Myers Industries Inc (MYE) 2010 Q4 法說會逐字稿

Greetings, and welcome to the Myers Industries 2010 fourth-quarter and year-end earnings call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Max Barton, Director of Investor Relations. Thank you, Mr. Barton. You may begin.

Thank you, Jackie. Good morning, everyone, and welcome to the Myers Industries call for the 2010 fourth-quarter and full-year financial results.

With me today are John Orr, President and Chief Executive Officer; David Knowles, Executive Vice President and Chief Operating Officer; and Donald Merril, Senior Vice President and Chief Financial Officer.

This morning, we issued a news release containing the financial results for the fourth quarter and year. If you have not yet received a copy, you can access it from our website at MyersIndustries.com, and it's under the investor relations tab. This call is also being audio webcast from our site and will be archived there, along with a transcript, shortly after the event.

Before turning the call over to management for remarks, I want to remind you that we may make some forward-looking statements during the call. These comments are made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. These risks and uncertainties are detailed in the Company's SEC filings and may be found in the Company's 10-K.

Following management's remarks, there will be a brief question-and-answer session with the investment community. I am now pleased to turn the call over to Mr. John Orr, President and Chief Executive Officer. John?

Thank you, and good morning, everyone. It's a pleasure to have you with us.

I'm very pleased with the performance of our Company in 2010, as three of our operating segments reported significantly improved profitability for the full year. Material Handling, Distribution, and our Engineered Products segments continued to recover from poor economic conditions in their markets. Our focus on operations excellence, improved pricing initiatives, and innovation were the keys to our improved performance.

We spoke at our last conference call of the challenges we had in our Lawn and Garden segment passing through unexpected changes in raw material costs to the market. Since that call, we've made good progress in Lawn and Garden and have positioned ourselves to have a successful spring season beginning in the first quarter of this year. I will ask David Knowles to add some color to this later.

With Lawn and Garden on the rebound and our other three segments moving forward with growth, innovation, and productivity improvement, I feel good about how 2010 ended and I'm excited for 2011. We've made good progress in our five areas of strategic focus -- customer dedication, innovation, operations excellence, organization development, and financial strength. I'm sure you'll see evidence of this in the rest of our discussion today and as we move into 2011.

Now I'd like to turn the call over to our Chief Operating Officer, David Knowles, to review some of the key operational factors in our business segments for the quarter and year. David?

Thank you, John. As we get inside the results of the fourth-quarter and the full-year 2010, I believe you'll see what why we are very bullish on Myers Industries.

2010 began with strengthening in three of our four business segments, and has ended with solid performance in these three, Material Handling, Distribution, and Engineered Products, and substantial improvements in Lawn and Garden have moved this segment toward becoming a more predictably profitable business.

Before I speak to each of the business segments, I'd like to point out that the progress we've made in 2010 stems directly from work in the five areas of our strategic focus. In particular, our businesses are starting to show growth, resulting from our increased market focus and our innovation initiative, creating and delivering value-added new products and solutions for our markets. Each of our operations has delivered improvements from our operations excellence initiative, stressing productivity gains in excellence and quality and delivery. This has certainly helped us with our focus on customer dedication.

Additionally, all of our teams have been strengthened from our organization development initiative, and progress in our business is improving our financial strength. Specifically, our Material Handling business benefited from real improvement in our core Buckhorn and Akro-Mils operations.

Collectively, these businesses grew, they gained market position, and improved profitability based on aggressive actions in the initiatives I just highlighted. While the total topline growth of these businesses is somewhat masked by the decline in our pallet manufacturing business, the growth in productivity gains of Buckhorn and Akro-Mils generated the profit improvement that you can see in both the fourth-quarter and the full-year results. Profit and material handling was up $4.7 million in the fourth quarter compared to the fourth quarter of 2009, and up $7.1 million, or 44%, for the year compared to 2009, both on an adjusted basis.

Buckhorn and Akro-Mils also refocused on key markets and have developed a pipeline of innovative new products and services. Notably, Buckhorn assisted a major customer in re-looking how it finances returnable containers, creating record sales in 2010 of a major line of bulk container products. Akro-Mils introduced seven new product lines in 2010, including the InSight bin for healthcare and the Indicator bin for plant and supply room productivity. And Buckhorn will announce what we believe will be a major new product at the ProMat show in Chicago this March.

Today, both businesses have solid and developing pipelines of new products. Added to this, our Buckhorn business is translating technology developed in our pallet operations to new products that will, over time, drive our pallet assets to a higher-value use.

