Synalloy Corporation (Nasdaq: SYNL), today announced net sales for
the first quarter of 2019 of $84.8 million. This represents an
increase of $26.3 million or 45% when compared to net sales for the
first quarter of 2018. Excluding the net sales of ASTI and
Munhall-Galvanized, net sales for the first quarter of 2019
increased $10.3 million, or 17.6% compared to net sales for the
first quarter of 2018.
For the first quarter of 2019, the Company
recorded a net loss of $0.9 million, or $0.10 diluted loss per
share, compared to net income of $3.8 million, or $0.44 diluted
earnings per share for the first quarter of 2018. Excluding the
financial results of ASTI and Munhall-Galvanized, net income for
the first quarter of 2019 decreased $5.1 million, or 126% compared
to net income for the first quarter of 2018. The first quarter of
2019 was negatively impacted by inventory price change losses
which, on a pre-tax basis, totaled $3.4 million, compared to a $2.5
million gain in the first quarter of 2019.
The Company also reports its performance
utilizing two non-GAAP financial measures: Adjusted Net Income and
Adjusted EBITDA. The Company's performance, as calculated under the
two measures, is as follows:
- Adjusted Net Income for the first quarter of 2019 was $0.6
million, or $0.07 adjusted diluted earnings per share, a decrease
of $3.1 million from Adjusted Net Income of $3.7 million, or $0.43
adjusted diluted earnings per share for the first quarter of
2018.
- Adjusted EBITDA decreased $2.9 million for the first quarter of
2019 to $4.8 million (5.6% of sales), from $7.6 million (13.0% of
sales) for the first quarter of 2018.
The Company's results are periodically impacted
by factors that are not included as adjustments to our non-GAAP
measures, but which represent items that help explain differences
in period to period results. As mentioned above, for the first
quarter of 2019, the most significant of those was inventory price
change losses which, on a pre-tax basis, totaled $3.4 million,
compared to a $2.5 million gain in the first quarter of 2018,
representing a decrease of $5.9 million in pre-tax income compared
to the prior year.
“We are very pleased with the Company’s
performance in the first quarter, with all business units
performing in-line or exceeding the 2019 forecast for revenue and
earnings,” said Craig C. Bram, President and CEO. “The ASTI
acquisition exceeded our expectations in the first quarter, both in
terms of sales and profits. The markets for high-end ornamental
stainless steel tubing remain robust and we are excited about what
this new business can contribute going forward. As previously
noted, metal price adjustments in the commodity welded stainless
steel pipe and tube product line swung from a profit of $2.5
million in the first quarter of 2018 to a loss of $3.4 million in
the first quarter of this year. Stainless steel surcharges in the
first quarter of this year averaged about 25% less than at the end
of the third quarter of last year, generating inventory losses over
the past five months. However, assuming surcharges hold at current
levels, we anticipate metal price adjustments to reverse and begin
to generate profits starting in April. The Chemicals Segment
continued to show organic growth in revenue and profit in the first
quarter and the pipeline of new products is encouraging,” said
Bram.
Metals Segment
The Metals Segment's net sales for the first
quarter of 2019 totaled $71.1 million, an increase of $25.6 million
or 56% from the first quarter of 2018. Excluding the net sales of
ASTI and Munhall-Galvanized, Metals Segment net sales for the first
quarter of 2019 increased $9.6 million, or 21%, compared to net
sales for the first quarter of 2018.
Sales of seamless carbon pipe and tube were up
1.8% over last year’s first quarter. Storage tank and vessel sales
increased 70.2% over last year’s first quarter. Excluding ASTI and
Munhall-Galvanized, stainless-steel pipe and tube sales were up
14.6% over the first quarter of 2019.
The backlog for our subsidiary, Bristol Metals,
LLC, as of March 31, 2019 was $43.7 million, an increase of
28% when compared to the first quarter of 2018. The backlog for our
subsidiary, Palmer of Texas Tanks, Inc., as of March 31, 2019 was
$15.8 million, a decrease of 18%, when compared to the first
quarter of 2018. The decrease in backlog is primarily attributable
to increased throughput as opposed to a decline in order activity.
