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CL King Best Ideas Conference September 12, 2013
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Page 1: CLKing# # BestIdeasConferences2.q4cdn.com/555961355/files/doc_presentations/CL-King... · 2015. 10. 17. · ForwardLookingStatements # 2 Statements in this presentation concerning

CL  King    Best  Ideas  Conference  

September  12,  2013  

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Forward  Looking  Statements  

2  

Statements in this presentation concerning the Company’s goals, strategies, and expectations for business and financial results may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current indicators and expectations. Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we "believe," "expect," or "anticipate" will occur, and other similar statements), you must remember that our expectations may not be correct, even though we believe they are reasonable. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You should review this presentation with the understanding that actual future results may be materially different from what we expect. Many of the factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statement. We do not intend, and undertake no obligation, to update these forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. Such risks include:

(1) Fluctuations in product demand and market acceptance

(2) Uncertainties associated with the general economic conditions in domestic and international markets

(3) Increased competition in our markets

(4) Changes in seasonality

(5) Difficulties in manufacturing operations, such as production outages or maintenance programs

(6) Raw material availability

(7) Fluctuations in raw material costs; fluctuations outside the “normal” range of industry cycles

(8) Changes in laws and regulations and approvals and decisions of courts, regulators, and governmental bodies Myers Industries, Inc. encourages investors to learn more about these risk factors. A detailed explanation of these factors is available in the Company’s publicly filed quarterly and annual reports, which can be found online at www.myersindustries.com and at the SEC.gov web site.

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Strategic  Goals  

Strategic  &  Financial  Goals  to  Drive  Shareholder  Value  

•  Focus  on  industries  that  have  strong,  sustainable  growth  and  profit  potenHal  

•  Posi)on  our  businesses  to  grow  through  new  products,  geographic  expansion  and  acquisiHons  

•  Invest  within  our  five  business  growth  plaKorms  for  value  creaHon  

•  Maintain  a  strong  and  flexible  balance  sheet,  providing  funds  for  acquisiHons  and  returns  to  shareholders  

•  Op)mize  Lawn  &  Garden  with  Phase  1  and  Phase  2  projects  

3  

•  Sales  Growth  >  1.5x  GDP  

•  Gross  Margin  >  29%  

•  EPS  Growth  >  20%  CAGR  

•  Free  Cash  Flow  ≥  100%  of  Net  Income  

 

•  ROIC  >  Cost  of  Capital  

•  L&G  to  return  Cost  of  Capital  in  2015  

Financial  Goals  

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Company  at  a  Glance  

4  

•  NYSE:  MYE  •  Founded  in  1933  •  Headquartered  in  Akron,  OH  •  3,378  employees  •  Diversified  InternaHonal  

manufacturer  of  polymer  products  and  wholesale  distributor  that  operates  in  four  segments  

2012  Net  Sales  2012  Adjusted  

EBIT  

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Business  Segments  

5  

Poly

mer

Pro

duct

s D

istr

ibut

ion

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Growth  PlaKorms  

6  

Pla$orm   Segment   Growth   Recent  Acquisi8ons  

Returnable  Packaging  

Material  Handling  

Drive  conversions  to  reusable  products  through  further  penetraHon  of  food,  liquid,  bulk  solids  and  

agricultural  markets.  Novel  

Storage  &  Safety    

Products  

Material  Handling  

Further  grow  plaKorm  with  acquisiHons.  Strengthen  compeHHve  advantage  through  distribuHon  

channels.  

Jamco  Products  Inc.  

Tire  Repair  &  Retread  Products  

Engineered  Products  

Leverage  product  and  customer  experHse  to  grow  niche  market.    

Specialty  Molding  

Engineered  Products  

Expand  our  capabiliHes  to  further  grow  our  posiHons  in  Marine  and  RV.    

Tire  Supply  Distribu8on   DistribuHon   Grow  through  market  reach,  innovaHve  products  

and  expanded  global  sourcing.    

Myers  Tyre  Supply  India  Limited  Inc.  