Our Distribution business continues to grow and improve bottom-line performance by focusing on the basics -- a broad product offering, product knowledge, customer service, and rapid availability with consistent same-day shipping of our products to customers. In addition, our Distribution team introduced a few solid new product and service offerings that continue to make our customers' experience with Myers Tire Supply uniquely valuable, including a full range of TPMS, or tire pressure monitoring system, products, an online truck fleet torque-tracking program, and a green nitrogen tire inflation program, which is designed to help our customers with their customer retention and service.

In the fourth quarter of 2010, our Distribution model transformation project, named Project Enterprise, ramped up significantly. Enterprise will drive a dramatic change in our business by reducing the number of overall branches and creating efficient regional distribution centers. Project Enterprise's goal is to improve our ability to deliver to our customers while reducing our costs and working capital. Again, improving service to customers, which we are known for, while reducing costs. We're at the early stages of a two-year implementation, and with several branches already consolidated, the early signs point to a successful transformation.

Our Engineered Products segment really knocked the cover off the ball in 2010. Both the top and bottom line, as you can see in the results, were significantly improved. Our Ameri-Kart business continued to benefit from increased demand from the recreational vehicle market. Wholesale shipments of RV products, mainly towable platforms, remained strong compared to last year, and the whole industry was up more than 45% for the year.

Our sales of custom molded plastic products to the marine industry were very strong, up over 60% compared to 2009. That's been an area of focus for us since we just introduced our new Enviro-Fill overflow prevention system for boat builders. The U.S. Patent Office has awarded patents for Enviro-Fill, and we've successfully completed our testing of a fully integrated fuel tank and Enviro-Fill fueling system.

In addition, as the automotive original equipment industry continued to strengthen, so did our WEK business. New orders for HVAC parts and the industry's development of new vehicle platforms all played a significant role in improving our business position.

As you can see, the combination of our solid sales growth, up 22% for the year, and restructuring activities generated substantial profit improvement in engineered products from $4.6 million in 2009 to $9.8 million in 2010, on an adjusted basis.

Our Lawn and Garden business has made substantial progress, too. For those of you who participated in our last conference call, you will recall that we outlined our plan to address the volatility in raw material costs. This has been included in an overall plan to drive Lawn and Garden to healthy and predictable profitability with solid returns for shareholders.

The plan focuses on five basic elements. First, restore our industry-best service and delivery to customers. Second, to implement a practical, straightforward process for passing changing raw material costs through to the market. Third is drive down material costs through substantially greater use of low-cost alternative materials. Fourth is to drive productivity, and fifth to bring a steady stream of innovative new products to continue to differentiate the value of doing business with Myers.

Since our last call, we've made progress in these five areas. We have substantially improved our customer relationships by significantly raising delivery performance. In fact, our delivery performance is up 37% over last year, and we are once again playing a leading role in our industry. We've substantially improved our ability to tackle raw material cost volatility by significantly compressing our order-to-delivery time and implementing a price passthrough process that can better handle unexpected raw material price spikes.

Beyond this, we've made other progress, too. We have reorganized our business around key nursery, greenhouse, and retail markets and we have strengthened our position in these markets. We instituted a new product development process and will introduce a new line of decorative pots this season. We've improved plant performance and our ability to use lower-cost raw material alternatives, two strategies that will yield significant benefit in the upcoming year as they begin to fully flow through our results.

Our fourth-quarter results show a step forward in implementing these changes, though stronger underlying improvements were masked by weaker sales. While we believe we improved our market position in the quarter, two factors weakened the quarter sales. First, our process of shortening our order-to-delivery time pulled sales that had traditionally delivered in the fourth quarter back into the third. Secondly, our customers, having experienced a relatively weak prior spring, have decided to plan cautiously for this season. They are ordering less in the fourth quarter and plan to complete the order process as spring approaches.

We also experienced a steady rebound in resin cost, and in December announced our own significant price increase to offset a spike in our major resin, polypropylene.

Fortunately, the changes to our process are in place. We're in the middle of managing this material cost increase right now and we're confident that we'll be able to navigate this challenge successfully.

So as we enter 2011, we expect to gain benefit in Lawn and Garden from reduced risk from raw material cost volatility, a stronger market position based on greater quality and service, and improved margins from lower-cost alternative materials and plant productivity. We look forward to reporting the steady improvements in Lawn and Garden over the next year.

