Executive Overview



The Company conducts its business activities in two distinct segments: The
Material Handling Segment and the Distribution Segment. The Brazil Business,
which was sold in December 2017, is classified as discontinued operations in all
periods presented.

The Company designs, manufactures, and markets a variety of plastic and rubber
products. The Material Handling Segment manufactures products that range from
plastic reusable material handling containers and small parts storage bins to
plastic OEM parts, custom plastic products, consumer fuel containers, military
water containers as well as ammunition packaging and shipping containers. The
Distribution Segment is engaged in the distribution of tools, equipment and
supplies used for tire, wheel and under vehicle service on passenger, heavy
truck and off-road vehicles, as well as the manufacturing of tire repair and
retreading products.

The Company's results of operations for the year ended December 31, 2020 are
discussed below.  However, the Company's past results of operations may not
reflect its future operating trends. In March 2020, the COVID-19 pandemic began
to affect the U.S. economy and has created additional uncertainty for the
Company's operations.  Regulatory actions in response to COVID-19 have varied
across jurisdictions and have included closure of nonessential businesses. The
duration and extent of these measures is unknown, including possible
reimplementation of any measures that have been removed or relaxed. Through the
date of this report, most of the Company's businesses are considered essential
because they supply food and agricultural, automotive, healthcare, industrial
and consumer end markets.  Accordingly, those businesses have continued to
operate.  Throughout the year, the Company has experienced temporary closures of
certain facilities as a result of the pandemic, including certain manufacturing
facilities in the Material Handling Segment and our Distribution business in
Central America, in parts of March and April 2020.  Beyond the impact of these
temporary closures, some of our businesses have been and may continue to be
affected by the broader economic effects from COVID-19 and related regulatory
actions, including customer demand for our products.  The Company believes it is
well-positioned to manage through this uncertainty as it has a strong balance
sheet with sufficient liquidity and borrowing capacity as well as a diverse
product offering and customer base.

Results of Operations: 2020 Compared with 2019

Net Sales:



(dollars in thousands)        Year Ended December 31,
Segment                         2020             2019         Change        % Change
Material Handling           $    343,884       $ 356,407     $ (12,523 )           (4 )%
Distribution                $    166,544       $ 159,349     $   7,195              5 %
Inter-company elimination   $        (59 )     $     (58 )   $      (1 )
Total net sales             $    510,369       $ 515,698     $  (5,329 )           (1 )%




Net sales for the year ended December 31, 2020 were $510.4 million, a decrease
of $5.3 million or 1% compared to the prior year. Net sales were negatively
impacted by lower volume of $25.5 million, lower pricing of $4.2 million, and
the effect of unfavorable currency translation of $0.3 million, which was
primarily within the Material Handling Segment. These declines were partially
offset by $11.8 million of incremental sales from the Elkhart Plastics
acquisition on November 10, 2020 and $12.9 million of incremental sales related
to the Tuffy acquisition on August 26, 2019. Elkhart Plastics' annual sales are
approximately $100 million and Tuffy's annual sales are approximately $20
million.

Net sales in the Material Handling Segment decreased $12.5 million or 4% for the
year ended December 31, 2020 compared to the prior year. The decrease in net
sales was due to lower volume of $19.8 million, lower pricing of $4.2 million,
and the effect of unfavorable currency translation of $0.3 million. The lower
volume was primarily due to declines in the vehicle market, food and beverage
market and the industrial market and was partially offset by higher volume in
the consumer market driven by higher levels of hurricane and wildfire
activity. The lower volumes were primarily the result of the economic impacts of
COVID-19 during the first half of the year. This decrease was partially offset
by $11.8 million of incremental sales due to the Elkhart Plastics acquisition on
November 10, 2020.

Net sales in the Distribution Segment increased $7.2 million or 5% in the year
ended December 31, 2020 compared to the prior year, primarily the result of
$12.9 million of incremental sales due to the August 26, 2019 Tuffy acquisition
partly offset by $5.7 million of lower volume, which occurred primarily as a
result of the impacts of COVID-19 on travel patterns and other economic effects
in the first half of the year.

