10-Q

Required Level

Actual Level

Interest Coverage Ratio

3.00 to 1 (minimum)

Leverage Ratio

3.25 to 1 (maximum)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


☑	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023


☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 001-08524

Myers Industries, Inc.

(Exact name of registrant as specified in its charter)


Ohio	34-0778636
(State or other jurisdiction of	(IRS Employer Identification
incorporation or organization)	Number)

1293 South Main Street
Akron, Ohio	44301
(Address of principal executive offices)	(Zip code)

(330) 253-5592

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, without par value	MYE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-Accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ .

The number of shares outstanding of the issuer’s common stock, without par value, as of October 27, 2023 was 36,838,466 shares.

TABLE OF CONTENTS


Part I — Financial Information	1

Item 1. Financial Statements	1

Condensed Consolidated Statements of Operations (Unaudited)	1

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	2

Condensed Consolidated Statements of Financial Position (Unaudited)	3

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)	4

Condensed Consolidated Statements of Cash Flows (Unaudited)	6

Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

Item 4. Controls and Procedures	26

Part II — Other Information	27

Item 1. Legal Proceedings	27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 5. Other Information	27

Item 6. Exhibits	28

Signature	29

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 101

Part I — Financial Information

Item 1. Financial Statements

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net sales	$	197,798		$	228,065		$	621,990		$	686,707
Cost of sales		135,419			156,417			420,136			468,415
Gross profit		62,379			71,648			201,854			218,292
Selling, general and administrative expenses		43,698			51,756			148,130			152,066
(Gain) loss on disposal of fixed assets		(22	)		(5	)		(78	)		(693	)
Operating income		18,703			19,897			53,802			66,919
Interest expense, net		1,539			1,719			4,975			4,077
Income before income taxes		17,164			18,178			48,827			62,842
Income tax expense		4,417			4,507			12,499			16,003
Net income	$	12,747		$	13,671		$	36,328		$	46,839
Net income per common share:
Basic	$	0.35		$	0.37		$	0.99		$	1.29
Diluted	$	0.34		$	0.37		$	0.98		$	1.28

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(Dollars in thousands)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net income	$	12,747		$	13,671		$	36,328		$	46,839
Other comprehensive income (loss):
Foreign currency translation adjustment		(948	)		(2,376	)		(141	)		(2,985	)
Total other comprehensive income		(948	)		(2,376	)		(141	)		(2,985	)
Comprehensive income	$	11,799		$	11,295		$	36,187		$	43,854

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position (Unaudited)

(Dollars in thousands)


	September 30,			December 31,
	2023			2022
Assets
Current Assets
Cash	$	24,768		$	23,139
Accounts receivable, less allowances of $3,896 and $3,259, respectively		117,362			133,716
Inventories, net		96,230			93,351
Prepaid expenses and other current assets		9,051			7,001
Total Current Assets		247,411			257,207
Property, plant, and equipment, net		106,936			101,566
Right of use asset - operating leases		27,384			28,908
Goodwill		95,129			95,157
Intangible assets, net		46,785			51,752
Deferred income taxes		129			129
Other		7,347			7,915
Total Assets	$	531,121		$	542,634

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	80,760		$	73,536
Accrued employee compensation		18,008			24,664
Income taxes payable		324			2,054
Accrued taxes payable, other than income taxes		3,016			3,169
Accrued interest		454			1,264
Other current liabilities		29,138			26,380
Operating lease liability - short-term		5,604			6,177
Finance lease liability - short-term		581			518
Long-term debt - current portion		25,994			—
Total Current Liabilities		163,879			137,762
Long-term debt		33,987			93,962
Operating lease liability - long-term		22,023			22,786
Finance lease liability - long-term		8,766			8,919
Other liabilities		10,284			15,270
Deferred income taxes		9,961			7,508
Total Liabilities		248,900			286,207

Shareholders’ Equity
Serial Preferred Shares (authorized 1,000,000 shares; none issued and outstanding)		—			—
Common Shares, without par value (authorized 60,000,000 shares; outstanding 36,820,242 and 36,500,020; net of treasury shares of 5,732,215 and 6,052,437, respectively)		22,590			22,332
Additional paid-in capital		320,578			315,865
Accumulated other comprehensive loss		(17,934	)		(17,793	)
Retained deficit		(43,013	)		(63,977	)
Total Shareholders’ Equity		282,221			256,427
Total Liabilities and Shareholders’ Equity	$	531,121		$	542,634

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(Dollars in thousands, except per share data)


	Quarter Ended September 30, 2023
	Common Shares		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Total Shareholders' Equity
Balance at July 1, 2023	$	22,572	$	319,553	$	(16,986	)	$	(50,717	)	$	274,422
Net income		—		—		—			12,747			12,747
Foreign currency translation adjustment		—		—		(948	)		—			(948	)
Shares issued under incentive plans, net of shares withheld for tax		18		339		—			—			357
Stock compensation expense		—		686		—			—			686
Declared dividends - $0.135 per share		—		—		—			(5,043	)		(5,043	)
Balance at September 30, 2023	$	22,590	$	320,578	$	(17,934	)	$	(43,013	)	$	282,221

	Quarter Ended September 30, 2022
	Common Shares		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Total Shareholders' Equity
Balance at July 1, 2022	$	22,304	$	311,939	$	(16,010	)	$	(80,975	)	$	237,258
Net income		—		—		—			13,671			13,671
Foreign currency translation adjustment		—		—		(2,376	)		—			(2,376	)
Shares issued under incentive plans, net of shares withheld for tax		17		101		—			—			118
Stock compensation expense		—		1,308		—			—			1,308
Declared dividends - $0.135 per share		—		—		—			(5,002	)		(5,002	)
Balance at September 30, 2022	$	22,321	$	313,348	$	(18,386	)	$	(72,306	)	$	244,977

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(Dollars in thousands, except per share data)


	Nine Months Ended September 30, 2023
	Common Shares		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Total Shareholders' Equity
Balance at January 1, 2023	$	22,332	$	315,865		$	(17,793	)	$	(63,977	)	$	256,427
Net income		—		—			—			36,328			36,328
Foreign currency translation adjustment		—		—			(141	)		—			(141	)
Shares issued under incentive plans, net of shares withheld for tax		258		(365	)		—			—			(107	)
Stock compensation expense		—		5,078			—			—			5,078
Declared dividends - $0.405 per share		—		—			—			(15,364	)		(15,364	)
Balance at September 30, 2023	$	22,590	$	320,578		$	(17,934	)	$	(43,013	)	$	282,221

	Nine Months Ended September 30, 2022
	Common Shares		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Total Shareholders' Equity
Balance at January 1, 2022	$	22,172	$	306,720		$	(15,401	)	$	(104,166	)	$	209,325
Net income		—		—			—			46,839			46,839
Foreign currency translation adjustment		—		—			(2,985	)		—			(2,985	)
Shares issued under incentive plans, net of shares withheld for tax		149		1,460			—			—			1,609
Stock compensation expense		—		5,168			—			—			5,168
Declared dividends - $0.405 per share		—		—			—			(14,979	)		(14,979	)
Balance at September 30, 2022	$	22,321	$	313,348		$	(18,386	)	$	(72,306	)	$	244,977

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)


	For the Nine Months Ended September 30,
	2023			2022
Cash Flows From Operating Activities
Net income	$	36,328		$	46,839
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Depreciation and amortization		16,904			15,600
Amortization of deferred financing costs		234			363
Non-cash stock-based compensation expense		5,078			5,168
(Gain) loss on disposal of fixed assets		(78	)		(693	)
Other		2,473			292
Cash flows provided by (used for) working capital
Accounts receivable		13,764			(18,751	)
Inventories		(2,905	)		(7,016	)
Prepaid expenses and other current assets		(2,053	)		(4,912	)
Accounts payable and accrued expenses		1,027			13,869
Net cash provided by (used for) operating activities		70,772			50,759
Cash Flows From Investing Activities
Capital expenditures		(19,292	)		(17,615	)
Acquisition of business, net of cash acquired		(160	)		(24,253	)
Proceeds from sale of property, plant and equipment		142			1,525
Net cash provided by (used for) investing activities		(19,310	)		(40,343	)
Cash Flows From Financing Activities
Net borrowings (repayments) from revolving credit facility		(34,000	)		7,000
Payments on finance lease		(403	)		(374	)
Cash dividends paid		(15,266	)		(14,872	)
Proceeds from issuance of common stock		1,948			2,059
Shares withheld for employee taxes on equity awards		(2,055	)		(450	)
Deferred financing fees		—			(718	)
Net cash provided by (used for) financing activities		(49,776	)		(7,355	)
Foreign exchange rate effect on cash		(57	)		(292	)
Net increase (decrease) in cash		1,629			2,769
Cash at January 1		23,139			17,655
Cash at September 30	$	24,768		$	20,424

See notes to unaudited condensed consolidated financial statements.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except where otherwise indicated)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Myers Industries, Inc. and all wholly owned subsidiaries (collectively, the “Company”), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

In the opinion of the Company, the accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position as of September 30, 2023, and the results of operations and cash flows for the periods presented. The results of operations for the quarter and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2023.