•  We  will  conHnuously  upgrade  the  value  of  Myers  through  disciplined  por$olio   management   and   a   structured   organizaHon   operaHng  around  market-­‐based  growth  pla$orms:    

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AkroShelf

InnovaHve  New  Products  2013  Divider Label Tab

32x30 Bulk Box (Gen II) 640-lb

CheeseBox

Grower Decorative Containers

Decorative Products for Retail

AirFlexx Bendable Air Valve

Angle Vu Label Holder

Tiltview Product Line

Novel Beverage

Crate

Myers Pneumatics Line

Redesigned AkroBin Lids

TPMS Program

Tool

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OpHmizing  Lawn  &  Garden  

•  Second  phase  of  Lawn  &  Garden  Segment  restructuring  announced  July  18,  2013  •  Targeted  to  deliver  annual  profit  improvement  of  approximately  $8  million  •  AcHons  include  closure  of  two  plants  and  opening  of  a  west  coast  plant  to  posiHon  

the  segment  for  future  growth  •  Pre-­‐tax  costs  esHmated  to  be  approximately  $15  million  of  which  $3  million  will  be  

non-­‐cash  costs  

•  Phase  one  of  restructuring  was  announced  February  13,  2013  

•  Product  line  simplificaHon  anHcipated  to  yield  annual  profit  improvement  of  approximately  $5  million  

•  Pre-­‐tax  costs  esHmated  to  be  approximately  $2  million  of  which  $1  million  will  be  non-­‐cash  costs  

•  Combined  annual  profit  improvement  of  $13  million  ($0.24  per  share)  from  phases  one  and  two  of  restructuring  should  enable  the  Lawn  &  Garden  Segment  to  generate  returns  above  the  company’s  cost  of  capital  in  2015  

 

8  

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$3.5   $3.5   $3.5  

$5.0   $5.0  

$8.0  

$-­‐

$2.0  

$4.0  

$6.0  

$8.0  

$10.0  

$12.0  

$14.0  

$16.0  

$18.0  

2012  Adj.  EBIT* 2012  Adj.  EBIT*  with  Phase  1

2012  Adj.  EBIT*  with  Phases  1&2

Lawn  &  Garden  Pro  Forma  EBIT

Phase  2  Benefits

Phase  1  Benefits

2012  Adjusted  Earnings  Before  Income  Taxes  (EBIT)

OpHmizing  Lawn  &  Garden  

9  

$Millions  

Lawn  &  Garden  2012  identifiable  assets $128.3MLawn  &  Garden  2012  pro  forma  adj.  EBIT  with  all  benefits $16.5MLawn  &  Garden  2012  pro  forma  pre-­‐tax  return  with  all  benefits 13%

*See 2012 Reconciliation of Non-GAAP Financial Measures in appendix

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Progress  Towards  Financial  Goals  

10  

Key Accomplishment Metrics Metric Goal 2013 June YTD 2012

Sales Growth* > 1.5x GDP 10.3% 4.7%

Gross Margin > 29% 27.2% 27.4%

EPS Growth** > 20% CAGR 43.7% 21.8%

Free Cash Flow ≥ 100% of Net Income 123% 113%

ROIC*** > 10% 10% 10%

Innovation / NPD**** >10% of Sales 6% 6%

Operations Excellence Savings = 5% of COGS (gross) 2% 3%*Using real GDP forecasted and actual growth rates, 1.5x GDP growth = 2.4% and 3.3% for 2013 and 2012 respectively.

**2013 EPS Growth calculated using TTM (trailing twelve months) figures.

***ROIC = Net Operating Profit After Tax / (Debt + Equity); 2013 calculated using TTM figures.

****NPD = New Product Development. Calculation based on products/services introduced within last 3 years.

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Strong  &  Flexible  Balance  Sheet  

11  

Note: 1) Net Debt-to-Capital ratio calculated as net debt/(net debt + equity).

Net Debt-to-Capital

42% 44% 41% 41%

34%39%

28% 27% 25%28%

24%

0%

10%

20%

30%

40%

50%

$0

$50

$100

$150

$200

$250

$300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 June  30,2013

Net  Debt  ($  Millions) Net  Debt-­‐to-­‐Capital

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Solid  Cash  Flow  GeneraHon  

•  Our  strong  balance  sheet  and  free  cash  flow  genera?on  posi?ons  the  Company  well  to  make  investments  

12  

Notes: 1)  Free cash flow calculated as cash flow from continuing operations less capital expenditures.

