Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Synalloy Reports Record First Quarter 2022 Results By: Synalloy Corporation via Business Wire May 10, 2022 at 16:05 PM EDT 2022 Starts Strong with Second Consecutive Quarter of Record Results for Net Sales, Net Income and Adjusted EBITDA Poised to Continue Executing on Strategic Priorities Throughout the Year Synalloy Corporation (Nasdaq: SYNL) (“Synalloy” or the “Company”), an industrials company focused on the production and distribution of piping, tubing and specialty chemicals, is reporting its results for the first quarter ended March 31, 2022. First Quarter 2022 Summary (in millions, expect per share and margin) Q1 20221 Q1 2021 Change Net Sales $116.2 $69.8 67% Gross Profit $22.5 $8.7 158% Gross Profit Margin 19.4% 12.5% 690bps Net Income (Loss) $10.3 $1.1 838% Diluted Earnings (Loss) per share $0.99 $0.12 725% Adjusted EBITDA $17.0 $4.9 248% Adjusted EBITDA Margin 14.6% 7.0% 760bps Management Commentary “We started the year off strong with a second consecutive quarter of record results as we continued to make significant progress with our turnaround strategy,” said Chris Hutter, president and CEO of Synalloy. “The pricing environment remained strong for both business segments and we excelled at expanding our sales funnel and integrating operations of our chemicals segment. The improvements we’re in the process of making create a more efficient operating structure, allowing us to better capitalize on the dynamics within our end markets. “Looking at the balance of the year, we are in a strong position to continue executing on the priorities we’ve laid out. While the macro-environment remains dynamic, we have confidence in the steps we’ve taken to operate more efficiently and achieve our goal of maintaining competitiveness throughout all environments. We remain committed to driving long-term shareholder value and are pleased that our strong results position us well to continue to build a robust and valuable platform.” _______________________ 1 The first quarter of 2022 included $7.5 million in net sales, $0.2 million in net income and $0.8 million in adjusted EBITDA from the acquisition of DanChem, which closed on October 22, 2021. First Quarter 2022 Financial Results Net sales increased 67% to $116.2 million compared to $69.8 million in the prior year period. The increase was primarily driven by continued strong demand from end-markets across both business segments leading to higher average selling prices. Gross profit increased significantly to $22.5 million, or 19.4% of net sales, compared to $8.7 million, or 12.5% of net sales, in the first quarter of 2021. Gross profit and gross margin continued to benefit from increased customer demand of higher margin products and a favorable surcharge market environment, offset by increased raw material and freight costs. Net income increased significantly to $10.3 million, or $0.99 diluted earnings per share, compared to a net income of $1.1 million, or $0.12 diluted earnings per share, in the first quarter of 2021. The increase was primarily a result of the continued strong net sales and commensurate gross profit performance. Adjusted EBITDA increased significantly to $17.0 million compared to $4.9 million in the first quarter of 2021. Adjusted EBITDA margin also improved 760 basis points to 14.6% compared to 7.0% in the prior year period. Segment Results Metals – Net sales in the first quarter of 2022 increased 60% to $88.5 million compared to $55.2 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $14.5 million compared to $2.6 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $16.4 million compared to $4.9 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 970 basis points to 18.5% compared to 8.8% in the first quarter of 2021. Specialty Chemicals – Net sales in the first quarter of 2022 increased 90% to $27.7 million compared to $14.6 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $2.4 million compared to $1.1 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $3.4 million compared to $1.5 million in the prior year period. Adjusted EBITDA margin improved 210 basis points to 12.2% compared to 10.1% in the first quarter of 2021. Liquidity As of March 31, 2022, total debt was $71.1 million under the Company’s revolving credit facility, compared to $70.4 million in debt at December 31, 2021. As of the end of the first quarter of 2022, the Company had $38.