Fair Value Measurement

The Company follows guidance included in ASC 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, as required. Under ASC 820, the hierarchy that prioritizes the inputs to valuation techniques used to measure fair value is divided into three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are observable either directly or indirectly.

Level 3: Unobservable inputs for which there is little or no market data or which reflect the entity’s own assumptions.

The Company has financial instruments, including cash, accounts receivable, accounts payable and accrued expenses. The fair value of these financial instruments approximates carrying value due to the nature and relative short maturity of these assets and liabilities.

The fair value of debt under the Company’s Loan Agreement, as defined in Note 11, approximates carrying value due to the floating rates and relative short maturity (less than 90 days) of any revolving borrowings under this agreement. The fair value of the Company’s fixed rate senior unsecured notes was estimated using market observable inputs for the Company’s comparable peers with public debt, including quoted prices in active markets and interest rate measurements which are considered Level 2 inputs. At September 30, 2023 and December 31, 2022, the aggregate fair value of the Company's outstanding fixed rate senior unsecured notes was estimated to be $37.5 million and $37.4 million, respectively.

The purchase price allocations associated with the May 31, 2022 acquisition of Mohawk Rubber Sales of New England Inc. ("Mohawk"), as described in Note 3, required fair value measurements using unobservable inputs which are considered Level 3 inputs. The fair value of the acquired intangible assets was determined using an income approach.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) are as follows:


	Foreign Currency			Defined Benefit Pension Plans			Total
Balance at July 1, 2023	$	(15,603	)	$	(1,383	)	$	(16,986	)
Other comprehensive income (loss) before reclassifications		(948	)		—			(948	)
Net current-period other comprehensive income (loss)		(948	)		—			(948	)
Balance at September 30, 2023	$	(16,551	)	$	(1,383	)	$	(17,934	)

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)


	Foreign Currency			Defined Benefit Pension Plans			Total
Balance at July 1, 2022	$	(14,544	)	$	(1,466	)	$	(16,010	)
Other comprehensive income (loss) before reclassifications		(2,376	)		—			(2,376	)
Net current-period other comprehensive income (loss)		(2,376	)		—			(2,376	)
Balance at September 30, 2022	$	(16,920	)	$	(1,466	)	$	(18,386	)


	Foreign Currency			Defined Benefit Pension Plans			Total
Balance at January 1, 2023	$	(16,410	)	$	(1,383	)	$	(17,793	)
Other comprehensive income (loss) before reclassifications		(141	)		—			(141	)
Net current-period other comprehensive income (loss)		(141	)		—			(141	)
Balance at September 30, 2023	$	(16,551	)	$	(1,383	)	$	(17,934	)


	Foreign Currency			Defined Benefit Pension Plans			Total
Balance at January 1, 2022	$	(13,935	)	$	(1,466	)	$	(15,401	)
Other comprehensive income (loss) before reclassifications		(2,985	)		—			(2,985	)
Net current-period other comprehensive income (loss)		(2,985	)		—			(2,985	)
Balance at September 30, 2022	$	(16,920	)	$	(1,466	)	$	(18,386	)

Allowance for Credit Losses

Management has established certain requirements that customers must meet before credit is extended. The financial condition of customers is continually monitored and collateral is usually not required. The Company evaluates the collectability of accounts receivable based on a combination of factors. The Company reviews historical trends for credit loss as well as current economic conditions in determining an estimate for its allowance for credit losses. Additionally, in circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for credit losses is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably expects will be collected.

The changes in the allowance for credit losses for the nine months ended September 30, 2023 and 2022 were as follows:


	2023			2022
Balance at January 1	$	2,273		$	2,173
Provision for expected credit loss, net of recoveries		1,224			218
Write-offs and other		(739	)		(469	)
Balance at September 30	$	2,758		$	1,922

2. Revenue Recognition

The Company’s revenue by major market is as follows:


	For the Quarter Ended September 30, 2023
	Material Handling		Distribution		Inter-company			Consolidated
Consumer	$	21,740	$	—	$	—		$	21,740
Vehicle		29,770		—		—			29,770
Food and beverage		26,770		—		—			26,770
Industrial		54,204		—		(21	)		54,183
Auto aftermarket		—		65,335		—			65,335
Total net sales	$	132,484	$	65,335	$	(21	)	$	197,798

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)


	For the Quarter Ended September 30, 2022
	Material Handling		Distribution		Inter-company			Consolidated
Consumer	$	24,476	$	—	$	—		$	24,476
Vehicle		38,158		—		—			38,158
Food and beverage		31,126		—		—			31,126
Industrial		61,898		—		(9	)		61,889
Auto aftermarket		—		72,416		—			72,416
Total net sales	$	155,658	$	72,416	$	(9	)	$	228,065


	For the Nine Months Ended September 30, 2023
	Material Handling		Distribution		Inter-company			Consolidated
Consumer	$	75,900	$	—	$	—		$	75,900
Vehicle		97,983		—		—			97,983
Food and beverage		86,915		—		—			86,915
Industrial		167,543		—		(44	)		167,499
Auto aftermarket		—		193,693		—			193,693
Total net sales	$	428,341	$	193,693	$	(44	)	$	621,990


	For the Nine Months Ended September 30, 2022
	Material Handling		Distribution		Inter-company			Consolidated
Consumer	$	90,989	$	—	$	—		$	90,989
Vehicle		134,036		—		—			134,036
Food and beverage		88,960		—		—			88,960
Industrial		191,399		—		(29	)		191,370
Auto aftermarket		—		181,352		—			181,352
Total net sales	$	505,384	$	181,352	$	(29	)	$	686,707

Revenue is recognized when obligations under the terms of a contract with customers are satisfied. In both the Distribution and Material Handling segments, this generally occurs with the transfer of control of the products. This transfer of control may occur at either the time of shipment from a Company facility, or at the time of delivery to a designated customer location. Obligations under contracts with customers are typically fulfilled within 90 days of receiving a purchase order from a customer, and generally no other future obligations are required to be performed. The Company generally does not enter into any long-term contracts with customers greater than one year. Based on the nature of the Company’s products and customer contracts, no deferred revenue has been recorded, with the exception of cash advances or deposits received from customers prior to transfer of control of the product. These advances are typically fulfilled within the 90-day time frame mentioned above.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the products. Certain contracts with customers include variable consideration, such as rebates or discounts. The Company recognizes estimates of this variable consideration each period, primarily based on the most likely level of consideration to be paid to the customer under the specific terms of the underlying programs. While the Company’s contracts with customers do not generally include explicit rights to return product, the Company will in practice allow returns in the normal course of business and as part of the customer relationship. Expected returns allowances are recognized each period based on an analysis of historical experience, and when physical recovery of the product from returns occurs, an estimated right to return asset is also recorded based on the approximate cost of the product.

Amounts included in the Condensed Consolidated Statements of Financial Position (Unaudited) related to revenue recognition include:

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)


	September 30,			December 31,			Statement of Financial Position
	2023			2022			Classification
Returns, discounts and other allowances	$	(1,138	)	$	(986	)	Accounts receivable
Right of return asset	$	386		$	350		Inventories, net
Customer deposits	$	(4,013	)	$	(5,896	)	Other current liabilities
Accrued rebates	$	(4,093	)	$	(4,711	)	Other current liabilities

Sales, value added, and other taxes collected with revenue from customers are excluded from net sales. The cost for shipments to customers is recognized when control over products has transferred to the customer and is classified as Selling, General and Administrative expenses for the Company’s manufacturing business and as Cost of sales for the Company’s distribution business. Costs for shipments to customers in Selling, General and Administrative expenses were approximately $3.0 million and $2.9 million for the quarters ended September 30, 2023 and 2022, respectively, and $8.6 million and $10.1 million for the nine months ended September 30, 2023 and 2022, respectively, and in Cost of sales were approximately $2.7 million and $3.1 million for the quarters ended September 30, 2023 and 2022, respectively, and $9.9 million and $7.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Based on the short-term nature of contracts described above, contract acquisition costs are not significant. These costs, as well as other incidental items that are immaterial in the context of the contract, are recognized as expense as incurred.