$(Millions) Free Cash Flow

$31

$18

$29

$55

$77

$20

$57

$25

$42$34

$20

$0

$20

$40

$60

$80

$100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Jun  YTD

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Balanced  Approach  to  Capital  AllocaHon  

13  

• New  product  development  • AcquisiHons  

• Dividends  •  Share  repurchases  • Debt  reducHon  

2)  Grow  Shareholder  Value  

3)  Return  Capital  to  Shareholders  

1)  Maintain  the  Business  

• Organic  growth  capital  expenditures  • Process  improvements  

Page 14: CLKing# # BestIdeasConferences2.q4cdn.com/555961355/files/doc_presentations/CL-King... · 2015. 10. 17. · ForwardLookingStatements # 2 Statements in this presentation concerning

$0.19 $0.20 $0.20 $0.22 $0.24 $0.24 $0.26 $0.28$0.32

$0.36

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Returning  Cash  to  Shareholders  

14  

•  Consistent  Dividend  Growth  Dividends  Paid  

Notes:      1)  Above  adjusted  for  stock  dividends  and  splits  in  2000,  2001,  2002  and  2004.  2)  In  2007  there  was  an  addiHonal  special  dividend  (not  shown  above)  of  $0.28  or  $9.9M  accrued  but  not  paid            unHl  2008,  resulHng  from  a  merger  terminaHon  payment.    3)  In  2012  there  was  an  accelerated  dividend  paid  in  December  that  is  not  reflected  above.  

•  Share  repurchases  •  Spent  $3M  to  buy  back  238k  shares  June  YTD  2013  •  Spent  $4M  to  buy  back  300k  shares  in  2012  •  Spent  $20M  to  buy  back  2M  shares  in  2011  

CAGR = 6.9%

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Appendix  

15  

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2012  ReconciliaHon  of  Non-­‐GAAP  Measures  

16  

MYERS INDUSTRIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

INCOME (LOSS) BEFORE TAXES BY SEGMENT (UNAUDITED) (Dollars in millions)

Twelve Months Ended December 31 2012 Material Handling Income before taxes as reported $ 47.5 Restructuring expenses 0.2 Income before taxes as adjusted 47.7 Lawn & Garden Income before taxes as reported 2.9 Restructuring expenses 0.6 Income before taxes as reported 3.5 Distribution Income before taxes as reported 14.8 Restructuring expenses 0.7 Gain on building sale (0.8 ) Income before taxes as adjusted 14.7 Engineered Products Income before taxes as reported 14.5 Restructuring expenses 1.2 Income before taxes as adjusted 15.7 Corporate and interest expense Income (loss) before taxes as reported (32.4 ) Severance and other 1.8 Environmental 0.0 Income (loss) before taxes as adjusted (30.6 ) Consolidated Income before taxes as reported 47.3 Restructuring expenses and other adjustments 3.7 Income before taxes as adjusted 51.0 Income taxes 18.9 Net income as adjusted $ 32.1 Adjusted earnings per share 0.94

Note: Numbers in the Corporate and interest expense section above may be rounded for presentation purposes. Note on Reconciliation of Income and Earnings Data: Income (loss) excluding the items mentioned above in the text of this release and in this reconciliation chart is a non-GAAP financial measure that Myers Industries, Inc. calculates according to the schedule above, using GAAP amounts from the unaudited Consolidated Financial Statements. The Company believes that the excluded items are not primarily related to core operational activities. The Company believes that income (loss) excluding items that are not primarily related to core operating activities is generally viewed as providing useful information regarding a company's operating profitability. Management uses income (loss) excluding these items as well as other financial measures in connection with its decision-making activities. Income (loss) excluding these items should not be considered in isolation or as a substitute for net income (loss), income (loss) before taxes or other consolidated income data prepared in accordance with GAAP. The Company's method for calculating income (loss) excluding these items may not be comparable to methods used by other companies.