Monthly throughput in the first quarter increased by over 30% from
the prior two quarters, both from reduced employee turnover and
improvements in the paint and blast department.
The Metals Segment's operating income
decreased $4.6 million to $1.4 million for
the first quarter of 2019 compared to $6.0
million for the first quarter of 2018.
Current quarter operating results were affected
by the following factors:
- Nickel prices and resulting surcharges for 304 and 316 alloys
ended the first quarter of 2019 lower than the previous two
quarters, with surcharges decreasing by $0.05 and $0.06 per pound,
respectively, from December 2018 and $0.16 and $0.19 per pound,
respectively from September 2018. That combined reduction in the
nickel indices resulted in substantially lower pricing in the first
quarter, generating a net unfavorable operating impact of $3.4
million related to metal pricing. Compared to a period of rising
nickel pricing in the first quarter of 2018, which generated metal
pricing gains of $2.5 million, the first quarter of 2019 was
unfavorable $5.9 million compared to the first quarter of
2018;
- The acquisition of ASTI lowered first quarter operating income
by $1.3 million, primarily from purchase price accounting that
marks up purchased inventory to fair value selling price, thus
eliminating profits on the acquired inventory that was sold during
the period;
- Year-over-year improvements in welded pipe and tube, including
organic growth as well as the addition of ASTI, and substantial
improvement in Palmer tank sales, yielded volume and product mix
related incremental operating profits totaling $2.8 million;
and
- Seamless carbon pipe and tube showed an improvement of 1.8% in
sales; however, the impact of higher priced tariff materials, lower
pricing driven by increased distributor inventories and some lower
margin first quarter project business, all resulted in compressed
margins of approximately 3%, lowering operating profit by
approximately $0.2 million. Some of those impacts should moderate
as the year progresses, resulting in more favorable margin
performance.
Specialty Chemicals Segment
Net sales for the Specialty Chemicals Segment in
the first quarter of 2019 totaled $13.7 million, representing a
$0.7 million or 5% increase from the same quarter of 2018.
Net sales continued to benefit during the first
quarter 2019 primarily from demand in both contract/toll
manufacturing and proprietary products.
Operating income for the Specialty Chemicals
Segment for the first quarter of 2019 was $0.6 million, a total
that met plan expectations for the seasonally low, first quarter of
the year. The result represents a 9% improvement over the first
quarter of 2018, excluding a $0.3 million favorable gain booked in
the first quarter of 2018 related to a successful legal claim.
Other Items
Unallocated corporate expenses for the first
quarter of 2019 increased $0.8 million or 54% to $2.3 million (2.7%
of sales) compared to $1.5 million (2.6% of sales) for the first
quarter of 2018. The first quarter increase resulted primarily from
higher professional fees ($0.3 million), higher stock option/grant
compensation ($0.3 million), and higher employee benefits ($0.1
million).
Acquisition costs were $1.6 million for the
first quarter of 2019 ($1.3 million recorded in Metals Segment Cost
of Sales and $0.3 million in unallocated SG&A), resulting from
costs associated with the January 1, 2019 American Stainless
acquisition. This compares to $0.2 million (Metals Segment Cost of
Sales) during the first quarter of 2018.
Interest expense was $1.0 million and $0.3
million for the first quarters of 2019 and 2018, respectively. The
increase was related to higher average debt outstanding in the
first quarter of 2019, as additional borrowings were primarily
related to acquisitions and to support working capital requirements
associated with increased business activity.
During the first quarter of 2019, the Company
recorded a realized gain of $0.3 million on the sale of equity
securities, offset by a net unrealized loss of $0.1 million on the
investments in equity securities held as of March 31, 2019.
The effective tax rate was 30.5% for the
three-month period ended March 31, 2019. The March 31, 2019
effective tax rate is higher than the statutory rate of 21 percent
due to state taxes, net of the federal benefit, and discrete tax
benefits on our stock compensation plans. The effective tax rate
was 21.6% for the three-month period
ended March 31, 2018. The 2018 effective tax rate was
higher than the federal statutory rate of 21% due to state tax
expense, net of the federal benefit.