3. Acquisitions

Mohawk

On May 31, 2022, the Company acquired the assets of Mohawk, a leading auto aftermarket distributor, which is included in the Distribution Segment. The Mohawk acquisition aligns with the Company's long-term objective to optimize and grow its Distribution business. Cash consideration was $27.8 million, net of $1.1 million of cash acquired. Total cash consideration also includes a $3.5 million working capital adjustment, of which $3.3 million was settled in November 2022 and $0.2 million was settled in February 2023. The Company funded the acquisition with proceeds from the Loan Agreement described in Note 11.

The acquisition of Mohawk was accounted for using the acquisition method, whereby all of the assets acquired and liabilities assumed were recognized at their fair value on the acquisition date, with any excess of the purchase price over the estimated fair value recorded as goodwill. The following table summarizes the allocation of the purchase price based on the estimated fair value of assets acquired and liabilities assumed, including measurement period adjustments.


	Initial Allocation of Consideration		Measurement Period Adjustments(1)			Final Allocation
Assets acquired:
Accounts receivable	$	10,137	$	458		$	10,595
Inventories		8,209		(16	)		8,193
Prepaid expenses		104		—			104
Other assets - long term		30		—			30
Property, plant and equipment		1,432		(261	)		1,171
Right of use asset - operating leases		1,367		—			1,367
Intangible assets		7,720		90			7,810
Goodwill		7,485		(403	)		7,082
Assets acquired	$	36,484	$	(132	)	$	36,352

Liabilities assumed:
Accounts payable	$	5,996	$	(191	)	$	5,805
Accrued expenses		1,414		(70	)		1,344
Operating lease liability - short term		399		—			399
Operating lease liability - long term		968		—			968
Total liabilities assumed		8,777		(261	)		8,516

Net acquisition cost	$	27,707	$	129		$	27,836

(1) The Company's preliminary purchase price allocation changed due to additional information and further analysis.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

The goodwill represents the future economic benefits arising from other assets acquired that could not be individually and separately recognized, and the Company expects that the goodwill recognized for the acquisition will be deductible for tax purposes.

The intangible assets included above consist of the following:


	Fair Value		Weighted Average Estimated Useful Life
Customer relationships	$	5,500	12.0 years
Trade name		2,000	5.0 years
Non-competition agreements		310	5.0 years
Total amortizable intangible assets	$	7,810

4. Restructuring

Ameri-Kart Plan

In March 2019, the Company committed to implementing a restructuring plan involving its Ameri-Kart Corp. subsidiary (“Ameri-Kart”), a rotational molding business within the Material Handling Segment. The Company is consolidating certain manufacturing operations into a new facility in Bristol, Indiana (the “Ameri-Kart Plan”). In December 2019, as amended in March 2021, Ameri-Kart entered into a lease agreement for a newly constructed manufacturing and distribution facility in Bristol, Indiana. The building became substantially complete in March 2021 as defined in the lease agreement, and the 15-year finance lease of the new Bristol facility commenced. In connection with the lease agreement, Ameri-Kart agreed to sell its original Bristol facility and lease it back for a period of 5 years. During the second quarter of 2021, the sale of the original facility for net proceeds of $2.8 million was completed, which resulted in a gain of $1.0 million, and the lease back commenced. The new Bristol facility is in service and the original facility has been closed. Remaining costs to complete this consolidation are expected to be approximately $2.5 million, including approximately $0.3 million in 2023 related to remaining equipment moves and $2.2 million to be incurred through 2026 related to remaining lease and maintenance costs for the idled facility.

The Company incurred $0.2 million and $0.7 million of restructuring charges related to the initiatives discussed above during the quarter and nine months ended September 30, 2023, respectively, and $0.3 million and $0.7 million of restructuring charges during the quarter and nine months ended September 30, 2022, respectively, which were recorded within both Cost of sales and Selling, General and Administrative. The Company also incurred $0.3 million related to loss on disposal of fixed assets during the nine months ended September 30, 2022. Accrued and unpaid restructuring expenses were not significant at September 30, 2023 or December 31, 2022.

Other Initiatives

Severance charges from other restructuring initiatives to reduce and streamline overhead costs during the quarter and nine months ended September 30, 2023 totaled $1.1 million and $1.5 million, respectively which were recorded within Selling, General and Administrative. Accrued and unpaid costs for these initiatives totaled $0.2 million at September 30, 2023 and remaining costs associated with these other restructuring initiatives are expected to be approximately $0.1 million, related primarily to employee severance.

5. Inventories

Inventories are valued at the lower of cost or market for last-in, first-out (“LIFO”) inventory and lower of cost or net realizable value for first-in, first-out (“FIFO”) inventory. Approximately 35 percent of inventories are valued using the LIFO method of determining cost. All other inventories are valued using the FIFO method of determining cost. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation. No adjustment to the LIFO reserve was recorded for the quarter ended September 30, 2023. During 2022, the Company incurred an adjustment of $1.1 million to increase the LIFO reserve and cost of sales for the quarter and nine months ended September 30, 2022.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

Inventories consisted of the following:


	September 30,		December 31,
	2023		2022
Finished and in-process products	$	57,194	$	54,991
Raw materials and supplies		39,036		38,360
	$	96,230	$	93,351

6. Other Liabilities

The balance in Other Current Liabilities is comprised of the following:


	September 30,		December 31,
	2023		2022
Customer deposits and accrued rebates	$	8,106	$	10,607
Dividends payable		5,828		5,722
Accrued litigation, claims and professional fees		656		596
Current portion of environmental reserves		8,005		3,284
Other accrued expenses		6,543		6,171
	$	29,138	$	26,380

The balance in Other Liabilities (long-term) is comprised of the following:


	September 30,		December 31,
	2023		2022
Environmental reserves	$	7,581	$	13,078
Supplemental executive retirement plan liability		618		824
Pension liability		253		184
Other long-term liabilities		1,832		1,184
	$	10,284	$	15,270

7. Goodwill and Intangible Assets

The change in goodwill for the nine months ended September 30, 2023 was as follows:


	Distribution		Material Handling			Total
January 1, 2023	$	14,730	$	80,427		$	95,157
Foreign currency translation		—		(28	)		(28	)
September 30, 2023	$	14,730	$	80,399		$	95,129

Intangible assets other than goodwill primarily consist of trade names, customer relationships, patents, non-competition agreements and technology assets established in connection with acquisitions. These intangible assets, other than certain trade names, are amortized over their estimated useful lives. Indefinite-lived trade names had a carrying value of $9.8 million at both September 30, 2023 and December 31, 2022. Refer to Note 3 for the intangible assets acquired through the Mohawk acquisition in May 2022.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

8. Net Income per Common Share

Net income per common share, as shown on the accompanying Condensed Consolidated Statements of Operations (Unaudited), is determined on the basis of the weighted average number of common shares outstanding during the periods as follows:


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Weighted average common shares outstanding basic		36,811,296		36,472,378		36,712,662		36,383,398
Dilutive effect of stock options and restricted stock		168,584		244,775		259,722		295,557
Weighted average common shares outstanding diluted		36,979,880		36,717,153		36,972,384		36,678,955

Options to purchase 104,409 shares of common stock that were outstanding for the quarter and nine months ended September 30, 2023 and 114,540 shares of common stock that were outstanding for the quarter and nine months ended September 30, 2022 were not included in the computation of diluted earnings per share as the exercise prices of these options were greater than the average market price of common shares, and were therefore anti-dilutive.

9. Stock Compensation

The Company’s 2021 Long-Term Incentive Plan (the “2021 Plan”) was adopted by the Board of Directors on March 4, 2021, amended by the Board of Directors on April 20, 2021, and approved by shareholders in the annual shareholder meeting on April 29, 2021. The 2021 Plan authorizes the Compensation and Management Development Committee of the Board of Directors (“Compensation Committee”) to issue up to 2,000,000 additional various stock awards including stock options, performance stock units, restricted stock units and other forms of equity-based awards to key employees and directors.

