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03/09/21

Synalloy Reports Fourth Quarter and Full Year 2020 Results

RICHMOND, Va.--(BUSINESS WIRE)--Mar. 9, 2021-- 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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Summary

(in millions, expect per share and margin)

Q4 2020

Q3 2020

Q4 2019

Net Sales

$55.9

$59.3

$67.9

Gross Profit

$6.1

$5.0

$7.0

Gross Profit Margin

11.0%

8.4%

10.2%

Net Loss

$(8.6)

$(10.5)

$(0.9)

Net Loss per share

$(0.94)

$(1.16)

$(0.10)

Adjusted EBITDA

$3.0

$1.6

$2.5

Adjusted EBITDA Margin

5.4%

2.8%

3.7%

Management Commentary

“While 2020 had its challenges, I’m proud of how our dedicated employees have persisted through this unique time and continued to deliver high-quality products and services to our customers,” said Chris Hutter, interim president and CEO of Synalloy. “As expected, net sales were impacted during the fourth quarter as our customers continued to be affected by macro-economic conditions resulting from COVID-19, however, we were able to take proactive steps to enhance our production and purchasing efficiency resulting in materially improved profitability across our businesses.

“Since taking the helm as interim CEO just a few months ago, the management team and board of directors have been developing and fine tuning our go-forward strategic priorities that we believe will deliver long-term shareholder value creation. During this period, we’ve enjoyed productive dialogue with our employee base and customers, who see tremendous value in the high-quality products and services we offer in both our metals and chemicals segments. We also expect to continue investing in all elements of our culture to foster accountability and transparency. This will enable us to better leverage the diverse experiences and relationships that can create a renewed sense of alignment throughout our organization. Although we still have much to do, we are moving in the right direction and look forward to providing value-added solutions to our customers while also improving profitability and returning the Company to growth.”

Fourth Quarter 2020 Financial Results

Net sales were $55.9 million compared to $67.9 million in the fourth quarter of 2019. The decline in sales was primarily driven by the curtailment of Synalloy’s Palmer operations prior to the fourth quarter of 2020, as well as lower pipe and tube shipments.

Gross profit was $6.1 million or 11.0% of net sales, compared to $7.0 million or 10.2% of net sales in the fourth quarter of 2019. The decrease in gross profit was primarily driven by the aforementioned decline in net sales, while the improvement in gross margin was a result of operational efficiencies and commodity price increases that the Company passed through to its customers.

Net loss was $8.6 million or $(0.94) per share, compared to a net loss of $0.9 million or $(0.10) per share for the fourth quarter of 2019. The decline was a result of a $5.5 million goodwill impairment in Synalloy’s Metals Segment, related to the carrying value of the Welded Pipe and Tube reporting unit.

Adjusted EBITDA increased 19% to $3.0 million compared to $2.5 million in the fourth quarter of 2019. Adjusted EBITDA as a percentage of net sales also improved 170 basis points to 5.4% compared to 3.7% in the prior year period. The increases were primarily driven by improved operational execution and the benefit of cost containment measures.

Full Year 2020 Financial Results

Net sales were $256.0 million compared to $305.2 million in 2019. Excluding the curtailed Palmer operations from both periods, net sales for 2020 were $250.5 million compared to $276.5 million in 2019.

Gross profit was $22.7 million or 8.8% of net sales, compared to $30.8 million or 10.1% of net sales in 2019.

Net loss was $27.3 million or $(3.00) per share, compared to a net loss of $3.0 million or $(0.34) per share in 2019. The decline in net loss was driven by a non-cash goodwill impairment in the Company’s Metals segment of $16.2 million, $6.2 million of asset impairment charges related to Synalloy’s Palmer operations, along with $3.1 million in costs related to the Company's proxy contest and election of directors at the 2020 Annual Meeting of Shareholders.

Adjusted EBITDA was $9.2 million compared to $13.5 million in 2019. Adjusted EBITDA as a percentage of net sales was 3.6% compared to 4.4% in the prior year.

