Transcript of Myers Industries, Inc. (MYE) 2009 Fourth Quarter & Full-Year Performance Conference Call February 24, 2010

Transcription

1 Transcript of 2009 Fourth Quarter & Full-Year Performance Participants Max Barton, Director of Investor Relations John Orr, President and Chief Executive Officer Donald Merril, Vice President and Chief Financial Officer David Knowles, Executive Vice President and Chief Operating Officer Presentation Operator Greetings and welcome to the Myers Industries, Inc Fourth Quarter and Full- Year Performance. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Max Barton, Director of Investor Relations for Myers Industries, Inc. Thank you Mr. Barton, you may begin. Max Barton Myers Industries, Inc. Director of Investor Relations Thank you and good morning. Welcome to the Myers Industries call to review our 2009 fourth quarter and full year financial results. With me today are John Orr, President and Chief Executive Officer, Donald Merril, Vice President and Chief Financial Officer and David Knowles, our new Executive Vice President and Chief Operating Officer who has been on board with the company since June This morning we issued our news release detailing the financial results for both the quarter and the year. If you have not yet received a copy, you may access it from our website at myersind.com under the investor relations tab. This call is also being audio webcast from our site and will be archived there along with the transcript. Before I turn the call over to management for remarks, I would like to remind you that we may make some forward-looking statements during the course of this call. These comments are made pursuant to the Safe Harbor Provisions of the Securities Reform Act of Some statements involve risks and uncertainties which may cause results to differ materially from those set forth. These risks and uncertainties are detailed in the company s SEC filings and may be found in the company s 10-K filings. Following managements remarks there will be a brief Q&A session with the investment community. I am now pleased to turn the call over to John Orr, President and Chief Executive Officer. John. 1

2 Thank you and good morning everyone. It s a pleasure to have you with us. Economic conditions of 2008 that continued and worsened into the recession of 2009 truly tested our customers, our company, our shareholders and our employees. Despite the challenges our employees responded with overwhelming commitment to our business plans. Their work is particularly evident in our strong cash flow generation last year of approximately 72 million compared to 60 million in In this environment or any, our cash flow performance is a critical measure of our diligence around improving working capital and maintaining appropriate cost controls. With this performance we were able to reduce debt by 67.3 million last year to million at the end of the year. We funded our necessary capital expenditures for strategic projects and maintained our regular dividend pay out to shareholders. For this hard work I would like to thank each and every one of our people for helping to make us a stronger company. Most of you have read the detailed results from the release. I will review some brief highlights here from the fourth quarter. Net sales from continuing operations were up 5%. This increase primarily reflects higher volumes in our material handling and lawn and garden segments and this is the first time in the last several quarters that sales have moved into positive territory, which is quite encouraging after the impact of full year economic weakness. Income from continuing operations was $2.0 million or $0.06 per share including special pretax expenses detailed in the earnings release and reconciliation statement. On an adjusted basis we achieved income from continuing operations of $5.6 million or $0.16 per share in the fourth quarter, which also includes a pretax gain of $3.3 million on the sales of a manufacturing facility from our lawn and garden segment. This compares to an adjusted $1.5 million or $0.05 per share in the fourth quarter of Now for the full year. Net sales from continuing operations were $701.8 million, a decrease of 14%. Tracking with a broader economic weakness, this decrease was primarily due to reductions in volumes and pricing in all of our segments but was partially offset by increased sales of customer pallets through our material handling segment. Income from continuing operations was $7 million or $0.20 per share including the special pretax expenses detailed in the release. On an adjusted basis, income from continuing operations was $23 million or $0.65 per share for the year compared to $19.2 million or $0.54 per share in Operationally we undertook two major restructuring programs last year; one in lawn and garden and one in material handling. These programs helped us to adjust our cost structure to be more competitive and to better meet the needs of the market and our customers. In addition, our focus on operations excellence programs, both last year and continuing into this year will allow us to better serve our markets and customers as we all experience economic recovery. Looking into 2010 our strategy is to invest to grow in our key operating segments. With that focus we will drive higher levels of performance using operations excellence techniques to optimize supply chain efficiency. We will increase our raw material recycling capabilities and continue to explore internal rationalization initiatives to lower our cost. We will also continue to be opportunistically acquisitive looking for potential leading brands and next generation technologies that will accelerate our profitable growth and we will continue 2