Thanks, David. Now to quickly review the fourth-quarter and full-year financial results from the business segments, as well as some other key financial metrics, I'd like to turn the call over to Don Merril, our Chief Financial Officer. Don?

Thanks, John, and good morning, everyone.

The fourth-quarter results from continuing operations compared to the same period last year were net sales of $188.2 million, compared to $188.3 million last year. We reported a loss from continuing operations of $50.5 million, or $1.43 per share, as compared to income from continuing operations of $2 million, or $0.06 per share, in the fourth quarter of 2009.

Our results for 2010 include a non-cash goodwill impairment charge of $72 million in our Lawn and Garden segment. While the pricing and process improvements which David spoke about earlier were implemented in the Lawn and Garden group, fourth-quarter results, both top and bottom line, were below our expectations. With market performance and our own performance below expectations for the quarter, we were required to re-examine our projections and ultimately the goodwill value in this segment, resulting in a reported write-off.

In addition, results for both 2010 and 2009 include special gains and pretax expenses, as we detail in the reconciliation of non-GAAP financial measures at the end of the earnings release.

On an adjusted basis, factoring out the goodwill and other special items as reconciled, our income from continuing operations was $4.2 million, or $0.12 per share, compared to $3.1 million, or $0.09 per share, in 2009.

On a full-year basis, results from continuing operations compared to last year were net sales up 5% at $737.6 million, primarily on improved demand as many of our end markets continued to strengthen and emerge from the economic downturn. Including the goodwill impairment charge, we reported a loss from continuing operations of $42.8 million, or $1.21 per share, as compared to income from continuing operations of $7 million, or $0.20 per share, in 2009. In addition to the goodwill charge, results for both full-year 2010 and 2009 include special gains in pretax expenses, as we detail in the reconciliation of non-GAAP financial measures, again at the end of the release.

On an adjusted basis, our income from continuing operations was $13 million, or $0.37 per share, for the year, as compared to $19.5 million, or $0.55 per share, in 2009. Gross profit for the quarter was 23.5%, compared to 20% in the fourth quarter of 2009. This 350 basis-point improvement is primarily the result of our efforts in improved pricing, ops excellence, driving productivity, and favorable product mix, particularly in our Material Handling segment. For the year to date, gross profit was 22.3%, versus 24.3% in 2009.

As we said, despite the 200 basis-point reduction, significant process was made in the back half of the year with price, mix, and operations excellence initiatives established to mitigate the full-year impact of substantially higher raw material costs. In fact, for the full year, the Company experienced polyethylene inflation of 30%, and polypropylene surged 46%, which clearly had a significant impact on the business.

Cash from operations for the year was $45.7 million, compared to $73.2 million in 2009. We reduced debt by $20.5 million for the year, ending the year with total debt of $83.8 million. Capital spending in 2010 increased to $20.5 million, of which 63% was concentrated on growth and productivity projects.

Now we'd like to turn your attention to continuing operations in our business segments and their performance. This is detailed in the news release and given here again for additional color and the benefit for those who may not have read through the release. Results for the fourth quarter and year are all compared to the same periods of 2009. I will be referencing the adjusted pretax income or loss information as it appears, again, on the reconciliation of non-GAAP financial measures located at the end of the news release.

In our Lawn and Garden segment, sales in the quarter were down slightly for the year -- I'm sorry, down slightly in the quarter, and for the year increased 2% for reasons outlined earlier in the call. The segment's adjusted pretax income was $800,000 in the quarter and pretax loss of $2.2 million for the year. As David explained, our focused efforts and resulting actions implemented during the second half of the year have shown improvement evident late in the fourth quarter.

In our Material Handling segment, sales were down slightly at 3% in the quarter, but up 2% for the year. As noted earlier, this segment continues to experience demand recoveries across its wide range of markets for re-usable containers and storage systems, in particular the legacy products business which -- with higher gross margin potential. Of note was the increase in products sold into the agricultural market, which helped offset the significant decline in our plastic pallet sales.

Adjusted pretax income in the quarter was $6.9 million and $23.3 million for the year, up 214% and 44%, respectively. These results are mostly due to the favorable mix of legacy products replacing lower-margin custom pallets, pricing, and operations excellence program savings.

In our Engineered Products segment, sales were up 5% and 22%, respectively, for the quarter and year, reflecting the higher demand for our custom products in the RV, marine, and automotive OEM markets. Adjusted pretax income was solid at $1.1 million for the quarter and $9.8 million for the year.