Stock compensation expense was approximately $0.7 million and $1.3 million for the quarters ended September 30, 2023 and 2022, respectively, and $5.1 million and $5.2 million for the nine months ended September 30, 2023 and 2022, respectively. These expenses are included in Selling, General and Administrative expenses. Total unrecognized compensation cost related to non-vested stock-based compensation arrangements at September 30, 2023 was approximately $8.9 million, which will be recognized over the next three years, as such compensation is earned. Outstanding options expire, if unexercised, ten years from the date of grant.

10. Contingencies

The Company is a defendant in various lawsuits and a party to various other legal proceedings arising in the ordinary course of business, some of which are covered in whole or in part by insurance. When a loss arising from these matters is probable and can reasonably be estimated, the most likely amount of the estimated probable loss is recorded, or if a range of probable loss can be estimated and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary.

Based on current available information, management believes that the ultimate outcome of these matters, including those described below, will not have a material adverse effect on our financial position, cash flows or overall trends in our results of operations. However, these matters are subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which the ruling occurs, or in future periods.

New Idria Mercury Mine

In September 2015, the U.S. Environmental Protection Agency (“EPA”) informed a subsidiary of the Company, Buckhorn, Inc. (“Buckhorn”) via a notice letter and related documents (the “Notice Letter”) that it considers Buckhorn to be a potentially responsible party (“PRP”) in connection with the New Idria Mercury Mine site (“New Idria Mine”). New Idria Mining & Chemical Company (“NIMCC”), which owned and/or operated the New Idria Mine through 1976, was merged into Buckhorn Metal Products Inc. in 1981, which was subsequently acquired by Myers Industries, Inc. in 1987. As a result of the EPA Notice Letter, Buckhorn and the Company engaged in negotiations with the EPA with respect to a draft Administrative Order of Consent (“AOC”) proposed by the EPA for the Remedial Investigation/Feasibility Study (“RI/FS”) to determine the extent of remediation necessary and the screening of alternatives. Buckhorn and the EPA finalized the AOC and related Statement of Work (“SOW”) with regards to the New Idria Mine, effective as of

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

November 27, 2018, the date that it was executed by the EPA. The AOC requires a $2 million letter of credit to be provided for the duration of the RI/FS as assurance of Buckhorn's performance obligations.

All reasonably estimable costs related to the environmental remediation are accrued. These costs are comprised primarily of estimates to perform the RI/FS, negotiation of the AOC, identification of possible other PRPs, EPA oversight fees, past cost claims made by the EPA, periodic monitoring, and responses to demands issued by the EPA under the AOC. It is possible that adjustments to the aforementioned reserves will be necessary as new information is obtained, including after finalization and EPA approval of the work plan for the RI/FS. Estimates of Buckhorn’s liability are based on current facts, laws, regulations and technology. Estimates of Buckhorn’s environmental liabilities are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluation and cost estimates, the extent of remedial actions that may be required, the extent of oversight by the EPA and the number and financial condition of other PRPs that may be named, as well as the extent of their responsibility for the remediation. Beginning in late 2021 and continuing through the current period, Buckhorn and the EPA continue to actively discuss the scope of the activities in the work plan for the RI/FS, resulting in changes to the estimated costs to perform the RI/FS work plan from time to time. Cost estimates will continue to be refined as the work plans for the RI/FS and the ultimate remediation are finalized and as the activities are performed over a period expected to last several years.

In the fourth quarter of 2022, Buckhorn reached an agreement with respect to certain insurance coverage related to defense costs, which is expected to apply to a substantial portion of the estimated RI/FS costs. Recovery of accrued costs are recorded as a receivable to the extent such recovery is determined to be probable under this agreement. Estimates of cost recoveries will continue to be refined as the RI/FS work plan is finalized and the activities are performed over a period expected to last several years. Buckhorn may also have opportunity for cost recovery under other insurance policies.

Since October 2011, when the New Idria Mine was added to the Superfund National Priorities List by the EPA, Buckhorn has recognized $19.3 million of cumulative charges, made cumulative payments of $10.1 million and received insurance recoveries of $3.4 million through September 30, 2023. For the three and nine months ended September 30, 2023 the following activity was recorded in connection with the New Idria Mercury Mine:


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Beginning reserve balance	$	12,082		$	9,153		$	11,855		$	8,213
Changes in estimated environmental liability		300			1,500			3,800			2,800
Payments made(1) (4)		(1,182	)		(123	)		(4,455	)		(483	)
Ending reserve balance(2)	$	11,200		$	10,530		$	11,200		$	10,530

Beginning receivable balance	$	6,162		$	—		$	6,000		$	—
Changes in estimated probable insurance recovery		400			—			1,600			—
Insurance recovery reimbursements		(394	)		—			(1,432	)		—
Ending receivable balance(3)	$	6,168		$	—		$	6,168		$	—

(1) Payments made in 2022 were offset by insurance refunds of $0.3 million and $0.4 million in the three and nine months ended September 30, 2022, respectively. In the fourth quarter of 2022, Buckhorn reached an agreement with respect to certain insurance coverage related to defense costs for which recovery of accrued costs are recorded as a receivable to the extent such recovery is determined to be probable under this agreement.

(2) As of September 30, 2023, Buckhorn has a total ending reserve balance of $11.2 million related to the New Idria Mine, of which $7.7 million is classified in Other current liabilities and $3.5 million in Other liabilities (long-term).

(3) As of September 30, 2023, Buckhorn has a total receivable balance related to the probable insurance recovery of $6.2 million, of which $3.2 million

is classified in Accounts receivable and $3.0 million is classified in Other (long-term).

(4) Payments made for the nine months ended September 30, 2023 include a $1.9 million payment related to a settlement agreement with the EPA to resolve the past costs claim, which Buckhorn paid in the first quarter of 2023.

Given the circumstances referred to above, including the fact that the final remediation strategy has not yet been determined, Buckhorn has not accrued for remediation costs in connection with this site as it is unable to estimate the range of a reasonably possible liability for remediation costs.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

New Almaden Mine

A number of parties, including the Company and its subsidiary, Buckhorn (as successor to NIMCC), were alleged by trustee agencies of the United States and the State of California to be responsible for natural resource damages due to environmental contamination of areas comprising the historical New Almaden mercury mines located in the Guadalupe River Watershed region in Santa Clara County, California (“County”). In 2005, Buckhorn and the Company, without admitting liability or chain of ownership of NIMCC, resolved the trustees’ claim against them through a consent decree that required them to contribute financially to the implementation by the County of an environmentally beneficial project within the impacted area. Buckhorn and the Company negotiated an agreement with the County ("Cost Sharing Agreement"), whereby Buckhorn and the Company agreed to reimburse one-half of the County’s costs of implementing the project. A detailed estimate was received from the County in 2016, and estimated costs for implementing the project to range between $3.3 million and $4.4 million. In 2022, the County informed the Company that it may begin implementation of the project in 2023 and that costs were expected to be higher. In January 2023, the County informed Buckhorn that the project will commence in 2023 and that it had accepted a bid to complete the project for approximately $9.0 million. The Company and Buckhorn intend to vigorously challenge, under the terms of the Cost Sharing Agreement, their responsibility to share in the entirety of the project cost increases. No additional costs were incurred related to New Almaden in the quarter and nine months ended September 30, 2023 or 2022, respectively and payments of $0.1 million were made in the quarter and nine months ended September 30, 2023. As of September 30, 2023, the Company has a total reserve of $4.4 million related to the New Almaden Mine, of which $0.3 million is classified in Other Current Liabilities and $4.1 million in Other Liabilities (long-term).

As work on the project occurs and dispute resolution proceeds, it is possible that adjustments to the aforementioned reserves will be necessary to reflect new information. In addition, the Company may have claims against and defenses to claims by the County under the 2005 agreement that could reduce or offset its obligation for reimbursement of some of these potential additional costs. With the assistance of environmental consultants, the Company will closely monitor this matter and will continue to assess its reserves as additional information becomes available.

No Spill Matter

On December 11, 2018, No Spill Inc. ("No Spill") filed suit against Scepter Manufacturing LLC in the United States District Court for the District of Kansas asserting infringement of two patents, breach of contract, and trade dress claims in relation to plastic gasoline containers Scepter manufactures and sells in the United States. Scepter Canada, Inc. was later added in a second amended complaint. On January 6, 2022, the District Court bifurcated the patent infringement and invalidity issues from the antitrust and other issues in the case. The trial on patent infringement and invalidity was held in early March 2023, resulting in a unanimous jury verdict on March 14, 2023 in favor of the defendant Scepter entities on each of the alleged claims of infringement. On April 24, 2023, the Court issued an Order dismissing all remaining claims in the case with prejudice and entered final Judgment of the jury verdict in favor of Scepter. On April 24, 2023, the parties dismissed the remaining claims and phase two of the bifurcated trial will not proceed.