3 to refine our succession planning and professional development of our management team, seeking world class performance and teamwork that leads to growth and longterm success. Be assured as we execute on both the internal and external initiatives from our operating strategy, we are taking the critical actions necessary to build a better business for customers, shareholders and employees. Now to review the fourth quarter and full year financial results from the business segments as well as some other key financial metrics, I will turn the call over to Don Merril, our Chief Financial Officer. Don? Thanks John. I wanted to echo your assertion that we are indeed executing on all aspects of our strategies throughout the business segments and our ability to undertake major restructuring projects and other programs while still delivering profitable operating performance in this challenging environment clearly shows. As you indicated, our team has demonstrated the resolve and discipline to lead the company through this or any other down cycle. Now turning to some of the other financial measures we reported in our earnings release this morning. Gross profit was 20% in the fourth quarter of 2009, compared to 24.8% in the fourth quarter of As we said, the decrease primarily reflects the impact of persistent market weakness, unfavorable mix in custom-molded material handling products and competitive pricing pressures. For the year, gross profit was virtually flat at 24.3% versus 24.2% in 2008, benefits from our restructuring programs, along with lower commodity pricing through the year helped to mitigate the weaker volume environment unfavorable mix during the full year. SG&A declined $7 million in the fourth quarter of 2009 and $12.9 million for the year compared to those same periods of Again this was primarily due to a reduction in selling expenses, on lower volumes and the ongoing benefits from our restructuring in lawn and garden and material handling. We also benefited from a reduction in interest expense of $1.1 million in the fourth quarter and $3 million for the full year due to lower debt levels and lower interest rates. On the plastic raw materials front, commodity prices were on the rise sequentially throughout We worked diligently on adjusting our selling prices to mitigate this pressure and to match our pricing with the value that we put behind products and services for our customers. Now turning our attention to continuing operations and our business segments and their performance, this is detailed in the news release and again results for the fourth quarter and year are all compared to the same periods of On the discussion of pretax income, I will be referencing adjusted numbers as presented in the reconciliation statement in the back of the release. In our lawn and garden segment, sales for the fourth quarter of 2009 increased 6% primarily due to the seasonal increase in demand from grower markets and special advanced marketing promotions. The sales decline of 19% for the full year primarily reflects the weak economic conditions and demand through most of the year as well as cautious inventory management by customers and the depressed housing market. Profitability for both the 2009 fourth quarter and full year benefited from the segment s extensive 3