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Strategic  Principles  

17  

• Generate strong financial results – EBITDA growth, Cash, ROIC • Maintain a strong balance sheet • Build industry leading decision-making tools across the business

• Ensure industry-best talent • Make Myers’ training and development a competitive advantage

• Maintain highest standards in safety and productivity • Ensure process for continuous quality, service and productivity improvement

• Deliver next-generation products/services in high niche markets • Utilize “Voice of the Customer” tools • Market based strategic planning

• Structure the organization closer to the customer - decentralize • Build and maintain processes to maximize customer input • Lead our industries in service, quality and delivery

Customer Dedication

Innovation

Operations Excellence

Organization Development

Financial Strength

Key M

anagement C

apabilities

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PorKolio  EvoluHon  

18  

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(40.0)  

(30.0)  

(20.0)  

(10.0)  

0.0    

10.0    

20.0    

30.0    

40.0    

50.0    

2008   2009   2010   2011   2012   2013   2014  

Material  Handling  Index  Annual  rate  of  change  

Shipments   Orders  

Macro  Indicators  

19  

Material Handling MHEM (Material Handling Equipment) Index

Source: Material Handling Industry of America, Aug 2013 Forecast

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0.0  

10.0  

20.0  

30.0  

40.0  

50.0  

60.0  

70.0  

80.0  

90.0  

(30.0)  

(20.0)  

(10.0)  

0.0    

10.0    

20.0    

30.0    

40.0    

Inde

x  

Percent  Change  (y/y)  

Consumer  Sentiment  

Index   Index  %  Change  Y/Y  

(50.0)  

(40.0)  

(30.0)  

(20.0)  

(10.0)  

0.0    

10.0    

20.0    

30.0    

40.0    

0  

200  

400  

600  

800  

1,000  

1,200  

1,400  

1,600  

1,800  

2,000  

Annual  Rate  of  Change  Housing  Ac

8vity

 (000

)  

NAHB  Housing  Forecast  

Total  Housing  Starts   Single  Family   %  Change  

Sources: National Association of Home Builders (NAHB); Aug 2013 Thomson Reuters/University of Michigan; Aug 2013

Macro  Indicators  

20  

Lawn & Garden Housing Starts; Consumer Sentiment

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-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F

Key  Indicators  for  the  Tire  Market  

Miles Driven (B) Repl Tire Shipments- Gasoline Sales (Gal/B)

Macro  Indicators  

21  

Distribution Replacement Tire Shipments; Miles Driven; Fuel Prices

Source: JP Morgan, RMA, Energy Information Administration

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0  

2  

4  

6  

8  

10  

12  

-­‐80  

-­‐60  

-­‐40  

-­‐20  

0  

20  

40  

60  

80  

2009

 Q1  

2009

 Q2  

2009

 Q3  

2009

 Q4  

2010  Q

1  20

10  Q

2  20

10  Q

3  20

10  Q

4  20

11  Q

1  20

11  Q

2  20

11  Q

3  20

11  Q

4  20

12  Q

1  20

12  Q

2  20

12  Q

3  20

12  Q

4  20

13  Q

1  20

13  Q

2  

million  un

its  

Annual  Rate  of  Change  

Autos  and  Light  Truck  Assemblies  

Autos  and  light  truck  assemblies;  s.a.  Annual  Rate  of  Change  

13.2  8.4  

3.9  

(40)  

(30)  

(20)  

(10)  

0    

10    

20    

30    

40    

50    

60    

0.0  

50.0  

100.0  

150.0  

200.0  

250.0  

300.0  

350.0  

400.0  

450.0  

2005   2006   2007   2008   2009   2010   2011   2012   2013F   2014F  Annaul  Rate  of  Change  (%

)  

Units  (000)  

RV  Shipments  

RV  Unit  Shipments  (000)   %  Change  from  P/Y  

Macro  Indicators  

22  

Engineered Products RVIA; Motor Vehicle and Parts Production

Sources: RVIA Forecasts, June 2013 FRB G17 Release (Jul 2013; MAPI Forecast, June 2013)

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