Myers Industries, Inc. (NYSE:MYE) Q3 2022 Earnings Conference Call October 27, 2022 8:30 AM ET
Company Participants
Monica Vinay – Interim Chief Financial Officer and Vice President, Investor Relations and Treasurer
Mike McGaugh – President and Chief Executive Officer
Conference Call Participants
Lance Vitanza – Cowen
Steve Barger – KeyBanc
Operator
Good morning and a warm welcome to the Myers Industries Third Quarter 2022 Earnings Conference Call. My name is Candice and I will be your moderator for today’s call. [Operator Instructions] I would now like to pass the conference over to our host, Monica Vinay. Please go ahead.
Monica Vinay
Thank you, Candice. Good morning and thank you for joining us. I am Monica Vinay, Interim Chief Financial Officer and Vice President of Investor Relations and Treasurer at Myers Industries. Joining me today is Mike McGaugh, our President and Chief Executive Officer.
Earlier this morning, we issued a press release outlining the financial results for the third quarter of 2022. We have also posted a PowerPoint presentation to accompany today’s prepared remarks. If you’ve not yet received a copy of either the release or the presentation, you can access them on our website at www.myersindustries.com, they are under the Investor Relations tab. This call is also being webcasted on our website and will be archived along with the transcript of the call shortly after this event.
Please turn to Slide 2 of the presentation for our Safe-Harbor disclosures. I would like to remind you that we may make some forward-looking statements during this call. These comments are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and involve risks, uncertainties and other factors which may cause results to differ materially from those expressed or implied in these statements.
Also please be advised that certain non-GAAP financial measures such as adjusted gross profit, adjusted operating income, adjusted EBITDA and adjusted EPS may be discussed on this call. Further information concerning these risks, uncertainties and other factors is set forth in the company’s periodic SEC filings and may be found in the company’s 10-K and 10-Q filings.
Now, please turn to Slide 3 of our presentation, I’m pleased to turn the call over to Mike McGaugh.
Mike McGaugh
Thank you, Monica. Good morning, everyone and welcome to our third quarter 2022 earnings call. I’m excited to report a third consecutive quarter of record top and bottom line results. These results were driven by strong revenue growth, continued year-over-year margin expansion and consistent progress against our 3 Horizon strategy. We saw healthy momentum across the majority of our businesses, we continue to execute and deliver on our self-help initiatives and we continue to realize the benefit from pricing actions taken by our commercial teams over the past 2 years.
The quarter’s results serve as another proof point that our strategy is working and then our businesses are resilient in the face of a challenging macro environment. In the third quarter, our net sales increased 14% compared to the year ago period, which represents the eight consecutive quarter of double-digit expansion. On an organic basis, excluding the incremental $19.4 million of net sales from the Trilogy and Mohawk rubber acquisitions, our revenue grew 4%. Increased sales in our agriculture, auto aftermarket and industrial end-markets continue to more than offset the impact of weaker demand in the consumer and recreational vehicle end-markets.
We also continue to meaningfully expand our profitability as our adjusted earnings per share increased by 78% or $0.18 per share compared to the year-ago period. Additionally, our adjusted EBITDA increased by 57% or nearly $10 million to the year-ago period. This bottom line performance represents our third consecutive quarterly record and I am especially proud that the Myers team was able to accomplish this in the midst of a challenging macroeconomic backdrop. As a result of our strong performance year-to-date, we are raising our earnings guidance for the full year, which Monica will review in greater detail momentarily.
Please turn to Slide 4 where we have a more detailed outline of the quarter’s results. As I mentioned, we experienced another quarter of strong revenue growth driven by sales increases across both of our operating segments, with net sales for the company of $228.1 million, up 14% compared to the third quarter of 2021. Dropping down the EBITDA margin, our goal is a simple one to expand margin by driving a wedge between cost and price and we’re making good progress against this goal. By driving excellence in purchasing and deploying the tactics I’ve discussed over the past 2.5 years, we are making meaningful progress on managing our raw-material costs.
On the other side of the equation by executing on the commercial excellence and pricing excellence initiatives I’ve discussed on these past calls, we’re moving our prices up. We’re having success with our value-based pricing initiatives. We’re now pricing our products to reflect the value in the high levels of service they bring to our customers and distributors. The success we’re having in expanding the gap between pricing cost was demonstrated by the 430 basis point margin improvement versus the same-period last year. Our results are exciting.