4 restructuring program. On an adjusted basis, pretax income was $4 million in the quarter and $24.2 million for the year as compared to $1.5 million and $7.4 million adjusted in the same periods of This strong performance clearly reflects rewards from our heavy lifting in this segment. With this successful restructuring program, we believe the ongoing optimization of the resources in this segment presents unmatched capabilities to meet the needs of a professional grower offering clear opportunities for growth. In our material handling segment the sales increased 12% in the quarter but were down slightly at 3% for the full year. The sales increase in the fourth quarter was primarily due to an increase in sales and our new custom-molded pallet program which we invested in during As noted however, the segment continues to experience soft demand across its wide range of markets for reusable containers and storage systems have customers who must make capital expenditures for these products continue to conserve their cash, while waiting for sustainable improvement in the economy. On an adjusted basis, pretax income in the quarter was $2.2 million and $15.2 million for the full year, down 68% and 40% respectively. This is primarily due to the lower volume, pricing adjustments made in a tight and competitive environment as well as the higher mix of sales from the lower margin custom molded pallet program. We believe that our strong Akro-Mils and Buckhorn brands in this segment are well positioned to deepen their leadership in the reusable packaging markets through innovation and value added solutions once our customers capital spending and business levels return. In our distribution segment, sales declined 3% in the fourth quarter and 13% for the full year. This performance tracked closely with a slow demand for replacement tire and vehicle service throughout the year. Pretax income increased 30% in the fourth quarter, primarily due to favorable product mix of five and SG&A reductions and declined 22% for the year, again the result of market weakness and the resulting cautious just-in-time spending by customers to carry lower inventory. In our automotive and custom segment, sales were down 12% and 28% respectively for the fourth quarter and full year reflecting the deep weakness in automotive markets and slow demand for other original equipment and custom products. On an adjusted basis, pretax income was $1.1 million during the quarter and $4.6 million for the year, up 83% for the quarter, however down 40% for the year. During the fourth quarter we completed the divestiture of two rubber products businesses in this segment, Buckhorn rubber products and Michigan rubber products. This lessened our exposure to the difficult domestic automotive business as well as heavy truck and construction market. Our focus in 2010 is to optimize the capabilities of the three remaining brands in the segment, Ameri-Kart, Patch Rubber and WEK to drive higher levels of operating performance, additionally to better reflect the capabilities in markets of this segment it will be renamed to Engineered Products as we report the first quarter of Now turning our attention back to the corporate level, as John referenced earlier, we made excellent progress on debt reduction for the year. This has further strengthened our balance sheet to allow the company the flexibility to react quickly to future potential growth opportunities. Finally capital expenditures for the year totaled 4

5 approximately $16 million most, for which was focused on new products and manufacturing technologies. Over the last two years, the company has invested close to $60 million in capital to foster new products and expand our manufacturing capabilities and expertise. Now I ll turn it back over to John for a wrap up. Thank you, John? Thanks Don. As we have stated we have posted positive results for both quarter and year but clearly our results for 2009 reflect the full impact of the recessionary climate. Notwithstanding, they also reflect the benefits and costs from our own internal actions to strengthen and improve long-term performance across our business segments. Restructuring and productivity initiatives in our lawn and garden and material handling segments will carry over into our other businesses as we implement the tactics in our evergreen operating strategy. In closing we view 2010 as a year of gradual economic recovery, we will remain focused on innovation and operations excellence activities that support our growth objectives. With that, I d like to thank our shareholders for the confidence you have placed in the company s direction. I also thank our customers for their support and again our employees for the commitment they have to the success of Myers Industries. That concludes management s presentation so I will turn it back over to Max so we can take your questions. Max Barton Myers Industries, Inc. Director of Investor Relations Thanks John. I ll ask the operator to now direct the Q&A phase of the presentation, go ahead please. Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You can press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. One moment please while we poll for questions. Our first question comes from the lines Chris Manuel with KeyBanc Capital Market. Please go ahead with your question sir. <Q:> Good morning gentlemen. Good morning Chris. <Q:> And congratulations on a very, very strong, you know, cash year this year. Thank you. Thank you. 5

