Monica Vinay – Vice President-Investor Relations and Treasurer Dave Banyard – President and Chief Executive Officer Kevin Brackman – Vice President, Corporate Controller and Interim Chief Financial Officer.

Adam Josephson – KeyBanc Capital Markets Chris Manuel – Wells Fargo Securities Brian Sponheimer – Gabelli and Company Adam Josephson – KeyBanc.

Greetings and welcome to the Myers Industries Second Quarter 2016 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Monica Vinay, Vice President of Investor Relations and Treasurer. Thank you. You may begin, Monica..

Thank you, Jerry. Good morning. Welcome to our second quarter 2016 earnings call. Joining me today are Dave Banyard, President and Chief Executive Officer; and Kevin Brackman, Vice President, Corporate Controller and Interim Chief Financial Officer.

Earlier this morning, we issued a news release outlining the financial results for the second quarter of 2016. If you have not yet received a copy of that release, you can access it on our website at www.myersindustries.com, 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 may be found in the company’s 10-K filing. I’m now pleased to turn the call over to Dave Banyard..

one was for the impairment – an impairment related to the exit of a product line, and the other was an increase in our environmental reserves that shows up in our SG&A. You can see on the operating line, a margin of 7.7%, which is in line with what we saw in the first quarter.

I can switch to Slide 5 now and talk about our adjusted income statement, a couple of points on here and the adjusted SG&A was down a bit year-over-year, most of that’s from employee-related costs. And you can see here our adjusted operating margin here at 8.1% and that’s inline with what our expectations were.

You think about, about 27% flow through on the revenue declines, so not bad considering a 31% gross margin. Going down to the bottom, $0.21 on adjusted earnings from continued ops and with about $20.5 million of adjusted EBITDA, which is inline and similar to what we saw in the first quarter.

Move on to Slide 6 now, we’ll talk about the balance sheet and cash flow. In the upper left, the balance sheet is very similar to first quarter. We did pay down a little bit of debt in the second quarter.

Looking down at the lower left in cash flow, really the highlight on here is the capital spending, is slightly higher and which is resulting in a slightly lower free cash flow year-to-date.

I’m going to highlight on that that this is, as I mentioned in the first quarter, a similar dynamic, where number of these projects were – projects that were begun in 2015 and carried on through several months. So the 2016 run rate is much lower in capital spending and we expect that new run rate to continue throughout the year.

And we’ve highlighted in our appendix, our new expectation for capital spending for the full-year. Move over to the right side, talking about our working capital, this is an area that I’m disappointed in our performance here for the quarter.

I’m going to talk a little bit about a couple of details behind it, but we did improve in cash receivable and inventory. The largest part of this move here is in the accounts payable line.

You go back to what I said in Q1, one of my goals this year is to get our working capital to be less choppy and it’s been very choppy as we go from quarter-to-quarter. I think that’s because we haven’t been sustaining process improvements. We made some moves in that direction throughout the quarter.

I think we in some ways perhaps overcorrected a bit on the accounts payable side and you’re seeing that in this number. We saw some work to do here. My goal is to come out of the year with a normalized working capital each quarter.

And so, we’re seeing a little bit of choppiness still, but we’re working very hard on the right process improvements, improving our terms with our suppliers and that’s going to show up as we move forward throughout the year. Next slide. On Slide 7, I’ll spend a little bit of time here talking about each of our individual segment results.

From the top level both of our businesses were down about the same amount. I start over here on the left with material handling. Sales, down 12%, on an organic basis, really the majority of that and the large driver of that is the capital spending environment in a couple of our key end markets.

And behind that, as I mentioned earlier, we did expect a little bit of year-over-year decline in that, but the market dynamics are worse than we expected. And really the main driver of that, particularly in the food and ag markets has been the supply situation in those markets. The commodity prices are low because of a large supply.

As you look at the ag market, there is a lot of the indicators point towards a pretty good crop this year, which will continue to exacerbate that problem. So our specific customers are under a lot of spending pressure and that’s affecting our business.

They’re not ordering material, really in a lot of their different – from a lot of their different suppliers and we’re affected by that. On the beverage market, we have known for a while that that market is going to be down. We have that built into our expectations. It really did come in about where we thought, but it is a large number.

