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spk04: Hello and welcome to today's Myers Industries first quarter 2022 earnings call. My name is Bailey and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to Monica Vinay. Monica, please go ahead.
spk01: Thank you. Good morning. Thank you for joining us. I'm Monica Vinay, Vice President of Investor Relations and Treasurer at Myers Industries. Joining me today are Mike McGaugh, President and Chief Executive Officer, and Sonal Robinson, Executive Vice President and Chief Financial Officer. Earlier this morning, we issued a news release outlining the financial results for the first quarter of 2022. We have also posted a PowerPoint presentation to accompany today's prepared remarks. If you've not yet received a copy of either the release or the PowerPoint, you can access them on our website at www.myersindustries.com under the Investor Relations tab. This call is also being webcast on our website and will be archived along with the transcript of the call shortly after this event. Before I turn the call over to Mike, I would like to remind you that we may make some forward-looking statements during this call. These comments are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and involve risks, uncertainties, and other factors which may cause results to differ materially from those expressed or implied in these statements. Also, please be advised that certain non-GAAP financial measures, such as adjusted gross margin, adjusted operating income, adjusted EBITDA, and adjusted EPS, may be discussed on this call. Further information concerning these risks, uncertainties, and other factors is set forth in the company's periodic SEC filing and may be found in the company's 10-K and 10-Q filings. Please turn to slide three of our presentation, and I'm now pleased to turn the call over to Mike McGaugh.
spk02: Thank you, Monica. Good morning, everyone, and welcome to our first quarter 2022 earnings call. I'm pleased to share that first quarter 2022 was a record earnings quarter for Meyers. Our strategic vision and one Meyers approach have fundamentally changed the way we do business and how we operate our company. This vision has been our North Star, helping us get aligned and grow together. Our teams are beginning to look more like the collegiate rowing teams on the Charles River in Boston. Rowing together as a single unit in synchronicity with less effort producing more speed. The proof is in our first quarter results. Myers delivered record EPS for the quarter in our sixth consecutive quarter of double-digit revenue growth. During the quarter, we realized the benefits of pricing actions we've taken to counter inflationary pressures, and we increased our production to meet heightened demand from our customers. These actions drove a 29% increase in net sales for the first quarter. This momentum continued through the income statement with a 127% year-over-year improvement in adjusted EPS and an 82% increase in adjusted EBITDAO. Our strong results in the first quarter gave us confidence to raise both our net sales and adjusted EPS expectations for the full year. Donna will discuss our revised guidance in her remarks. Please turn to slide four, which has a more detailed financial summary of the quarter's results. We had sales of $225 million, up 29%, compared with the first quarter of 2021, which in part was due to stronger-than-expected seed demand, healthy demand in most of our end markets, and incremental revenues from the acquisition of Trilogy Plastics. Throughout the quarter, we were able to realize the benefits of the pricing action taken by our commercial teams in 2021. These actions successfully countered cost headwinds stemming from strained raw material supplies and ongoing inflationary pressures in raw materials freight and labor. We also continued our efforts to be a highly reliable and value-added partner to our customers. We are true to our four corporate values with specific emphasis on being customer focused. As a result of this focus, our continued reliability supplying our customers, we generated the second consecutive quarter of operating margin expansion while also growing sales. Before I turn the call over to Sano for an update on our financials, I want to reiterate how gratified we are with Meijer's first quarter performance. This performance is one more proof point that demonstrates the opportunity and the potential that exists in Meyers. Our team has done a lot of work over the last two years in the area of self-help in improving our plants, our capacity, and our capability. The changes we've made to this company are deep and will be long lasting. Recently, a potential investor took pause after listening to the changes I described that were underway at Meyers. She cleverly remarked, you're taking large cap capabilities and bolting them to a small cap body. I think that's a great way to describe what we're doing, attaching large cap capabilities to a small cap body. I think we've uncovered an approach that will generate superior returns in long-term shareholder value creation. We are a diversified industrial company that has a number one or number two position in most of our niche markets. We believe that much of our business is resilient to potential macroeconomic headwinds. It's compelling. As I say on every call, I like the progress I see. We are transforming the company. However, we are still just getting started, and we are in the early innings of what's possible for Myers Industries. Now I'll turn the call over to Sonal to review the first quarter financial results and provide our updated 2022 outlook. I will then spend a few minutes discussing our progress to date and current goals for our three horizon strategy. Sonal?
