Myers Industries, Inc.

Hello and welcome to the Myers Industries fourth quarter and full year 2023 results. My name is Harry and I'll be coordinating your call. If you'd like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I'll now hand over to our host, Megan Berringer, Myers Industries Senior Director, Investment Relations, to begin. Please go ahead.

Thank you, Harry, and good morning, everyone. Thank you for joining Myers Conference Call to review 2023 fourth quarter and full year results. Joining me today is Mike McGaugh, our President and Chief Executive Officer, and Grant Fitts, Executive Vice President and Chief Financial Officer. Earlier this morning, we issued a press release outlining our financial results for the fourth quarter and full year 2023. We have also posted a presentation to accompany today's prepared remarks, which is available under the investor relations tab at www.myersindustries.com. This call is also being webcasted on our website and will be archived along with the transcript of the call shortly after this event. After the prepared remarks, we will have the question and answer session. Please turn to slide two of the presentation for our Safe Harbor Disclosures. 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 profit, adjusted operating income, adjusted EBITDA, and adjusted earnings per share, or EPS, may be discussed on this call. Further information concerning these risks, uncertainties, and other factors are set forth in the company's periodic FCC filings and may be found in the company's 10-K and 10-Q filings. Now, please turn to slide three of our presentation. I am pleased to turn the call over to Mike McGaugh.

Thank you, Megan. Good morning, everyone, and welcome to our fourth quarter and full year 2023 earnings call. I'll begin with a review of our full year 2023 highlights, but first I'd like to thank all of our team members whose hard work, dedication, and day-to-day efforts continue to improve the strength of our company. Our team has made incredible progress transforming Myers Industries over the past few years. That progress is evident in our 2023 results as we delivered improvements in operating performance and free cash flow generation despite cyclical weaknesses in several of our end markets. We first outlined our three horizon strategy shortly after I joined Myers Industries in 2020. And since then, much of our team's work has been focused on building a strong foundation for the company. I'm pleased with the progress we've made so far, and I look forward to sharing even more details of our journey at our upcoming Investor Day event on March 19th in New York City. At this event, we will outline our growth strategy for Horizon 2 and the updated long-term outlook for our company. We hope many of you will join us in person for this event. Now onto our full year 2023 highlights. On many measures, I'm pleased with our results for the year. That said, I am less than satisfied that we did not build on the very strong results we achieved in the prior year. Starting with the positive, calendar year 2023 was one of the top years in the history of our company for earnings per share, adjusted EBITDA, and revenue. We grew adjusted gross margin, expanding at 40 basis points year-over-year to 32%. We improved cash flow, producing $86 million in cash flow from operations and $63 million in free cash flow, a $15 million year-over-year improvement. Due to our team's continued focus on the self-help levers of operational excellence and commercial excellence, we were able to achieve these results despite challenging in-market conditions in macroeconomic and inflationary headwinds. While I'm proud of our team's efforts in the face of a challenging economic environment, I'm disappointed that on several measures, we fell short of our objectives for the year. Compared to prior year results, our revenue declined just under 10% to $813 million. Our adjusted EBITDA declined just over 10% to $98 million, And our adjusted EPS declined just over 17% to $1.39 per share. On the heels of a strong 2022, where we grew EBITDA 51% and earnings per share 73% year over year, these 2023 results were disappointing. To improve our results, we continue to implement the operational excellence and commercial excellence techniques and know-how brought to Meyers through the experienced leaders I've recruited from large cap companies. Our self-help mindset and measures are now ingrained in our company and are being institutionalized and made permanent in the best practices playbook we call the Myers Business System. This system raises the floor of our earnings potential during times of soft, cyclical in-market demand as we experienced over the past year. Other, the Myers Business System is accelerating our transformation by delivering simplified and standardized work processes across our company. As a result, when we are faced with headwinds from our end markets, as we experienced in 2023, our businesses will be even more resilient than they have been historically. We already see many of the benefits of these practices. For example, despite cyclical headwinds from RV, marine, and consumer end markets, the material handling segment delivered solid fourth quarter results with strong margins. Operational excellence initiatives delivered more productivity liberating more capacity on our assets, what I've referred to in past calls as a hidden factory. This additional production capacity is unlocked by optimizing how we operate and schedule our assets. We expect that this improvement in productivity will allow us to continue to optimize our asset footprint and reduce fixed costs in the future. In our distribution segment, the business did not deliver the results I expected. Fourth quarter results were disappointing, unfavorably impacted by a short-term decline in sales volume and revenue, primarily due to a strategic realignment of the sales organization undertaken in the third quarter. Sales revenue and volume were also negatively impacted in 2023 due to inefficiencies from the lack of a fully integrated ERP system in the segment. These inefficiencies have now largely been remediated with the recently completed consolidation of ERP systems for the distribution segment. Longer term, both the Salesforce realignment as well as the newly integrated ERP system will enable Meyers to better capitalize on its size, scale, and service level capabilities in this segment. As consolidation occurs in the tire repair industry and as independent tire service centers are rolled up into national chains, Meyers Industries is best positioned to serve these nationwide accounts. The distribution segment will also benefit from the Meyers Business System initiatives just as we are now seeing in the material handling segment. Finally, we announced in early 2024 the acquisition of Signature Systems, which moves us significantly toward our Horizon 1 target of $1 billion in sales at an EBITDA margin of 15% or more, and positions us well for Horizon 2. In acquiring Signature, we have added to Meyers a differentiated, profitable, high-growth business. Signature represents another important step in achieving even greater in-market diversification and less cyclicality in our overall results. We believe Signature Systems is the catalyst for Meijer's transformation and will be a growth engine for the company. Continue to be excited about our growth prospects, many of which have a long-term runway. In our material handling segment, our development programs in military cases and containers, continued strong demand for our industrial products, and the success in our e-commerce sales channel efforts are all solid multi-year growth platforms for Meyers. In addition, we expect our distribution segment to demonstrate revenue growth and improve profitability as we begin to realize the benefits from the sales organization improvements and the ERP consolidation. Finally, bringing Signature into the Meyers family will open new growth opportunities across broader end markets. Today, our company is unrecognizable from the one I joined in 2020. Through Horizon One, we sharpened our acquisition and integration capabilities by deliberately learning with smaller scale acquisitions. We now have more capability that enables us to pursue larger, more value creating acquisitions like Signature. Our sustained progress with commercial excellence and operational excellence, which are robust self-help measures, have raised the floor of Meijer's earning potential when some end markets are facing trough-like conditions. These key elements of Horizon 1 will serve as the foundation for long-term shareholder value creation as we advance through our Three Horizons strategy in the coming quarters and years. Now, I'll turn the call over to Grant for a detailed review of our 2023 fourth quarter and full-year financial results, as well as more details on our 2024 outlook. Grant?