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Cost of Sales & Gross Profit:



                                             Year Ended December 31,
(dollars in thousands)                         2020             2019         Change        % Change
Cost of sales                              $    338,409       $ 344,386     $  (5,977 )            (2 )%
Gross profit                               $    171,960       $ 171,312     $     648               0 %
Gross profit as a percentage of sales              33.7 %          33.2 %




Gross profit margin increased to 33.7% for the year ended December 31, 2020
compared to 33.2% for the same period in 2019, primarily due to lower commodity
raw material costs offsetting the effect of lower volumes. Cost of sales in 2019
included a $3.5 million charge for estimated replacement costs of certain
defective boxes as discussed in Note 9 to the consolidated financial statements.
In the first quarter of 2021, the Company announced an 8 percent price increase
in response to rapidly rising raw material costs, primarily resin. This is
expected to primarily impact the Material Handling Segment.



Selling, General and Administrative Expenses:





                                             Year Ended December 31,
(dollars in thousands)                         2020             2019         Change        % Change
SG&A expenses                              $    130,331       $ 133,130     $  (2,799 )            (2 )%
SG&A expenses as a percentage of sales             25.5 %          25.8 %




Selling, general and administrative ("SG&A") expenses for the year ended
December 31, 2020 were $130.3 million, a decrease of $2.8 million or 2% compared
to the prior year. SG&A expenses in 2020 included a $2.4 million charge related
to executive severance, of which $0.6 million related to stock compensation
acceleration. SG&A expenses in 2019 included the reversal of $2.0 million of
stock compensation expense related to the forfeiture of stock awards due to the
resignation of the CEO in 2019 and $0.9 million of restructuring costs incurred
in the prior year related to the implementation of the Distribution
Transformation Plan that did not reoccur in 2020. Year-over-year comparisons
were also affected by lower charges related to the environmental contingencies
of $3.5 million discussed in Note 12, lower travel expenses of $2.3 million,
lower freight of $1.3 million, lower depreciation and amortization of $2.9
million and savings from the Distribution Transformation Plan, that were partly
offset by $2.0 million of incremental SG&A from the November 10, 2020 Elkhart
Plastics acquisition and $2.4 million of incremental SG&A from the August 26,
2019 Tuffy acquisition.

Restructuring:

As discussed in Note 8 to the consolidated financial statements, the Company has implemented various restructuring programs.



In the Material Handling Segment, the Ameri-Kart Plan involves consolidation of
two manufacturing facilities into a single new manufacturing facility and is
expected to be substantially completed in 2021. In connection with this plan,
the Company plans to commence a new facility lease once construction of the new
facility is substantially completed, as described in Note 16 to the consolidated
financial statements. Although construction has commenced, no restructuring
costs were incurred during the years ended December 31, 2020 or 2019 related to
the Ameri-Kart Plan. As previously announced, the Company expects annualized
benefits of approximately $1.5 million upon completion.

The Distribution Transformation Plan was announced during the first quarter of
2019 and was substantially completed by the end of 2019. No costs were incurred
during the year ended December 31, 2020. Restructuring costs of $0.9 million
were incurred during the year ended December 31, 2019.

Impairment Charges:





During the first quarter of 2019, the Company recognized a $0.9 million
impairment charge in connection with classifying a previously closed facility as
held for sale, as discussed in Note 4 to the consolidated financial statements.
The facility was sold in the second quarter of 2019.

Other (Income) Expenses:



During the year ended December 31, 2020, the Company recorded a pre-tax gain of
$11.9 million related to the sale to HC of the fully-reserved promissory notes
and related accrued interest receivable in exchange for $1.2 million and the
release from a lease guarantee with a carrying value of $10.7 million related to
one of HC's facilities as discussed in Note 6 to the consolidated financial
statements.

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Net Interest Expense:



                                              Year Ended December 31,
(dollars in thousands)                         2020              2019          Change        % Change
Net interest expense                       $      4,688       $    4,083     $      605              15 %

Average outstanding borrowings, net $ 78,000 $ 78,000

  $        -               0 %
Weighted-average borrowing rate                    6.28 %           6.27 %




Net interest expense for the year ended December 31, 2020 was $4.7 million compared to $4.1 million during 2019. The higher net interest expense was due primarily to lower interest income in the current year.