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. Conference Call Synalloy will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2022. Synalloy management will host the conference call, followed by a question-and-answer period. Date: Tuesday, May 10, 2022 Time: 5:00 p.m. Eastern time Toll-free dial-in number: 1-866-374-5140 International dial-in number: 1-404-400-0571 Conference ID: 38157095 Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860. The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.synalloy.com. About Synalloy Corporation Synalloy Corporation (Nasdaq: SYNL) is a company that engages in a number of diverse business activities including the production of stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Synalloy Corporation, please visit its web site at www.synalloy.com. Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, including risks relating to the impact and spread of and the government’s response to COVID-19; inability to weather an economic downturn; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw material availability; financial stability of the Company’s customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with acquisitions; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by the Company’s debt financing arrangements; and other risks detailed from time-to-time in Synalloy Corporation's Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC. Synalloy Corporation assumes no obligation to update any forward-looking information included in this release. Non-GAAP Financial Information Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. SYNALLOY CORPORATION Condensed Consolidated Balance Sheets ($ in thousands) (Unaudited) March 31, 2022 December 31, 2021 Assets Cash $ 1,241 $ 2,021 Accounts receivable, net of allowance for credit losses of $456 and $216, respectively 67,819 50,126 Inventories, net 112,114 103,249 Prepaid expenses and other current assets 3,808 3,728 Assets held for sale 797 855 Total current assets 185,779 159,979 Property, plant and equipment, net 42,720 43,720 Right-of-use assets, operating leases, net 30,431 30,811 Goodwill 12,637 12,637 Intangible assets, net 13,661 14,382 Deferred charges, net 278 302 Other non-current assets 4,127 4,171 Total assets $ 289,633 $ 266,002 Liabilities and Shareholders' Equity Accounts payable $ 44,268 $ 32,318 Accounts payable - related parties 2 2 Accrued expenses and other current liabilities 13,609 12,407 Current portion of long-term debt 2,464 2,464 Current portion of earn-out liability 891 1,961 Current portion operating lease liabilities 1,140 1,104 Current portion of finance lease liabilities 248 233 Total current liabilities 62,622 50,489 Long-term debt 68,610 67,928 Long-term portion of operating lease liabilities 31,748 32,059 Long-term portion of finance lease liabilities 1,362 1,414 Deferred income taxes 2,861 2,433 Other long-term liabilities 76 89 Shareholders' equity 122,354 111,590 Total liabilities and shareholders' equity $ 289,633 $ 266,002 Note: The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date. SYNALLOY CORPORATION Condensed Consolidated Statement of Operations - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended March 31, 2022 2021 Net sales Metals Segment $ 88,497 $ 55,213 Specialty Chemicals Segment 27,721 14,565 $ 116,218 $ 69,778 Operating income Metals Segment $ 14,492 $ 2,577 Specialty Chemicals Segment 2,387 1,056 Unallocated expense (income) Corporate 3,029 1,767 Acquisition costs and other 531 — Proxy contest costs and recoveries — (464 ) Earn-out adjustments 102 225 Operating income 13,217 2,105 Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Loss on extinguishment of debt — 223 Other, net (35 ) 162 Income before income taxes 12,849 1,335 Income tax provision 2,589 241 Net income $ 10,260 $ 1,094 Net income per common share Basic $ 1.00 $ 0.12 Diluted $ 0.99 $ 0.12 Average shares outstanding Basic 10,209 9,191 Diluted 10,320 9,288 Other data: Adjusted EBITDA1 $ 16,961 $ 4,875 1 The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA. SYNALLOY CORPORATION Consolidated Statement of Cash Flows (Unaudited) ($ in thousands) Three Months Ended March 31, 2022 2021 Operating activities Net income $ 10,260 $ 1,094 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation expense 2,116 1,817 Amortization expense 721 680 Amortization of debt issuance costs 25 21 Loss on extinguishment of debt — 223 Deferred income taxes 