The Company's cash balance decreased $1.6
million to $0.6 million as of March 31, 2019 compared to $2.2
million at December 31, 2018. Fluctuations affecting cash
flows during the period were comprised of the following:
- Net inventories remained relatively consistent at
March 31, 2019 when compared to December 31, 2018, mainly due
to efforts to balance inventory with projected business levels.
Excluding the impact of American Stainless' acquired inventory, the
Company generated $5.2 million of operating cash flows from the
relief of inventory during the three months ended March 31, 2019.
Inventory turns increased from 1.81 turns at December 31,
2018, calculated on a three-month average basis, to 2.15 turns at
March 31, 2019;
- Accounts payable increased $5.4 million as of March 31,
2019 as compared to December 31, 2018. The majority of the
increase is related to increased levels of purchasing activity
across all sectors of the business, including first quarter
receipts of inventory that were still unpaid on normal terms at the
end of the quarter. Accounts payable days outstanding were
approximately 36 days at March 31, 2019 compared to 37 days at
December 31, 2018;
- Net accounts receivable increased $5.8 million at
March 31, 2019 as compared to December 31, 2018, which
primarily resulted from a 14% increase in sales for the last two
months of the first quarter of 2019 compared to the last two months
of the fourth quarter of 2018. Days sales outstanding, calculated
using a three-month average basis, decreased from 52 days
outstanding at the end of December 2018 to 50 days at the end of
the March 31, 2019;
- On January 1, 2019, the Company paid $21.9 million to complete
the ASTI acquisition;
- The Company purchased and sold equity securities during the
three-month period ended March 31, 2019, which resulted in net cash
proceeds of $0.3 million;
- Capital expenditures for the first three months of 2019 were
$1.0 million; and
- The Company paid out $0.6 million during the first three months
of 2019 related to the earn-out liabilities from the 2018
MUSA-Galvanized and 2017 MUSA-Stainless acquisitions.
The Company increased its overall debt balance
by $15.1 million during the first three months of 2019 and had
$91.5 million of total borrowings outstanding with its lender as of
March 31, 2019. Covenants under the Credit Agreement include
maintaining a minimum fixed charge coverage ratio, maintaining a
minimum tangible net worth, and a limitation on the Company’s
maximum amount of capital expenditures per year, which is in line
with currently projected needs. As of March 31, 2019, the Company
had $25.2 million of remaining available capacity under its Line of
credit. The Company was in compliance with all covenants as of
March 31, 2019.
Outlook
Our forecast for the entire Company for 2019
remains unchanged. We are projecting revenue of $340 million and
Adjusted EBITDA of $30 million. Adjusted EBITDA reflects metal
losses and unfavorable manufacturing variances totaling
approximately $3.9 million. In the Metals Segment, our forecast
calls for demand in the North American welded stainless steel pipe
market to be similar to that of 2018. However, early indications
are that market volume in the first quarter was down by as much as
13% over the same period last year. This is likely a reflection of
ramped up buying activity in the first quarter of 2018 in advance
of the tariffs, as opposed to an actual decline in demand. Our
shipments of welded stainless steel pipe in the first quarter of
this year were down about 7% from the same period last year, so we
outperformed the market and gained share among the domestic
producers.