And that’s mainly in our Brazil business, where we have a large customer that hasn’t been ordering. We have seen some orders start to come in, in the second half, which is exactly what we’d expected, but still on a year-over-year basis it’s a lot more muted than we’ve seen in the past.

Moving on to the consumer business, it was a bit softer than expected, a couple of different dynamics going on there. The consumer spending indicators are stronger than what our performance would make a look at.

But a couple of things that affect us, one is that we have done some product line rationalization within that business among profitable products and that’s still coming out of our revenue.

But also from a mix standpoint, we did see a number of lower price product sold in a higher volume than we had expected and so that’s contributed to our softness there. On the good side, we have seen some good wins in our vehicle markets, particularly in automotive and also in RV.

And unfortunately some of that we’re seeing looking forward that perhaps the auto market is slowing a bit, but we have done well there this year. It’s just not quite enough to make a dent compared to the down graph we’ve seen in the capital spending up in our ag and food markets.

On the industrial side, the market itself has been very choppy throughout the year and I mentioned that in the first quarter and we saw more of that in the second quarter and a little bit of desell in the second quarter in the market itself. But we’ve done a good job there and had some nice wins and been able to hold our own there.

So, we’re happy with the performance there, but again we’re kind of coming in flat where the market is down. So that’s a win, but it’s not enough to overcome the softness we see elsewhere. Moving over to the distribution side, there is a similar dynamic. It’s for different reasons, but we’re experiencing a bit of the similar dynamic.

So typically in that market, you see a seasonal uptick in the second quarter that didn’t happen. And we just spent a lot of time in the field in the second quarter, looking at the pace of business at our customers and a lot of the smaller tire dealers and tire repair stores.

And the first reaction that you see when the business is slowing as that they slowdown the capital spending and that’s we did experience that in our equipment sales in the second quarter with a biggest part of our decline here. There are some good leading indicators for this market.

Myers driven are up fuel prices and so forth, so we’re expecting a good summer from people driving our cars, but it hasn’t shown up in people going and changing their tires in a higher way than last year. So, we didn’t see that uptick that we normally see in the second quarter and that hurt our business there.

The retread markets continue to be slow and that’s – we did have some wins in the first quarter, but mostly that volume will come through later in the year. And moving down the list here, I mentioned before that we’re working on a sales – we made a lot of progress in the second quarter, but we still are being affected a bit by that.

But I think we’ve moved the needle quite a bit in the second quarter towards the performance that we’re looking for, but it’s a long process and it’s not something that’s going to happen overnight. So we did make progress, but it still affected our top-line in the quarter.

A couple of nice wins highlighted here at the bottom, both of which again at this point are still fairly small, but they’re helping us to focus on where we’re going to go and try to win. Switch to the next slide, now Slide 8. We’ll conclude by talking about our outlook.

And I wanted to also spend a little bit of time updating you, did a lot of work on our strategy in the second quarter and I wanted to update you on some of the things we found there. In terms of the outlook, based on our second quarter results plus based on what’s going on in really our big and key end markets, we’re lowering our outlook.

We now expect full year revenues to be down mid to high single-digits. The main driver of that is capital spending. Really it’s hard to see catalyst, particularly in the commodity markets, a positive catalyst that’s going to change the current dynamic in capital spending there. So we’ve taken our viewpoint of the future down because of that.

We do have – as I mentioned just a minute ago, we do see some mixed indicators in the distribution segment. It doesn’t really change our view on what we’re going to do there.

We’re going to continue to really work hard at improving our sales performance there and we’re going to work through whatever market challenges we see there, but there’s most likely a similar challenges on the capital spending side there as well. Spend a couple minutes here on our strategy, what we accomplished in the quarter.

We did accomplish quite a bit particularly at the business unit level and I’m very excited about a lot of the work that the teams have done. We did a lot of strategic marketing work. And coming out of the quarter, I think we better understand where we’re winning and where we’re losing, more importantly, I think, we understand why.