Now for more details, I’ll turn the call over to Monica to speak to our financial performance for the quarter and walk through our guidance. Monica?
Monica Vinay
Thank you, Mike. As Mike mentioned on Slide 4, our net sales were up $28 million or 14% compared to the third quarter of 2021, driven by strong sales in both the Material Handling and Distribution segments. Excluding our recent acquisitions, organic net sales increased 4%. Adjusted gross profit increased $17.5 million or 32%, primarily driven by pricing actions and incremental contributions from the Mohawk Rubber and Trilogy acquisitions and partially offset by a change in sales mix and lower volume.
Adjusted gross margin increased by 430 basis points to 31.5%, compared to 27.2% in the third quarter of 2021. Adjusted operating income increased $9.5 million or nearly 76% compared to the prior year, driven by the higher gross profit, partially offset by higher SG&A expenses. SG&A expenses increased due to cost inflation, the Mohawk Rubber and Trilogy Plastics acquisitions and higher salaries, incentive compensation costs and variable selling expenses. As a result, adjusted SG&A as a percentage of sales increased to 21.9% compared with 21% in the same period last year. Adjusted EBITDA was $27.2 million, an increase of nearly $10 million or 57% compared to the prior year. Adjusted EBITDA margin expanded 330 basis points to 11.9% for the third quarter compared with 8.6% in the same period last year. Lastly, adjusted EPS was $0.41, an increase of $0.18 or 78%.
Please turn to Slide 5 for an overview of our segment performance for the quarter. For the Material Handling segment, net sales increased $6 million or 4% compared to the prior year. Excluding the incremental $2.9 million of sales from the Trilogy Plastics acquisitions, organic net sales increased 2%. Organic net sales increases in the agriculture and industrial end-markets were partly offset by a decline in sales in the consumer and recreational vehicle end markets.
Adjusted operating income increased $9 million or 59% to $24 million, driven by ongoing benefits from strategic pricing actions and operations excellence initiatives. These were partially offset by a change in sales mix, lower-volume and higher SG&A expenses. SG&A expenses were higher primarily due to cost inflation, the Trilogy Plastics acquisition, higher salaries, benefits and incentive compensation costs and increased variable selling expenses.
Net sales for the Distribution segment increased by $22 million or 44% year-over-year. Excluding the incremental $16.6 million of net sales from the Mohawk Rubber acquisition, organic net sales increased 11% due to favorable volume and price. Adjusted operating income increased 18% to $5.2 million. The contribution from higher pricing and volume was partially offset by an increase in product costs and higher SG&A expenses year-over-year. The higher SG&A expenses were primarily due to cost inflation, the Mohawk Rubber acquisition and higher variable selling and incentive compensation expenses.
Turning to Slide 6, free cash flow was $9.8 million compared to negative free cash flow of $13.8 million for the third quarter of 2021. You may recall that an increase in working capital significantly impacted cash flow during the third quarter of last year. The implementation of sales and operations planning, S&OP processes across our businesses is shortening our cash conversion cycle and as a result working capital as a percentage of net sales decreased 170 basis points compared to the same period last year.
Capital expenditures were $6.7 million for the quarter and cash on hand at the end of the quarter was $20.4 million. Our balance sheet is strong with debt-to-adjusted EBITDA at 1x our capital structure provides ample flexibility to support our long-term growth plans. Given our solid execution in the first three quarters of 2022, we are reiterating our 2022 sales outlook with sales growth anticipated to be in the high-teens range, with approximately 45% of the increase due to the acquisitions of Trilogy Plastics and Mohawk Rubber. Additionally, we are updating and raising our full year 2022 outlook for our adjusted EPS, which we now expect to be between $1.50 to $1.70 compared to the previous range of $1.40 to $1.60. We continue to expect SG&A expenses to be approximately 22% of net sales, primarily reflecting continued inflation and ongoing investments in our people, processes and operational efficiencies.
Other key modeling assumptions include depreciation and amortization expenses of approximately $21 million and CapEx of approximately $25 million to $28 million. Interest expense is still forecasted to be approximately $6 million and effective tax rate is forecasted to be 26%. I’d like to extend a thank you to the entire Myers team for their tireless efforts to deliver another record quarter.
With that, I will turn the call back over to Mike to provide an update on our strategy.