428 (41 ) Earn-out adjustments 102 225 Payments of earn-out liabilities in excess of acquisition date fair value (372 ) — Provision for losses on accounts receivable 240 12 Provision for losses on inventories 496 184 (Gain) loss on disposal of property, plant and equipment (5 ) 28 Non-cash lease expense 107 124 Change in fair value of interest rate swap — (2 ) Issuance of treasury stock for director fees 254 — Stock-based compensation expense 132 187 Changes in operating assets and liabilities: Accounts receivable (17,933 ) (11,181 ) Inventories (9,302 ) (3,866 ) Other assets and liabilities (27 ) 38 Accounts payable 11,950 6,357 Accrued expenses (959 ) (569 ) Accrued income taxes 2,161 3,901 Net cash provided by (used in) operating activities 394 (768 ) Investing activities Purchases of property, plant and equipment (1,117 ) (245 ) Proceeds from disposal of property, plant and equipment 5 18 Net cash used in investing activities (1,112 ) (227 ) Financing activities Borrowings from long-term debt 122,068 14,730 Proceeds from the exercise of stock options 118 — Payments on long-term debt (121,386 ) (12,333 ) Principal payments on finance lease obligations (62 ) (10 ) Payments on earn-out liabilities (800 ) (1,029 ) Payments for termination of interest rate swap — (46 ) Payments for deferred financing costs — (155 ) Net cash provided by financing activities (62 ) 1,157 (Decrease) increase in cash and cash equivalents (780 ) 162 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,241 $ 398 SYNALLOY CORPORATION Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended March 31, ($ in thousands) 2022 2021 Consolidated Net income $ 10,260 $ 1,094 Adjustments: Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Income taxes 2,589 241 Depreciation 2,116 1,817 Amortization 721 680 EBITDA 16,089 4,217 Acquisition costs and other 531 — Proxy contest costs and recoveries1 — (464 ) Loss on extinguishment of debt — 223 Earn-out adjustments 102 225 Loss on investment in equity securities and other investments — 363 Stock-based compensation 132 187 Non-cash lease expense 107 124 Adjusted EBITDA $ 16,961 $ 4,875 % sales 14.6 % 7.0 % Metals Segment Net income $ 14,424 $ 2,538 Adjustments: Interest expense — — Depreciation expense 1,213 1,393 Amortization expense 625 680 EBITDA 16,262 4,611 Earn-out adjustments 102 225 Stock-based compensation 35 38 Metals Segment Adjusted EBITDA $ 16,399 $ 4,874 % segment sales 18.5 % 8.8 % Specialty Chemicals Segment Net income $ 2,378 $ 1,055 Adjustments: Interest expense 9 — Depreciation expense 886 386 Amortization expense 96 — EBITDA 3,369 1,441 Stock-based compensation 6 31 Specialty Chemicals Segment Adjusted EBITDA $ 3,375 $ 1,472 % segment sales 12.2 % 10.1 % 1 Proxy contest costs and recoveries for the year ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006296/en/Contacts Company Contact Aaron Tam Chief Financial Officer 1-804-822-3260 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 SYNL@gatewayir.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Synalloy Reports Record First Quarter 2022 Results By: Synalloy Corporation via Business Wire May 10, 2022 at 16:05 PM EDT 2022 Starts Strong with Second Consecutive Quarter of Record Results for Net Sales, Net Income and Adjusted EBITDA Poised to Continue Executing on Strategic Priorities Throughout the Year Synalloy Corporation (Nasdaq: SYNL) (“Synalloy” or the “Company”), an industrials company focused on the production and distribution of piping, tubing and specialty chemicals, is reporting its results for the first quarter ended March 31, 2022. First Quarter 2022 Summary (in millions, expect per share and margin) Q1 20221 Q1 2021 Change Net Sales $116.2 $69.8 67% Gross Profit $22.5 $8.7 158% Gross Profit Margin 19.4% 12.5% 690bps Net Income (Loss) $10.3 $1.1 838% Diluted Earnings (Loss) per share $0.99 $0.12 725% Adjusted EBITDA $17.0 $4.9 248% Adjusted EBITDA Margin 14.6% 7.0% 760bps Management Commentary “We started the year off strong with a second consecutive quarter of record results as we continued to make significant progress with our turnaround strategy,” said Chris Hutter, president and CEO of Synalloy. “The pricing environment remained strong for both business segments and we excelled at expanding our sales funnel and integrating operations of our chemicals segment. The improvements we’re in the process of making create a more efficient operating structure, allowing us to