And once you understand that you can really do something about it. The teams have all identified key initiatives and process improvements. And those are really cross-functional process improvements. And there’s both operational customer service commercial type process improvements that are all wound together in these initiatives.

And it’s really helped us to focus on where the starts that we think we’re going to win and what do we need to improve where we’re losing. A couple of themes that I wanted to share with you that came out of this process.

I said at before, it’s a theme that I could tell from early on in my tenure here, but it came out very strongly in our planning process, commercial execution and putting good process in place around the entire commercial part of the organization is going to be a critical part of our moving forward.

I think we really learn that early on in the distribution business and we’re making a lot of progress there, but other businesses within our portfolio have seen that and started taking that to hearten and putting those in place.

And I think the strategic marketing work that we did was a great first step in teaching people within the organization and how to think about commercial execution. Additionally, a couple new things coming out of these themes that I saw throughout each of the discussions with the different General Managers.

Protecting the core is about being successful at what got you where you are. So going back and making sure that we’re protecting the business that we have today, winning more of that and selling more of what we have. That came out in a lot of things and simplify was another common theme.

And that’s been started a while ago with a couple of different moves within the portfolio, but I think that folks as I took a look at their strategies and the businesses realized that we still have a ways to go on that and there’s more that we can do to simplify our business and be more focused on how we can serve our customers better.

In terms of next step, given our current economic environment in the markets around us, as we look at these strategies and the initiatives that we have, we’re moving up the priority on the things that we think it had a tangible benefit to our cost structure.

So that we can protect the commercial investments, which often take a bit longer to show results. With that, we’re open to questions..

At this time, we’ll begin the question-and-answer session. [Operator Instructions] First question is from Adam Josephson, KeyBanc Capital Markets. Please go ahead sir..

Thanks, Dave, Monika. Good morning..

Good morning, Adam..

Good morning..

Dave, just a couple of clarification, just one on consumer sales. Can you just talk a little bit – I think you talked about selling more a lower margin products, but if you can just help us better understand that a bit that would be great.

And similarly on the equipment side of your distribution business, can you just talk about what you think the weakness was there?.

Sure. So maybe a clarification on the consumer side, not lower margin products per se, but lower price, those a cheaper version if you will. It’s a combination effect. When we went to market through last fall, which is the big buying season, we had new product that we wanted to sell.

We would launch them late, which we’ve highlighted before and I’m not going to rehash all that. But if you think about the shelf space and what depth filled in, they were – whatever that’s getting filled in were lower priced products. So it’s – the margins weren’t terribly off, it was more of a lower priced type products.

It’s more of a mix issue from that – from the top-line rather than the bottom line. But it does lower both – it’s just getting lower dollars. And that’s more of the dynamic there. I mean, honestly, we thought we would see a better given the current consumer indicators out there. We thought we’d see a better market for this in the spring and we did it.

So we’re adjusting to that. I think we’re also – a couple of points on the business as a whole. The founder did retire this spring. We brought in a new President and he is off to a great start and really has been laser focused on how we can set ourselves up for this next coming season, better than we did last year and we’re really excited about that.

So that’s our focus right now what that business is to make sure that we have the right products positioned in the right way coming into the winter and next spring season, because this is the time that you’re starting to think about that to go.

Related to the capital spending in the distribution side, the dynamic there is again if you think of our customer base, it’s a pretty broad view of different types of shops. And the capital spending there often is driven by sentiment, how those people are feeling.

So if their base are not full and they’re not feeling like there’s a constant steady state of business, they’re probably going to push off any kind of large expenditures.

And I think that’s the dynamic we’re seeing because as we went out and we spending a lot more time with what we think are our better salespeople to release get agaugefrom them on market and then we’re working on our sales force initiative on the underperforming sales people to improve their performance.

But from the people that are high performing salespeople, they did see a lower than expected seasonal level of activity in a lot of our key – our independent tire repair stores. And to me that’s a huge indicator as to why we didn’t see the normal level of capital spending we saw in that market..

Dave thanks. And just one clarification on the consumer side. Can you just give us examples of some of the lower price products just so we have can better kind of grasp onto what you’re talking about..