Mike McGaugh
Thank you, Monica. Now turn to Slide 8, I want to provide an update to our three Horizon strategy, which we unveiled a little more than 2 years ago. Since the launch of our strategy, we have made significant progress against the three elements of Horizon 1, self-help, organic growth and bolt-on M&A. And the first element, self-help, our continued rollout of a robust S&OP process has allowed us to better schedule, better sequence our plants, leading to the identification and unlocking of additional capacity. This hidden factory as we call it is providing both cost capacity and will allow us to continue to drive volume and revenue growth in the years to come.
Our injection of new talent continues to have a significant impact in this area as well. These individuals have joined Myers from large, well-run global multinationals and expertise in running highly efficient and low-cost operations. Combining the know-how of these individuals with the passion and commitment of our legacy associates will continue to be an approach that improves margins and create shareholder value. It’s exciting we continue to see breakthrough opportunities in Myers performance using this approach that I’ve described in the past is we’ve bought in large-cap talent and capability to a small-cap company.
And the second element, organic growth, we continue to drive commercial excellence through ongoing training, through the addition of new talent and through the implementation of proven and disciplined processes, we continue to improve our commercial capabilities. These improvements are lasting and are significant contributor to our record breaking results. The good news is that we are early in our journey and there is still much improvement to be obtained over the next years.
And our third and final element, bolt-on M&A, we’ve integrated three companies into Myers over the past 2 years, including Elkhart Plastics, Trilogy Plastics and Mohawk Rubber. We’ve learned, we’ve gotten better and we become sharper and smarter on deal integration. In Horizon 1, we said we would do a few bolt-on acquisitions to help us build scale, add capabilities and to build our M&A competence, this is exactly what’s happened. M&A activity in Horizon 1 has given us scale and prepares for bigger and more complex acquisitions in Horizon 2. We’re now well on our way towards completing Horizon 1 and we’re in the planning stages for Horizon 2. We look forward to sharing more information on this in the coming quarters.
Please turn to Slide 9, which outlines the strategic pillars of our strategy. Our strategy comes to life and is executed through our four pillar approach. I’ll discuss these pillars in our progress against our execution at every earnings call and today’s call is no exception. As a reminder, we have annual goals for each pillar and we have a team leader, a single person who is accountable to deliver these goals, we relentlessly track and execute. This approach is simple and it works.
I’d like to take a few minutes to walk through our progress on our four pillars, please turn to Slide 10. Starting with organic growth, our commercial excellence focus and training continues to bear fruit. In the third quarter, we completed comprehensive market plans for 2023 for each market segment. These plans provide a detailed roadmap for how and where we will grow organically.
Our sales training also continues to bear fruit. This training combined with our market plans has enabled us to gain new business, most notably in the agriculture end-market. Our profitability is growing. Our bottom-line margins are expanding year-over-year. These increased margins have allowed us to invest more in our people and in our capabilities. We remain focused on this pillar and believe it’s crucial to Myers transformation.
Moving to the second pillar, strategic M&A. In the third quarter, we continued to build out our deal funnel, targeting companies that are highly accretive and add complementary products, production capabilities or geographic scope. Additionally, we want to be sure at potential acquisition fits culturally. We’ve had good success meeting these criteria in Horizon 1, most recently with Mohawk Rubber and Trilogy Plastics.
We continue to develop our pipeline and expect that Myers will continue to grow through M&A. Quite frankly I believe that the next quarters and years will provide many opportunities for Myers to acquire good companies at attractive economics. Myers has an excellent balance sheet, improved core businesses and improved capabilities in M&A. I believe we will have significant opportunities to grow the company and create shareholder value.
Operational excellence, our third pillar represents our culture of continuous improvement. We aim to get a little better every day. We’re improving how we operate our assets, how we manage our products in our supply chains and how we reduce our costs. This new capability and approach has been catalyzed by the large cap talent we’ve added over the past 2.5 years. I’ve spoken in the past about these capabilities and how they are transforming Myers. We continue to see operational excellence bear fruit. In the third quarter, we continued to invest in digital tools for production and supply chain. We now have better data and as a result we’re making better decisions and we are increasing our service levels to our customers all while incurring less wear and tear on our employees, which increases retention in yields better profits.
Finally, the fourth pillar which is building a high performing culture at Myers is critical to our transformation. The One Myers culture and approach continues to gain traction in the organization, our core values, our focus on servant leadership is improving morale, job satisfaction and business results. As we reached the end of Horizon 1, I’m pleased with how our employees have transitioned to the One Myers culture, moving from a holding company to an integrated one.