Synalloy Corporation (Nasdaq: SYNL) is a
growth-oriented company that engages in a number of diverse
business activities including the production of stainless steel
pipe and tubing, galvanized pipe and tubing, fiberglass and steel
storage tanks, specialty chemicals, and the master distribution of
seamless carbon pipe and tubing. For more information about
Synalloy Corporation, please visit our 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; the impact of competitive products and pricing; product
demand and acceptance risks; raw material and other increased
costs; raw materials availability; employee relations; ability to
maintain workforce by hiring trained employees; labor efficiencies;
customer delays or difficulties in the production of products; new
fracking regulations; a prolonged decrease in oil and nickel
prices; unforeseen delays in completing the integrations of
acquisitions; risks associated with mergers, acquisitions,
dispositions and other expansion activities; financial stability of
our customers; environmental issues; negative or unexpected results
from tax law changes; unavailability of debt financing on
acceptable terms and exposure to increased market interest rate
risk; inability to comply with covenants and ratios required by our
debt financing arrangements; ability to weather an economic
downturn; loss of consumer or investor confidence and other risks
detailed from time-to-time in the Company's Securities and Exchange
Commission filings. The Company assumes no obligation to update the
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 Net Income and Adjusted Diluted
Earnings per Share are non-GAAP measures and exclude discontinued
operations, goodwill impairment, stock option / grant costs,
acquisition costs, shelf registration costs, earn-out adjustments,
gain on excess death benefit, unrealized (gains) and losses on
investments in equity securities, casualty insurance gain, and
retention costs from net income. They also utilize a constant
effective tax rate to reflect tax neutral results.
Adjusted EBITDA is a non-GAAP measure and
excludes discontinued operations, goodwill impairment, interest
expense, change in fair value of interest rate swap, income taxes,
depreciation, amortization, stock option / grant costs, acquisition
costs, shelf registration costs, earn-out adjustments, gain on
excess death benefit, unrealized (gains) and losses on investments
in equity securities, casualty insurance gain and retention 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.
Contact: Dennis Loughran at (804) 822-3266
|
Synalloy Corporation Comparative
Analysis |
Condensed Consolidated Statement of
Operations |
|
|
|
|
|
Three Months EndedMarch
31 |
(unaudited) |
2019 |
|
2018 |
|
|
|
|
Net
sales |
|
|
|
Metals Segment |
$ |
71,103,000 |
|
|
$ |
45,493,000 |
|
Specialty
Chemicals Segment |
13,701,000 |
|
|
12,988,000 |
|
|
$ |
84,804,000 |
|
|
$ |
58,481,000 |
|
Operating income |
|
|
Metals
Segment |
$ |
1,437,000 |
|
|
$ |
6,017,000 |
|
Specialty
Chemicals Segment |
614,000 |
|
|
863,000 |
|
|
|
|
|
Unallocated
expense (income) |
|
|
|
Corporate |
2,308,000 |
|
|
1,503,000 |
|
Acquisition costs |
282,000 |
|
|
— |
|
Earn-out
adjustments |
17,000 |
|
|
154,000 |
|
Operating
(loss) income |
(556,000 |
) |
|
5,223,000 |
|
Interest
expense |
1,024,000 |
|
|
314,000 |
|
Change in
fair value of interest rate swap |
48,000 |
|
|
(73,000 |