Segment Results

Metalsnet sales in the fourth quarter of 2020 were $44.7 million compared to $55.4 million in the fourth quarter of 2019. The decline was primarily driven by the curtailment of Synalloy’s Palmer operations prior to the fourth quarter of 2020, as well as lower pipe and tube shipments. Net loss in the fourth quarter was $4.6 million compared to a net loss of $0.3 million in the prior year period. Adjusted EBITDA in the fourth quarter was $2.9 million compared to $3.2 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 70 basis points to 6.6% compared to 5.9% in the fourth quarter of 2019.

Net sales in 2020 were $204.5 million compared to $251.1 million in 2019. The decrease was due to the curtailment of Synalloy’s Palmer operations, as well decreased shipments spread fairly evenly across all of the Company’s products and end markets. Net loss in 2020 was $22.4 million compared to net income of $4.4 million in the prior year, with the decline primarily driven by the $16.2 million goodwill impairment charge and $6.2 million of Palmer asset impairment charges. Adjusted EBITDA in 2020 was $8.0 million compared to $15.3 million in the prior year. As a percentage of segment net sales, adjusted EBITDA was 3.9% compared to 6.1% in 2019. The decrease in adjusted EBITDA was primarily driven by the decline in net sales.

Specialty Chemicalsnet sales in the fourth quarter of 2020 were $11.2 million compared to $12.6 million in the fourth quarter of 2019. The decline was primarily driven by decreased shipments, particularly to customers in the oil and gas market. Net income in the fourth quarter increased to $0.5 million compared to $0.4 million in the prior year period. Adjusted EBITDA in the fourth quarter increased to $0.9 million compared to $0.8 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 190 basis points to 8.4% compared to 6.5% in the fourth quarter of 2019. The improvement in profitability was driven by operational efficiencies and cost containment measures.

Net sales in 2020 were $51.5 million compared to $54.1 million in 2019. Net income in 2020 increased 44% to $4.0 million compared to $2.8 million in the prior year. Adjusted EBITDA in 2020 increased 29% to $5.8 million compared to $4.5 million in the prior year. As a percentage of segment net sales, adjusted EBITDA improved 300 basis points to 11.3% compared to 8.3% in 2019. The improvement in profitability was driven by operational efficiencies, cost containment measures and elevated margins related to hand sanitizer production during the second quarter.

Liquidity

As of December 31, 2020, total debt was $61.4 million, consisting of $49.0 million outstanding under the Company’s revolving credit facility and $12.3 million outstanding under the term loan, representing a reduction of $14.2 million in debt compared to December 31, 2019.

On January 15, 2021, the Company and its subsidiaries entered into an agreement for a new revolving credit facility with BMO Harris Bank N.A. The new agreement provides the Company with a four-year revolving credit facility that includes up to $150 million of borrowing capacity. As of January 31, 2021, the Company had $30.9 million of available borrowing capacity under the new facility. Please see the Company's January 19, 2021 press release and corresponding 8-K filing for more details.

Conference Call

Synalloy will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2020.

Synalloy management will host the conference call, followed by a question-and-answer period.

Date: Tuesday, March 9, 2021
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: 1-877-303-6648
International dial-in number: 1-970-315-0443
Conference ID: 4387292

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 Investor Relations 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 earnings release includes and incorporates by reference "forward-looking statements" within the meaning of the federal securities laws. All statements that are not historical facts are forward-looking statements. The words "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions identify forward-looking statements. 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; a prolonged decrease in nickel and oil prices; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw materials 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 mergers, acquisitions, dispositions and other expansion activities; 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. 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 measure and excludes goodwill impairment, asset impairment, gain on lease modification, interest expense (including change in fair value of interest rate swap), income taxes, depreciation, amortization, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs, shelf registration costs, earn-out adjustments, gains on investments in equity securities, retention costs and restructuring & severance costs from net income.