Before we open for questions, I want to reiterate the new Myers is resilient. I believe that our products, our markets and our simple, clear and consistent strategy will continue to allow Myers to perform well despite potential economic headwinds. I’m encouraged with the pace we are advancing through our three Horizon strategy. Our transformation is well underway, and we continue to be in the early innings of what’s possible with Myers. We have a long runway and we expect to create significant shareholder value over the next years.
And with that, we will now turn the call over for questions.
Monica Vinay
Operator?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] So our first question comes from the line of Lance Vitanza of Cowen. Your line is now open. Please go ahead.
Lance Vitanza
Hi, thanks, guys. Thanks for taking the questions. I’ve got a couple, if that’s okay. And Mike I thought I’d actually start on Slide 8 and the long-term vision. You talked a lot about M&A and I guess I’m curious, I think you mentioned that you – we should expect to hear more about Horizon 2 in the coming quarters, I think that’s what you said. And so my question there is, I mean, I think as I read the slide, Horizon 2 is more squarely focused on global expansion as opposed to bolt-ons within the North American market, so I just want to make sure are you suggesting that we’re going to hear more about overseas expansion in coming quarters. And then part of Horizon 2 is, is enterprise level M&A within North America, so I guess I’m just wondering if that is also – are you suggesting that you’re going to be doing a transformative type of a transaction, is that sort of the next phase for you?
Mike McGaugh
Yes, Lance. Appreciate the question. We’ve looked at Horizon 1 was self-help to improve our profitability, that funds organic growth and bolt-on M&A, which gives us some scale and gets us comfortable for potential transformational deals that I think would move the needle more in terms of shareholder value creation. Horizon 2 was to focus more on largely domestic, but still potentially transformational deals. And then Horizon 3 was more global in nature. We continue to talk about it in our release, our focus on durable plastics in adjacencies, really focused on those products with competitive moats and they are typically going to be large-format or large-size products because that just has greater barriers to entry, I think allows itself for more profitability. So if you look at Horizon 2 as I’ve outlined on slide 8, we do talk about Horizon 1 kind of sunsetting through the year 2023 and Horizon 2 beginning in the year 2023 and I really believe Lance we’re right on schedule. What’s most exciting is that our company continues to hit stride on the self-help piece and on the operational excellence and organic growth in commercial. I think we will continue to see Myers hit stride just as some of the macro factors start to potentially have a more negative impact on potential acquisition targets. And so on a relative basis, I’m excited, I think we’re going to be getting stride over the next 12 to 18 months, 12 to 24 months and that’s going to put us in a great position to acquire good companies at attractive economics.
Lance Vitanza
Okay. Thank you for clarifying that. So then get back to the sort of the near-term, the revenue performance that you reported 4% organic growth, that’s better than we were expecting and quite good. But it is a big slowdown from the trends that we were seeing earlier in the year as we expected, but could you just remind me why we are having this big slowdown in the year-on-year organic growth versus the rates that we saw in the first half of the year? And then just how does that generally make – how does that leave us as we think about the setup for 2023?
Mike McGaugh
Yes, Lance, great question. I believe we published our segment results and when we file at the end of the day today or later today, part of that is the consumer market was down 27% year-over-year and some of that is the portable fuel container business notwithstanding Hurricane Ian at the end of the quarter, it was a pretty column and quiet hurricane season. And so we saw that. The other piece is, we make high-end consumer discretionary goods in the road molding business as an example, I’ve talked about that in the past, some of these high-end planters, household decorative moldings, lawn and garden covers, mill box covers that are really high end. We’re seeing the warehouses for some of those products get full at the retail big boxes and that’s slowing down. I think we’re seeing inflation, pinch consumers’ buying habits on high-end consumer discretionary and that’s why our consumer segment is of 27%.
Lance Vitanza
Okay. I understand. Thank you. And then on the margin side, I just – the gross margin trend into fourth quarter, I’m wondering if you were to hit the same sort of level of revenues that you were – that you hit in the third quarter, as you think about you have a lot of different puts and takes, there is inflationary pressures, you’ve got the cost increases, the price increases that are flowing through. Do you think that, that gross margin of 3Q, is that sustainable? Or is that biased, should we think about that as biased to the downside or upside as we think about the rest of the year and into next year?
Mike McGaugh
Lance, let me ask Monica to address that.