) |
Other
(income) expense |
(295,000 |
) |
|
88,000 |
|
|
|
|
|
Net (loss)
income before income taxes |
(1,333,000 |
) |
|
4,894,000 |
|
(Benefit)
provision for income taxes |
(406,000 |
) |
|
1,059,000 |
|
|
|
|
|
Net (loss)
income |
$ |
(927,000 |
) |
|
$ |
3,835,000 |
|
|
|
|
|
Net (loss)
income per common share |
|
|
|
Basic |
$ |
(0.10 |
) |
|
$ |
0.44 |
|
Diluted |
$ |
(0.10 |
) |
|
$ |
0.44 |
|
|
|
|
|
Average shares
outstanding |
|
|
|
Basic |
8,927,000 |
|
|
8,746,000 |
|
Diluted |
8,927,000 |
|
|
8,806,000 |
|
|
|
|
|
Other
data: |
|
|
|
Adjusted
EBITDA (1) |
$ |
4,767,000 |
|
|
$ |
7,627,000 |
|
|
(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, acquisition costs, acquisition related retention costs,
shelf registration costs, earn-out adjustments, gain on excess
death benefit, (gains) losses associated with Sale-leaseback, stock
option/grant costs, and other adjustments (lesser value items
meeting the criteria, where cumulative impact in a period is
material). For a reconciliation of this non-GAAP measure to the
most comparable GAAP equivalent, refer to the Reconciliation of Net
Income to Adjusted EBITDA as shown on next page. |
Reconciliation of Net (Loss) Income to Adjusted
EBITDA |
|
|
THREE MONTHS ENDED |
(unaudited) |
Mar 31, 2019 |
|
Mar 31, 2018 |
Consolidated |
|
|
|
Net (loss) income |
$ |
(927,000 |
) |
|
$ |
3,835,000 |
|
Adjustments: |
|
|
|
Interest
expense |
1,024,000 |
|
|
314,000 |
|
Change in
fair value of interest rate swap |
48,000 |
|
|
(73,000 |
) |
Income
taxes |
(406,000 |
) |
|
1,059,000 |
|
Depreciation |
1,890,000 |
|
|
1,371,000 |
|
Amortization |
924,000 |
|
|
577,000 |
|
EBITDA |
2,553,000 |
|
|
7,083,000 |
|
Acquisition costs (1) |
1,640,000 |
|
|
186,000 |
|
Earn-out
adjustments |
17,000 |
|
|
154,000 |
|
(Gain)
loss on equity securities |
(273,000 |
) |
|
88,000 |
|
Stock
option / grant costs |
616,000 |
|
|
192,000 |
|
Straight
line lease cost |
137,000 |
|
|
92,000 |
|
Amortized
gain on sale of assets - sale-leaseback |
— |
|
|
(84,000 |
) |
Retention
expense |
79,000 |
|
|
42,000 |
|
Adjusted EBITDA |
$ |
4,767,000 |
|
|
$ |
7,627,000 |
|
%
sales |
5.6 |
% |
|
13.0 |
% |
|
|
|
|
Other (unfavorable)
favorable impacts to income (2): |
|
|
|
Inventory
price change (loss) gain |
$ |
(3,375,000 |
) |
|
$ |
2,454,000 |
|
Inventory
cost adjustments |
111,000 |
|
|
(184,000 |
) |
Aged
inventory adjustment |
(16,000 |
) |
|
(57,000 |
) |
Manufacturing variances |
(496,000 |
) |
|
777,000 |
|
Total
other (unfavorable) favorable impacts |
$ |
(3,776,000 |
) |
|
$ |
2,990,000 |
|
|
|
|
|
Metals
Segment |
|
|
|
Operating income |
$ |
1,437,000 |
|
|
$ |
6,017,000 |
|
Adjustments: |
|
|
|
Depreciation expense |
1,482,000 |
|
|
1,022,000 |
|
Amortization expense |
924,000 |
|
|
571,000 |
|
EBITDA |
3,843,000 |
|
|
7,610,000 |
|
Acquisition costs |
1,358,000 |
|
|
13,000 |
|
Stock
option / grant costs |
147,000 |
|
|
48,000 |
|
Amortized
gain on sale of assets - sale-leaseback |
— |
|
|
(60,000 |
) |
Retention
expense |
54,000 |
|
|
42,000 |
|
Metals Segment Adjusted
EBITDA |
$ |
5,401,000 |
|
|
$ |
7,653,000 |
|
% segment
sales |
7.6 |
% |
|
16.8 |
% |
|
|
|
|
Other (unfavorable)
favorable impacts to income (2): |
|
|
|
Inventory
price change (loss) gain |
$ |
(3,375,000 |
) |
|
$ |
2,454,000 |
|
Inventory
cost adjustments |
96,000 |
|
|
(190,000 |
) |
Aged
inventory adjustment |
(17,000 |
) |
|
(57,000 |
) |