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) per Share are non-GAAP measures and exclude goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease costs, acquisition costs and other fees, proxy contest costs, shelf registration costs, earn-out adjustments, gains on investments in equity securities, retention costs and restructuring & severance costs from net income. They also utilize a constant effective tax rate to reflect tax neutral results.

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.

 

Condensed Consolidated Balance Sheets

 

($ in thousands)

December 31, 2020

 

December 31, 2019

Assets

 

 

 

Cash

$

236

 

 

$

626

 

Accounts receivable, net of allowance for credit losses of $496 and $70, respectively

28,183

 

 

35,074

 

Inventories, net

85,080

 

 

98,186

 

Prepaid expenses and other current assets

13,384

 

 

13,229

 

Total current assets

126,883

 

 

147,115

 

 

 

 

 

Property, plant and equipment, net

35,096

 

 

40,690

 

Right-of-use assets, operating leases, net

31,769

 

 

35,772

 

Goodwill

1,355

 

 

17,558

 

Intangible assets, net

11,426

 

 

15,714

 

Deferred charges, net

455

 

 

348

 

Total assets

$

206,984

 

 

$

257,197

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Accounts payable

$

19,732

 

 

$

21,150

 

Accrued expenses and other current liabilities

6,123

 

 

6,037

 

Current portion of long-term debt

875

 

 

4,000

 

Current portion of earn-out liability

3,434

 

 

5,576

 

Current portion operating lease liabilities

867

 

 

3,562

 

Current portion of finance lease liabilities

19

 

 

253

 

Total current liabilities

31,050

 

 

40,578

 

 

 

 

 

Long-term debt

60,495

 

 

71,554

 

Long-term portion of earn-out liability

287

 

 

3,578

 

Long-term portion of operating lease liabilities

32,771

 

 

33,723

 

Long-term portion of finance lease liabilities

37

 

 

336

 

Deferred income taxes

1,957

 

 

790

 

Other long-term liabilities

92

 

 

127

 

Shareholders' equity

80,296

 

 

106,511

 

Total liabilities and shareholders' equity

$

206,984

 

 

$

257,197

 

Note: The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date.

 

Synalloy Corporation Comparative Analysis

Condensed Consolidated Statement of Operations

 

(Amounts in thousands, except per share data)

Three Months Ended
December 31,

 

Year Ended
December 31,

(unaudited)

2020

 

2019

 

2020

 

2019

Net sales

 

 

 

 

 

 

 

Metals Segment

44,698

 

 

55,351

 

 

204,459

 

 

251,078

 

Specialty Chemicals Segment

11,203

 

 

12,596

 

 

51,541

 

 

54,090

 

 

$

55,901

 

 

$

67,947

 

 

$

256,000

 

 

$

305,168

 

Operating (loss) income

 

 

 

 

 

 

Metals Segment

(4,815

)

 

613

 

 

(24,599

)

 

3,692

 

Specialty Chemicals Segment

525

 

 

424

 

 

4,033

 

 

2,811

 

 

 

 

 

 

 

 

 

Unallocated expense (income)

 

 

 

 

 

 

 

Corporate

2,784

 

 

1,780

 

 

7,917

 

 

8,357

 

Acquisition costs and other

42

 

 

164

 

 

845

 

 

601

 

Proxy contest costs

 

 

 

 

3,105

 

 

 

Earn-out adjustments

(226

)

 

896

 

 

(1,195

)

 

(747

)

Gain on lease modification

 

 

 

 

(171

)

 

 

Operating loss

(6,890

)

 

(1,803

)

 

(31,067

)

 

(1,708

)

Interest expense

406

 

 

840

 

 

2,110

 

 

3,818

 

Change in fair value of interest rate swap

(14

)

 

(4

)

 

51

 

 

141

 

Other (income) expense, net

(10

)

 

(1,680

)

 

(1,255

)

 

(1,904

)

Net loss before income taxes

(7,272

)

 

(959

)

 

(31,973

)

 

(3,763

)

Income tax provision (benefit)

1,320

 

 

(66

)

 

(4,706

)

 

