Myers Industries(MYE)2024-03-05 21:00Financial Performance - Net sales for the year ended December 31, 2023 were $813.1 million, a decrease of $86.5 million or 9.6% compared to 2022, primarily due to lower overall volume/mix and pricing [135]. - The Material Handling Segment reported net sales of $555.3 million, a decrease of $92.4 million or 14.3%, while the Distribution Segment saw an increase of $5.9 million or 2.3% to $257.9 million [135][137]. - Gross profit decreased by $24.3 million or 8.6% to $259.1 million, with a gross margin of 31.9%, up from 31.5% in the prior year [138][139]. - Selling, general and administrative (SG&A) expenses were $186.9 million, a decrease of $12.6 million or 6.3%, primarily due to lower incentive compensation and variable selling expenses [140]. Debt and Liquidity - As of December 31, 2023, the Company had $30.3 million in cash and $224.3 million available under its Loan Agreement, indicating strong liquidity [144]. - The Company was in compliance with all debt covenants, with an interest coverage ratio of 16.17 and a leverage ratio of 0.70 as of December 31, 2023 [154]. - The Company repaid $26.0 million of Senior Unsecured Notes upon maturity and prepaid the remaining $12.0 million, terminating the Note Purchase Agreement [155]. - Amendment No. 1 to the Loan Agreement includes a new 5-year $400 million term loan facility, with quarterly amortization of $20 million in the first two years and $40 million in the last three years [156]. - The maximum leverage ratio was modified to not exceed 4.00 to 1.00 for the first fiscal quarter after the Signature Systems acquisition and 3.25 to 1.00 thereafter [158]. - The Company incurred approximately $9 million in deferred financing fees related to the Loan Agreement amendment [157]. Tax and Interest - Net interest expense increased to $6.3 million, up 10.8% from $5.7 million in 2022, due to a higher weighted-average borrowing rate of 6.86% [141]. - The effective tax rate rose to 26.0% for 2023, compared to 22.9% in the prior year, primarily due to the recognition of a previously unrecognized tax benefit [142]. Operational Highlights - Cash provided by operating activities increased to $86.2 million in 2023 from $72.6 million in 2022, driven by lower working capital [147]. - The Company acquired Signature Systems for $350 million in February 2024, which generated approximately $110 million in revenue in 2023 [143]. Risk Management - If market interest rates increase by 1%, the Company's variable interest expense would increase by approximately $0.2 million annually [170]. - The net foreign currency exposure related to operations in Canada is generally less than $1 million [171]. - The Company currently has no derivative contracts to hedge changes in raw material pricing, particularly for plastic resins and natural rubber [172]. Off-Balance Sheet Arrangements - The Company has no off-balance sheet arrangements that materially affect its financial condition as of December 31, 2023 [159].