Income Taxes:



                                                          Year Ended December 31,
(dollars in thousands)                                      2020             2019
Income from continuing operations before income taxes   $     48,862       $  33,183
Income tax expense                                      $     12,093       $   8,968
Effective tax rate                                              24.7 %          27.0 %




The effective tax rate was 24.7% for the year ended December 31, 2020 compared
to 27.0% in the prior year. The decrease in the effective tax rate was primarily
the result of lower non-deductible expenses and the reduction of an unrecognized
tax benefit due to a lapse in the related statute of limitations.

Financial Condition & Liquidity and Capital Resources



The Company's primary sources of liquidity are cash on hand, cash generated from
operations and availability under the Loan Agreement (defined below). At
December 31, 2020, the Company had $28.3 million of cash, $194.2 million
available under the Loan Agreement and outstanding debt with face value of $78.0
million. Based on this liquidity and borrowing capacity, the Company believes it
is well-positioned to manage through the uncertainty caused by COVID-19. The
Company believes that cash on hand, cash flows from operations and available
capacity under its Amended Loan Agreement will be sufficient to meet expected
business requirements including capital expenditures, dividends, working
capital, debt service, and to fund future growth, including selective
acquisitions.

Operating Activities



Cash provided by operating activities from continuing operations was $46.5
million and $47.0 million for the years ended December 31, 2020 and 2019,
respectively. The decrease in cash provided by continuing operations of $0.5
million during the year ended December 31, 2020 compared to 2019 was primarily
due to lower net sales in the first half of 2020, partly offset by higher volume
of sales in the second half of 2020 due to hurricane and wildfire activity and
its effects on working capital, particularly on increases in accounts receivable
and inventory balances as of December 31, 2020.

Net cash provided by operating activities of discontinued operations was $7.3
million in 2019 and resulted from the remaining receipt of the tax benefit from
the worthless stock deduction related to the sale of the Brazil Business in
2017.

Investing Activities



Net cash used by investing activities of continuing operations was $75.6 million
for the year ended December 31, 2020 compared to cash used of $20.8 million for
the year ended December 31, 2019. In 2020, the Company paid $62.6 million to
acquire Elkhart Plastics, paid the working capital adjustment of $0.7 million
related to the 2019 acquisition of Tuffy and received proceeds from the sale of
notes receivable of $1.2 million. In 2019, the Company paid $18.0 million to
acquire Tuffy and received proceeds from the sale of fixed assets of $7.5
million, substantially all of which related to the sale of two buildings.
Capital expenditures were $13.4 million and $10.3 million for the years ended
December 31, 2020 and 2019, respectively. See Notes 3, 4 and 6 to the
consolidated financial statements for further discussion of these items.

Financing Activities



The Company used cash to pay dividends of $19.4 million and $19.3 million in
2020 and 2019, respectively. Other proceeds from the issuance of common stock
relate primarily to exercises of stock options issued under the stock incentive
plans as described in Note 10 to the consolidated financial statements.

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Credit Sources



In March 2017, the Company entered into a Fifth Amended and Restated Loan
Agreement (the "Loan Agreement"). The Loan Agreement amended the pre-existing
senior revolving credit facility's borrowing limit to $200 million, inclusive of
letters of credit, and extended the maturity date from December 2018 to March
2022. As of December 31, 2020, the Company had $194.2 million available under
the Loan Agreement after $5.8 million of letters of credit issued related to
insurance and other financing contracts in the ordinary course of business,
including the $2 million provided to the EPA as discussed in Note 12 to the
consolidated financial statements. Borrowings under the Loan Agreement bear
interest at the LIBOR rate, prime rate, federal funds effective rate, the
Canadian deposit offered rate, or the euro currency reference rate depending on
the type of loan requested by the Company, plus the applicable margin as set
forth in the Loan Agreement.

At December 31, 2020, $78 million face value of Senior Unsecured Notes are
outstanding. The series of four notes range in face value from $11 million to
$40 million, with interest rates ranging from 4.67% to 5.45%, payable
semiannually, and maturing between January 15, 2021 and 2026. The $40 million
note of these Senior Unsecured Notes matured January 15, 2021. In January 2021,
the Company repaid the $40 million note using cash on hand and borrowing under
the Loan Agreement. See further detail in Note 13 to the consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K.