Manufacturing variances |
(306,000 |
) |
|
886,000 |
|
Total
other (unfavorable) favorable impacts |
$ |
(3,602,000 |
) |
|
$ |
3,093,000 |
|
|
|
|
|
Specialty
Chemicals Segment |
|
|
|
Operating income |
$ |
614,000 |
|
|
$ |
863,000 |
|
Adjustments: |
|
|
|
Depreciation expense |
369,000 |
|
|
359,000 |
|
Amortization expense |
— |
|
|
6,000 |
|
EBITDA |
983,000 |
|
|
1,228,000 |
|
Stock
option / grant costs |
69,000 |
|
|
24,000 |
|
Amortized
gain on sale of assets - sale-leaseback |
— |
|
|
(24,000 |
) |
Specialty Chemicals
Segment Adjusted EBITDA |
$ |
1,052,000 |
|
|
$ |
1,228,000 |
|
% segment
sales |
7.7 |
% |
|
9.5 |
% |
|
|
|
|
Other (unfavorable)
favorable impacts to income (2): |
|
|
|
Inventory
price change loss |
$ |
— |
|
|
$ |
6,000 |
|
Inventory
cost adjustments |
$ |
15,000 |
|
|
$ |
— |
|
Aged
inventory adjustment |
1,000 |
|
|
— |
|
Manufacturing variances |
(190,000 |
) |
|
(109,000 |
) |
Total
other (unfavorable) favorable impacts |
$ |
(174,000 |
) |
|
$ |
(103,000 |
) |
|
(1) Acquisition costs include the amortization of
the incremental fair value above predecessor cost associated with
acquired inventory that was sold during the quarter. |
(2) Other favorable (unfavorable) impacts to
income - listed to provide investors with insight into financial
impacts, that cannot be included in the Non-GAAP measure Adjusted
EBITDA, 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, ii) reserve for aged inventory and iii) manufacturing
variances - the calculated value of manufacturing absorption
deferred into inventory to be amortized in a later period, rather
than being shown in the period that created the benefit or
cost. |
Reconciliation of (Loss) Income and (Loss)
Earnings Per Share toAdjusted Net Income and
Adjusted Earnings Per Share |
|
|
|
THREE MONTHS ENDED |
(unaudited) |
Mar 31, 2019 |
|
Mar 31, 2018 |
|
|
|
|
(Loss) income before
taxes |
$ |
(1,333,000 |
) |
|
$ |
4,894,000 |
|
|
|
|
|
Adjustments: |
|
|
|
Acquisition costs |
1,640,000 |
|
|
13,000 |
|
Earn-out
adjustments |
17,000 |
|
|
154,000 |
|
(Gain)
loss on investments in equity securities |
(273,000 |
) |
|
88,000 |
|
Stock
option / grant costs |
616,000 |
|
|
192,000 |
|
Straight
line lease cost |
137,000 |
|
|
92,000 |
|
Amortized
gain on sale of assets - sale-leaseback |
— |
|
|
(84,000 |
) |
Retention
expense |
79,000 |
|
|
42,000 |
|
|
|
|
|
Adjusted income before
income taxes |
882,000 |
|
|
5,391,000 |
|
Provision
for income taxes at 30.5% |
269,000 |
|
|
1,644,000 |
|
|
|
|
|
Adjusted net
income |
$ |
613,000 |
|
|
$ |
3,747,000 |
|
|
|
|
|
Average shares
outstanding, as reported |
|
|
|
Basic |
8,927,000 |
|
|
8,746,000 |
|
Diluted |
8,927,000 |
|
|
8,806,000 |
|
|
|
|
|
Adjusted net income per
common share |
|
|
|
Basic |
$ |
0.07 |
|
|
$ |
0.43 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.43 |
|
|
|
|
|
Other
(unfavorable) favorable impacts to income (2): |
|
|
Inventory
price change gain (loss) |
$ |
(3,375,000 |
) |
|
$ |
2,454,000 |
|
Inventory
cost adjustment |
111,000 |
|
|
(184,000 |
) |
Aged
inventory adjustment |
(16,000 |
) |
|
(57,000 |
) |
Manufacturing variance |
(496,000 |
) |
|
777,000 |
|
|
|
|
|
Total other
(unfavorable) favorable impacts |
$ |
(3,776,000 |
) |
|
$ |
2,990,000 |
|
Other
impacts, net of tax |
$ |
(2,624,000 |
) |
|
$ |
2,078,000 |
|
|
(2) Other favorable (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, ii) reserve for aged inventory and iii) manufacturing