Yes, it’s going to be more of the legacy products that we’ve had before. So we priced our products to be – the newer products are – have what we think add more value. And so, those are going to be priced differently than the other set of products we have.

We still think we have a better product than the competitor, but at a certain point you’ve got to start computing on features and that was our game plan coming into the year. And because of our – of how late we want those products, we weren’t really able to get the traction we wanted with the product that have the new features.

I think they still do have good staying power in the market and we’re building sort of new strategy around what we have in terms of new products for next year in that regard..

Thanks Dave. And just two others and I’ll get back in the queue. One is Brazil, can you just tell us broadly what you’re experiencing there just you’re in a couple businesses there..

Yes. I’d say, it’s – Brazil actually came in pretty close what we expected. It’s not great, but I’m not going to try to say hey its stabilized down there or anything like that, but we’ve gotten I think better clarity on where we stand down there. And part of that’s also we had a leadership change down there as well early in the second quarter.

The dynamic there that particularly for things that you look at, it’s hard – you can't really take what’s the demand level for beer, it’s in the short-term or for soft drinks in the short-term because the spending level was literally shutdown.

And they told us that, but the first quarter they basically said we're not going to be ordering crates in the beverage markets. And so, we are now seeing, they've made good on that. And now they are starting to place some orders, but it's more muted. So I don't know that there is any again real uptick in there and things, but maybe that’s stabilized.

Elsewhere in the market, there’s some activity. I think part of that was that there were some pent up demand from people just not knowing when you have a big political turmoil if they had back in this early part of the spring. I think people just wait. And so, we start a bit of that and things like automotive and manufacturing.

So I don't want to say, hey things are picking up. The economy is still not doing well down there, but we are seeing some activity and we’re delivering products..

Sure. Just one last one before I get back in the queue, Dave. You started in this role in December. Can you just talk, so that’s been seven months or so.

Can you just talk about what's been positively surprising to you, what have been the negative surprises, presumably economic activity domestically and in Brazil the most likely negative surprises? But can you just talk about what's been different than your expectations thus far in the job?.

Sure. I mean, I don't think that – in terms of the company and job, I don't think – it's very similar to what I expected. So, we're a small – in euros, we’re a small manufacturer and I think the challenges we have are similar to companies of this size. So nothing internally is a surprise to me.

I think that at the beginning of the year or let’s say more towards the tail-end of 2016 and even frankly a lot in the first quarter, there has been a bias in the market and the world that we would see – that we would start coming out of some of the commodity down pressure and that's been around for the past few years.

And the inventory levels and the supply glut has continued. And that's probably been – and that's you see that in a lot of the various end markets and that's we’ve been talked about a lot since sort of beginning of June and so that's a bit worse than I think any of us expected. And so, we've learned a lot about our interaction.

We spent a lot of time in the second quarter as part of our strategy process, really is learning the buying dynamic and the value add that we provide to people like the seed companies, food processing companies and so forth. So we know a lot more, but unfortunately what we know is that when times are this bad, they really do stop spending.

So, we've just got to be prepared for that because that's the reality of our situation..

Thanks very much, Dave. I'll get back to in..

We have a question from Chris Manuel, Wells Fargo Securities. Please go ahead sir..

Good morning..

Good morning, Chris..

Dave, I wanted – I appreciate the color on Slide 8, the couple of bullets here on a strategic update, but kind of to follow along the thing that Adam just spoke out. You had about seven months now at the helm, I'm confident that you've developed quite a bit more with respect to strategy and vision.

And what you think Myers can look like down the road or a path? Could you perhaps share with us some of what that vision is whether is it – do you want to be a technology driven company? Do you want to be a process or a new product driven company? Or what you view some of the future might look like at Myers Industries? Or perhaps maybe share with us when you might be prepared to share some of those items with us, maybe financial milestones et cetera.

How should we think about the process?.

Yes, Chris, it’s certainly a fair question. It's pre-mature at this point. And let me – I'll give you an answer to the second part of your question, which is my goal and plan is to have by the end of this year to be able to explain to you where we’re going. And it's not that I'm not working on this, it’s there's a process to it.

