Good morning. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Myers Industries' Q4 and Full Year 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Monica Vinay, Vice President, Investor Relations and Treasurer, you may begin your conference.

Thank you. Good morning. Welcome to the Myers Industries fourth quarter and full year 2017 earnings call. Joining me today are Dave Banyard, President and Chief Executive Officer; Matteo Anversa, Executive Vice President, Chief Financial Officer and Corporate Secretary; and Kevin Brackman, Chief Accounting Officer. Earlier this morning, we issued a news release outlining the financial results for the fourth quarter and full year of 2017. If you have not yet received a copy of the release, you can access it on our website at www.myersindustries.com, it's under the Investor Relations' tab. This call is also being webcast on our website and will be archived there along with a transcript of the call shortly after this event. Before I turn the call over to management for remarks, I would like to remind you that we may make some forward-looking statements during the course of 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. Further information concerning these risks, uncertainties, and other factors is set forth in the company's periodic SEC filings and maybe found in the company's 10-K filing. I'm now pleased to turn the call over to Dave Banyard.

Thanks, Monica and good morning everyone. Thank you for joining us. We are going to start on Slide 4 with a review of the year. We accomplished a lot in 2017 and we are starting to see the results of the work that we did, showing up in our numbers in Q4. Starting on my left, we generated $43 million in free cash flow in the year, an increase of 102%. We are very proud of that. As we said before, we feel that cash is the best measure of performance and we delivered strong cash flow in 2017. And we got there by executing on our strategy. We had strong commercial execution in our - in three of our key niche markets. Double digit year-over-year growth in the consumer markets, and in the food and beverage markets, both due to increased demand as well as good work from our teams there to take shares. We also had high single digit growth year-over-year on vehicle markets that are primarily driven by the work that our team has done in the RV segment. They did a very nice job of delivering the customers there and obviously that market is also very strong at the moment. Operationally, we accomplished a lot with the lot of different improvements moving further towards our asset like business model. We closed too many factories and facilities and relocated lot of our field camp production. We did all that on time and on budget and with minimal or no impact to the customers. And that's a real testament to the work that the team did there, particularly given that in the fourth quarter we did see a large increase in demand. And so we were moving at a time of ramping up production. So it was a…

Okay. Thanks, Dave and good morning, everyone. I will review today our performance in the fourth quarter and total year, as well as the cash flow for the year. So if we turn to Slide 5, I will walk you through an overview of our fourth quarter 2017 performance on a GAAP basis. And as always the numbers in the presentation reflect continuing operations. So as you can see on the chart on the top left side of the page, net sales increased by 15.6% to $140.1 million compared to $123.3 million of the fourth quarter of last year. Excluding the impact of foreign exchange, the increase in sales year-over-year was 13%. This increase was primarily the result of higher sales in key niche markets within Material Handling, partially offset by declines in the Industrial end market and Distributions segment. Gross profit increased $3 million year-over-year due to higher sales volume and price partially offset by unfavorable mix and operating inefficiencies. The benefit from the pricing actions as Dave mentioned before, mostly offset the raw material cost during the quarter. SG&A expenses were flat year-over-year and as a result our GAAP diluted earnings per share were $0.06 compared to a loss of $0.03 in the fourth quarter of last year. If we turn to Slide 6, I will give you an overview of the key variances on adjusted basis. So if we start at the top right side of the page, adjusted gross profit was $38.7 million in the quarter, compared to $35.3 million of last year, corresponding to an increase of $3.4 million. Similar to the increase in GAAP gross profit, the increase compared to last year was due to higher sales volumes and price partially offset by unfavorable mix and operating inefficiencies related to the factory footprint realignment…

Thanks Matteo. If you can change to Slide 12 please. Looking forward into 2018, we have good momentum coming out of the fourth quarter of 2017 to start the year. We have solid backlog in a number of areas. And so with that we are expecting overall low to mid-single digit growth throughout the year. And what I'll do here is go through each of the macro market that we serve and as a reminder this is our view on the right side of where we think we will be participating not what we think the underlying market growth will be. So starting at the top with the consumer market. We think our performance there will be flat this year. Number of different things are at play here, primarily it's - were flat due to a tough year-over-year comparison. As you all remember, lot of Hurricane activity in 2017, so we shift quite a bit of product in the second half higher than our normal volume in the second half for that business. And we are not expecting that to happen again, hopefully doesn't happen again. And so we have a tough year-over-year comp in the second half. It also does has a little bit of dynamic of a late set up, couple of different factors that are coming into play here but we are seeing a late set up through our channel there. Their working inventory off so we do we have good point of sale data that shows that the market is perhaps behaving normally. However, our channels are getting rid of inventory that they had built up through this second half. And so we are little slower start to the year which we expected and then we will have tough comp in the second half. So that's…

[Operator Instructions] Your first question comes from the line of Chris Manuel with Wells Fargo. Your line is now open.