As of December 31, 2020, the Company was in compliance with all of its debt
covenants. The most restrictive financial covenants for all of the Company's
debt are an interest coverage ratio (defined as earnings before interest, taxes,
depreciation and amortization, as adjusted, divided by interest expense) and a
leverage ratio (defined as total debt divided by earnings before interest,
taxes, depreciation and amortization, as adjusted). The ratios as of and for the
period ended December 31, 2020 are:



                            Required Level      Actual Level
Interest Coverage Ratio   3.00 to 1 (minimum)        15.38
Leverage Ratio            3.25 to 1 (maximum)         1.11



Critical Accounting Policies and Estimates



The discussion and analysis of the Company's financial condition and results of
operations are based on the accompanying consolidated financial statements,
which are prepared in accordance with accounting principles generally accepted
in the United States of America ("U.S. GAAP"). As indicated in the Summary of
Significant Accounting Policies included in the Notes to Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K, the amount of
assets, liabilities, revenue and expenses reported are affected by estimates and
judgments that are necessary to comply with U.S. GAAP. The Company bases its
estimates on prior experience and other assumptions that they consider
reasonable to their circumstances. The Company believes the following matters
may involve a high degree of judgment and complexity.

Contingencies - In the ordinary course of business, the Company is involved in
various legal proceedings and contingencies. When a loss arising from these
matters is probable and can reasonably be estimated, the most likely amount of
the estimated probable loss is recorded, or if a range of probable loss can be
estimated and no amount within the range is a better estimate than any other
amount, the minimum amount in the range is recorded. Disclosure of contingent
losses is also provided when there is a reasonable possibility that the ultimate
loss could exceed the recorded provision or if such probable loss cannot be
reasonably estimated. As additional information becomes available, any potential
liability related to these contingent matters is assessed and the estimates are
revised, if necessary. The actual resolution of these contingencies may differ
from these estimates, and it is possible that future earnings could be affected
by changes in estimated outcomes of these contingencies. If a contingency were
settled for an amount greater than our estimate, a future charge to income would
result. Likewise, if a contingency were settled for an amount that is less than
our estimate, a future credit to income would result. See disclosure of
contingencies in Note 12 to the consolidated financial statements included in
Item 8 of this Annual Report on Form 10-K.

Income Taxes - In the ordinary course of business there is inherent uncertainty
in quantifying certain income tax positions. The Company evaluates uncertain tax
positions for all years subject to examination based upon management's
evaluations of the facts, circumstances and information available at the
reporting date. Income tax positions must meet a more-likely-than-not
recognition threshold at the reporting date to be recognized. The Company
recognizes potential accrued interest and penalties related to unrecognized tax
benefits as a component of income tax expense.

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As discussed further in Notes 6 and 14 to the consolidated financial statements
included in Item 8 of this Annual Report on Form 10-K, the Company made
judgements for tax positions in connection with its December 2017 divestiture of
its Brazil Business. In connection with this divestiture, the Company incurred a
capital loss of $9.5 million on its investment in the Myers do Brazil business
and recorded a deferred tax asset of $2.0 million for this capital loss
carryforward. A valuation allowance of $2.0 million is recorded against this
deferred tax asset as the recovery of the asset is not more likely than not. The
Company also recorded tax benefits within its discontinued operations of
approximately $14.3 million through 2018 that were generated as a result of a
worthless stock deduction for the Novel do Nordeste business included in this
divestiture. Although management believes that the worthless stock deduction is
valid, there can be no assurance that the 2017 IRS audit will not challenge it
and, if challenged, that the Company will prevail.

Business Combinations - The Company uses the acquisition method of accounting to
allocate costs of acquired businesses to the assets acquired and liabilities
assumed based on their estimated fair values at the dates of acquisition. The
excess costs of acquired businesses over the fair values of the assets acquired
and liabilities assumed are recognized as goodwill. The valuations of the
acquired assets and liabilities will impact the determination of future
operating results. Determining the fair value of assets acquired and liabilities
assumed requires management's judgment and often involves the use of significant
estimates and assumptions, including assumptions with respect to future cash
inflows and outflows, revenue growth rates, discount rates, customer attrition
rates, royalty rates, asset lives, contributory asset charges, and market
multiples, among other items. The Company determines the fair values of
intangible assets acquired generally in consultation with third-party valuation
advisors. See disclosure of acquisitions in Note 3 to the consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K.

Recent Accounting Pronouncements



Information regarding the recent accounting pronouncements is contained in the
Summary of Significant Accounting Policies footnote of the Notes to Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.





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