And so, I've come out of the second quarter and what I've highlighted on this at the tail-end of the presentation is, I have a much better understanding now of our end markets. That's what you've got to do first. You've got to understand the markets and where we're strong, where we need to work on. So we've made a lot of progress on that.

And I think if you would talk to anybody within the organization, they would say the exact same thing. So we're learning how to be good at marketing. It's not a skill we've had in the past. So that's a starting point. But then there's a lot more to an enterprise strategy, and there's a vision to it. And obviously, I'm forming opinions in my mind.

But there's a lot of work to be done with the board in terms of what we want to be and how we're going to get there and we’re not through that yet. So, it would be pre-mature for me to put anything out there beyond what I put out just now..

All right. Maybe just one more question kind of along those lines before I switch gears, but as you look at the current portfolio today, how do you feel about it? Are there parts or pieces that you may say where I really like this, but I want to go deeper or do more with….

Yes, actually….

And you struggle with fit or how do you….

Whenever you have a diverse business, there's going to be both for sure. I'm hesitant to be very specific on some. And then the reason for that I'm not trying to be shifty, but we are a small company and some of our markets are small.

So, it's going real specific on strategic initiatives around niche markets that we have is not something I'm going to do now or in the future. So because I don't – but I'm getting that away for free to our competition and that's not what we're going to do.

We've done all the strategic – we put a lot of effort in the strategic marketing, and I want my competitors to just have it. But, yes, there are areas. A couple of – I will share a couple of things with you.

When you do deep strategic marketing work, you very often confirm hunches that you have whether that the hunches about the competitive dynamic in a particular market segment or your place and competitive position there. And we have confirmed a number of things that I think we thought we’re true, but didn't have a conviction around.

And when you have conviction around something, it's really it makes it much more powerful to be confident to go invest in it. And that – if that's the biggest thing that came out of our Q2 strategic plan for our teams, that's going to yield some great results in the future and there are a few of those.

In particular and I've said this publicly and I will say it to you now, I think our distribution we have great opportunity there. And from the work that we've done and from the work that I've seen our team put together, I don't have any change in my view on that..

Okay, that's helpful. Thanks, just two other things. First is – this has been kind of choppy quarter and you talked about how some things have played out.

Do you feel that through time the business can become more consistent or will it always be sort of a business that some pieces are doing well, some pieces aren’t, and it's rare to see it will hit on all cylinders.

How do you think about your business becoming consistent on an ongoing basis?.

Yes, it’s a fair question. I think that process is a good way. So, there’s two different pieces to that. There's the external piece, are we in markets that allow for some consistency and are we consistent in executing. And that's the way I think two of them. So my focus right now, I can’t do a lot in the short-term to change what markets we're in.

So, I'm focused on helping ourselves internally be as consistent as we can. And that means it does have a market effect because you have to understand what's going on in your market. So you can react and have process to react. And that's what we're working on right now.

Future stayed, of course, you want to look and say where are we advantaged in markets that will help us to be more consistent over time.

I think generally if you’re going to be an industrial, you're going to see a cycle – business cycle to every business and you can – I'm not a person that sits here and says, hey you’re going to try to line up countercyclical business and the other thing, I mean it's – I think 2009 proved that when things go down, everything goes with.

So I don't – I'm not trying to look at the world from that perspective, but yes there are certain ways of finding opportunity that allow you to be a little more consistent, but I would say I bifurcate the two..

Okay, that's helpful. Last topic is the CFO search.

Can you give us perhaps an update on where you are? Do you anticipate having somebody in place by next quarter or rough kind of thoughts there?.

Yes, sure. We have several strong candidates in the pipeline. The process is moving at the pace that I expected it would. I'm not going to put a due date on it because there's a dynamic that’s just not – that’s not worthwhile, that's a guess. So but the process is moving at the pace that I expected it..

Okay. Thank you good luck..

Thank you..

The next question is from Brian Sponheimer, Gabelli and Company. Please go ahead sir..

Hi, good morning, Dave. Good morning, Monica..

Hey, Brian..

Hey, Brian..

Maybe if I can ask the strategic question in a different way and I think that they were really well done so far. As you are thinking about how your timeline develops over the course of the next 6 months, 12 months, 18 months.