Good morning, gentlemen. Wanted to just, I have a couple of questions and I will jump back in the queue. But if we could maybe start, I have a couple of questions about a few in the business. If I start with the Distribution one, I see you flag here about $3 million a quarter or so of revenue hit from exiting a business, how should we think about the profitability with down a chunk too? Should we assume that maybe a quarter or a third of that was also related to that I mean I guess what I am trying to do is get a sense of what 2018 versus 2017 looks like? Do you think you are going to be able to get back, some of the people or what you need to have done for that business to show some nice growth next year?

Yes. So let me walk you through some pieces of that Chris that hopefully will get you some clarity on the question you are asking. So we are behind in what I would say is process and systems for world class sales organization. So we have invested in that in 2017 and in addition to that we invested in adding people to help work with that. So those are fixed costs increases in the face of a declining revenue situation which is not the formula we are going for obviously. So that's the driver of the profitability. The flipside of that, one of the things, all these investments we are making we do with the idea there is going to be a return on that investments. One of the things we invested in was a pricing, really a pricing process that we put in place that has systems associated with it, that did yield results and so that improves our contribution margins and we were able to see that. We saw it even more so in places where we are growing the business. So we do look at this from a breakeven standpoint. In other words, we look at the contribution; we look at the fixed costs. We know we added fixed costs to this business as a part of these investments in 2017. We are now in a position where we feel that we have the tools that as we grow the contribution margin is better than it's been in the past. We don't feel we have to put a lot more fixed costs in place and so as we grow we get that leverage to the bottom line. In terms of specifics, I mean we try particular product lines is largest the one that we highlighted here. We felt that the complexity and the contribution from that product line were such that we weren't making money on it. So we don't exit a large product line like that without doing that kind of an analysis and really build that; that was a negative contributor overall. So that one was an easier decision perhaps than others but the dynamic is more of along the lines of what I described which is that we intentionally invested in some things which added fixed costs and we need to go to the business to get to get the return on that.

Okay, that's helpful. If I could switch gears and ask about Material Handling. Look, I appreciate all the color you gave us as you work through your regional stuff over the next year but again somewhat of a similar question in that I get that there's some puts or takes with a business divested and other components, but as you look at the path forward there, I mean the AG business getting better. Can you give us maybe some flavor as to what you've been seeing there and correct me if I'm wrong, but that's a much higher than say corporate average material handling profitability business. So does that help you quite a bit or maybe if you could somehow frame that for us it would be useful.

Sure I think this is sort of the opposite story, the Material Handling business. So we took a lot of fixed costs out last year. The challenges we faced in the fourth quarter and some of that has moved in as we've moved in the first quarter here just because of the time it takes to get some of these things done. The challenges on the contribution side. So in order to meet the volume requirements while we were moving these factories we incurred higher variable costs in the form of labor, in the form of using partners et cetera. And so that was the story in the fourth quarter. We're not; I would be frank with you we're not jumping up and down about the profitability performance because of that but we understood it going in and it was more important for us to serve the customer well, and make sure they got deliveries. We knew what we had to do and we've been working on that basically as soon as we were able to free up the time and the resources to address it starting in December and working our way through the first quarter here. So on the cost side; we've taken a lot of action here in the first quarter to improve our flow in the factory to improve our processes in the factory which eliminates a lot of variable costs particularly just in the form of people. And so that we will start seeing more improvement on that as we come through the first quarter. The other foot side of that are also the material costs have gone up and the way our mechanisms work, and I'll give you a more specific on this, one of the things we don't like about our current pricing…

Okay, I know that makes sense. Last question and then I'll turn it over is on the M&A side you know a lot of companies have told us that post-tax law change, so late last year and even the beginning of this year that the M&A gates have really kind of loosened up quite a bit, and tend to favor more strategic type players versus private equity given what will be down the road leverage constraints for deductibility things of that nature. I'm noting also that you guys did get a divestiture done late last year under the wire. How, as you sit today, how are you feeling about M&A markets? Better, worse, how would you take a temperature if I could of your confidence level of getting something done you think this year?