(727

)

 

 

 

 

 

 

 

 

Net loss

$

(8,592

)

 

$

(893

)

 

$

(27,267

)

 

$

(3,036

)

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

Basic

$

(0.94

)

 

$

(0.10

)

 

$

(3.00

)

 

$

(0.34

)

Diluted

$

(0.94

)

 

$

(0.10

)

 

$

(3.00

)

 

$

(0.34

)

 

 

 

 

 

 

 

 

Average shares outstanding

 

 

 

 

 

 

 

Basic

9,156

 

 

9,026

 

 

9,099

 

 

8,983

 

Diluted

9,156

 

 

9,026

 

 

9,099

 

 

8,983

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

Adjusted EBITDA (1)

3,017

 

 

2,527

 

 

9,247

 

 

13,460

 

(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 included 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 includes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: earnings before discontinued operations, interest (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, acquisition costs and other fees, proxy contest costs, shelf registration costs, earn-out adjustments, gain on excess death benefit, realized and unrealized (gains) and losses on investments in equity securities, casualty insurance gains, all (gains) losses associated with sale-leaseback, stock option/grant costs, non-cash lease cost, 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.

 

Consolidated Statement of Cash Flows

For the years ended December 31, 2020 and 2019

 

(in thousands)

2020

 

2019

Operating activities

 

 

 

Net loss

$

(27,267

)

 

$

(3,036

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation expense

7,572

 

 

7,578

 

Amortization expense

3,028

 

 

3,486

 

Amortization of debt issuance costs

177

 

 

160

 

Asset impairments

6,214

 

 

 

Goodwill impairment

16,203

 

 

 

Unrealized gain on equity securities

(208

)

 

(1,547

)

Deferred income taxes

1,167

 

 

(773

)

Proceeds from business interruption insurance

1,040

 

 

 

Loss (gain) on sale of equity securities

38

 

 

(326

)

Earn-out adjustments

(1,195

)

 

(747

)

Payments of earn-out liabilities in excess of acquisition date fair value

(292

)

 

(448

)

Provision for (reduction of) losses on accounts receivable

890

 

 

(171

)

Provision for losses on inventories

271

 

 

1,617

 

Loss (gain) on sale of property, plant and equipment

237

 

 

(50

)

Non-cash lease expense

510

 

 

560

 

Non-cash lease termination loss

24

 

 

 

Gain on lease modification

(171

)

 

 

Change in fair value of interest rate swap

51

 

 

(141

)

Issuance of treasury stock for director fees

345

 

 

304

 

Stock-based compensation expense

1,791

 

 

2,091

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

5,552

 

 

9,696

 

Inventories

9,122

 

 

19,962

 

Other assets and liabilities

(912

)

 

179

 

Accounts payable

(1,418

)

 

(5,323

)

Accrued expenses

86

 

 

(3,317

)

Accrued income taxes

(4,877

)

 

(1,114

)

Net cash provided by operating activities

17,978

 

 

28,640

 

Investing activities

 

 

 

Purchases of property, plant and equipment

(3,748

)

 

(4,537

)

Proceeds from sale of property, plant and equipment

312

 

 

189

 

Purchases of equity securities

 

 

(544

)

Proceeds from sale of equity securities

4,430

 

 

1,092

 

Acquisitions

 

 

(21,895

)

Net cash provided by (used in) investing activities

994

 

 

(25,695

)

Financing activities

 

 

 

Repayments on line of credit

(10,184

)

 

(17,185

)

Borrowings from term loan

 

 

20,000

 

Payments on long-term debt

(4,000

)

 

(3,666

)

Principal payments on finance lease obligations

(109

)

 

(106

)

Payments for finance lease terminations

(204

)

 

 

Payments on earn-out liabilities

(3,946

)

 

(3,627

)

Payments of debt issuance costs

(284

)

 

 

Proceeds from exercised stock options

 

 

45

 

Repurchase of common stock

(635

)

 

 

Net cash used in financing activities

(19,362

)

