Myers Industries Inc. wants to acquire plastics molding companies with a goal of reaching a run rate of $1 billion in annual sales by the end of 2023, the company announced Oct. 29.
Potential acquisition targets include manufacturers of bulky rotationally molded and blow molded products, President and CEO Mike McGaugh said. He added that Myers may buy companies from private owners who are "looking for liquidity and would prefer not to sell to private equity."
McGaugh said he'd like to do two to four deals in the next year to 18 months, then look for larger deals. Myers will capitalize on the "integration excellence" that it has added to its staff in 2020, he said.
The M&A-focused strategy comes after Akron, Ohio-based Myers named McGaugh, a longtime Dow Chemical Co. executive, as its president and CEO in March.
The typically low-key company dates back to 1933, but it has uncharacteristically made headlines in recent years. In September 2018, it announced plans to move its headquarters from Akron to Cleveland, only to cancel the plan a few weeks later.
A year later, then-President and CEO Dave Banyard resigned to join Fortune Brands & Home Security Inc.
McGaugh joined Myers after nearly 25 years with Dow. In September, he recruited three more former Dow executives onto its senior leadership team: James Gurnee as vice president, sales and commercial excellence; David Basque as president, Buckhorn and vice president, integration; and Jeffrey Baker as vice president, procurement. All three had worked for Dow for 30+ years.
Myers has two main businesses. Its material handling unit makes returnable packaging and storage products. It already has a strong plastics focus, with plastics brands including Scepter, Ameri-Kart, Buckhorn and Akro-Mils.
The other business, called distribution, handles wholesale tire repair and retread products.
McGaugh said the company now is pursuing a "One Myers" strategy that highlights its plastics processing capabilities.
"Going forward, we will go to market as one company," he said. "We will bring solutions that are based on all of our current capabilities: rotational molding, blow molding, injection molding and thermoforming.
"Having this full set of capabilities, is a differentiator in the market. Instead of separate sales teams for each business unit, where we were just selling one technology, now our sales force will bring all of our technologies to the market. This new approach will turbocharge our organic growth efforts."
Regarding the new M&A strategy, McGaugh said Myers will "continue to focus on specialized value-added products, and stay away from commodity products, just as we do today."
While the focus will initially be on plastics processing, McGaugh said the company will also be in a position to grow in what he called "adjacent technologies."
"As examples, we may build out the capabilities we have in thermoforming or in rubber processing or metal fabrication. As it stands today, we have a small presence in each of these. And it appears we have meaningful, organic growth opportunities to build them out," he said.
McGaugh added: "I like the products that are big and bulky and immune largely from overseas competition."
The announcement came as the publicly traded company disclosed its third quarter financial results. Net sales of $132.3 million were up 5.4 percent from the same quarter a year ago. Gross profit of $47.1 million was up $7.5 million over the same period. The company attributed the increase to strong demand from its consumer end market.
Sales of Scepter portable fuel containers were up because of the active hurricane season. Scarborough, Ontario-based Scepter ranked No. 32 in the most recent Plastics News survey of North American blow molders, with estimated sales of $56 million.
PN also ranks Myers Industries' rotational molding sales. Bristol, Ind.-based Ameri-Kart Corp. ranked No. 8, with estimated sales of $56 million.
Meanwhile, Myers' Distribution Segment was buoyed in part by incremental new sales from its Tuffy Manufacturing Industries Inc. subsidiary. The segment reported a 50 percent jump in operating income and a 10 percent increase in sales for the quarter ended Sept. 30.
The segment, which comprises the Myers Tire Supply auto aftermarket distribution business and Patch Rubber Co., reported earnings and sales of $5.1 million and $45.5 million, respectively, boosting the unit's operating ratio to 12.4 percent.
Incremental sales from the Tuffy acquisition, completed in August 2019, contributed $2.9 million to the increase, Myers said.
For the nine-month period, the Distribution Segment delivered 23.9 percent better operating income of $8.58 million on 4.6 percent higher sales of $121.3 million.