Both parties filed post-trial motions with the District Court to preserve the issues for appeal. The District Court denied No Spill's motion for judgment as a matter of law and for a new trial. No Spill did not file an appeal. The underlying case is now concluded.

The Company has maintained insurance policies, which it believes may cover a substantial portion of the defense costs incurred in this matter. To date, Scepter has incurred $13.3 million of defense costs in this matter, of which $0.1 million and $0.6 million were incurred in the quarters ended September 30, 2023 and 2022, respectively, and $3.6 million and $2.5 million were incurred in the nine months ended September 30, 2023 and 2022, respectively. The Company and Scepter are in active discussions with the insurer to recover these defense costs. In the third quarter of 2023 while discussions with the insurer were in progress, the Company received a preliminary $0.5 million payment from the insurer, which was recorded as a reduction to legal costs within Selling, General and Administrative expenses. The Company believes it is entitled to additional insurance proceeds and will continue to pursue recovery with the insurer.

Other Matters

On February 14, 2023, a lawsuit was filed by Nan Morgan McCartney in the Circuit Court of Escambia County, Florida against the Company, Scepter US Holding Company, Scepter Manufacturing, LLC, Scepter Canada Inc., Walmart Inc., and Wal-Mart Stores East, LP. The complaint seeks compensatory damages and court costs for harm caused to Ms. McCartney allegedly arising from use of a 5-gallon portable fuel container manufactured by a Scepter company and alleges amounts in controversy in excess of $30 thousand exclusive of costs. The case has been removed to the Northern District of Florida, Pensacola Division. The Myers' defendants filed their Answer to the Complaint on April 25, 2023. On May 19, 2023 the Court filed a Final Scheduling Order. Defendants have served written discovery on Plaintiff. Plaintiff was deposed on September 6, 2023. We are scheduling depositions for other fact witnesses. No other

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

proceedings have occurred in this litigation matter as of the date of this filing and the Company cannot assess with any meaningful probability the outcome or the potential damages.

On October 18, 2023, Tank Holding Corp. served a Complaint against Myers Industries, Inc. (“Myers”), asserting patent infringement with regard to a single product manufactured by Elkhart Plastics LLC. Myers has conducted a preliminary assessment of the allegations and believes it has strong defenses. No other proceedings or discovery have occurred in this matter as of the date of this filing and the Company cannot assess with any meaningful probability the outcome or the potential damages.

11. Long-Term Debt and Loan Agreements

Long-term debt consisted of the following:


	September 30,		December 31,
	2023		2022
Loan Agreement	$	22,000	$	56,000
5.25% Senior Unsecured Notes due January 15, 2024		11,000		11,000
5.30% Senior Unsecured Notes due January 15, 2024		15,000		15,000
5.45% Senior Unsecured Notes due January 15, 2026		12,000		12,000
		60,000		94,000
Less unamortized deferred financing costs		19		38
		59,981		93,962
Less current portion long-term debt		25,994		—
Long-term debt	$	33,987	$	93,962

On September 29, 2022, the Company entered into a Seventh Amended and Restated Loan Agreement (the “Seventh Amendment”), which amended the Sixth Amended and Restated Loan Agreement (the "Sixth Amendment"), dated March 12, 2021. The Seventh Amendment, among other things, extended the maturity date to September 2027 from March 2024. The Seventh Amendment did not change the senior revolving credit facility's $250 million borrowing limit, which includes a letter of credit subfacility and swingline subfacility, or the outstanding letters of credit. In connection with the Seventh Amendment, the Company incurred $0.9 million of deferred financing fees, which are included in Other Assets (long-term). Together with unamortized fees from the Sixth Amendment remaining deferred financing fees under the Company's Loan Agreement were $1.2 million and $1.4 million as of September 30, 2023 and December 31, 2022, respectively, which will be amortized to Interest expense over the term of the Loan Agreement (defined below).

In March 2021, the Company entered into the Sixth Amendment, which amended the Fifth Amended and Restated Loan Agreement (collectively with the Sixth and Seventh Amendments, the “Loan Agreement”) dated March 2017. The Sixth Amendment increased the senior revolving credit facility’s borrowing limit to $250 million from $200 million, extended the maturity date to March 2024 from March 2022, and increased flexibility of the financial and other covenants and provisions. Amounts borrowed under the credit facility are secured by pledges of stock of certain of the Company’s foreign subsidiaries and guaranties of certain of its domestic subsidiaries. In connection with the Sixth Amendment, the Company incurred $1.1 million of deferred financing fees, which are included in Other Assets (long-term) and being amortized to Interest expense over the term of the Loan Agreement.

As of September 30, 2023, the Company had $222.3 million available under the Loan Agreement, which is available for the ongoing working capital requirements of the Company and its subsidiaries and for general corporate purposes. The Company had $5.7 million of letters of credit issued related to insurance and other contracts requiring financial assurance in the ordinary course of business. Borrowings under the Loan Agreement bear interest at the Term SOFR, RFR, EURIBOR and CDOR-based borrowing rates. Amounts borrowed under the credit facility are secured by pledges of stock of certain of the Company’s foreign subsidiaries and guaranties of certain of its domestic subsidiaries.

The Company also holds Senior Unsecured Notes (“Notes”), which range in face value from $11.0 million to $15.0 million, with interest rates ranging from 5.25% to 5.45%, payable semiannually, and maturing between January 2024 and January 2026. At September 30, 2023, $38.0 million of the Notes were outstanding, of which $26.0 million are classified as current.

The weighted average interest rate on borrowings under the Company’s long-term debt was 7.09% and 5.50% for the quarters ended September 30, 2023 and 2022, respectively, and 6.74% and 4.55% for the nine months ended September 30, 2023 and 2022, respectively, which includes a quarterly facility fee on the used and unused portion, as well as amortization of deferred financing costs.

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

As of September 30, 2023, the Company was in compliance with all of its debt covenants associated with its Loan Agreement and Notes. The most restrictive financial covenants for all of the Company’s debt are a leverage ratio (defined as total debt divided by earnings before interest, taxes, depreciation and amortization, as adjusted) and an interest coverage ratio (defined as earnings before interest, taxes, depreciation and amortization, as adjusted, divided by interest expense).

12. Income Taxes

The Company’s effective tax rate was 25.7% and 25.6% for the quarter and nine months ended September 30, 2023, respectively compared to 24.8% and 25.5% for the quarter and nine months ended September 30, 2022. The effective income tax rate for both periods was different than the Company’s statutory rate, primarily due to non-deductible expenses and state taxes.

The Company and its subsidiaries file U.S. Federal, state and local, and non-U.S. income tax returns. As of September 30, 2023, the Company is no longer subject to U.S. Federal examination by tax authorities for tax years before 2019. The Company is subject to state and local examinations for tax years of 2018 through 2021. In addition, the Company is subject to non-U.S. income tax examinations for tax years of 2017 through 2021.

13. Leases

The Company determines if an arrangement is a lease at inception. The Company has leases for manufacturing facilities, distribution centers, warehouses, office space and equipment, with remaining lease terms of one to twelve years. Certain of these leases include options to extend the lease for up to five years, and some include options to terminate the lease early. Leases with an initial term of 12 months or less are not recorded on the statement of financial position; the Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term. Operating leases with an initial term greater than 12 months are included in Right of use asset – operating leases (“ROU assets”), Operating lease liability – short term, and Operating lease liability – long term and finance leases are included in Property, plant and equipment, Finance lease liability – short term, and Finance lease liability – long term in the Condensed Consolidated Statements of Financial Position (Unaudited).