spk00: Thank you, Mike, and good morning, everyone. Let me begin by reiterating that we are extremely pleased with our performance in the first quarter. As you can see on slide four, sales were up $51 million, or 29%, with healthy underlying demand across most of our key end markets. Adjusted gross profit increased 44% for $21.9 million, primarily driven by higher prices and metrology plastics acquisition. Our pricing and sales teams executed pricing exceptionally well last year, which allowed us to realize our second quarter of a positive price to cost relationship. In addition to higher raw material costs, other inflationary pressures, particularly in our labor and manufacturing costs, continue to impact our results and partially offset some of our gross profit growth. Despite this, gross margin increased 320 basis points for the quarter, from 28.9% in the prior year to 32.1% this year. Adjusted operating income was $25.8 million, an increase of $14 million. Increased first profit was partially offset by higher SG&A expenses related to higher salaries and incentive compensation costs, along with increased variable selling expenses. However, as a percentage of sales, adjusted SG&A expenses decreased to 20.9% in the first quarter compared to 22.1% in the prior year. Adjusted EBITDA was $31 million, an increase of $14 million, or 82% compared to the prior year. Adjusted EBITDA margin was 13.8% for the first quarter, compared with 9.8% in the prior year. Lastly, adjusted EPS was 50 cents, an increase of 28 cents, more than doubling last year's first quarter EPS. Please turn to slide five for an overview of our segment performance for the quarter. Beginning with material handling, net sales increased $47 million, or 36%, including the trilogy acquisition, which occurred at the end of July 2021. On an organic basis, material handling net sales increased approximately 28%, driven by favorable pricing of 24% and strong volume mix, which contributed another 4%. Notably, organic net sales increase in the vehicle, industrial, food and beverage, and consumer end markets. Material handling's adjusted operating income increased $15 million, or 88%, to $31.9 million. As Mike mentioned, we did see better than expected seed sales during the quarter, which tends to be a fourth and first quarter event for us. Additionally, our pricing actions more than offset the higher raw material input costs in the quarter. Inflationary pressures related to labor and other manufacturing costs partially offset these benefits. SGMA expenses were higher, primarily due to the trilogy plastics acquisition, higher compensation costs, increased variable selling expenses, and higher facility costs. In the distribution segment, sales increased approximately $4 million, or 10%. The increase was driven by our previously noted pricing actions. Distributions adjusted operating income increased $1.3 million, for 68% to $3.3 million, a favorable price-to-cost relationship more than offset the higher SG&A expenses. Turning to slide six, free cash flow was $2.2 million compared to $1.4 million for the first quarter of 2021. Cash from operations increased in the quarter driven by income growth, partially offset by an increase in cash used for working capital, primarily accounts receivable and inventory. Capital expenditures were $5.1 million for the quarter and cash on hand at quarter end was $17.6 million. Overall, our balance sheet remains strong with leverage at 1.2 times, and our capital structure continues to provide the flexibility needed to execute on our long-term growth strategy. On slide seven, turning now to our updated outlook for fiscal year 2022, Given the strength of our results in the first quarter, along with the additional pricing actions we've taken, we now anticipate our net sales to increase in the low to mid-double-digit range versus our previous outlook of a high single to low double-digit range. Approximately one quarter of the sales increase is distributed to the incremental seven months of sales related to the trilogy acquisitions. Significant pricing actions taken throughout 2021 combined with healthy underlying demand across most of our end markets are expected to drive growth in 2022. We are also raising our full-year adjusted EPS outlook from a range of $1.20 to $1.40 per share to a range of $1.30 to $1.50 per share. At the midpoint of our range, this reflects more than a 40% increase over our 2021 adjusted EPS. Once again, keep in mind that the first quarter was a record earnings quarter for the company. While resin costs had somewhat moderated in the first quarter, we are beginning to see signals of upward movement in the near term and have continued to take additional pricing actions in response. We expect that the pricing actions we've taken to date, along with our ability to continue to take future pricing costs at inflation, should drive over 200 basis points of gross margin expansion for the full year. Recall that adjusted gross margin for fiscal year 2021 was 27.9%. Estimated expenses are still expected to approximate 22% of net sales, primarily reflecting investments we are making in our people, processes, and operational efficiencies. Other key modeling assumptions include depreciation and amortization expenses of approximately $23 million, capex in the range of $25 to $28 million, interest expense of $5.5 million, and an effective tax rate of approximately 26%. Despite increased CapEx, we expect higher earnings to translate to increased cash flow in 2022. Before I turn the call back to Mike, I want to extend my gratitude to the Myers team for their tireless efforts in delivering an outstanding quarter. I'm confident in our ability to foster long-term growth and execute our strategic plans in 2022 and beyond.