better capitalize on the dynamics within our end markets. “Looking at the balance of the year, we are in a strong position to continue executing on the priorities we’ve laid out. While the macro-environment remains dynamic, we have confidence in the steps we’ve taken to operate more efficiently and achieve our goal of maintaining competitiveness throughout all environments. We remain committed to driving long-term shareholder value and are pleased that our strong results position us well to continue to build a robust and valuable platform.” _______________________ 1 The first quarter of 2022 included $7.5 million in net sales, $0.2 million in net income and $0.8 million in adjusted EBITDA from the acquisition of DanChem, which closed on October 22, 2021. First Quarter 2022 Financial Results Net sales increased 67% to $116.2 million compared to $69.8 million in the prior year period. The increase was primarily driven by continued strong demand from end-markets across both business segments leading to higher average selling prices. Gross profit increased significantly to $22.5 million, or 19.4% of net sales, compared to $8.7 million, or 12.5% of net sales, in the first quarter of 2021. Gross profit and gross margin continued to benefit from increased customer demand of higher margin products and a favorable surcharge market environment, offset by increased raw material and freight costs. Net income increased significantly to $10.3 million, or $0.99 diluted earnings per share, compared to a net income of $1.1 million, or $0.12 diluted earnings per share, in the first quarter of 2021. The increase was primarily a result of the continued strong net sales and commensurate gross profit performance. Adjusted EBITDA increased significantly to $17.0 million compared to $4.9 million in the first quarter of 2021. Adjusted EBITDA margin also improved 760 basis points to 14.6% compared to 7.0% in the prior year period. Segment Results Metals – Net sales in the first quarter of 2022 increased 60% to $88.5 million compared to $55.2 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $14.5 million compared to $2.6 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $16.4 million compared to $4.9 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 970 basis points to 18.5% compared to 8.8% in the first quarter of 2021. Specialty Chemicals – Net sales in the first quarter of 2022 increased 90% to $27.7 million compared to $14.6 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $2.4 million compared to $1.1 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $3.4 million compared to $1.5 million in the prior year period. Adjusted EBITDA margin improved 210 basis points to 12.2% compared to 10.1% in the first quarter of 2021. Liquidity As of March 31, 2022, total debt was $71.1 million under the Company’s revolving credit facility, compared to $70.4 million in debt at December 31, 2021. As of the end of the first quarter of 2022, the Company had $38.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. Conference Call Synalloy will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2022. Synalloy management will host the conference call, followed by a question-and-answer period. Date: Tuesday, May 10, 2022 Time: 5:00 p.m. Eastern time Toll-free dial-in number: 1-866-374-5140 International dial-in number: 1-404-400-0571 Conference ID: 38157095 Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860. The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.synalloy.com. About Synalloy Corporation Synalloy Corporation (Nasdaq: SYNL) is a company that engages in a number of diverse business activities including the production of stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Synalloy Corporation, please visit its web site at www.synalloy.com. Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, including risks relating to the impact and spread of and the government’s response to COVID-19; inability to weather an economic downturn; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw material availability; financial stability of the Company’s customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with acquisitions; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by the Company’s debt financing arrangements; and other risks detailed from time-to-time in Synalloy Corporation's Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC. Synalloy Corporation assumes no obligation to update any forward-looking information included in this release. Non-GAAP Financial Information Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. SYNALLOY CORPORATION Condensed Consolidated Balance Sheets ($ in thousands) (Unaudited) March 31, 2022 December 31, 2021 Assets Cash $ 1,241 $ 2,021 Accounts receivable, net of allowance for credit losses of $456 and $216, respectively 67,819 50,126 Inventories, net 112,114 103,249 Prepaid expenses and other current assets 3,808 3,728 Assets held for sale 797 855 Total current assets 185,779 159,979 Property, plant and equipment, net 42,720 43,720 Right-of-use assets, operating leases, net 30,431 30,811 Goodwill 12,637 12,637 Intangible assets, net 13,661 14,382 Deferred charges, net 278 302 Other non-current assets 4,127 4,171 Total assets $ 289,633 $ 266,002 Liabilities and Shareholders' Equity Accounts payable $ 44,268 $ 32,318 Accounts payable - related parties 2 2 Accrued expenses and other current liabilities 13,609 12,407 Current portion of long-term debt 2,464 2,464 Current portion of earn-out liability 891 1,961 Current portion operating lease liabilities 1,140 1,104 Current portion of finance lease liabilities 248 233 Total current liabilities 62,622 50,489 Long-term debt 68,610 67,928 Long-term portion of operating lease liabilities 31,748 32,059 Long-term portion of finance lease liabilities 1,362 1,414 Deferred income taxes 2,861 2,433 Other long-term liabilities 76 89 Shareholders' equity 122,354 111,590 Total liabilities and shareholders' equity $ 289,633 $ 266,002 Note: The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date. SYNALLOY CORPORATION Condensed Consolidated Statement of Operations - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended March 31, 2022 2021 Net sales Metals Segment $ 88,497 $ 55,213 Specialty Chemicals Segment 27,721 14,565 $ 116,218 $ 69,778 Operating income Metals Segment $ 14,492 $ 2,577 Specialty Chemicals Segment 2,387 1,056 Unallocated expense (income) Corporate 3,029 1,767 Acquisition costs and other 531 — Proxy contest costs and recoveries — (464 ) Earn-out adjustments 102 225 Operating income 13,217 2,105 Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Loss on extinguishment of debt — 223 Other, net (35 ) 162 Income before income taxes 12,849 1,335 Income tax provision 2,589 241 Net income $ 10,260 $ 1,094 Net income per common share Basic $ 1.00 $ 0.12 Diluted $ 0.99 $ 0.12 Average shares outstanding Basic 10,209 9,191 Diluted 10,320 9,288 Other data: Adjusted EBITDA1 $ 16,961 $ 4,875 1 The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA. SYNALLOY CORPORATION Consolidated Statement of Cash Flows (Unaudited) ($ in thousands) Three Months Ended March 31, 2022 2021 Operating activities Net income $ 10,260 $ 1,094 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation expense 2,116 1,817 Amortization expense 721 680 Amortization of debt issuance costs 25 21 Loss on extinguishment of debt — 223 Deferred income taxes 428 (41 ) Earn-out adjustments 102 225 Payments of earn-out liabilities in excess of acquisition date fair value (372 ) — Provision for losses on accounts receivable 240 12 Provision for losses on inventories 496 184 (Gain) loss on disposal of property, plant and equipment (5 ) 28 Non-cash lease expense 107 124 Change in fair value of interest rate swap — (2 ) Issuance of treasury stock for director fees 254 — Stock-based compensation expense 132 187 Changes in operating assets and liabilities: Accounts receivable (17,933 ) (11,181 ) Inventories (9,302 ) (3,866 ) Other assets and liabilities (27 ) 38 Accounts payable 11,950 6,357 Accrued expenses (959 ) (569 ) Accrued income taxes 2,161 3,901 Net cash provided by (used in) operating activities 394 (768 ) Investing activities Purchases of property, plant and equipment (1,117 ) (245 ) Proceeds from disposal of property, plant and equipment 5 18 Net cash used in investing activities (1,112 ) (227 ) Financing activities Borrowings from long-term debt 122,068 14,730 Proceeds from the exercise of stock options 118 — Payments on long-term debt (121,386 ) (12,333 ) Principal payments on finance lease obligations (62 ) (10 ) Payments on earn-out liabilities (800 ) (1,029 ) Payments for termination of interest rate swap — (46 ) Payments for deferred financing costs — (155 ) Net cash provided by financing activities (62 ) 1,157 (Decrease) increase in cash and cash equivalents (780 ) 162 