The ROU assets represent the right to use an underlying asset for the lease term and the lease liabilities represent the obligation to make lease payments. ROU assets and lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. When leases do not provide an implicit rate, the Company’s incremental borrowing rate is used, which is then applied at the portfolio level, based on the information available at commencement date in determining the present value of lease payments. The Company has also elected not to separate lease and non-lease components. The lease terms include options to extend or terminate the lease when it is reasonably certain the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

Amounts included in the Condensed Consolidated Statements of Financial Position (Unaudited) related to leases include:


		September 30,		December 31,
	Classification	2023		2022
Assets:
Operating lease assets	Right of use asset - operating leases	$	27,384	$	28,908
Finance lease assets	Property, plant and equipment, net		8,854		9,075
Total lease assets		$	36,238	$	37,983

Liabilities:
Current	Operating lease liability - short-term	$	5,604	$	6,177
Long-term	Operating lease liability - long-term		22,023		22,786
Total operating lease liabilities			27,627		28,963
Current	Finance lease liability - short-term		581		518
Long-term	Finance lease liability - long-term		8,766		8,919
Total finance lease liabilities			9,347		9,437
Total lease liabilities		$	36,974	$	38,400

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

The components of lease expense include:


		For the Quarter Ended September 30,				For the Nine Months Ended September 30,
Lease Cost	Classification	2023		2022		2023		2022
Operating lease cost (1)	Cost of sales	$	1,493	$	1,440	$	4,664	$	4,172
Operating lease cost (1)	Selling, general and administrative expenses		856		803		2,493		2,081
Finance lease cost
Amortization expense	Cost of sales		190		172		535		517
Interest expense on lease liabilities	Interest expense, net		89		85		251		256
Total lease cost		$	2,628	$	2,500	$	7,943	$	7,026

(1)

Includes short-term leases and variable lease costs, which are immaterial

Supplemental cash flow information related to leases was as follows:


	For the Nine Months Ended September 30,
Supplemental Cash Flow Information	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,649	$	5,074
Operating cash flows from finance leases	$	251	$	256
Financing cash flows from finance leases	$	403	$	374
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	3,756	$	3,638
Finance leases	$	313	$	—


Lease Term and Discount Rate	September 30, 2023			December 31, 2022
Weighted-average remaining lease term (years):
Operating leases		5.93			6.44
Finance leases		12.24			13.17
Weighted-average discount rate:
Operating leases		4.4	%		3.6	%
Finance leases		3.7	%		3.5	%


Maturity of Lease Liabilities - As of September 30, 2023	Operating Leases			Finance Leases			Total
2023(1)	$	1,783		$	225		$	2,008
2024		6,415			920			7,335
2025		5,506			924			6,430
2026		4,838			924			5,762
2027		3,948			945			4,893
After 2027		8,749			7,658			16,407
Total lease payments		31,239			11,596			42,835
Less: interest		(3,612	)		(2,249	)		(5,861	)
Present value of lease liabilities	$	27,627		$	9,347		$	36,974

(1)

Represents amounts due in 2023 after September 30, 2023

MYERS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)

(Dollars in thousands, except where otherwise indicated)

14. Segments

The Company manages its business under two operating segments, Material Handling and Distribution, consistent with the manner in which the Chief Operating Decision Maker (“CODM”) evaluates performance and makes resource allocation decisions. None of the reportable segments include operating segments that have been aggregated. These segments contain individual business components that have been combined on the basis of common management, customers, products, production processes and other economic characteristics. Intersegment sales are recorded with a reasonable margin and are eliminated in consolidation.

The Material Handling Segment manufactures a broad selection of durable plastic reusable containers that are used repeatedly during the course of their service life. At the end of their service life, these highly sustainable products can be recovered, recycled, and reprocessed into new products. The Material Handling Segment’s products include pallets, small parts bins, bulk shipping containers, storage and organization products, OEM parts, custom plastic products, consumer fuel containers and tanks for water, fuel and waste handling. Products in the Material Handling Segment are primarily injection molded, rotationally molded or blow molded. This segment conducts its primary operations in the United States and Canada. Markets served include industrial manufacturing, food processing, retail/wholesale products distribution, agriculture, automotive, recreational vehicles, marine vehicles, healthcare, appliance, bakery, electronics, textiles and consumer, among others. Products are sold both directly to end-users and through distributors.

The Distribution Segment is engaged in the distribution of equipment, tools, and supplies used for tire servicing and automotive under-vehicle repair and the manufacture of tire repair and retreading products. The product line includes categories such as tire valves and accessories, tire changing and balancing equipment, lifts and alignment equipment, service equipment and tools, and tire repair/retread supplies. The Distribution Segment also manufactures and sells certain traffic markings, including reflective highway marking tape. The Distribution Segment operates domestically through its sales offices and eight regional distribution centers in the United States, and in certain foreign countries through export sales. In addition, the Distribution Segment operates directly in certain foreign markets, principally Central America, through foreign branch operations. Markets served include retail and truck tire dealers, commercial auto and truck fleets, truck stop operations, auto dealers, general service and repair centers, tire retreaders, and government agencies. The acquisition of Mohawk, described in Note 3, is included in the Distribution Segment.

Total sales from foreign business units were approximately $10.2 million and $13.9 million for the quarters ended September 30, 2023 and 2022, respectively, and $33.9 million and $40.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Summarized segment detail for the quarters and nine months ended September 30, 2023 and 2022 are presented in the following table:


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net Sales
Material Handling	$	132,484		$	155,658		$	428,341		$	505,384
Distribution		65,335			72,416			193,693			181,352
Inter-company sales		(21	)		(9	)		(44	)		(29	)
Total net sales	$	197,798		$	228,065		$	621,990		$	686,707

Operating income
Material Handling	$	19,978		$	23,962		$	70,157		$	83,216
Distribution (1)		4,993			4,899			10,628			12,469
Corporate (1) (2) (3)		(6,268	)		(8,964	)		(26,983	)		(28,766	)
Total operating income		18,703			19,897			53,802			66,919
Interest expense, net		(1,539	)		(1,719	)		(4,975	)		(4,077	)
Income before income taxes	$	17,164		$	18,178		$	48,827		$	62,842

(1) In the nine months ended September 30, 2023, the company recognized $0.7 million of executive severance, of which $0.4 million was recognized in the Distribution Segment related to severance and $0.3 million was recognized in Corporate related to charges for the acceleration of stock compensation.

(2) The company recognized $(0.1) million and $1.5 million of expense (income) from changes to the estimated environmental reserve, net of probable insurance recoveries for the quarters ended September 30, 2023 and 2022, respectively, and $2.2 million and $2.8 million for the nine months ended September 30, 2023 and 2022, respectively, as described in Note 10. Environmental charges are not included in segment results and are shown with Corporate.

(3) Corporate includes $1.3 million of consulting costs to improve the Company's capabilities to screen and execute large acquisitions in the nine months ended September 30, 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the information incorporated by reference contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including information regarding the Company’s financial outlook, future plans, objectives, business prospects and anticipated financial performance. Forward-looking statements can be identified by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” or variations of these words, or similar expressions. These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, these statements inherently involve a wide range of inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. The Company’s actual actions, results, and financial condition may differ materially from what is expressed or implied by the forward-looking statements.

Specific factors that could cause such a difference on our business, financial position, results of operations and/or liquidity include, without limitation, raw material availability, increases in raw material costs, or other production costs; risks associated with our strategic growth initiatives or the failure to achieve the anticipated benefits of such initiatives; unanticipated downturn in business relationships with customers or their purchases; competitive pressures on sales and pricing; changes in the markets for the Company’s business segments; changes in trends and demands in the markets in which the Company competes; operational problems at our manufacturing facilities or unexpected failures at those facilities; future economic and financial conditions in the United States and around the world; inability of the Company to meet future capital requirements; claims, litigation and regulatory actions against the Company; changes in laws and regulations affecting the Company; impacts from the novel coronavirus (“COVID-19”) pandemic; and other risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including without limitation, the risk factors disclosed in Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Given these factors, as well as other variables that may affect our operating results, readers should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or trends in future periods. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company expressly disclaims any obligation or intention to provide updates to the forward-looking statements and the estimates and assumptions associated with them.

Executive Overview

The Company conducts its business activities in two reportable segments: The Material Handling Segment and the Distribution Segment.

The Company designs, manufactures, and markets a variety of plastic, metal and rubber products. The Material Handling Segment manufactures a broad selection of plastic reusable containers, pallets, small parts bins, bulk shipping containers, storage and organization products, OEM parts, custom plastic products, consumer fuel containers and tanks for water, fuel and waste handling. Products in the Material Handling Segment are primarily injection molded, rotationally molded or blow molded. The Distribution Segment is engaged in the distribution of tools, equipment and supplies used for tire, wheel and under vehicle service on passenger, heavy truck and off-road vehicles, as well as the manufacturing of tire repair and retreading products.

The Company’s results of operations for the quarter and nine months ended September 30, 2023 are discussed below. The current economic environment includes heightened risks from inflation, interest rates, banking liquidity, volatile commodity costs, supply chain disruptions and labor availability stemming from the broader economic effects of the international geopolitical climate, including the conflict between Russia and Ukraine, and the COVID-19 pandemic. Russia’s invasion of Ukraine in the first quarter of 2022 in addition to other geopolitical events has increased volatility in global commodity markets, including oil (a component of many plastic resins), energy and agricultural commodities. The Company believes it is well-positioned to manage through this uncertainty as it has a strong balance sheet with sufficient liquidity and borrowing capacity as well as a diverse product offering and customer base.