spk02: with that i'll turn the call back over to mike to provide an update on our strategy thank you donald great work well done uh let's turn to slide eight i'm now in my third year as ceo of myers and we've been running our three horizon strategy for about two full years we're seeing meaningful and lasting results which continue to give me confidence in delivering our Horizon One goal of a run rate of $1 billion in annual revenue at a 15% EBITDA margin by the end of 2023. Although we're technically in Horizon One, we are starting our planning and our preparation for Horizon Two. The future is exciting and we'll be here soon. that excitement aside our key to meaningfully growing myers in sales and profitability is executing against our core tenants of horizon one self-help which provides the oxygen and the funding for the next two elements which are organic growth and bolt on in the name in the area of self-help our internal pricing excellence group has helped our commercial teams analyze and better understand data better understand the value our products bring, and we are seeing the results in gaining traction in value-based pricing. In addition to pricing excellence, we focused on making S&OP a core confidence as well. Over the past few quarters, we piloted a robust sales and operation planning process in one of our plastics businesses. The results were very good. The plan hit production and profitability records. We've since rolled out this pilot to a few of our other businesses and plan to continue to roll this out to all businesses in Meyers, completing work over the next 12 to 24 months. The enhanced S&OP increases output and ensures that we can reliably supply our customers. This reliability of supply puts us in good speed with our customers, often putting us in a preferential position to grow with them. In the area of organic growth, I'm proud to say that this was our sixth consecutive quarter of double-digit sales growth. Customer demand has continued. Our sales training and market planning processes that I've spoken about before have been a breakthrough. The new sales and market planning processes have provided alignment across our commercial and operations teams. We are rolling together. Going back to my Charles River analogy, we're one of those eight-person boats that are smooth and in balance. Not failing, not struggling, we have alignment. We're on plane and we're moving faster with more harmony across the water. Just like watching those apes cut across the water when we hit stride at Myers and we're rowing in synchronicity, it's a beautiful thing. We're having more of those moments with each passing month and quarter. Yes, we still have our moments of struggles when we fall out of sequence. Those moments are becoming less and less frequent. Regarding bolt-on M&A, Elkhart and Trilogy acquisitions continue to increase their contributions to our financial results. Elkhart and Trilogy are proof that we will have discipline in our acquisitions. We will buy companies with an easy-to-see and easy-to-understand competitive moat. We'll buy talented leadership teams and we'll pay a fair price. In Q1, we received numerous inbounds and we passed on many. We're not going to get starry-eyed. We will have discipline our acquisitions in which ones we pursue. This discipline is important. We treat the opportunity to shepherd our shareholders' capital as an honor, not a right, and we'll make decisions accordingly. From a pipeline standpoint, we're always evaluating potential M&A opportunities within both our material handling and distribution segments, and we continue to be pleased with our prospects. Slide 9 outlines the strategic pillars of Verizon One of our strategy. This one slide is the simple, clear playbook for our true north, our strategic objective. We will execute and deliver the strategic objective by driving the four pillars, organic growth, strategic M&A, operational excellence, and by having a high-performing culture. We will have success in execution because we have clearly defined the areas of focus for each of these four pillars. These areas of focus have specific action items for the year 2022 and are paired with a single executive team member who is accountable for delivering results. This drives alignment, drives clarity. It's the coxswain that helps us keep tempo and roll together. Now, I'd like to walk through our progress against those pillars quickly on slide 10. With the first pillar, we have seen encouraging and consistent organic growth in both top and