 

(4,539

)

Decrease in cash and cash equivalents

(390

)

 

(1,594

)

Cash and cash equivalents at beginning of year

626

 

 

2,220

 

Cash and cash equivalents at end of year

$

236

 

 

$

626

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

 

 

 

 

 

 

 

($ in thousands)

Three Months Ended
December 31,

 

Year Ended
December 31,

(unaudited)

2020

 

2019

 

2020

 

2019

Consolidated

 

 

 

 

 

 

 

Net loss

$

(8,592

)

 

$

(893

)

 

$

(27,267

)

 

$

(3,036

)

Adjustments:

 

 

 

 

 

 

 

Interest expense

406

 

 

840

 

 

2,110

 

 

3,818

 

Change in fair value of interest rate swap

(14

)

 

(4

)

 

51

 

 

141

 

Income taxes

1,320

 

 

(66

)

 

(4,706

)

 

(727

)

Depreciation

1,820

 

 

1,888

 

 

7,572

 

 

7,578

 

Amortization

705

 

 

871

 

 

3,028

 

 

3,486

 

EBITDA

(4,355

)

 

2,636

 

 

(19,212

)

 

11,260

 

Acquisition costs and other

53

 

 

174

 

 

861

 

 

1,936

 

Proxy contest costs

 

 

 

 

3,105

 

 

 

Shelf registration costs

 

 

 

 

 

 

10

 

Earn-out adjustments

(226

)

 

896

 

 

(1,195

)

 

(747

)

Gain on investments in equity securities

 

 

(1,680

)

 

(170

)

 

(1,873

)

Asset impairments

135

 

 

 

 

6,214

 

 

 

Goodwill impairment

5,455

 

 

 

 

16,203

 

 

 

Gain on lease modification

 

 

 

 

(171

)

 

 

Stock-based compensation

755

 

 

331

 

 

1,791

 

 

2,091

 

Non-cash lease expense

124

 

 

128

 

 

510

 

 

560

 

Retention expense

 

 

42

 

 

235

 

 

223

 

Restructuring and severance costs

1,076

 

 

 

 

1,076

 

 

 

Adjusted EBITDA

$

3,017

 

 

$

2,527

 

 

$

9,247

 

 

$

13,460

 

% sales

5.4

%

 

3.7

%

 

3.6

%

 

4.4

%

 

 

 

 

 

 

 

 

Metals Segment

 

 

 

 

 

 

 

Net income (loss)

$

(4,590

)

 

$

(302

)

 

$

(22,388

)

 

$

4,356

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

 

19

 

 

11

 

 

83

 

Depreciation expense

1,398

 

 

1,478

 

 

5,855

 

 

5,954

 

Amortization expense

705

 

 

871

 

 

3,028

 

 

3,486

 

EBITDA

(2,487

)

 

2,066

 

 

(13,494

)

 

13,879

 

Acquisition costs and other

13

 

 

10

 

 

16

 

 

1,381

 

Earn-out adjustments

(226

)

 

896

 

 

(1,195

)

 

(747

)

Asset impairments

135

 

 

 

 

6,214

 

 

 

Goodwill impairment

5,455

 

 

 

 

16,203

 

 

 

Stock-based compensation

54

 

 

258

 

 

303

 

 

663

 

Retention expense

 

 

17

 

 

 

 

123

 

Metals Segment Adjusted EBITDA

$

2,944

 

 

$

3,247

 

 

$

8,047

 

 

$

15,299

 

% segment sales

6.6

%

 

5.9

%

 

3.9

%

 

6.1

%

 

 

 

 

 

 

 

 

Specialty Chemicals Segment

 

 

 

 

 

 

 

Net income

$

525

 

 

$

424

 

 

$

4,046

 

 

$

2,811

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

 

 

 

9

 

 

 

Depreciation expense

381

 

 

367

 

 

1,552

 

 

1,461

 

EBITDA

906

 

 

791

 

 

5,607

 

 

4,272

 

Stock-based compensation

29

 