6 <Q:> I have a long list of questions, so let me ask a few and then I ll jump back in the queue but let s start with you know how we move forward here into 2010, if we could take a look through the different segments and start with your biggest on, lawn and garden, looks like housing is starting to improve, you still have some restructuring benefits coming through, how do you think about profitability 2010 versus 2009 and then particularly considering we are now about two months into your first quarter, and that your first quarter is typically you know the guts of the year? Yeah Chris, this is Don. I think that, you know our profitability in 2010, we re 11% on an op-income basis, I think going forward we re inching that up a little bit, probably closer to the 12% range. We are heading into a very difficult headwind on resin and I think that is important for everybody understand as we go forward. <Q:> Okay so, some modest improvement. If we could move over to material handling as well and we had some favorable data out yesterday from one of your trade groups suggesting that material handling areas would be up, you know mid to upper single digits in 2010, how do you think that would break out for consumable products and you know thinking about mix there as well, similar question, what profitability might be like in This is John. Let me say Chris, you know material handling, yeah there is a slight pick-up in 2010, I think consumables, in a lot of cases, people have been waiting to reload their fleet, you know people have been sitting on cash so you know, I guess you could say we re seeing some of that. We re cautiously optimistic about material handling, you know one of our big products that we have invested in recently is plastic reusable and returnable pallets that are fire retardant. We are making those for a major customer who is selling to major customers in the retail, food and industrial segments. We re seeing a little bit of a slowing there in that particular market, but we expect to see things happen as we move into the rest of the year. The key will be around CapEx and the amount of CapEx that customer s have to be able to use, you know to redo their supply change or improve their supply chain which is our solution selling it, you know getting people out of cardboard and wood and so on. Don do you have anything you might want to add to that? Yeah I think, clearly in 2010 the issue in material handling is volume. You know we have pricing mechanisms around the resin, so if you look at that business by itself, the pricing decreases virtually offset the resin favorability so that wasn t the issue in material handling, it s really being driven by volume in our Legacy business. So the indicators that you talk about, as that volume comes back, we are poised to do very well in this business. You know historically we have been double digit op-income, in fact mid-teens; today we re carrying it at about 6 and it s all driven by volume, so once that comes back, I could see us jumping over 10% again and getting back to some normalcy there once the volume hits. 6

7 <Q:> Okay that s helpful. And then the last two pieces, distribution, auto- well soon to be engineered products, stopped myself there, but as I think about, you know you re looking at miles driven, start to improvement and distribution is one in particular that, you were back to a double digit margin, it looked like, I believe in the 4Q, is that a reasonable sustainable rate here now that demand has started to appear to modestly pick up, moving forward. Yeah I mean this is a, you know distribution is a heavy SG&A business as you know, so on the downside you lose on the leverage, that s clearly the issue in distribution today so as we see that tick up, as we see miles driven going up, as we see the demand for replacement tires going up, that directly correlates with our business so when we see those come back we ll be back to the 9% op-income. <Q:> Okay last question I have and then I ll turn it over, is as we look at the restructuring actions you have taken over the past, two years actually, help review for us, the big actions that you keep taking lawn and garden material handling, where you are to date with those. I think you re done in lawn and garden and you re still working through material handling and when I think about it, kind of review, if you could help us with, you know what you have probably seen thus far in savings, how much more might carry or spill into 2010 with the material handling and then some carry forward on L&G etc. I think, let s start with lawn and garden. We kicked off that project in August of 08, worked our way all the way through It has been a very successful project for us. Total expenses on that were on the high end of what we d anticipated, right around $27 million, however we are also spot on, actually a little bit above the savings that we had said, we predicted about $20 million and we are there in lawn and garden, obviously those savings then are being offset by volume and some other things that are going on in lawn and garden but the project was very, very successful. A lot of that was creating a footprint that was more able to handle our customers needs so we did close a lot of facilities in that segment. Switching to material handling, we only announced the closure of one facility with that project so there wasn t as much fixed cost coming out, it was more of a productivity project and quite frankly because of the loss of volume, we re suffering a little bit on the savings. We announced or we had said we could do $10-13 million worth of savings, we re clearly at the low end of that, in fact we re a little shy of that on a run-rate basis for 2009 and we re not going to see those savings until we start to see the volume come back like we talked about earlier in the call. <Q:> Okay, so on the L&G side, through 3Q you kind of hit your run rate, is there still some of the 20 that will carry forward into 2010? We virtually got all 20 in 2009, let s call it 19 so we got it in the year, however as volume picks up, you re going to see some hangover there because of the productivity improvements in these facilities. So clearly there s upside when volume comes back. 7