variances - the calculated value of manufacturing absorption
deferred into inventory to be amortized in a later period, rather
than being shown in the period that created the benefit or
cost. |
Condensed Consolidated Balance
Sheets |
|
(unaudited) |
Mar 31, 2019 |
|
Dec 31, 2018 |
|
|
|
|
Assets |
|
|
|
Cash |
$ |
605,000 |
|
|
$ |
2,220,000 |
|
Accounts
receivable, net |
46,858,000 |
|
|
41,065,000 |
|
Inventories, net |
114,158,000 |
|
|
114,201,000 |
|
Other
current assets |
10,341,000 |
|
|
9,983,000 |
|
Total current assets |
171,962,000 |
|
|
167,469,000 |
|
|
|
|
|
Property,
plant and equipment, net |
42,792,000 |
|
|
40,925,000 |
|
Right-of-use assets, operating leases |
36,759,000 |
|
|
— |
|
Goodwill |
16,844,000 |
|
|
9,800,000 |
|
Intangible assets, net |
18,772,000 |
|
|
9,696,000 |
|
Other
assets |
468,000 |
|
|
508,000 |
|
|
|
|
|
Total
assets |
$ |
287,597,000 |
|
|
$ |
228,398,000 |
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
Accounts
payable |
$ |
30,440,000 |
|
|
$ |
25,074,000 |
|
Accrued
expenses and other current liabilities |
11,283,000 |
|
|
12,163,000 |
|
Current
portion of long-term debt |
4,000,000 |
|
|
— |
|
Current
portion operating lease liabilities |
3,474,000 |
|
|
— |
|
Current
portion of finance lease liabilities |
236,000 |
|
|
— |
|
Total current liabilities |
49,433,000 |
|
|
37,237,000 |
|
|
|
|
|
Long-term
debt |
87,481,000 |
|
|
76,405,000 |
|
Long-term
portion of earn-out liability |
7,409,000 |
|
|
4,703,000 |
|
Long-term
portion of operating lease liabilities |
34,366,000 |
|
|
— |
|
Long-term
portion of finance lease liabilities |
539,000 |
|
|
— |
|
Long-term
portion of deferred sale-leaseback gain |
— |
|
|
5,599,000 |
|
Other
long-term liabilities |
65,000 |
|
|
1,717,000 |
|
Deferred
income taxes |
1,508,000 |
|
|
253,000 |
|
Shareholders'
equity |
106,796,000 |
|
|
102,484,000 |
|
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
287,597,000 |
|
|
$ |
228,398,000 |
|
|
Note: The condensed consolidated balance sheet at
December 31, 2018 has been derived from the audited consolidated
financial statements at that date. |
Reconciliation of Forecasted 2019 Net Income to
Forecasted 2019 Adjusted EBITDA |
|
|
(unaudited) |
2019 Forecast |
Consolidated |
|
Net income |
$ |
9,423,000 |
|
Adjustments: |
|
Interest
expense |
3,493,000 |
|
Income
taxes |
2,659,000 |
|
Depreciation |
7,436,000 |
|
Amortization |
3,613,000 |
|
EBITDA |
26,624,000 |
|
Earn-out
adjustments |
201,000 |
|
Acquisition costs |
1,640,000 |
|
Stock
option / grant costs |
1,292,000 |
|
(Gain)
Loss on investments |
(273,000 |
) |
Straight
line lease cost |
404,000 |
|
Retention
expense |
148,000 |
|
Adjusted EBITDA |
$ |
30,036,000 |
|
|
|
Other favorable
(unfavorable) impacts to income (2) |
|
Inventory
price change loss |
$ |
(3,375,000 |
) |
Inventory
cost adjustments |
162,000 |
|
Aged
inventory adjustment |
(16,000 |
) |
Manufacturing variances |
(702,000 |
) |
Total
other unfavorable impacts |
$ |
(3,931,000 |
) |
|
(2) Other favorable (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, ii) reserve for aged inventory and iii) manufacturing
variances - the calculated value of manufacturing absorption
deferred into inventory to be amortized in a later period, rather
than being shown in the period that created the benefit or
cost. |
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