But also you’re having consolidation in the customer base on the tire service centers, we too are consolidating and we have the best ability, the greatest ability to serve those at a professional level. So that’s one. Another area is, we continue with incremental line extensions for our various containers and boxes. The line extensions are more geared towards customer need and customer request. I’ve said before and I want to do new, new and just invent for the purpose of indenting. But if a customer comes to us with a product that they need, we are actually pretty good at being able to invent those and deliver against it. That’s — you don’t see that in the volume because that’s offsetting so much of the weakness in RV, in marine and then even in consumer.
We continue to see where the customer — because their wallet is being used up to buy necessities, they have less ability to buy a discretionary, even a gas can that’s up in price or planters, mailbox sheets, home goods that we sell. So we actually are doing incremental innovation, continuing to drive growth, it’s masked right now because of the downturn in some of these other markets. What we are excited about is, we’ve been active in military for the last 10 to 15 years, selling governments and militaries outside of the United States, with the rearmament that’s been catalyzed by the Ukrainian conflict, worldwide militaries are rearming and we have a very good product that’s been now approved and qualified for the U.S. and there’s a significant need there on the artillery shell casing, so that’s been discussed publicly.
We believe that, that will be a tailwind for us for many years and we believe it will be a sizable tailwind for us. So it’s actually exciting. It actually helps offset some of the long-term weakness that you may have in gas kits as electrification takes root. We believe that military will more than cover that and we’re excited about it. Grant?
Grant Fitz: Yes, nothing really quantitative just to add to what Mike said but the one thing that really struck me is learning the business is when we have customers in the distribution segment, they’ve basically said we’re coming back to Myers because of the fact that we try to do some of this work ourselves. And you just — we just can’t do it to the same level of quality and service that you provide. And so I think that just really bodes well for the opportunities that we have in the distribution segment. And then just to add, also the building momentum on the e-commerce, although it may not be one specific customer. We continue to have good traction and I’ve spent a fair amount of time with that team just really stress testing and really been impressed with their strategy and approach on that. And I think that really should provide future opportunities for us as well.
Unidentified Analyst: Very exciting business ones out there. Switching gears a little bit, if I take your first half sales and run rate then for the year, I get about $850 million seems to match your — what your updated guidance indicates. If I connect that to your Horizon 1 and upcoming Horizon 2 plans, how should we think about that $1 billion Horizon 1 sales target that you guys laid out? I know that excludes M&A but do you think that target is achievable in ’24? Or is that a ’25 or somewhere down the line, I’m not…
Michael McGaugh: Yes, I think we’re basically, let’s say, year behind, that’s a fair question. I laid out those targets in the summer of 2020 in the midst of COVID and they were directional but I felt like they were correct. I still feel that they’re correct. We’ve had some downturns the RV downturn in some of the marine tanks that downturn has been meaningful in terms of revenue and then also some of the — just the softness in consumer. Now again, we are backfilling that with military, backfilling with e-commerce, backfilling with distribution. But I think directionally to look at it and say, hey, it’s a year behind schedule due to some recessionary conditions in the end markets in which we participate, I think it’s probably a reasonable way to think about it.
On the EBITDA percent and the EBITDA quality, those numbers are still obtainable. Again, when we lose some revenue, we lose some volume, at our scale, it’s a little harder to bridge that gap. But as far as the — a directional number on where we — what we believe the company can do on a quality standpoint, it’s still there. Again, maybe that’s delayed a year. But I’m still confident that this company and these businesses should be able to obtain that quality. So, Grant?
Grant Fitz: Yes, just — looking at it right now and I’ve been in companies before that have set revenue targets and that became the ultimatum to try and hit those revenue numbers. I think what’s different at Myers is the team is very disciplined and that they’re not going to deteriorate the earnings capability or the cash generation capability within the business. And so I feel that the building blocks are certainly there. We strengthened our M&A process quite a bit with the second quarter work that we had with our consulting on really getting ready for Horizon 2. And having spent a fair amount of time in the M&A space, I really think that the team is in a good position for this. But as Mike said, we will work that process with the M&A but we’re going to be very disciplined and we are not going to overpay and we really want to look to create value for the shareholders.
So — as maybe it is off a year but I don’t think those are — I would not view that as necessarily been a bad situation, I think it’s really point of the discipline that Myers follows. And that with that, I think we’ve got a process that can continue to drive growth for the business.
Michael McGaugh: Yes, I’m sure you guys are seeing this. It’s a tough environment in M&A right now. We’re seeing targets that we like, just the value expectations are still too high versus what we think the asset should bear. So we’re going to build our capability, we’re going to refine our strains, we’re going to build our team. We’re going to be ready to execute but it’s just — we’re going to make a decision when it’s the right decision for Myer shareholders. And so we’re not going to rush that and I think ultimately for the long-term those are the right decisions as it relates to acquisitions.