8 <Q:> Yeah so they ll be some leverage to volume and on the material handling side, I think there was only a little bit was supposed to come in 2009 anyway but so we ll probably see, let s call it an incremental, I m going to guess and say 7, 8, 9 or something like that in That s a very good number. We saw a little over 4, let s call it almost $5 million of savings from the project in 2009 so we re going to double that going into 2010, again the caveat I m going to through on that is these are productivity improvements and we ve got to get the volume back. <Q:> Okay that s helpful. Thanks and by the way thanks for doing this conference call, it s very helpful to investors to you know, hear you guys present the story. I ll jump back in the queue. Sure, no problem. Operator Our next question is from Christopher Butler with Sidoti & Company. Please go ahead with your question sir. <Q:> Hi good morning guys. Hey Chris. <Q:> I wanted to start with, just clarifying the adjustments that you had made on the pro forma EPS, you had adjusted out some impairment and restructuring but if I m not mistaken, you left in the $3.3 million from the gain on the sale of assets, is that correct? We did when you re looking at the first page of the press release, however the back page does show you a kind of apples to apples by taking that out. <Q:> Alright. And [INAUDIBLE] on just little things. What kind of tax rate are you looking at for 2010? 2010 is probably going to go back to a more historical level, if you look back to 2007, we were right around 36% so I think we re heading back in that direction. <Q:> And if we re looking at the distribution business, a lot of the indicators that I ve been seeing on demand for tires and you know some of your peer groups seems to be showing a pretty sizeable step up in demand for car care services, you know your 8

9 results in the quarter, while improving didn t necessarily show that, could you help me out and give me an indication of what s going on with your distribution? Well you know keep in mind last year that that market was down over 30% and what the, you know the market analysts are predicting this year is that that will come back about 25% so it still could be down 5% from previous years, so you know we re kind of seeing that as the first quarter starts, we didn t see it so much in the fourth quarter, you know, our business is dependent on people coming and getting their cars and tires serviced, with weather in January, December being pretty strong in some areas, people haven t been doing that, but I guess we could say we re much more bullish looking forward than we have been looking backwards on it. <Q:> And you had mentioned on lawn and garden that there was some marketing promotions in the fourth quarter, is that something that pulled anything forward from the first quarter or is that fairly typical for the business? It s pretty typical. We did get a little bit more aggressive trying to level load our facilities, so we did ask for orders up front, but it s fairly typical, I would say there may have been some movement from Q1 to Q4, but not all that much. <Q:> And looking at the new engineered segment, all the news coming out of Toyota and the Japanese auto manufacturers, could you give us an idea of the impact on that segment. We don t supply anything to Toyota, we do supply to Honda. Our WEK business is 100% Honda, you know, right now Honda is seeing some increase in business, whether that s the Toyota issue or other issues I m not really too sure but at this point, you know we don t see any impact from the Toyota issue. And let me just add that sales to the automotive sector, the whole automotive sector under our engineered products division is still just a little less than 3% of the total sales for the company. <Q:> I appreciate your time, I ll go back in the queue. Thanks Chris. Operator Our next question is from the line of Gary Farber, with C. L. King. Please go ahead with your question. <Q:> Yeah sure, good morning. Just two questions on, the gross margin line seems like it s been moving around a fair amount this past year, can you give us any feel for 9

10 how we should think about it for next year and then also on the acquisition front can you, is there any particular areas you are looking to fill in and how is the acquisition market today, is it slow or is it picking up? If you look at gross margin, you re probably looking at it maybe by quarter and you can see it move, which is pretty normal for us, however on a full year basis, running 24% in 2008 and 24% in 2009, I would look at gross margins being maybe a little bit better in 2010, you know we ve got productivity projects, we ve got restructuring hangover, the concern I have right now is the face that we re starting to see some spikes in resin, like I said earlier, we ve got a real headwind coming at us here on resin. On the acquisition front as we said in our release, you know we re going to continue to be looking at potential opportunities, last year what we found was, you know a lot of people have businesses they thought about selling but they thought the value was a lot higher than what the actual value was so it didn t look to be a good year for deal making. You know we ll continue to look in our material handling, our distribution in our lawn and garden business for positive acquisitive acquisitions and you know we ll go from there. All I can say is we re going to continue to keep at it. I think one of the reasons that we have the cash position we have is the very quick availability of funds as necessary. <Q:> And how do you think about, just one last question, how do you think about your free cash flow for fiscal 10? I think we ve got some more levers to pull as far as working capital goes, you know, we ve done, I think a fabulous job over the last couple of years, specifically in AP and AR, I think we do have some work to do on inventory. I think CapEx is going to be up a little bit next year versus this year so I think our cash flow is going to be, not as robust as it was over the last couple of years. <Q:> And CapEx this past year was how much? $16 million. <Q:> 16, okay. It was 41 the year before. <Q:> Alright thank you. Right, okay, thanks again. Thanks Gary. 10