In our Distribution segment, sales increased 7% in the quarter and for the year, which was in line with our broader end markets. Additionally, volumes were enhanced due to our focus on new product introductions, as well as a robust 14% increase in our Myers international business for the year. Adjusted pretax income was $4.3 million for the quarter and $15.8 million for the year, primarily due to increased volume and a favorable product mix of supplies throughout the full year. However, our fourth quarter was particularly high in capital equipment sales, which does carry a lower margin.

That's a quick review of the high-level financials. Now, I'll turn it back over to John for a wrap-up. Thanks. John?

Thanks, Don. As we look at 2011, we are optimistic in our outlook that end markets will continue to recover across our businesses.

Myers Industries established solid momentum in 2010 and will remain focused on improving operating results across our segments. Our financial position remains strong with our cash management and available credit line providing opportunities to grow the business.

One final announcement. We will now have regular quarterly earnings calls starting next quarter to better communicate with all of our constituents.

With that, I'd like to thank our investors for being here today. I also thank our customers for their support and our employees for the commitment they have to the success of Myers Industries.

That concludes management's presentation, so I'll turn it back over to Max so we can take your questions.

Thanks, John. Jackie, I'll have you go ahead and direct the Q&A phase of the presentation. So, go ahead, please.

(Operator Instructions). Chris Manuel, KeyBanc Capital Markets.

Actually, I have a question for each one of you. So let's start with -- I'll start with Mr. Knowles. So, as we look at where you kind of came out of 4Q and as you're heading into 2011, it sounds like you've got some good momentum coming through the business. Do you have a sense -- you have new products, number one, coming across all the different segments, and any sense of how much you think new products can add for you in 2011? Is it something that could be one, two, three, four points of volume or what have you?

I would say, Chris, we had some very good momentum in the fourth quarter and we've got a pipeline of new products that we are introducing.

In fact, we expect -- we have a goal inside the Company to commercialize over 25 new products this year across our operations. Now, some of those will be bigger than others. Some of those will be small products. And I'd say it's sort of the beginning of commercializing some of these new products.

I guess I -- we've got an internal target, and we believe that we'll grow our business nicely in the Material Handling business, certainly, and in some of the other businesses as well. And I think I would say that we are on the ramp up. So, in terms of moving the needle in a big way in 2011, that's not the expectation, but I think we're going to begin the growth process with new products in 2011.

That's helpful. And then, for Mr. Merril, a question regarding -- it looks like, if I did my math right, you had about $25 million or so of free cash flow, a little bit north of $25 million in 2011 -- or 2010. As you move forward into 2011, what are the big swing factors? You wrote off a big slug of goodwill. Will D&A be about -- maybe some assumptions of what you think for D&A, what working capital might do, et cetera.

I would say in 2010 we were users of cash, as far as working capital goes. As we grow, we are probably going to see that trend continue a little bit. I would say that from a depreciation and amortization standpoint that 2011 is going to be roughly the same, if not slightly down in 2011.

That's helpful. And was that all of the goodwill that you wrote off in Lawn and Garden, or is there any left there?

I can tell you -- let me overanswer that question. We've got $41 million worth of goodwill left. Roughly $10 million of that exists in Lawn and Garden, $30 million of it exists in Material Handling, and there's about $1 million in Engineered Products.

That's helpful. And then, last but not least, I have a question for you, too, John. As you've gone through the last couple of years, you've had some -- lots of moving parts within the businesses. You've added some -- since you've become CEO, you've added some businesses to the fold, you've deleted some businesses from the fold. As you sit with the portfolio today, do you have it basically where you want it or do you anticipate further changes from here?

You know, Chris, as we talked on the last call, I think where we sit today is our strategy going forward.

I'll talk about each one kind of individually. Material Handling is our -- is an invest-to-grow business. We're very excited about what we are seeing around our legacy products, as well as new products that David mentioned earlier. So we're very bullish on our Material Handling business, and that, as I said, can be something that we can grow.

The Distribution business, we're also very excited about. It truly is an invest-to-grow business. However, the first thing we're going to do is continue this restructure program that we've started, called Project Enterprise, and as you know, that reduces branches into four distribution centers around the country. Once that's completed over the next 18 months to two years, that business becomes right back into that invest-to-grow category.