Monica Vinay
Sure. Thanks. Lance, you have started the question with at the same sales level, I would say at the same sales level, that margin would be sustainable. But based on the midpoint of our guidance and our revenue outlook, obviously, sales in Q4 are going to be down sequentially. We still expect margin expansion year-over-year to be up the plus 400 basis points we saw in Q3, but again we expect lower top line. So, it will – the lower volume will have an impact on overall margins.
Mike McGaugh
Yes. Lance, if I can, just talking about the overall sales volume for fourth quarter as you look into 2023 and beyond, I think ag is going to still be healthy, construction is going to be healthy, industrial is going to be healthy, industrial and infrastructure will be healthy. I think consumer is still going to be problematic. I think RV is going to continue to be problematic. And as those things kind of balance themselves, you do see more muted sales growth in spite of having three or four segments that are really good and two or three segments that are significantly off.
Lance Vitanza
Okay. Thanks for that clarification Mike, appreciate it. Why don’t I get back into the queue, hand the baton to the next person. Thank you.
Operator
[Operator Instructions] Our next question comes from the line of Steve Barger of KeyBanc. Your line is now open. Please go ahead.
Steve Barger
Hey good morning. Thanks.
Mike McGaugh
Hi Steve.
Steve Barger
Mike, no question your team has done a great job of managing price-cost from both sides of the equation. As some input costs come down, yet you see other areas that are still high, how are you thinking about your ability to hold price? And maybe can you compare auto, ag and industrial versus the weakness you are seeing in consumer?
Mike McGaugh
Well, I would say, in general, Steve, we have taken a – through commercial excellence, through the training, we really take this pricing our products for the value they bring to our customer. We really take that seriously. I believe that’s going to provide a durable expansion of margin. I believe it’s going to allow us to continue to hold price directionally. And there will be areas where – there will be areas where we may have to moderate based upon competitive pressures. But in general I think we are going to be able to hang on to the price, I think we are. So, as I look into the next quarters and years, I think what we will be able to hold and expand margin even if volumes are down a bit. Now, across what our asset base, Steve, is not extremely high cost capital. So, we are not having to run the plant to cover a big fixed cost basis. We can throttle these plants up and down based upon need. I talked in the past, we actually had a labor force for these facilities, some of that is contract deliberately. So, we can throttle that down as well. There is a lot of ability to vary down our plants and our labor as needed. And so we don’t have to – we are not in a position where we have a big high cost, fixed cost asset that we have got to run and in order to run it, we have got to drop price if demand slows. Fortunately, we are just not in that situation. And so – and remember most of our niche markets, we are the leader or we are in the top one or two and we make great high quality products and our service levels most of the time are really good, and that allows us to have confidence in our stickiness of the pricing.
Steve Barger
It’s great color. And as to the point on the plants, you are running, call it, $230 million per quarter this year, where are utilization rates on the plants? And is the footprint where you want it to be, do you need to close anything or shift anything or spend money just to rationalize?
Mike McGaugh
Yes, that’s a good question. We are doing some of that, Steve, as far as trying to figure out. Over the next 2 years to 3 years, we actually brought in some really good capital planning personnel that have really helped us dial that in. Directionally, I think we could have more assets in the South and the Southeast. And we are looking – quite frankly, we are looking at if there is a potential recession, does that provide us with opportunity to go expand at attractive price points into the South of the Southeast. Overall – in an overall rationalization, I think our footprint is a good footprint. There may be a few asset consolidations, Steve, that we may need to do, but it’s not driven necessarily by a decrease in demand, but it’s more of an outlook of – we need more exposure in the South, Southern United States, more exposure into the Southeastern United States. I am really pleased with the personnel we have brought in to help us on capital planning, capital discipline and we are seeing really good results from that.
Steve Barger
That’s great. Shifting to end markets a little bit, do you expect – and I think you already said you expect continued strength in auto and industrial. Any pockets of weakness there, or is that remaining pretty firm as you go into year-end?
Mike McGaugh
Auto still seems to hang in there. Industrial still seems to hang in there. If there is any industrial that has more exposure to infrastructure, we are seeing good uptake there. Construction still seems to be strong as well. Any sorts of tanks or plastic parts that we make for some of the big construction equipment companies, that’s going well. In fact, I think a lot of those companies will still take all the products we can make for them. Just the consumer discretionaries where we see the weakness and if the customer is spending so much money putting food in the shopping cart or putting gas into their car, they don’t have a lot left over for something that’s nice to have, particularly if it’s a premium good. And we are seeing some of that thing, some of that weakness. But let me – Monica, any additional color?
Monica Vinay
No, I think that covers. One other comment too is just that ag will continue to be strong.