11 Operator Our next question is from the line of Chris Libica[ph] with Systematic Financial, please go ahead with your question. <Q:> Good morning guys. Good morning Chris. <Q:> Question for ya, on the material handling side, can you try to break out or is there any way to break out the impact of the negative mix versus some of the resin input costs? Yeah I can tell you on that, if you look at what s going on in material handling, really the price reductions basically follow the resin reductions, so what you ve got there is two issues which is going to be the mix and volume which are going to make up the rest of the delta. <Q:> Okay and do you see this negative mix kind of impairing you for the next couple of quarters, kind of being continued headwinds, I mean it seemed to be sort of your lowest margin I ve seen in perhaps as long as this segments been around. Yeah I mean obviously what s happening here is the volume in our Legacy business is exacerbating the issue. That Legacy business has really taken a hit, as John explained earlier, as our customers just aren t wanting to spend capital dollars. Now we re trying to address that in a lot of different ways and we re looking at potentially helping our customers through leasing mechanisms and setting them up with third parties etc but we are trying to get through that but clearly it s a headwind for us until we can get that Legacy business back with an improved economy. <Q:> Okay and is there any way you can break out what the material handling volumes were for the quarter? What material handling volume reductions were? <Q:> Yeah I mean just how has the volume changed in the quarter? Unless you want to break it out in the Q? Yeah, we ll obviously have a lot more data in the Q, or the K rather. Yeah so we ll break it out in a little bit more detail in the K. <Q:> Okay and just as far as the engineered products, is this something that, at one point you were talking about you, know trying to get sort of to the double digits 11

12 operating margins, now, I think at once point you were talking close to 10%, is that still something that s attainable. I believe that to be true. Yeah very much so. <Q:> Yeah and is that sort of a 2010 event, more back half or 2011? I think we re on that run rate in You know really, believe it or not, the RV business and the marine business is beginning to show some life. Our custom business there is beginning to show some life, so we re more bullish on that segment then we ve been for the last couple of years. <Q:> Alright so it sounds like you re comfortable about that double digits for Good. Yes. <Q:> Alright, good. And again also congratulations on having a conference call, it s a welcome change. Thanks Chris. Operator Our next question is from the line of David Mevowitz with Horizon Asset Management. Please go ahead with your question. <Q:> Good morning. Hey David. Hi David. <Q:> You mentioned resin prices are on the way up, have you raised your selling prices in anticipation? 12