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,241 $ 398 SYNALLOY CORPORATION Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended March 31, ($ in thousands) 2022 2021 Consolidated Net income $ 10,260 $ 1,094 Adjustments: Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Income taxes 2,589 241 Depreciation 2,116 1,817 Amortization 721 680 EBITDA 16,089 4,217 Acquisition costs and other 531 — Proxy contest costs and recoveries1 — (464 ) Loss on extinguishment of debt — 223 Earn-out adjustments 102 225 Loss on investment in equity securities and other investments — 363 Stock-based compensation 132 187 Non-cash lease expense 107 124 Adjusted EBITDA $ 16,961 $ 4,875 % sales 14.6 % 7.0 % Metals Segment Net income $ 14,424 $ 2,538 Adjustments: Interest expense — — Depreciation expense 1,213 1,393 Amortization expense 625 680 EBITDA 16,262 4,611 Earn-out adjustments 102 225 Stock-based compensation 35 38 Metals Segment Adjusted EBITDA $ 16,399 $ 4,874 % segment sales 18.5 % 8.8 % Specialty Chemicals Segment Net income $ 2,378 $ 1,055 Adjustments: Interest expense 9 — Depreciation expense 886 386 Amortization expense 96 — EBITDA 3,369 1,441 Stock-based compensation 6 31 Specialty Chemicals Segment Adjusted EBITDA $ 3,375 $ 1,472 % segment sales 12.2 % 10.1 % 1 Proxy contest costs and recoveries for the year ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006296/en/Contacts Company Contact Aaron Tam Chief Financial Officer 1-804-822-3260 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 SYNL@gatewayir.com
2022 Starts Strong with Second Consecutive Quarter of Record Results for Net Sales, Net Income and Adjusted EBITDA Poised to Continue Executing on Strategic Priorities Throughout the Year
Synalloy Corporation (Nasdaq: SYNL) (“Synalloy” or the “Company”), an industrials company focused on the production and distribution of piping, tubing and specialty chemicals, is reporting its results for the first quarter ended March 31, 2022. First Quarter 2022 Summary (in millions, expect per share and margin) Q1 20221 Q1 2021 Change Net Sales $116.2 $69.8 67% Gross Profit $22.5 $8.7 158% Gross Profit Margin 19.4% 12.5% 690bps Net Income (Loss) $10.3 $1.1 838% Diluted Earnings (Loss) per share $0.99 $0.12 725% Adjusted EBITDA $17.0 $4.9 248% Adjusted EBITDA Margin 14.6% 7.0% 760bps Management Commentary “We started the year off strong with a second consecutive quarter of record results as we continued to make significant progress with our turnaround strategy,” said Chris Hutter, president and CEO of Synalloy. “The pricing environment remained strong for both business segments and we excelled at expanding our sales funnel and integrating operations of our chemicals segment. The improvements we’re in the process of making create a more efficient operating structure, allowing us to better capitalize on the dynamics within our end markets. “Looking at the balance of the year, we are in a strong position to continue executing on the priorities we’ve laid out. While the macro-environment remains dynamic, we have confidence in the steps we’ve taken to operate more efficiently and achieve our goal of maintaining competitiveness throughout all environments. We remain committed to driving long-term shareholder value and are pleased that our strong results position us well to continue to build a robust and valuable platform.” _______________________ 1 The first quarter of 2022 included $7.5 million in net sales, $0.2 million in net income and $0.8 million in adjusted EBITDA from the acquisition of DanChem, which closed on October 22, 2021. First Quarter 2022 Financial Results Net sales increased 67% to $116.2 million compared to $69.8 million in the prior year period. The increase was primarily driven by continued strong demand from end-markets across both business segments leading to higher average selling prices. Gross profit increased significantly to $22.5 million, or 19.4% of net sales, compared to $8.7 million, or 12.5% of net sales, in the first quarter of 2021. Gross profit and gross margin continued to benefit from increased customer demand of higher margin products and a favorable surcharge market environment, offset by increased raw material and freight costs. Net income increased significantly to $10.3 million, or $0.99 diluted earnings per share, compared to a net income of $1.1 million, or $0.12 diluted earnings per share, in the first quarter of 2021. The increase was primarily a result