Results of Operations:

Comparison of the Quarter Ended September 30, 2023 to the Quarter Ended September 30, 2022

Net Sales:


(dollars in thousands)	Quarter Ended September 30,
Segment	2023			2022			Change			% Change
Material Handling	$	132,484		$	155,658		$	(23,174	)		(14.9	)%
Distribution		65,335			72,416			(7,081	)		(9.8	)%
Inter-company sales		(21	)		(9	)		(12	)
Total net sales	$	197,798		$	228,065		$	(30,267	)		(13.3	)%

Net sales for the quarter ended September 30, 2023 were $197.8 million, a decrease of $30.3 million or 13.3% compared to the quarter ended September 30, 2022. Net sales decreased due to lower volume/mix of $24.9 million, the effect of unfavorable currency translation of $0.3 million and lower pricing of $5.1 million. The Company continues to pursue further pricing initiatives, and beginning in February 2023, the Company began to implement a series of additional pricing increases across a majority of its portfolio of products within its Distribution segment.

Net sales in the Material Handling Segment decreased $23.2 million or 14.9% for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022. Net sales decreased due to lower volume/mix $16.5 million, lower pricing $6.4 million and the effect of unfavorable currency translation of $0.3 million.

Net sales in the Distribution Segment decreased $7.1 million or 9.8% for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022, primarily due to lower volume of $8.4 million. The decrease in net sales was partially offset by higher pricing of $1.3 million.

Cost of Sales & Gross Profit:


	Quarter Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
Cost of sales	$	135,419		$	156,417		$	(20,998	)		(13.4	)%
Gross profit	$	62,379		$	71,648		$	(9,269	)		(12.9	)%
Gross profit as a percentage of sales		31.5	%		31.4	%

Gross profit decreased $9.3 million, or 12.9%, for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022, due to lower volume/mix and pricing as described under Net Sales above and increased labor and productivity costs. Gross margin expanded to 31.5% for the quarter ended September 30, 2023 compared with 31.4% for the quarter ended September 30, 2022 as the benefits from lower material costs partially offset the decrease in gross profit for the quarter ended September 30, 2023.

Selling, General and Administrative Expenses:


	Quarter Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
SG&A expenses	$	43,698		$	51,756		$	(8,058	)		(15.6	)%
SG&A expenses as a percentage of sales		22.1	%		22.7	%

Selling, general and administrative (“SG&A”) expenses for the quarter ended September 30, 2023 were $43.7 million, a decrease of 15.6% compared to the same period in the prior year. Decreases in SG&A expenses in the third quarter 2023 were primarily due to $5.3 million of lower incentive compensation, $1.2 million of lower facility costs and $0.9 million of lower variable selling expenses, partially offset by other professional fees and $0.3 million of higher salaries and benefits. Environmental matters, as described in Note 10 resulted in a net $0.1 million recovery for the quarter ended September 30, 2023, which compared to $1.5 million of charges for the quarter ended September 30, 2022.

Net Interest Expense:


	Quarter Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
Net interest expense	$	1,539		$	1,719		$	(180	)		(10.5	)%
Average outstanding borrowings, net	$	84,220		$	120,315		$	(36,095	)		(30.0	)%
Weighted-average borrowing rate		7.09	%		5.50	%

Net interest expense for the quarter ended September 30, 2023 was $1.5 million, a decrease of $0.2 million, or 10.5%, compared with $1.7 million for the quarter ended September 30, 2022. The lower net interest expense was due to lower average outstanding borrowings in the current quarter, partially offset by a higher weighted-average borrowing rate.

Income Taxes:


	Quarter Ended September 30,
(dollars in thousands)	2023			2022
Income before income taxes	$	17,164		$	18,178
Income tax expense	$	4,417		$	4,507
Effective tax rate		25.7	%		24.8	%

The Company’s effective tax rate was 25.7% for the quarter ended September 30, 2023, compared to 24.8% for the quarter ended September 30, 2022. The increase in the effective tax rate was driven primarily by non-deductible expenses.

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022

Net Sales:


(dollars in thousands)	Nine Months Ended September 30,
Segment	2023			2022			Change			% Change
Material Handling	$	428,341		$	505,384		$	(77,043	)		(15.2	)%
Distribution		193,693			181,352			12,341			6.8	%
Inter-company sales		(44	)		(29	)		(15	)
Total net sales	$	621,990		$	686,707		$	(64,717	)		(9.4	)%

Net sales for the nine months ended September 30, 2023 were $622.0 million, a decrease of $64.7 million or 9.4% compared to the nine months ended September 30, 2022. Net sales decreased due to lower volume/mix of $83.1 million, following high volume of certain products focused on outdoor activities, which were especially strong due to a surge in COVID-19 induced consumer discretionary spending in the prior period. Net sales also decreased due to the effect of unfavorable currency translation of $1.5 million and lower pricing of $3.2 million. The decrease in net sales was partially offset by $23.1 million of incremental sales from the acquisition of Mohawk on May 31, 2022, included in the Distribution Segment. Mohawk's annual sales were approximately $65 million at the time of the acquisition. The Company continues to pursue further pricing initiatives, and beginning in February 2023, the Company began to implement a series of additional pricing increases across a majority of its portfolio of products within its Distribution segment.

Net sales in the Material Handling Segment decreased $77.0 million or 15.2% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Net sales decreased due to lower volume/mix of $65.9 million, lower pricing of $9.6 million and the effect of unfavorable currency translation of $1.5 million.

Net sales in the Distribution Segment increased $12.3 million or 6.8% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to higher pricing of $6.4 million and $23.1 million of incremental sales from the acquisition of Mohawk on May 31, 2022. The increase in net sales was partially offset by lower volume/mix of $17.2 million.

Cost of Sales & Gross Profit:


	Nine Months Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
Cost of sales	$	420,136		$	468,415		$	(48,279	)		(10.3	)%
Gross profit	$	201,854		$	218,292		$	(16,438	)		(7.5	)%
Gross profit as a percentage of sales		32.5	%		31.8	%

Gross profit decreased $16.4 million, or 7.5%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, due to lower volume/mix as described under Net Sales above and increased labor and productivity costs. Gross margin expanded to 32.5% for the nine months ended September 30, 2023 compared with 31.8% for the nine months ended September 30, 2022 as the benefits from lower material costs and the acquisition of Mohawk on May 31, 2022 both partially offset the decrease in gross profit for the nine months ended September 30, 2023.

Selling, General and Administrative Expenses:


	Nine Months Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
SG&A expenses	$	148,130		$	152,066		$	(3,936	)		(2.6	)%
SG&A expenses as a percentage of sales		23.8	%		22.1	%

Selling, general and administrative (“SG&A”) expenses for the nine months ended September 30, 2023 were $148.1 million, a decrease of $3.9 million or 2.6% compared to the same period in the prior year. Decreases in SG&A expenses for the nine months ended September 30, 2023 were primarily due to $8.2 million of lower incentive compensation, $2.6 million of lower variable selling expenses and $2.3 million of lower facility costs. The decrease to SG&A expenses for the nine months ended September 30, 2023 was partially offset by $5.0 million of incremental SG&A from the acquisition of Mohawk on May 31, 2022, $1.9 million of higher salaries and benefits and $2.3 million of higher legal and other professional fees, primarily related to a success fees payable in conjunction with the favorable patent trial result, offset by insurance recoveries, as described in Note 10. Environmental matters, as described in Note 10 resulted in a net $2.2 million expense for the nine months ended September 30, 2023, which compared to $2.8 million of charges for the nine months ended September 30, 2022.

Net Interest Expense:


	Nine Months Ended September 30,
(dollars in thousands)	2023			2022			Change			% Change
Net interest expense	$	4,975		$	4,077		$	898			22.0	%
Average outstanding borrowings, net	$	96,112		$	113,812		$	(17,700	)		(15.6	)%
Weighted-average borrowing rate		6.74	%		4.55	%

Net interest expense for the nine months ended September 30, 2023 was $5.0 million, an increase of $0.9 million, or 22.0%, compared with $4.1 million for the nine months ended September 30, 2022. The higher net interest expense was due to a higher weighted-average borrowing rate, partially offset by lower average outstanding borrowings for the nine months ended September 30, 2023.