13 We are, let me answer that on our two biggest segments. Our material handling segment typically comes with resin escalators and de-escalators so those will automatically kick in and that effects about 50% of that business, actually now, a little bit more than 50% of that business. And we are evaluating our lawn and garden business right now to look at some price increases there. The issue we re going to have is that a lot of the pricing was set back in early fourth quarter, late third quarter which was prior to this, what I ll call pretty dramatic increase we re seeing so unfortunately we re behind the curve a little bit but we will definitely get tough on price like we have over the last four or five years. <Q:> Also following up on acquisitions, first in your prepared remarks you spoke about new technologies, could you inform us what those are and how they impact the business? Well it s primarily in our material handling piece, you know it s different technology around producing lighter weight products used in the supply chain of major industrial and you know agricultural users. I don t really want to go into a lot of detail about what all that is, but suffice to say that its technology that we ve invested in, thus a major CapEx investment in 2008, getting it up and running in 2009, the first product that we re using it on is this plastic reusable pallet. If you think about the blue wood chip pallet, you know you see them everywhere, this plastic reusable pallet that has RFID chips in it, is going to be cutting into the chip market, what we think significantly, so we re using this technology to produce those pallets but at the same time, we re learning around that technology to make other of our, some of our Legacy products from a much decreased cost situation with the new technology, but I really don t want to go into what all that is. We have obviously competitors that listen to this phone call so I ll stay away from that. We ve also got a lot of new materials that we ve been working on around green technology, you know especially in our lawn and garden business as well as our material handling business, you know, you just about name it, we ve tried to make plastic out of it. We re working diligently at that, we ve got some hits, you know in some of our lawn and garden products so yeah I d say the best thing to do is just kind of stay tuned and you know see what we come out with as the year comes on. <Q:> Okay and staying with acquisitions, are there any talks in progress at this time? Really, really, really can t comment on that. <Q:> Okay and lastly on acquisitions, what is the size of a transaction you would be comfortable doing at this time? Well you know we ve, if you look at our history, we ve stayed in the $50 to $100 million range. I think we re pretty comfortable with those kind of acquisitions. You know, again our strategy has been around keeping our powder dry, holding on to our cash 13

14 and being you know able to very quickly access what we need. So if you kind of look at what access we have and those size of acquisitions, I think it kind of matches up. <Q:> And the last question if I may, what are you biggest concerns for this year, outside of the overall economy? Well I think obviously materials is a big part of our business and so you know we always have that bear in the closet, you know it kind of comes and goes, you know we re going to see it peaking up here in the next couple of months, then our expectations and I think the market expectations is for it to drop again. You know I think that s a big issue for us. You know we certainly, you said, not the economy but the economy is going to be an issue for us. I still don t see 2010 as a great year, so we re going to have to work our way through that, and you know we ve made a lot of cost reductions using operations excellence techniques, we re learning more and more of those as we move forward here and we know that cost is a situation that we have to continue to work on very, very diligently and you know certainly volume. Volume is the key for us, we ve taken capacity out, we think we ve right-sized the business but we still need to have additional capacity to fill those plants that we have left and to continue to operate from a cost effective standpoint. <Q:> Thank you very much. Sure Dave. Operator Ladies and gentlemen we are approaching the end of our time for question and answer session, if you do have a question, you may press *1 on your telephone keypad. Our next question is a follow-up from the line of Chris Manuel with KeyBanc Capital Market. Please go ahead with your question. <Q:> Good morning again. A couple of questions for you Don if I could, as we look at the balance sheet. I think you had a couple of maturities 2010 and 2011 [INAUDIBLE] of $100 million in total for some bonds. Where do you stand with those right now, has that been what you paid some down of and could you talk to us maybe a little bit with respect to what your plans are there, I m guessing, we don t have the full balance sheet yet but I m guessing a chunk of those went current and that s why current liabilities are up. That s exactly right. Current liabilities went up because you re seeing about $65 million worth of private placement notes that come due in December You know, right now, like John mentioned earlier, we ended up the year at $ million in total debt, 100 of which is fixed debt and of that 65 million is a subset of that 100 million. So we clearly have enough room on the revolver to take care of those notes and we also are going to generate cash so at the end of the year, all else being equal, we ll pay off some of that with cash and the rest we ll put to the revolver. To continue 14