What are the steps that that you think that you're really going to be able to put your footprint or your assumption right around on this business?.

That's a good question, Brian. And none of the other ones weren’t, they’re all good questions, but this one I’ll answer. The biggest thing I can do is prioritize and then put focus on where we have best opportunities to make a difference. And some of that's going to be short-term.

I mean there's – because of the markets we're in, there's a – you have to be nimble, you have to react to the world around you, you can't just ignore it.

So as I look at the strategic opportunity – the whole purpose of going through the work that we've done over the past four months is to look at the world of opportunities that we have and then prioritize those and invest appropriately. And I think if you try to do it all, you'll fail.

If you really focus on one or two things and you can do that in a variety of different ways, but if you really focus your energies and put the way to the organization behind one or two things that are really important, you can be very successful of that. And so, we're working through that right now.

There is figuring out, what’s exactly of those things we’re going to do..

All right. And most of my other questions have been answered. Thank you so much..

Thank you..

We have a follow-on question from Adam Josephson from KeyBanc. Please go ahead sir..

Thanks, Dave and Monica. Dave, just one more on the economic stuff and then I have a couple of cash flow, balance sheet questions.

Just one on the economic weakness you've experienced, have you been able to square what you've been seeing, what the recent pickup in the PMI and the ISM – PMI data over the past two or three months?.

Yes, I’ll tell you that’s the one that's the most confusing to me, because – no, I don't know, but I think the way I would – the way I’d look at it in my view is it’s a – because of our exposure in certain commodity markets, I don't think that’s fully captured at times in the PMI.

So, I think, if the PMI people spoke a lot to John Deere and AGCO, [indiscernible]..

Right..

So I think that's part of it, but that's what's very challenging about seeing some of this coming as you feel like that data is showing inventories going down and other things. So, it's not a good answer, but I'll be honest with you and I don't know and I'm pretty much there..

No, I appreciate your honesty, Dave. Just a couple on cash flow balance sheet items, so you guided the CapEx for 2015 to 2018 and that’s obviously down from your previous guidance just presumably on account to be good volume and sales weakness you experienced.

What do you think – so you’re guiding to D&A of 35 to 37 I'm assuming there's a few million of Scepter amortization in there, but there's still a huge gap between your CapEx this year and your D&A, how do you expect those two to converge over time?.

Yes, so, I think it's – I have a different way of thinking about. I understand the math that you all do and there’s some rationale, but I think it’s very reasonable. But I think about capital spending very differently than perhaps that that method. There are two buckets of capital.

So there is – you have your distinct physical plant that you have to take care of. We’re going to continue to do that. So, if our factories, our offices, our equipment, we’re going to maintain them to the standards that we need to maintain them to produce the product properly. So, if the roof is leaking, we’re going to fix the roof, things like that.

So that capital spending profile isn’t going to change. I think we have very good factories. We have very good equipment and we’re going to continue to maintain to such. Where I think differently is on the growth side. And I don't want people to look at my view of capital spending and think that that's going to sign the growth, because it's not.

I challenge people on where we spend our capital and its back to the comment I made to Brian before, first of all its focus. We're going to make sure we're investing in the best opportunities that we have and not one that we're not sure about. That’s first and foremost.

Secondly, we're going to make sure we're doing within the value chain that we're doing the operations that add the most value and then we have the most expertise in. And if we don't have that, we're going to find somebody else to do it for us and that often reduces what you need.

And then thirdly, when I think about a growth project, my methodology for how I'm going to get there is much more option focused for us. So I'm not all in when I start looking at a growth opportunity. I want to do all the marketing work first, which we've learned how to do now. And then I want to experiment.

And if that means getting the product out into the market at a more expensive cost point to start to prove the case, we're going to do that and then you spend the capital to get it to the right price point if you're successful. We haven't operated that way in the past. And so, it is a different mindset.

And we've already seen that as we – it’s amazing when you kind of teach people a few things about what’s really important, how they’re willing to challenge the status quo of seeing that, I will give you a quick example we have – I won’t say, which business, but we have a process in one of our businesses, where we have to do massive changeovers at least once a month.