bottom line, which has allowed us to hire new, excellent people with world-class global multinational training and experience. With respect to our sales efforts, our teams are better trained. That training continues. Our teams are focused and incentivized on profitable growth, on cross-selling, and on pricing our products for the value they deliver. now on to strategic M&A, which has been an integral part in helping the company get scale. Over the past two years, through the deals we've consummated and the opportunities we've evaluated, we've learned. These valuable lessons and approaches have been incorporated into a proven integration playbook, which is helping us better identify, negotiate, and integrate newly acquired businesses. Moving on to operational excellence. This is an area where we are truly transforming Meyers in an area where we have added the greatest concentration of world-class talent and capability. As I mentioned earlier, we continue to implement SNLP across our businesses. These improvements are helping us better schedule, plan, and operate our plants. By doing this, we are identifying a hidden factor. We are identifying and unleashing additional capacity. Finally, we've seen meaningful improvements in our high-performing culture. We have and will continue to transform Meijer's mindset into a culture of winning. We are now doing company-wide employee development planning and succession planning. We've instilled robust, world-class frameworks and processes to ensure that we are developing our associates and leaders with an eye to their aspirations and needs over the next five years and the company's aspirations and needs over the next five years. We want our employees to have the career they seek here at Meyers. We run a low ego servant leader model. Servant leadership inspires all of us to serve our people. Servant leadership requires a roll up the sleeves and get the job done mindset. All of us take the hill together. The servant leadership approach is resonating very well. especially with the post-COVID mindset where our employees are interested in not only delivering great products reliably to our customers and making a great return for our shareholders, they're also interested in doing good for society and doing good for each other. We've now completed four waves of servant leadership training covering over 100 leaders. I've participated in all of the sessions. I often hear from seasoned veterans that this is the best training I've ever been through. It's remarkable. Something special is happening at Meyers in terms of culture. I'll close today by thanking our current investors for their confidence. We delivered solid results last quarter, and I continue to believe that our performance will continue to build in the future. We can't forecast precisely how every quarter will shake out in the near term. However, with all the great things occurring at Meyers, with our transformation underway, I'm confident that over the long term, we are continuing We are moving the company up and to the right. The company has done a remarkable journey, and I encourage you to join us on that journey. With that, we'll turn the call over for questions. Operator?
spk04: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question today comes from Steve Barger from KeyBank Capital Markets. Steve, please go ahead. Your line is now open.
spk03: Thank you. Good morning, everyone. Hey, Steve.
spk01: Good morning.
spk03: Great to see operating leverage come back on strong revenue growth. So I'll start with the guidance. Seems like 1Q will be the peak revenue and eps quarter um demand still seems solid you're getting traction on the pillars you've been aggressive on price what what will cause the operating margin to step back to more single digit for the rest of the year you know steve so this is mike i'll address the nice donald to follow up um we still see some underlying pressure on raw materials
spk02: That's a bit uncertain to what degree that will take, but we see some underlying pressure on raw materials. There's a little bit of mix that we're watching, mainly in our consumer segment with some of the fuel containers. You know, it's been a colder, wetter spring, and so you have a little bit of a lag in some of the sales of those products. I think you'll see that in lawn and garden with most all segments. What we've got also is just some uncertainty with inflation, with the macros, with the war, with product availability. Tell me, Tom, do you want to add anything to that? Sure.