15 with that, our revolver goes through We ve started thinking about what to do there, right, but it all depends on how 2010 plays out as the last questions we saw were a lot about acquisitions and certainly we re thinking an awful lot about that so it depends on what the needs of the company are going through 2010 but really we feel we re not in a rush to look at that revolver right now, we believe the markets coming to us a little bit, spreads are improving, tenders are getting longer, so as we go through the year we think we re going to be in a better position to take a look at that revolver. <Q:> Okay and I mean I m not, from a leverage standpoint, I would almost argue the company is you know under-levered where you said today We agree. <Q:> It s more of a timing and maturity standpoint that, I don t want to say is troubling, it s not troubling but it is more of an issue. How do you think about, you know balancing the priorities for cash through 2010 as you look at between, you know acquisitions are clearly something you guys had mentioned and you have some of these maturities coming up, you know two other, there s a company that s for sale or that always has stock for sale that is by my numbers trading at about 5 times EBITDA and I m referring to yourselves, kind of how you balance looking at acquisitions with share repurchase, with dividends, things of that nature. I think right now, in 2009 we went through a very robust strategic planning process, we looked very hard at each one of our segments and you know I think we are going to be active in 2010, we re looking at, you know how do we grow these businesses and how do we grow them profitability through acquisitions to increase you know the size of some our businesses and also add new technology as John talked about. We right now, because we re leveraged at about 1.5, we are, at least I am very comfortable at 3.0, I mean we have demonstrated the ability to generate cash on a very consistent basis in this company so based on that, you know we are looking at the business needs and we are looking to use some of this, some of the availability. You know and I d be remiss if I didn t mention we ve got a great group of banks who we have very good relationships with and you know those folks are waiting for us to do something too, so. <Q:> Well that s fair, okay. Last question for you. Is, you know I just wanted to fine tune a little bit on the price-cost discussion you had. As you look at, you know where you typically have to take most of the actions and move price, materially handling, you know the guts of that are a one a year adjustment, you probably already started to make that with the rest on escalators so that will resolve itself. You talked a little bit about the lawn and garden piece and that you might be a bit behind, can you maybe help, maybe provide a little more color there. I know 1Q is typically your biggest quarter for the year and I guess I m a bit concerned that if you re behind in 1Q how do you essentially make that up as the year goes on? 15

16 You know we said pricing, as Don said and later third quarter, very early fourth quarter for the first part of the horticultural year if you will. As we move forward now, around this time frame, you know we begin to see whether or not the spring is going to be a good spring from the growers standpoint and if it s a good spring then there becomes a re-buy of product and that s the opportunity for a price increase because that hasn t been agreed to at the time. You know a little concern there in that, you know the fact that we were in Florida two weeks ago and it was 35 degrees, 40 degrees, so there is some concern in the south, southeast of, you know how that market is going to do. There s no panic yet on the part of the growers but certainly we, you know in a few weeks we ll have a better idea or better handle on you know potential for repurchase of additional product which obviously then you know becomes a tremendous opportunity to improve our pricing. David Knowles, our new COO would like to make a comment Chris, about that. David Knowles Myers Industrial, Inc. - COO Yeah Chris if I could just add, if you look at the lawn and garden business which certainly is, you know raw material [INAUDIBLE], most of the activity in that business occurs in the fourth quarter and the third quarter and some of the challenge we have in reacting to raw material costs as quickly as raw material costs move, is we try to level load our production by taking orders earlier in the cycle so that we can kind of plan out our production. You know the, I can tell you though that given where we re at and the volatility we re seeing in raw materials now, we have prepared and are in the process of implementing pricing that will address raw material costs, starting in March. <Q:> Okay so third-shift today, you ve presumable taken some of these orders, and quoted them at X price and gone out and sourced material that made that, you know matched for lack of a better term and put that together? David Knowles Myers Industrial, Inc. - COO Right. <Q:> And it s from here forward as you re taking orders that you re envisioning making other adjustments, that s hard. And for what s it worth, I would look at that horrific weather that they ve had through parts of the south, snow in Texas and other things as a big replacement opportunity, so hopefully that That s right. We hope so. <Q:> Okay, good luck gentleman. Alright thank you. Operator Thank you we have reached the end of our question and answer session and I would like to turn the floor back over to Mr. Barton for closing comments. 16

17 Max Barton Myers Industries, Inc. Director of Investor Relations Okay. Thank you all for your time today. Just a reminder, there will be a transcript of the call available on the Myers site in approximately 24 hours. A replay is also available via webcast or call. All the details are found on the Myers website under the investor relations tab. Thank you all and have a pleasant today. Thanks everybody. Thank you. Operator This concludes today s teleconference. You may disconnect your lines at this time. Thank you for your participation. 17