And it was one of those simple why questions. Why do we do that? Well because – other thing and when it comes down to the end of it because we've always done at that way. And when you say well why don't you try at this way and see what you learn, I think what they found that well somebody else can do some of this.

And so we don't have to do that changeover anymore. And it's a markedly different view of how you need to use your capital at that point. And so that's a totally different way of thinking about the business. So I don't have a specific answer for you yet, but this has not been an environment, where I said everybody you don't get any capital.

It's been an environment, where I've explained and taught people how to think differently about their businesses and the inputs are lower in terms of what people are asking for. So if you look at the second half traditionally, we spent a lot coming out of our strategic planning cycle on growth capital projects. I don't see a scene.

I don't see us needing to do that as much as we’ve had to do in the past..

Fair enough. Thanks for that that response, Dave.

And just a couple others, the free cash flow for the year, what is your expectation now?.

I think it's going to be a little lower than what we had expected before. And part of that is that I'm still getting and we want to get our working capital to a normalized rate, a steady state, so we’re going improve off of that. And I think that's probably the biggest impact that we’ll see.

So I would say given the market conditions and so forth we’ll probably be a little lower than last year, but that's – a big chunk of that is kind of one year readjustment….

Got it. And just two others, one on your leverage, your leverage is 3.1 times at the end of the quarter. I think you said or your predecessors have previously said you're more comfortable in the 2 to 2.5 range, if I'm not mistaken.

Can you just tell us just how you're thinking about the current leverage ratio where you wanted to go? And how close you might be to any covenants?.

Yes, Kevin, do you want to talk covenants here real quick just get back question off the table and then I’ll talk about the future..

The covenant threshold is 3.25 is the maximum. So the actual covenant calculation comes to 2.9. This calculation is more of just the balance sheet calculation, but the actual covenant calculation comes in 2.9..

Compared to the 3.25, Kevin, I mean..

Compared to the 3.1..

3.25 is the….

Right. And the comparable leverage right now is 2.9..

Right..

Right..

That’s right..

I do that calculation, it would be 2.9..

Right, okay.

And Dave, in terms of where you're more comfortable longer term?.

Right. So it's one of our priorities is to pay down some of the debt and so we're working on that. And I'm not uncomfortable where we are, but we want to pay down some of the debt..

And just lastly – thanks, Dave and Kevin.

And just one last one in the working capital, can you just go into a little more detail Dave about the issue with the payables and having cut to deep previously and then experiencing the consequences of that now, just a little more on what you've experienced of late and why you think that happen?.

I think its process related, Adam, and we're putting the processes in place to be sustainable over the longer term.

And so, I'm a big you dig out the process in place and because that helps you to sustain and then you have a platform and you can look at that and say this is what we can do and now I can improve of that, because I can look at the process again and say where can I be better, where is my – where are my worse situations.

And so, if the process isn't good, it’s really hard to tell where the problem is. I'm a big value string math person, in fact we've done a lot of – haven’t mentioned anything about lean activities, we’ve done a lot of lean type stuff and value stream mapping is really kind of a key element to that. And so that's the key here.

So we've started – that allowed us now to look [indiscernible] the big impact we can have renegotiating terms and how do we go about doing that and so on and so forth. So that's what we're focused on doing here. And that I thought we've gotten through a bit of that. And in the first quarter, it wasn't quite what I thought.

So, I think, we – and in some cases you start for convenience and this is another process thing is maybe we stayed a few people early now, and that’s not what we want to do either. So I think there'll be a little bit of a correction to that as we get through the year. And then we'll have a good stable base coming out of the year.

And we don't see a large cap cash outflow in the first quarter anymore or as much. There's a bit of seasonality to the business, I can’t avoid that, but….

Sure. Now Dave I appreciate it. And I appreciate your candor and best of luck. Thank you..

Thanks, Adam..

Ladies and gentlemen, we’ve reached the end of the question-and-answer session. I'd like to turn the call back to Monica Vinay for closing remarks. Please go ahead ma'am..

Thank You. Thank 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 immediately be available via webcast or call. Details can be found on the Myers Industries’ website under the Investor Relations tab.

Thank you have a great day..