Mike McGaugh
Yes. For sure, that’s true.
Steve Barger
And then in the press release, you talked about looking to – you are thinking about adjacencies with moats. And I am just trying to define what that moat means. Is that a hard-to-replicate manufacturing process? Is that a patent? Is that a relationship? What are you – how do you see that playing out?
Mike McGaugh
Yes. Steve, good question and maybe I should have teased that a little bit more. We always talk about is what’s our sweet spot at this company. So, we have all these plastics technologies and we are actually reasonably good at executing them and we’re getting better. And so we look at it and say, can we get – can we make large-format products because they are difficult to ship from a low-cost geography like China or Southeast Asia. So, it gives us a bit of a competitive moat because we are competing against U.S. only companies. Now, I will tell you that also benefits from the trend we are seeing of onshore. I think Myers is well positioned to capitalize on this pro-USA manufacturing push. So, that’s a good thing. The other I will talk about is on a technology and difficulty standpoint, I like the larger products because they are more difficult to make, the molds are more expensive, the know-how is greater. And so as a result, the competitive moat is CapEx and knowledge and a little bit of the difficulty to make the parts. And just naturally that falls out that you have 3 or 4 competitors rather than 10 or 12. And so we just want to stay in that spaces. We know how to do it. It’s what we do well. But can we look beyond material handling potentially. And can we – that’s our core large-format material handling, but can we look beyond that. And I really believe, we are giving a lot of inbounds in the last few months, I think that’s going to continue. There is a lot of companies, particularly private companies that I think are going to have some challenges and I think it’s going to present some opportunities with us with a great balance sheet. And over the last 3 years, we have really worked to get our capabilities dialed in on how to run plants and make money. And I think it’s going to present us with some great opportunities to create value for our shareholders over the next couple of years.
Steve Barger
One last one from me. It’s interesting that you brought up the near shoring [ph]. We are asking this question about – of a lot of industrial companies. Do you think that’s a real trend? Are you getting requests for quotes for things that people want to resource from other countries?
Mike McGaugh
We are because it’s just – I think the supply chain issues spooked some customers that we saw over the last 2 years or 3 years. And if you can make it in the Quad Cities as an example versus somewhere in Southern China, even if the costs are little bit higher on labor, the ability to have rapid feedback and rapid delivery, it means something to our customers, particularly those construction and ag customers that are oversold. And so a reliable supplier that’s 300 miles away, we are seeing the quotes versus a supply chain that’s 8,000 miles away.
Steve Barger
Yes, perfect. Thanks.
Mike McGaugh
Awesome. Thanks Steve.
Monica Vinay
Thanks Steve.
Operator
Thank you. We have a follow-up question from Lance Vitanza of Cowen. Your line is now open. Please go ahead.
Lance Vitanza
Thanks guys. I did want to just ask you about the adjusted EPS guidance, which I believe suggests the fourth quarter will be coming in between $0.14 and $0.34. That range is wide and it’s wider than I would have expected. And I am wondering if that’s representative of real variability or volatility that you are seeing over the last couple of months of the year, or if there is something else there? And what – maybe if you could talk a little bit, Mike, about what sort of circumstances could lead the EPS to come in closer to the $0.14 versus closer to the $0.34 of that range? Thanks.
Mike McGaugh
Yes. That’s fair, Lance, I mean we put that guidance out. I mean just to keep it simple, we just raised it by $0.10. But you raised a good point of the spread between $0.14 and $0.34. Mathematically that’s correct. I just think that lower end is a very low probability. I don’t see that happening realistically. So, we just raised it a $0.10. But Monica, do you add any color to that?
Monica Vinay
I would just say that I think while there is some uncertainty, we feel pretty confident about the midpoint of the range, and we have raised it to $0.10 to continue to emphasize that we think we will be around the midpoint of the range.
Mike McGaugh
Yes. Lance, I was focused more on the midpoint and I kept it $0.10 on either side, maybe I should have tightened it up, just late in the year.
Lance Vitanza
Thanks guys. Appreciate it.
Mike McGaugh
Thank you.
Operator
Thank you. As there are no more questions registered at this time, I would like to hand the conference call back over to the management team for closing remarks.
End of Q&A
Monica Vinay
Thank you. Thanks to everyone for your time today and your interest in Myers Industries. Have a wonderful day.
Operator
Ladies and gentlemen, this now concludes today’s conference call. You may now disconnect your lines.
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