Income Taxes:


	Nine Months Ended September 30,
(dollars in thousands)	2023			2022
Income before income taxes	$	48,827		$	62,842
Income tax expense	$	12,499		$	16,003
Effective tax rate		25.6	%		25.5	%

The Company’s effective tax rate was 25.6% and 25.5% for the nine months ended September 30, 2023 and 2022, respectively. The increase in the effective tax rate was driven primarily by non-deductible expenses.

Liquidity and Capital Resources:

The Company’s primary sources of liquidity are cash on hand, cash generated from operations and availability under the Loan Agreement (defined below). At September 30, 2023, the Company had $24.8 million of cash, $222.3 million available under the Loan Agreement and outstanding debt of $69.3 million, including the finance lease liability of $9.3 million. Based on this liquidity and borrowing capacity, the Company believes it is well-positioned to manage through the working capital demands and the heightened uncertainty in the current macroeconomic environment. The Company believes that cash on hand, cash flows from operations and available capacity under its Loan Agreement will be sufficient to meet expected business requirements including capital expenditures, dividends, working capital, debt service, and to fund future growth, including selective acquisitions.

Operating Activities

Net cash provided by operating activities was $70.8 million for the nine months ended September 30, 2023, compared to $50.8 million in the same period in 2022. The increase was primarily due to lower working capital driven by decreases in accounts receivable.

Investing Activities

Net cash used by investing activities was $19.3 million for the nine months ended September 30, 2023 compared to cash used of $40.3 million for the same period in 2022. In 2022, the Company paid $24.3 million to acquire Mohawk, before working capital adjustments, as discussed in Note 3 and received proceeds of $1.5 million from the sale of fixed assets. Capital expenditures were $19.3 million and $17.6 million for the nine months ended September 30, 2023 and 2022, respectively. Full year 2023 capital expenditures are expected to be approximately $25 million to $30 million.

Financing Activities

Cash used by financing activities was $49.8 million for the nine months ended September 30, 2023 compared to cash used by financing activities of $7.4 million for the same period in 2022. Net repayments of the credit facility for the nine months ended September 30, 2023 were $34.0 million compared to net borrowings of $7.0 million in the nine months ended September 30, 2022. Net proceeds from the issuance of common stock in connection with incentive stock option exercises were $1.9 million and $2.1 million for the nine months ended September 30, 2023 and 2022, respectively. Cash paid for tax withholdings on vesting of stock compensation totaled $2.1 million and $0.5 million in the nine months ended September 30, 2023 and 2022 respectively, primarily due to improved vesting of performance-based awards in the current year. Fees paid for the amendment and extension of the Loan Agreement in September 2022 totaled $0.7 million. The Company also used cash to pay dividends of $15.3 million and $14.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Credit Sources

As of September 30, 2023, $222.3 million was available under the Loan Agreement, after borrowings and the Company had $5.7 million of letters of credit issued related to insurance and other financing contracts in the ordinary course of business. Borrowings under the Loan Agreement bear interest at the Term SOFR, RFR, EURIBOR and CDOR-based borrowing rates.

At September 30, 2023, $38 million face value of Senior Unsecured Notes are outstanding. The series of notes range in face value from $11 million to $15 million, with interest rates ranging from 5.25% to 5.45%, payable semiannually. As described in Note 11, $26.0 million of the Senior Unsecured Notes mature on January 15, 2024 and $12.0 million mature on January 15, 2026.

As of September 30, 2023, the Company was in compliance with all of its debt covenants. The most restrictive financial covenants for all of the Company’s debt are an interest coverage ratio (defined as earnings before interest, taxes, depreciation and amortization, as adjusted, divided by interest expense) and a leverage ratio (defined as total debt divided by earnings before interest, taxes, depreciation and amortization, as adjusted). The ratios as of and for the period ended September 30, 2023 are shown in the following table:

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably expected to have, a material current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources at September 30, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company has certain financing arrangements that require interest payments based on floating interest rates, and to that extent, the Company’s financial results are subject to changes in the market rate of interest. Borrowings under the Loan Agreement bear interest at the Term SOFR, RFR, EURIBOR and CDOR-based borrowing rates. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates. Based on current debt levels at September 30, 2023, if market interest rates increase one percent, the Company’s annual variable interest expense would increase approximately $0.2 million.

Foreign Currency Exchange Risk

Certain of the Company’s subsidiaries operate in foreign countries and their financial results are subject to exchange rate movements. The Company has operations in Canada with foreign currency exposure, primarily due to U.S. dollar sales made from businesses in Canada to customers in the United States. The Company has a systematic program to limit its exposure to fluctuations in exchange rates related to certain assets and liabilities of its operations in Canada that are denominated in U.S. dollars. The net exposure is generally less than $1 million. The foreign currency contracts and arrangements created under this program are not designated as hedged items under ASC 815, Derivatives and Hedging, and accordingly, the changes in the fair value of the foreign currency arrangements, which have been immaterial, are recorded in the Condensed Consolidated Statements of Operations (Unaudited). The Company’s foreign currency arrangements are typically three months or less and are settled before the end of a reporting period. At September 30, 2023, the Company had no foreign currency arrangements or contracts in place.

Commodity Price Risk

The Company uses certain commodity raw materials, primarily plastic resins, and other commodities, such as natural gas, in its operations. The cost of operations can be affected by changes in the market for these commodities, particularly plastic resins. The Company currently has no derivative contracts to hedge changes in raw material pricing. The Company may from time to time enter into forward buy positions for certain utility costs, which were not material at September 30, 2023. Significant future increases in the cost of plastic resin or other adverse changes in the general economic environment could have a material adverse impact on the Company’s financial position, results of operations or cash flows.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

The Company carries out a variety of on-going procedures, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2023.

Changes in Internal Control Over Financial Reporting

During the nine months ended September 30, 2023, there have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – Other Information

Item 1. Legal Proceedings

Certain legal proceedings in which the Company is involved are discussed in Note 10, Contingencies, in the Unaudited Condensed Consolidated Financial Statements in Part I of this report, and Part I, Item 3 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The Company’s disclosures relating to legal proceedings in Note 10, Contingencies, in the Unaudited Condensed Consolidated Financial Statements in Part I of this report are incorporated into Part II of this report by reference. The Company is a defendant in various lawsuits and a party to various other legal proceedings, in the ordinary course of business, some of which are covered in whole or in part by insurance. We believe that the outcome of these lawsuits and other proceedings will not individually or in the aggregate have a future material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information regarding the Company’s stock repurchase plan during the quarter ended September 30, 2023:


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of the Publicly Announced Plans or Programs		Maximum number of Shares that may yet be Purchased Under the Plans or Programs (1)
7/1/2023 to 7/31/2023		—	$	—		5,547,665		2,452,335
8/1/2023 to 8/30/2023		—		—		5,547,665		2,452,335
9/1/2023 to 9/30/2023		—		—		5,547,665		2,452,335

(1)

On July 11, 2013, the Board authorized the repurchase of up to 5.0 million shares of the Company’s common stock. This authorization was in addition to the 2011 Board authorized repurchase of up to 5.0 million shares. The Company completed the repurchase of approximately 2.0 million shares in 2011 pursuant to Rule 10b5-1 plans, which were adopted pursuant to the 2011 authorized share repurchase. This program does not have an expiration date

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended September 30, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

Item 6. Exhibits


3.1	Myers Industries, Inc. Second Amended and Restated Articles of Incorporation. Reference is made to Exhibit 3.1 to Form 8-K filed with the SEC on April 29, 2021.
3.2	Myers Industries, Inc. Amended and Restated Code of Regulations. Reference is made to Exhibit 3.2 to Form 8-K filed with the SEC on April 29, 2021.
10.1*	Form of Non-Competition, Non-Solicitation and Confidentiality Agreement for Executive Officers.*
31.1	Certification of Michael P. McGaugh, President and Chief Executive Officer of Myers Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Grant E. Fitz, Executive Vice President and Chief Financial Officer of Myers Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Michael P. McGaugh, President and Chief Executive Officer, and Grant E. Fitz, Executive Vice President and Chief Financial Officer, of Myers Industries, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Myers Industries, Inc. Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, formatted in inline XBRL includes: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Financial Position, (iv) Condensed Consolidated Statements of Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
*	Indicates executive compensation plan or arrangement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MYERS INDUSTRIES, INC.

November 1, 2023	/s/ Grant E. Fitz
	Grant E. Fitz
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)