Myers Industries Inc.
) have dropped 3.6% since it announced the initiation of the sale
of its Lawn & Garden Segment. The sale is expected to close
within a year.
This Zacks Rank #5 (Strong Sell) company had commenced a two-phased
restructuring program for the segment in Feb 2013. The Lawn &
Garden segment was underperforming in recent years and was unable
to restore its cost of capital.
In its last reported quarter, net sales at the Lawn and Garden
segment tanked 17.5% from the year-ago quarter to $49.8 million.
Moreover, the segment posted an adjusted loss before taxes of $0.1
million compared to an income of $2.7 million in the prior-year
period. Benefits from the ongoing restructuring project were being
nullified by inclement weather and transportation costs and
adversely impacted results.
Hence, the company decided to divest this segment and concentrate
on operations with growth prospects. The Lawn & Garden segment
will now form a part of Myer's discontinued operations.
The company, however, envisions potential in its Material Handling
segment, which designs recyclable containers, storage bins, and
In the past quarter, this segment posted a 13.3% rise in net sales
to $90.6 million, backed by robust sales in agricultural and food
processing markets. Also, the adjusted net income before taxes
soared 10% to $10.9 million, facilitated by a greater sales volume.
In an attempt to develop its Material Handling segment, the company
penned a deal to acquire Scepter Corporation and Scepter
Manufacturing, LLC (Scepter). This acquisition, comprising
warehouses, manufacturing facilities and offices in Oklahoma,
Scarborough, Miami and Ontario, is expected to hike the segment
sales by 30%. Also, Myers expects the acquisition worth $165.0
million to close within a month.
Scepter is a leading manufacturer of molded plastic material
handling products for various markets including marine, industrial,
consumer and military. The company generated net sales of about
$100.0 million in 2013 and is renowned for its state-of-the-art
mold capacities and in-house product engineering facilities.
The acquisition of Scepter is likely to enable Myers to strengthen
its foothold in the Material Handling segment and extend its global
reach. The deal is also expected to enhance its assortments and
position the company well for long-term growth in nascent markets.
Simultaneously, the company made amendments to its senior secured
revolving credit facility and raised it to $300.0 million from
$200.0 million. This increase was made to support the Scepter
acquisition. However, the terms of the loan remained unaltered and
is slated to end in Dec 2018. The company will use its sale
proceeds from the Lawn & Garden segment to repay the loan.
Other Stocks to Consider
Other better-ranked stocks in the related sector include
Proto Labs, Inc. (
Citi Trends, Inc.
Rite Aid Corporation
), each carrying a Zacks Rank #1 (Strong Buy).
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MYERS INDS (MYE): Free Stock Analysis Report
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