I'd say we're feeling better but I'd say that's mainly because of our own process and ability to focus on this. As we've gotten through - we had to focus a lot last year on the structural changes we were making to the business that takes a lot of our attention. We've shifted that later in the year towards M&A and so we feel that we've got a good list of things that we're interested in. We're getting into the deal flow which takes some time as well. People don't necessarily know us and what we're all about. In terms of whether the tax bill helps or hurts I mean it certainly has benefits in a lot of different ways. So I don't know if there's anything specific that I would say has changed in the last two months on that regard, but I think from a strategic perspective I think that what we're seeing is that there's an interest in joining a company like ours that can invest for the long haul. And we offer companies who are perhaps not seeing this from private equity that ability to really have a place where they're going to be able to invest and have some stability for you know we; our time horizon is very long compared to the other competitors that we're seeing and that does play as a factor. I think that you know we offer that, we are a lot of -- they go trade to private equity over and over they don't get that. So that's one of the things that we think is an advantage for us and pricing is we're still seeing a wide range on that. There's a lot of money out there and so you still have to get into the game with the price but I think ultimately we have a good management team and can provide a lot of help to smaller companies that have interest in joining a strategic…

Okay, that's helpful. I guess one last question maybe to help us tie some of this together and I know you don't like to get too pointed or specific with guidance per se but with all these moving parts and different components if perhaps we could just kind of take a look at cash flow and say that look you've had a nice step up 2016 to 2017 in cash flow. There were a lot of again moving parts here in 2017 but free cash flow in 2018 being at least equal to 2017 but do you have an opportunity to be something in the $5 million to $10 million range better or there be maybe perhaps the puts and takes as you think about it on a 2017 to 2018 basis.

Yes. So I'll frame it in two ways for you Chris I think that, first of all, like if you look at slide 11, I am very proud of our working capital performance. There's still opportunity there. So I think we have opportunity to continue to improve. In flip side, we're going to spend some of that on capital. We know that and that's okay. The other thing I'll say is we are focused on the targets that we've highlighted a year ago. And that's what we're shooting for and I think if you look at the cash flow we hit the 2018 number in 2017. So we like that and we want to continue with that. And we think if we can hit these other targets we are set up well to continue that trajectory. So definitely we're very focused on achieving these goals. And we think that as we have line of sight to what it takes to get there.

All right, but I mean simply put it would be difficult to envision 2018 cash flow being lower than 2017. Would that be a fair statement?

Yes. I would say so Chris.

Well, look, I'm just trying to make sure that - look, I predict CapEx is going to be up double where you were this year or close to it, so I get that there's a lot of moving parts and you highlighted working capital, so I'm just trying to make sure I have at least some and again I appreciate that you don't like to get this specific and you hate this question, but just give us a hand on a public forum at that something that we can look at.

I think, Chris, that's what's we are looking for.

Yes. Look, I mean we're - we as I said it to open this entire presentation that's what we think is the best measure of performance and we are yes we are not performing in that or if we see room for improvement in that we go after it with a lot. So it's important to us that we for a number of reasons.

Your next question comes from the line of Chris McGinnis with Sidoti & Company. Your line is now open.

Good morning. Thanks for taking my questions and nice job in 2017. I guess just to follow up on that and just talk about the goals you have out there from last year when you brought out to the targets and just I get just the confidence that, a year into it just how confident are you behind the targets that you do have out there. Thanks.

Sure. I think the way I'm framing is this we put our targets forward and we build our plans with the intent to hit them. So we have line of sight of what it would take to get to the kinds of targets we've set particularly in the short term here we're in 2018. And we have a set of targets in 2018. Obviously, on the free cash as a percent of sales we hit that target in 2017. And on the working capital target we've over delivered on that throughout 2017. So we feel that those are targets that we are comfortable with. I think the EBITDA and the operating margins have always been stretches. They have been beyond what this business has ever done in terms of margin performance in the past. And that's why we set them. We want we want to make this business better into the future. And so those - that's the next step for us. And that's a lot of what I just was describing in terms of the mechanics of how we're thinking about getting there is on the material handling side. it's working on the variable cost side and on the distribution side, it's working on the revenue growth and having that flow through the P&L. So those-- that's where we're focused, I'm making - I'm boiling it down to what sounds like simple things, There's a lot of challenge in getting there, but we're focused on that.

And we have no further question in the queue at this time. I'll turn call back over to Monica.

Thank you. Thanks to all of you for your interest in Myers Industries and your time and participation today. As a reminder, a transcript of this call will be available on our website within approximately 24 hours. A replay will be immediately available via webcast or call. Details can be found on the Myers Industries website under the Investor Relations tab. Thanks and have a great day.

And this concludes today's conference call. You may now disconnect.