Lawn and Garden is -- it's a fix up and optimize. As we said in the last call, we know it's an 18- to 24-month process. We've started the process. We feel pretty good about what we're doing and how we're doing it. Obviously, there is some overhang from past acquisitions that we've now cleaned up. So, again there, that's a fix up and optimize business.

And finally, Engineered Products -- really, they're still review businesses. We still are taking a look at them as to the long term for the businesses that are in that segment. So in reality, there's not really a whole lot of change from what we said last time.

Okay, that's helpful. I have a couple more questions, but I'll jump back in the queue. Thank you.

Chris Butler, Sidoti & Company.

As far as Lawn and Garden and the renegotiation of contracts go, could you give us an indication of how that's progressing as far as altering the terms on those contracts?

Yes, this is David. We have traditionally worked with season-long quotes in that business.

And we've -- as we've entered this season, we've done two things. One is actually a very simple thing within our own operations. We have shortened our order-to-delivery time. We now keep our backlogs and our order-to-delivery cycle down below 60 days. So if we see raw material changes, we're prepared to move.

We've also gone out to the market and introduced a new set of terms and conditions of sale into the marketplace, which gives us the ability, in case we have a rapid price spike in raw materials, to step in and make a change, if we need to, and reduce that risk.

I'd say those are really two very straightforward actions that we've taken, and to the extent that we took them earlier in the first half of the year, we're now better prepared for what we're experiencing right now because we are seeing a spike in our major polypropylene resin, over 35% in the first two months of this year. We expect that that will abate as we get toward the end of the first quarter or into the second quarter. And we introduced in late December a price increase to pass that through to the marketplace.

And I'd say, so far, so good. It's never a comfortable process, but it's a process that we're managing our way through. And we feel pretty confident that we can get ourselves through that process, translating what we need to into the marketplace, and not having a major impact on our position in the market.

Are these negotiations in any way impacting your ability to raise prices to recoup the margins that you lost in the business this year?

No. It's a straightforward negotiation. Now, of course, when you go out to a customer and you tell them you're going to increase their price, of course they're going to go out and they're going to test the market, and I think, fortunately, when you have a price spike at this point, the whole market is seeing the price go up.

So, I would say we have improved our ability to do this, and that was -- the major goal that we had laid out in front of ourselves after the second quarter, I'd say that we've positioned ourselves to successfully pass rapid raw material costs through to the marketplace.

And looking into 2011 for Lawn and Garden margins, we had an operating loss in 2010, nearly 12% operating margin in 2009. I have to imagine that those are two extremes. Should we be somewhere right in the middle of that?

I think that that's a good place for us to be targeting. What we see inside our business is this is a process. We are committed to getting this to a healthy business with a good solid return on investment, and we are in a journey here.

John, I think, mentioned 18 to 24 months, and we think it's that kind of a journey to get us back to where we are a consistently profitable solid return on investment. It gets us through the season this year, which is the first cycle with these changes. Gets us back to a season next year where we think the changes will be well fixed in the business, and then, so, as I said, it's a process. It's not all done at once, but we're making, I think, good forward progress in the changes that we need to make.

David Leibowitz, Horizon Asset Management.

A few unrelated items. First, are there residual costs going forward into the beginning of this year that could not be avoided with everything that was already done last year?

In regards to Lawn and Garden?

Operating. Lawn and Garden and other parts of the business where we still are facing, whether it's inventory costs, operating, you name it, across the board, and linked to that, why didn't we just really bite the bullet and write off all the goodwill on the balance sheet?

The first part of the question -- or the first question, I don't -- I really don't think there is any residual expenses going into 2011. We are pretty clean at that point in time -- at this point in time.

As far as goodwill, it really is a mathematical exercise. And we ran through the steps as appropriate, and what is left is what is the math told us should be left.

Okay. Second of all, based on what we know today, we're two-thirds of the way, or virtually two-thirds of the way through the first quarter, which is going to be the earliest quarter this year that we expect to see profitability on a fully-costed basis?

Are we talking about the full business or (multiple speakers)

Yes, companywide.

Oh, companywide. The first quarter is typically a good quarter for the Company.

So we would expect, then, to be showing a profit for the first quarter?

Yes.

We expect to show a profit in the first quarter in all of our segments. (Multiple speakers).

And are we going to be cash flow positive for the year? Absent write-downs?

For the year, yes. Absolutely. We typically run a cycle of cash in the business where in the first quarter, we are users of cash. And every quarter after that, we accrete cash, and the largest cash flow quarter for us is typically the fourth quarter. And that was true (multiple speakers) year.

