effective February 8, 2024, provided a new 5-year $400 million Term Loan A and maintained the $250 million revolving credit facility. The Company incurred $9.2 million in deferred financing fees[144][145] - An interest rate swap agreement was entered into on May 2, 2024, to fix the rate on a portion of Term Loan A at 4.606% plus applicable margin, with a remaining notional value of $187.5 million at June 30, 2025[146] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements impacting the company's financial position - The Company does not have any off-balance sheet arrangements that are expected to have a material current or future effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources at June 30, 2025[149] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, including interest rate, foreign currency, and commodity price risks, and mitigation strategies - The Company is exposed to interest rate risk on floating rate debt. A one percent change in market interest rates would alter annual variable interest expense by approximately $1.9 million based on current debt levels[150] - An interest rate swap agreement mitigates variable interest rate risk, effectively fixing the rate on a portion of outstanding borrowings. A one percent change in market rates would change annual fixed rate interest expense on the swap's fair value by approximately $5.5 million[151] - Foreign currency exposure primarily relates to operations in Canada and the UK. The Company has a systematic program to limit exposure to exchange rate fluctuations, typically using short-term arrangements (three months or less)[152] - The Company is exposed to commodity price risk, mainly for plastic resins and natural gas. It currently has no derivative contracts to hedge raw material pricing, but may enter into forward buy positions for utility costs[153] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - The Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2025[155] - No changes in internal control over financial reporting occurred during the six months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[156] Part II — Other Information This section provides additional information on legal proceedings, equity sales, and other disclosures Item 1. Legal Proceedings This section incorporates legal proceedings from Note 10, affirming that their ultimate outcome will not materially affect the company's financials - The Company is involved in various lawsuits and legal proceedings in the ordinary course of business, some covered by insurance[157] - Management believes the ultimate outcome of these matters will not have a material adverse effect on the consolidated financial position, results of operations, or cash flows[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchase activities during Q2 2025 under the newly authorized 2025 Repurchase Program Common Stock Repurchase Activity (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining Under Program | | :--- | :--- | :--- | :--- | | 4/1/2025 to 4/30/2025 | — | $— | $9,001,684 | | 5/1/2025 to 5/31/2025 | 27,359 | $12.39 | $8,662,843 | | 6/1/2025 to 6/30/2025 | 12,725 | $12.79 | $8,500,093 | - The 2025 Repurchase Program, authorized on February 27, 2025, allows for repurchases of up to $10.0 million in common stock and will end by December 31, 2025, or when the maximum amount is reached[158] Item 5. Other Information This section confirms no directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1(c) trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[159] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, stock awards, and SOX certifications - Exhibits include the Second Amended and Restated Articles of Incorporation, Amended and Restated Code of Regulations, various 2025 stock award agreements and non-employee director compensation, and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[161] - Financial information from the Quarterly Report is provided in inline XBRL format as Exhibit 101 and 104[161] Signature This section confirms the official signing of the report by the Interim Chief Financial Officer of Myers Industries, Inc - The report was duly signed on July 31, 2025, by Daniel W. Hoehn, Interim Chief Financial Officer (Principal Financial and Accounting Officer) of Myers Industries, Inc[163][164][165]