Myers Industries, Inc. (NYSE: MYE) made headlines today with the announcement of its acquisition of Signature Systems, a global leader in composite ground protection solutions. This strategic move is expected to significantly impact Myers' margin and profitability profile, providing a strong platform for continued growth.
According to the press release, the acquisition of Signature Systems is projected to deliver $8 million in annualized operational and cost synergies by 2025. While the US GAAP EPS is anticipated to be flat to slightly dilutive in 2024, the company expects $0.20 - $0.30 per share accretion in 2025, followed by $0.40 - $0.50 per share accretion in 2026, with additional meaningful accretion beyond 2026.
Mike McGaugh, CEO of Myers Industries, expressed enthusiasm about the acquisition, stating, "Signature aligns extremely well with our targeted acquisition criteria. The addition of Signature Systems immediately strengthens our profitability and cash flow profile and will support Myers in achieving our horizon 1 goals of one billion dollars in revenue at a 15% EBITDA margin."
The deal is valued at approximately $350 million and is expected to close in the first quarter of 2024. The transaction is projected to be neutral to slightly dilutive to US GAAP EPS in 2024, with expected EPS accretion in the following years. The company plans to finance the acquisition through a new $350 million credit facility.
McGaugh further added, "We are excited to welcome the Signature team to Myers. This acquisition is a catalyst in the transformation of Myers Industries and firmly moves us into horizon two of our three horizon strategy."
The full 8-K submission from Myers Industries, Inc. regarding the acquisition of Signature Systems can be accessed here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $566,735 | $515,698 | $510,369 | $761,435 | $899,547 | $834,830 |
| Revenue Growth | n/a | -9.01% | -1.03% | 49.19% | 18.14% | -7.19% |
| Operating Margins | 1% | 7% | 10% | 6% | 9% | 8% |
| Net Margins | -1% | 5% | 7% | 4% | 7% | 6% |
| Net Income (k) | -$3,349 | $24,333 | $36,769 | $33,538 | $60,267 | $49,756 |
| Net Interest Expense (k) | -$4,938 | -$4,083 | -$4,688 | -$4,208 | -$5,731 | -$6,629 |
| Depreciation & Amort. (k) | $17,638 | $15,120 | $20,530 | $20,885 | $21,216 | $22,520 |
| Earnings Per Share | -$0.1 | $0.68 | $1.02 | $0.92 | $1.64 | $1.35 |
| EPS Growth | n/a | 780.0% | 50.0% | -9.8% | 78.26% | -17.68% |
| Diluted Shares (k) | 33,427 | 35,653 | 35,917 | 36,359 | 36,791 | 36,980 |
| Free Cash Flow (k) | $56,129 | $44,029 | $33,086 | $27,047 | $48,329 | $66,665 |
| Capital Expenditures | $5,123 | $10,294 | $13,421 | $17,867 | $24,292 | $25,969 |
| Current Ratio | 1.88 | 2.24 | 1.29 | 1.66 | 1.87 | 1.51 |
| Total Debt (k) | $76,790 | $77,176 | $117,570 | $90,945 | $93,962 | $59,981 |
| Net Debt / EBITDA | 0.75 | 0.03 | 1.21 | 1.04 | 0.67 | 0.38 |
Myers Industries has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and low leverage. However, the firm suffers from weak operating margins with a positive growth rate and irregular cash flows.