And the last point, nothing was said today about acquisition policies. Is there anything you could update us on that score?

No, there is nothing that we can update you as of today. We are -- as I think most of the people on the call know, we're always an opportunistic acquirer, and there's always things that we're taking a look at, but there's nothing we can update you on today.

(Operator Instructions). Chris Manuel, KeyBanc Capital Markets.

If I could, at least by my math, this has been two consecutive quarters in a row where you've had up earnings on a year-over-year basis. So, I'm showing you nicely profitable the last couple of quarters, absent write-downs. But as we progress through 2011, you've talked about a lot of momentum in the businesses and things getting better, and would there be any reason to believe that being this stage we are and some recovery here in the economy with your new products, et cetera, that as we look quarter to quarter to quarter that we can't continue that trend?

I don't think there's any reason why we can't.

It's our expectation to grow our earnings. The thing you have to be somewhat mindful of is the seasonality in the business. We've got some seasonality in Lawn and Garden. First quarter is the strongest quarter. We've got a little bit of seasonality in the Material Handling business around one of our major product lines that tends to make the fourth quarter and the first quarter stronger than the others. But if you adjust for seasonality, we expect our earnings to grow.

So on a year-over-year basis, linked quarter to linked quarter, you should be able to do a little bit better. Okay, that's helpful.

Next question I had was, with the write-down from the Lawn and Garden business, if we go back to pre-2007, when that was just your own legacy business, that used to do $10 million to $20 million a year of -- or $10 million to $15 million a year of EBIT. And I recognize it's been some challenges to put these together, and in some years it's been [better works]. But what would be a normal expectation now as you sit for that business? Can it be a -- either what sort of margin do you think it can achieve or what do you think a reasonable runrate for EBIT can get to as you look out at that 18-to 24-month process as you finish [that fix]?

Are you talking specific to Lawn and Garden?

Yes, very specific to Lawn and Garden, given some of the changes, to understand versus pre-2007, pre-ITML, and now that you're -- you've written that off and you've taken most of the actions there, what is an anticipated run rate, post everything getting done. It's been kind of funky the last couple of years.

You know, it has been. If you go back to 2005, for example, we were in that 9% to 10% range from an operating income percentage, and then we were in the 5% to 6%, right?

And then, over the last couple of years since the ITML acquisition, which there's not a correlation there, it's more around the fact that the market fell off and the top line started to move. But I do see as we go forward, in our strategic planning cycle, which is three years, then we're back in that 5% to 6% range over the next two or three years as these corrections take place that David talked about.

Also, Chris, just to clear up something, this goodwill, 85% to 90% of this goodwill goes back to acquisitions made in 1999. The ITML acquisition had very little goodwill in it. So, just so we understand where this goodwill comes from.

I apologize. I was thinking that it primarily came with the other components. Okay, that's helpful.

Chris Butler, Sidoti & Company.

Thanks for taking the follow-up. Looking at the Engineered Products segment in the quarter, it seemed to lag a bit. Especially if we are looking at profitability year over year, we didn't really see any progress. Can you give us an idea of what's going on there?

I think the fourth quarter of last year was very strong from an RV perspective. So moving into this year, we are flat to last year. However, on a full-year basis, obviously we are up 500 basis points, so I think there's a lot of momentum there from -- for the business in particular, and we expect that to continue through 2011.

We had a -- in our Ameri-Kart business, we had a very strong rebound in the fourth quarter serving the RV market. There was an inventory build as the market was starting to come back last year. So, flat year over year, and that is -- reflects that happening in the fourth quarter of last year.

And on the Distribution side, you had said that equipment sales had picked up. I would view this as very good news for Distribution as equipment are probably the last to recover out of a recession. Am I thinking of this right, with the operating leverage that would be involved in this business model?

I would agree. There is kind of a good news/bad news story here. When the equipment is sold, it comes at a little bit lower margin, but it's very good news as far as foreshadowing what's going to happen in the future, so as we sell that -- the equipment, it's good for us from a repair, part, and the supplies that go along with that equipment going forward, so you're absolutely right.

There are no further questions at this time. I'd like to hand the floor back over to Mr. Max Barton.

Thank you. That will conclude our call for today. We thank everyone for their time. As a reminder, a transcript will be available on the Myers website within approximately 24 hours. A replay will be immediately available via webcast recall with those details found on the Myers Industries website under the investor relations tab. Thank you all and have a pleasant day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.