Myers Industries Inc. Reports Operating Results (10-Q)
Myers Industries Inc. has a market cap of $378.8 million; its shares were traded at around $10.69 with a P/E ratio of 21.4 and P/S ratio of 0.6. The dividend yield of Myers Industries Inc. stocks is 2.3%.MYE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Net sales in the Lawn and Garden segment in the first quarter of 2010 were down $6.9 million or 9% compared to the first quarter of 2009. Lower selling prices of approximately $4.8 million and volume declines of approximately $3.6 million more than offset the benefit of foreign currency translation from the favorable impact of exchange rates for the Canadian dollar.
Selling and administrative expenses for the quarter ended March 31, 2010 were $34.4 million, a reduction of $7.2 million or 17% compared with the prior year. SG&A expenses in the quarter ended March 31, 2010 include restructuring and other expenses of approximately $0.9 million offset by a gain from the sale of a closed manufacturing facility of $0.7 million. SG&A expenses in the quarter ended March 31, 2009 included charges of approximately $5.0 million for consulting fees, movement of machinery and equipment and other restructuring costs of our Lawn and Garden segment. Excluding the impact of restructuring and related expenses, operating expenses for the quarter ended March 31, 2010 were approximately 18.4% of sales compared with 20.0% in the prior year. The improvement in operating expense leverage in 2010 reflects the benefit of our restructuring activities and ongoing cost control initiatives.
Cash used by operating activities from continuing operations was $9.5 million for the quarter ended March 31, 2010 compared to $2.2 million in the first quarter of 2009. The increase in cash used for operations includes an increase of $3.6 million in cash used for working capital and a reduction of $3.7 million in cash generated from income, excluding depreciation and other non-cash charges.
The increase in cash used for working capital was primarily the result of an increase in inventories that used $3.3 million in cash in the first quarter of 2010 compared to cash generated of $12.0 million in the prior year. The increase of $15.3 million in cash used for inventories offset reductions of $5.3 million in cash used for accounts receivable and $2.6 million in cash used for accounts payable and other current liabilities in the current year. Prepaid expenses generated cash of $2.5 million in the first quarter of 2010 compared to cash used of $1.2 million in 2009 as a result of income tax refunds received. The Company typically experiences a use of cash for working capital in the first quarter, in part due to seasonal demands related to its Lawn and Garden segment. In the quarter ended March 31, 2010, the use of cash for inventories was also impacted by the rising cost of raw materials, particularly plastic resins, used in its manufacturing operations.
Capital expenditures were approximately $5.2 million in the quarter ended March 31, 2010 and are expected to be in the range of $20 to $25 million for the year. In addition, the Company used cash to pay dividends of $2.3 million in the first quarter of 2010.
Total debt at March 31, 2010 was approximately $120.0 million compared with $104.3 million at December 31, 2009 with the increase due to seasonal working capital demand. The Companys Credit Agreement provides available borrowing up to $250 million and, as of March 31, 2010, the Company had approximately $232 million available under this agreement. The Credit Agreement expires in October 2011 and, as of March 31, 2010 the Company was in compliance with all its debt covenants. The significant financial covenants include an interest coverage ratio and a leverage ratio, defined as earnings before interest, taxes, depreciation, and amortization, as adjusted, compared to total debt. The ratios as of and for the period ended March 31, 2010 are shown in the following table:
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