of the continued strong net sales and commensurate gross profit performance. Adjusted EBITDA increased significantly to $17.0 million compared to $4.9 million in the first quarter of 2021. Adjusted EBITDA margin also improved 760 basis points to 14.6% compared to 7.0% in the prior year period. Segment Results Metals – Net sales in the first quarter of 2022 increased 60% to $88.5 million compared to $55.2 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $14.5 million compared to $2.6 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $16.4 million compared to $4.9 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 970 basis points to 18.5% compared to 8.8% in the first quarter of 2021. Specialty Chemicals – Net sales in the first quarter of 2022 increased 90% to $27.7 million compared to $14.6 million in the first quarter of 2021. Operating income in the first quarter increased significantly to $2.4 million compared to $1.1 million in the prior year period. Adjusted EBITDA in the first quarter increased significantly to $3.4 million compared to $1.5 million in the prior year period. Adjusted EBITDA margin improved 210 basis points to 12.2% compared to 10.1% in the first quarter of 2021. Liquidity As of March 31, 2022, total debt was $71.1 million under the Company’s revolving credit facility, compared to $70.4 million in debt at December 31, 2021. As of the end of the first quarter of 2022, the Company had $38.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. Conference Call Synalloy will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2022. Synalloy management will host the conference call, followed by a question-and-answer period. Date: Tuesday, May 10, 2022 Time: 5:00 p.m. Eastern time Toll-free dial-in number: 1-866-374-5140 International dial-in number: 1-404-400-0571 Conference ID: 38157095 Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860. The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.synalloy.com. About Synalloy Corporation Synalloy Corporation (Nasdaq: SYNL) is a company that engages in a number of diverse business activities including the production of stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Synalloy Corporation, please visit its web site at www.synalloy.com. Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, including risks relating to the impact and spread of and the government’s response to COVID-19; inability to weather an economic downturn; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw material availability; financial stability of the Company’s customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with acquisitions; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by the Company’s debt financing arrangements; and other risks detailed from time-to-time in Synalloy Corporation's Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC. Synalloy Corporation assumes no obligation to update any forward-looking information included in this release. Non-GAAP Financial Information Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. SYNALLOY CORPORATION Condensed Consolidated Balance Sheets ($ in thousands) (Unaudited) March 31, 2022 December 31, 2021 Assets Cash $ 1,241 $ 2,021 Accounts receivable, net of allowance for credit losses of $456 and $216, respectively 67,819 50,126 Inventories, net 112,114 103,249 Prepaid expenses and other current assets 3,808 3,728 Assets held for sale 797 855 Total current assets 185,779 159,979 Property, plant and equipment, net 42,720 43,720 Right-of-use assets, operating leases, net 30,431 30,811 Goodwill 12,637 12,637 Intangible assets, net 13,661 14,382 Deferred charges, net 278 302 Other non-current assets 4,127 4,171 Total assets $ 289,633 $ 266,002 Liabilities and Shareholders' Equity Accounts payable $ 44,268 $ 32,318 Accounts payable - related parties 2 2 Accrued expenses and other current liabilities 13,609 12,407 Current portion of long-term debt 2,464 2,464 Current portion of earn-out liability 891 1,961 Current portion operating lease liabilities 1,140 1,104 Current portion of finance lease liabilities 248 233 Total current liabilities 62,622 50,489 Long-term debt 68,610 67,928 Long-term portion of operating lease liabilities 31,748 32,059 Long-term portion of finance lease liabilities 1,362 1,414 Deferred income taxes 2,861 2,433 Other long-term liabilities 76 89 Shareholders' equity 122,354 111,590 Total liabilities and shareholders' equity $ 289,633 $ 266,002 Note: The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date. SYNALLOY CORPORATION Condensed Consolidated Statement of Operations - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended March 31, 2022 2021 Net sales Metals Segment $ 88,497 $ 55,213 Specialty Chemicals Segment 27,721 14,565 $ 116,218 $ 69,778 Operating income Metals Segment $ 14,492 $ 2,577 Specialty Chemicals Segment 2,387 1,056 Unallocated expense (income) Corporate 3,029 1,767 Acquisition costs and other 531 — Proxy contest costs and recoveries — (464 ) Earn-out adjustments 102 225 Operating income 13,217 2,105 Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Loss on extinguishment of debt — 223 Other, net (35 ) 162 Income before income taxes 12,849 1,335 Income tax provision 2,589 241 Net income $ 10,260 $ 1,094 Net income per common share Basic $ 1.00 $ 0.12 Diluted $ 0.99 $ 0.12 Average shares outstanding Basic 10,209 9,191 Diluted 10,320 9,288 Other data: Adjusted EBITDA1 $ 16,961 $ 4,875 1 The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA. SYNALLOY CORPORATION Consolidated Statement of Cash Flows (Unaudited) ($ in thousands) Three Months Ended March 31, 2022 2021 Operating activities Net income $ 10,260 $ 1,094 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation expense 2,116 1,817 Amortization expense 721 680 Amortization of debt issuance costs 25 21 Loss on extinguishment of debt — 223 Deferred income taxes 428 (41 ) Earn-out adjustments 102 225 Payments of earn-out liabilities in excess of acquisition date fair value (372 ) — Provision for losses on accounts receivable 240 12 Provision for losses on inventories 496 184 (Gain) loss on disposal of property, plant and equipment (5 ) 28 Non-cash lease expense 107 124 Change in fair value of interest rate swap — (2 ) Issuance of treasury stock for director fees 254 — Stock-based compensation expense 132 187 Changes in operating assets and liabilities: Accounts receivable (17,933 ) (11,181 ) Inventories (9,302 ) (3,866 ) Other assets and liabilities (27 ) 38 Accounts payable 11,950 6,357 Accrued expenses (959 ) (569 ) Accrued income taxes 2,161 3,901 Net cash provided by (used in) operating activities 394 (768 ) Investing activities Purchases of property, plant and equipment (1,117 ) (245 ) Proceeds from disposal of property, plant and equipment 5 18 Net cash used in investing activities (1,112 ) (227 ) Financing activities Borrowings from long-term debt 122,068 14,730 Proceeds from the exercise of stock options 118 — Payments on long-term debt (121,386 ) (12,333 ) Principal payments on finance lease obligations (62 ) (10 ) Payments on earn-out liabilities (800 ) (1,029 ) Payments for termination of interest rate swap — (46 ) Payments for deferred financing costs — (155 ) Net cash provided by financing activities (62 ) 1,157 (Decrease) increase in cash and cash equivalents (780 ) 162 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,241 $ 398 SYNALLOY CORPORATION Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended March 31, ($ in thousands) 2022 2021 Consolidated Net income $ 10,260 $ 1,094 Adjustments: Interest expense 403 387 Change in fair value of interest rate swap — (2 ) Income taxes 2,589 241 Depreciation 2,116 1,817 Amortization 721 680 EBITDA 16,089 4,217 Acquisition costs and other 531 — Proxy contest costs and recoveries1 — (464 ) Loss on extinguishment of debt — 223 Earn-out adjustments 102 225 Loss on investment in equity securities and other investments — 363 Stock-based compensation 132 187 Non-cash lease expense 107 124 Adjusted EBITDA $ 16,961 $ 4,875 % sales 14.6 % 7.0 % Metals Segment Net income $ 14,424 $ 2,538 Adjustments: Interest expense — — Depreciation expense 1,213 1,393 Amortization expense 625 680 EBITDA 16,262 4,611 Earn-out adjustments 102 225 Stock-based compensation 35 38 Metals Segment Adjusted EBITDA $ 16,399 $ 4,874 % segment sales 18.5 % 8.8 % Specialty Chemicals Segment Net income $ 2,378 $ 1,055 Adjustments: Interest expense 9 — Depreciation expense 886 386 Amortization expense 96 — EBITDA 3,369 1,441 Stock-based compensation 6 31 Specialty Chemicals Segment Adjusted EBITDA $ 3,375 $ 1,472 % segment sales 12.2 % 10.1 % 1 Proxy contest costs and recoveries for the year ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006296/en/
Company Contact Aaron Tam Chief Financial Officer 1-804-822-3260 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 SYNL@gatewayir.com
