Myers Industries Inc. ( MYE ) began 2014 on a dismal note as shares of the company plunged 13.2% after its first-quarter 2014 earnings of 16 cents a share missed the Zacks Consensus Estimate of 22 cents and fell 33% year over year.
As predicted earlier, the company was hit hard by the faulty weather and transportation headwinds, causing net sales of the company to slip 2.9% from the year-ago quarter to $208.8 million, missing the Zacks Consensus Estimate of $218 million.
Moreover, adjusted gross profit of this Zacks Rank #4 (Sell) stock dropped 4.4% to a $55.9 million, with the adjusted gross margin shrinking 40 basis points (bps) to 26.8%.
Although Myers majorly lost sales in January and February 2014, the company's Material Handling segment performed well, especially in March. This segment posted a 13.3% rise in net sales to $90.6 million at the end of the first quarter, backed by robust sales in agricultural and food processing markets. Also, the adjusted net income prior to taxes soared 10% to $10.9 million, facilitated by greater sales volumes, partly impacted by unfavorable sales mix.
Net sales at the Lawn and Garden segment was most impacted by bad weather and transportation problems, as it tanked 17.5% from the year-ago quarter to $49.8 million. Moreover, this segment posted an adjusted loss before taxes of $0.1 million as against an income of $2.7 million in the prior-year period. The fact that benefits from the ongoing restructuring project were being washed away by the inefficiencies impacted the results.
Distribution segment sales declined 6.8% to $39.7 million, mainly affected by bad weather and the shutdown of this segment's outlets in Canada, during the quarter. Adjusted net income before tax for the segment remained flat year over year at $2.9 million, as the positive effects from an enhanced product mix were offset by soft sales.
Engineered Products segment sales and adjusted net income before tax decreased 11.5% to $32.7 million and 25.4% to $3.8 million, respectively, during the first quarter. The descent in sales was attributable to softness in transplant auto and custom sales, partly compensated by solid marine and RV sales.
The company ended the quarter with $5.7 million in cash. Its long-term debt stood at $116.7 million and total shareholders' equity came in at $228.7 million at the end of the first quarter.
During the quarter, Myers spent $4.7 million as capital expenditure and repurchased shares worth $5.1 million. Further, the company expects capital expenditures for 2014 to total nearly $35-$40 million.
Also, in February the company announced a 44% hike in its quarterly dividend, taking it to 13 cents a share, along with authorizing an additional share buy back program of $40 million. These factors reflect the company's capacity to generate healthy cash flows, its focus on driving shareholder value and its intentions to keep up with its efficient capital allocation.
Although Myers performed miserably in the first quarter, going forward in 2014, the company anticipates its full-year earnings to rise and expects to deliver another year of enhanced shareholder value, driven by cost curtailment initiatives and productivity gains from the second phase of the Lawn and Garden Segment restructuring initiatives.
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