spk00: Good morning, Steve. So I would just reiterate that 2021 was a very strong quarter for us. We had extremely strong feed box sales. We realized the accumulated benefits of pricing actions that we took in 2021, as you recall, A lot of that really benefited us last year in Q3 and Q4. So from a lapping standpoint, we'll get a greater benefit in Q1 and Q2 of this year that will start to moderate then as we go throughout the back of the year. And then as we mentioned in Q1, we did see resin costs starting to moderate. So sequentially it was down, but still up year over year. And as Mike mentioned, we are seeing some inflationary kind of pressures on that in the short term there.
spk03: Understood. And Mike, You made the comment that much of the business is resilient to macro headwinds. And I know you list consumer as 15%, but what percentage of products would you consider more consumer discretionary? Stuff that goes into recreational activities like RVs, boats, coolers?
spk02: Let's see. I may have to get back to you on that one, Steve. I would say the lion's share of our products, if you look at how diversified we are, for being a smaller company, and then the traction and uptake of those particular products, the end markets, we're still seeing strong demand. We're still seeing strong demand. And again, like I said, I think our product mix is relatively resistant, even if we have some difficult headwinds in the back half of the year from a – inflationary environment and some cooling in the economy. And I think our products are going to be quite resilient. I think our product mix is going to be quite resilient. On the specific breakout there, I may have to come back to you on that.
spk03: Okay. Longer-term question. Working through the guidance, it seems like you expect EBITDA margin in the mid-11% range this year, maybe 12%. So you'd need three to 350 basis points of expansion in 2023, right? Will that be mix or price or volume? Can you talk about what the margin expansion roadmap is from here to the end of Horizon 1?
spk02: Yeah, for sure. I think some of it is the S&OP work, lowering our cost division. Some of it is getting a continued pricing traction and holding prices as raw materials start to wane. And then some of it is just volume and operating leverage across the company. So I don't want to say it's a third, a third, a third. The margin targets we talked about as a run rate in 2023, Steve, I've got confidence in them. I can just see how much potential is in the company.
spk03: Great. I have more, but I will get back in line and see if anybody else has questions.
spk04: Thanks, Steve. Thank you. Thank you, Steve. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. The next question today comes from Jonathan Navarette from Cowan. Jonathan, please go ahead. Your line is now open.
spk05: Hey, good morning, everyone, and congrats on the quarter. I'd like to start with the pricing. So, you know, the team has done exceptionally well, as you mentioned, in 2021. And I'm wondering here, you know, with all of the inflationary pressures that the whole country is facing, the world for that matter, how quickly can buyers adjust to the rising costs? How quickly can you pass on those costs to its clients via price action? And what is the typical lag that pricing has with costs?
spk02: Yeah, Jonathan, typically, as we've talked in the past, it's a quarter, maybe two, depending upon the product line. But this was a real area of focus for us over the last 24 months, is we talk about not pricing to our costs, but pricing to the value we deliver to our customers, being a highly reliable supplier. And in these times, that's been highly important to our customers, is being able to deliver the right product at the right time. That's given us, as I talked about, a bit of a leg up, we believe, on partnership and preference from our customers Not to say the pricing doesn't matter, but it's been a secondary issue many times, availability. Our customers are more concerned with availability. So we do price to the value we create. That's a whole different mindset, and we've brought in a number of people who have helped us change that mindset. So going back to your original question, you know, a quarter to two lag, but I just think it's going to be sustainable in a way that's not been present in Meijer's in the past.
spk05: Chris? And I guess to that end, since the company's pricing based on value, despite what costs have, whether costs go up or down in the future, it seems like the value can only increase, right? So perhaps the pricing will stay and it won't go down in tandem with costs, correct?
