MYE Q3 2024: Execs forecast military sales to double in 2024
- Strong growth in military and power brand segments: Executives highlighted that Scepter’s military sales are expected to rise from $11 million to over $25 million in 2024 with a forecast of up to $40 million in the future, while the Signature business continues to fuel demand and capture new customers.
- Robust cost-saving initiatives: Management is executing an additional $15 million in annualized cost savings on top of earlier initiatives, with actions already underway that are expected to help counteract revenue headwinds and improve margins over time.
- Focused turnaround of the Distribution business: The new leadership team is leveraging industry relationships and recruiting efforts to address coverage gaps and boost performance, reflecting a commitment to revitalize a historically important business segment.
- Weak Distribution Business: Management acknowledged that the Distribution segment is still underperforming, with challenges in sales coverage and margin pressure, indicating the potential for continuing or even worsening losses.
- Delayed Impact of Cost-Saving Initiatives: The cost-cutting measures implemented in Q3 are not yet significantly impacting results, and further benefits are expected only in Q4 and into 2025, leaving near-term profitability uncertain.
- Persistent Market Headwinds: Ongoing challenges in key sectors—including food and beverage and automotive aftermarket—coupled with seasonal headwinds, may continue to pressure revenue and margins over the short term.
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Margin Outlook
Q: Will margins turn negative in 4Q?
A: Management expects a mix of seasonal margin pressures with lower volumes in Material Handling, but they do not anticipate outright negative margins in Distribution, as cost improvements help keep the business on a positive path. -
Cost Savings Timeline
Q: When will full savings be achieved?
A: The initial $7–9M savings should reach a full year run rate by year-end, while the additional $15M cost-cutting measures are being implemented through 2025. -
Cost Savings Impact
Q: Do Q3 results reflect savings?
A: Q3 primarily saw Tranche 1 initiatives with limited visible impact; further benefits are expected in Q4 and into 2025. -
Distribution Strategy
Q: Why keep the Distribution business?
A: Despite lower margins, Distribution is a core part of Myers’ heritage, and management plans a turnaround through enhanced leadership and strategic recruiting. -
Brand Performance Surprises
Q: Which brands surprised you most?
A: Management highlighted robust gains from Signature and Scepter—with military sales growing significantly—offsetting headwinds in other areas. -
E-commerce Update
Q: How is e-commerce performing?
A: Akro-Mils leads the e-commerce efforts on Amazon, and new product launches are boosting growth across the portfolio. -
CEO Focus
Q: What are your main priorities now?
A: The CEO emphasized focusing on expanding power brands and tightening cost controls in Engineered Products for improved performance. -
Distribution Team Hiring
Q: How is thenew Distribution team being built?
A: The team is leveraging industry relationships while actively recruiting new talent to fill critical sales coverage gaps. -
Distribution Growth Outlook
Q: What growth do you expect from Distribution?
A: Although the Distribution business faces challenges, management believes it holds potential for gradual organic improvement, even as power brands remain the strongest growth drivers.
Research analysts covering MYERS INDUSTRIES.