 

22

 

 

207

 

 

226

 

Specialty Chemicals Segment Adjusted EBITDA

$

935

 

 

$

813

 

 

$

5,814

 

 

$

4,498

 

% segment sales

8.4

%

 

6.5

%

 

11.3

%

 

8.3

%

Reconciliation of Income (Loss) and Earnings (Loss) Per Share to
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share

(Amounts in thousands, except per share data)

Three Months Ended
December 31,

 

Year Ended
December 31,

(unaudited)

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Loss before taxes

$

(7,272

)

 

$

(960

)

 

$

(31,973

)

 

$

(3,763

)

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Acquisition costs and other

54

 

 

174

 

 

861

 

 

1,936

 

Proxy contest costs

 

 

 

 

3,105

 

 

 

Shelf registration costs

 

 

 

 

 

 

10

 

Earn-out adjustments

(226

)

 

896

 

 

(1,195

)

 

(747

)

Gain on investments in equity securities

 

 

(1,680

)

 

(170

)

 

(1,873

)

Asset impairments

135

 

 

 

 

6,214

 

 

 

Goodwill impairment

5,455

 

 

 

 

16,203

 

 

 

Gain on lease modification

 

 

 

 

(171

)

 

 

Stock-based compensation

755

 

 

331

 

 

1,791

 

 

2,091

 

Non-cash lease expense

124

 

 

128

 

 

510

 

 

560

 

Retention expense

 

 

42

 

 

235

 

 

223

 

Restructuring and severance costs

1,076

 

 

 

 

1,076

 

 

 

Adjusted income (loss) before income taxes

101

 

 

(1,069

)

 

(3,514

)

 

(1,563

)

(Benefit) for income taxes at 21%

21

 

 

(224

)

 

(738

)

 

(328

)

 

 

 

 

 

 

 

 

Adjusted net income (loss)

$

80

 

 

$

(845

)

 

$

(2,776

)

 

$

(1,235

)

 

 

 

 

 

 

 

 

Average shares outstanding, as reported

 

 

 

 

 

 

 

Basic

9,156

 

 

9,026

 

 

9,099

 

 

8,983

 

Diluted

9,156

 

 

9,026

 

 

9,099

 

 

8,983

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) per common share

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

(0.09

)

 

$

(0.31

)

 

$

(0.14

)

Diluted

$

0.01

 

 

$

(0.09

)

 

$

(0.31

)

 

$

(0.14

)

 

 

 

 

 

 

 

 

Other (unfavorable) favorable impacts to income (1):

 

 

 

 

 

 

Inventory price change loss

$

189

 

 

$

(629

)

 

$

(5,301

)

 

$

(6,359

)

Inventory cost adjustment

(49

)

 

11

 

 

119

 

 

88

 

Aged inventory adjustment

(13

)

 

52

 

 

107

 

 

7

 

 

 

 

 

 

 

 

 

Total other (unfavorable) favorable impacts

$

127

 

 

$

(566

)

 

$

(5,075

)

 

$

(6,264

)

Other impacts, net of tax

$

100

 

 

$

(447

)

 

$

(4,009

)

 

$

(4,949

)

(1) Other (unfavorable) impacts to income - listed to provide investors with insight into financial impacts, that cannot be included in the Non-GAAP measure Adjusted Net Income, but management believes can provide insight into underlying operational earnings associated with the respective period's activity level. The items include a) inventory price change - the calculated value that profits improved (declined) due to the increase (decrease) in metal and alloy pricing indices during the period, and b) inventory valuation adjustments - value of periodic adjustment to inventory carrying value unrelated to periodic earnings including i) reserve for lower of cost or net realizable value and ii) reserve for aged inventory.

Company Contact

Sally Cunningham
Senior Vice President & Chief Financial Officer
1-804-822-3260

Investor Relations

Sean Mansouri, CFA and Cody Cree
Gateway Investor Relations
1-949-574-3860
SYNL@gatewayir.com

Source: Synalloy Corporation