spk02: Yeah, again, we can't hold it forever if we have a significant recessionary environment on a U.S. economy basis or a global basis. But the spread between our cost and our sales price, we're going to continue to drive a wedge between that. We have good products. We have good brands. We make quality products. Most of the time, we have a competitive moat. As I've mentioned before, we make big, bulky products. We don't have competition from faraway lands. I think there's a resurgence of U.S.-based manufacturing. There's a resurgence of Made in America. I think that's going to be a tailwind for us for many years. And we've brought in a number of world-class people that are helping us dial in our plants. Our OEE operating rates are, in some instances, the best they've ever been. And so I think all these things are coming together in the outlook for the company. I'm very bullish on it. As I mentioned before, look, every time you pick up the newspaper, every podcast, every news broadcast, there's a discussion on uncertainty, inflation, interest rates, the war. There's so much uncertainty. It's tough for us to get too aggressive May 5th about our outlook for the next year and years. But as I said, look, our heading is up and to the right. There's just a lot of good things going on here, and that's what makes me very excited and bullish.
spk05: Right. And just my last one, you mentioned one of the most important things to your customers is availability, and that's something that is resounding throughout all of our coverage universe, really. And to that end, given the demand is so robust right now, is the company having or can potentially see any trouble meeting demand perhaps in the second half of the year or, you know, given the inventory filled up that there is, like you guys are in a good point right now where you can meet demand and it can even meet it if we were to increase?
spk02: Yes. Yes, we can, to answer your question. So how we're doing that is we put a lot of focus on employee recruitment, on contingent staffing, on how we schedule and run our plants, the shift schedules, so that they allow us to get most product out the door in a way, in creating an environment that is good for our employees and allow us to retain them. That's more the factory and the shop floor. I feel good about that. I feel good about that piece. Now, I'll just leave it at that.
spk05: Okay. Got it. Thank you so much. Congrats again.
spk04: Thank you. Thank you. Thank you, Jonathan. Next up, we have a follow-up question from Steve Barger from KeyBank Capital Markets. Please go ahead. Your line is now open.
spk03: Thanks. Mike, can you give some more tangible examples around what you're finding with the hidden factory comment? How is that working and manifesting?
spk02: Yeah, so, Steve, I'll give an example. So we have, depending on how you count it, 80 to 100 machines across our plastic side. And what we found, some of these businesses that we've acquired, as well as some of the people we've brought in, have a really good experience set with running S&OP, doing better supply planning, better demand planning, and even just optimizing the shift schedule. So we've gone to a different shift schedule as an example in our Roto business. It's called 358, three shifts a day, five days a week, eight hours a day. In that discipline and that rigor and that approach, what we're finding is we have more capacity than we anticipated. We look at a particular plant, Middlebury, Indiana, Bristol, Indiana, and we thought we were sold out. We brought in a SWAT team to help us better schedule these plants and better schedule our machines, get the right products on the right machines. Steve had longer runs. Those longer runs and less changeover and less downtime the results have been remarkable. As a result, we're finding that we've got, you know, 20, 30% more capacity in some of these locations than we ever thought we had. And so the great thing is it's really, it's free capacity. It's free capacity so we can be a better, more reliable supplier. We're running our employees less hard and less ragged. And then we're also finding that we can just really put our foot on the gas and chase sales in a way that we maybe thought wasn't available 12 months ago.
spk03: That's great to hear. Very positive. Shifting to M&A, the macro world is obviously changing. Can you just update us on how you're thinking about the multiple that you're willing to pay, time requirements for a deal to show accretion, or hitting corporate ROIC, or just how you're thinking has changed around M&A, if at all?
spk02: Yes. Steve, it hasn't a lot. I mean, what we're always trying to do is buy – privately owned businesses that have good bones that probably need some improvement in how they're operated. We feel we can operate them better. In buying those businesses, we can typically get in for a turn or two less. Some of these businesses seek to not be acquired by a financial buyer. And oftentimes, these owners will take a turn or two less on their multiple to partner up with a company like Meyers, which has a good reputation. of taking care of the employees and growing the business. Oftentimes that's important to the owner. And so we're able to buy businesses at reasonably good prices, and then through cost synergies and growth synergies, they become even more compelling. The accretion and ROIC targets, IRR targets, quite frankly, all the deals that we're looking at, all those numbers are really off the charts, I mean, you know, directionally. And so we're finding that we're getting more inbounds. We're getting more inbounds. I think valuation expectations are still pretty high. I believe that those valuation expectations may start to soften a bit. And I think it's going to play very well into our hands given our balance sheet position and also the fact that, hey, we'll have two or three or four of these deals under our belt. We'll be better at integrating them. Again, that gives me some optimism as well.
spk03: And I think you said that you had walked away from a few. Is that due to price or culture or just product fit?
spk02: For the things you're passing on, what's the – Yeah, what we're finding, Steve, is that culture piece is so important. The culture piece is so important. But what we do is we'll find businesses that we think fit in terms of the leading position in a niche market segment and that we can help them get better and they can bring something to us. But we'll go through and diligent, and even if we're two, three months in, even if we've spent some money, if it's not right, it's not right. And so we'll constructively find a way to move on. But it's just we can't be starry-eyed and chase things. If we start to see some things that make us a little concerned, I hate to say it, but we'll have to pull the plug, and we've done that.
spk03: Got it. I have gotten a couple of questions from investors around your automotive exposure, just given volatile production schedules. I know you sell more to the factory floor, but has that affected you at all?
spk02: No, at this point it hasn't. In fact, that piece of business, our damage business, because of all the model changeover, Steve, actually that should have a pretty good run rate for the balance of the year.
spk03: Yeah. Okay. And then last one for Sonal. Just from a near-term modeling perspective, do you expect revenue will be up sequentially coming off what was obviously a record quarter?
spk00: Yeah. Steve, the way I would answer that is from a top-line standpoint distribution, you saw some nice top-line growth there in Q1. I would expect that to be in a similar type of range. As you think about material handling, we saw very nice growth in Q1. Clearly, we'll start lapping some of the pricing benefit that we saw in Q1, in Q2. And then also, given the strength of the seed box sales season in Q1, we would expect not to probably see as large of a growth there, but still a very nice sizable growth organically.
spk03: Double digit. Understood. Thank you. Yeah, I guess I do have one more. With higher fuel prices... does that affect does a change in miles driven affect distribution i mean it seems like it should since tire repair how are you thinking about what the forward look is for that just given you know dash prices above four bucks yeah steve that's a good point i was with actually the blow molding team yesterday at one of their operational reviews and on the mts side we're not seeing it as much um the distribution side we're not seeing it as much
spk02: Where you are seeing it and we're watching it, and we don't know if it's a trend or just a data point, you know, look, we had a cold, wet spring. Some of the fuel can sales were a little slow, you know, as you would expect in the spring. We're also watching, you know, our customers, so the Polaris's of the world, the Thor's of the world, et cetera, they have positive outlooks on the recreational toys, recreational products. They have positive and bullish outlooks. What we don't know is, you know, is inflation costing going to have people not camp, not ride their ATVs, not take their boats out? What is that impact? The signal we're getting right now is that the impact will be negligible, if any. But it may actually cause us to temper even our outlooks. a little bit. We just don't know. We just don't know how much inflation. I was in Walmart last weekend looking at all the prices. It's almost like we caught six to seven years of inflation in four to five months. And I don't know how much that's going to affect consumer demand. It's just uncertain, and that's causing us to have a little bit more of a tempered outlook.
spk03: Yeah, I should have been more clear earlier in the questioning. I mean, that really was the motivation for the consumer exposure question. It seems like there has to be an impact at some level to this recreational stuff.
spk02: You would think. You would think. You know, again, the order books still seem strong. The reports of those customers are still bullish. But we're watching it, Steve. You know, things look okay for us. Like I said, I don't want to belabor it, but we did have a little bit of a slower start in that piece in second quarter. But it remains to be seen. And that's why I said there's just uncertainty. That's the reason we're not coming out with a bigger swing on some of our outlooks, because it's just 2022, there's going to be uncertainty.
spk03: Understood. Thanks for the time. Thank you.
spk01: Thank you.
spk00: Thank you, Steve.
spk04: Thank you, Steve. As a final reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. There are no additional questions waiting at this time, so that concludes the Myers Industries first quarter 2022 earnings call. Thank you for your participation. You may now disconnect your lines.
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