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Synalloy Corp. (SYNL) filed Quarterly Report for the period ended 2011-10-01.
Synalloy Corp. has a market cap of $67.4 million; its shares were traded at around $10.66 with a P/E ratio of 10.9 and P/S ratio of 0.4. The dividend yield of Synalloy Corp. stocks is 2.3%.
This is the annual revenues and earnings per share of SYNL over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of SYNL.
Highlight of Business Operations:
Consolidated sales for the third quarter of 2011 increased ten percent to $46,193,000 compared to $41,932,000 for the same period one year ago. The Company s net earnings declined 60 percent to $571,000 or $0.09 per share for the third quarter of 2011 compared to net earnings of $1,412,000 or $0.22 per share for the third quarter of 2010. For the nine months ended October 1, 2011, sales were $130,334,000, up 15 percent from sales of $113,481,000 for the same period of 2010. Net earnings for the first nine months of 2011 increased 86 percent to $4,780,000 or $0.75 per share compared to $2,572,000 or $0.41 per share for the comparable period last year.Sales for the Metals Segment increased 16 percent to $35,817,000 while operating income decreased 49 percent to $912,000 in the third quarter of 2011 from the same period a year earlier. The sales increase resulted from a 14 percent increase in average selling prices combined with a one percent increase in unit volumes. The segment experienced a favorable product mix for the third quarter with higher priced non-commodity unit volume increasing 25 percent for the quarter while commodity unit volume decreased ten percent. Special alloy product shipments continue to surpass prior year levels as a result of increased projects and distributor restocking. International sales are also continuing to show year over year sales growth. Operating income decreased during the third quarter as lower nickel prices caused our material margins (defined as sales less material costs) to tighten. Based upon our FIFO inventory valuation method, as nickel prices decrease, our selling price is reduced accordingly while material costs reflect the higher priced inventory. Nickel prices decreased more than 15 percent from the second quarter of 2011. In addition, an inventory reserve of $631,000 was required at the end of the third quarter of 2011 to lower the inventory carrying costs of selected inventory sizes to market value. During the third quarter of 2010, the FIFO inventory method was favorable to the profitability of the Segment and an inventory valuation reserve was not required. The Company experienced a favorable adjustment in the third quarter of the current year as repair parts and manufacturing supplies previously expensed were inventoried and are reflected as a prepaid asset in the October 1, 2011 Balance Sheet. These costs will be expensed in future periods as they are used in the production process. The total of these three items reduced net income for the third quarter of 2011 by $0.09 per share. The favorable effect of the FIFO inventory valuation method in the prior year resulted in increased net income for the third quarter by $0.04 per share. This $0.13 per share difference accounts for the decline in net income per share experienced in the third quarter of 2011 compared to the year earlier results.
Sales for the first nine months of 2011 increased 21 percent to $97,753,000 and operating income of $7,390,000 was up 217 percent compared to the prior year periods. The sales increase was comprised of a 19 percent increase in average selling prices combined with a two percent increase in unit volumes. The unit volume increase reflects a 14 percent increase in non-commodity pipe from the same factors as outlined above for the third quarter, combined with a four percent decrease from commodity pipe sales. Both pipe manufacturing and fabricated piping systems showed operating margin improvement over the prior year on a year-to-date basis.
The Company s cash balance was relatively unchanged during the first nine months of 2011, increasing from $109,000 at the end of 2010 to $120,000 as of October 1, 2011. As a result of the higher Metals Segment sales activity during the third quarter of 2011, compared to the fourth quarter of 2010, accounts receivable increased at October 1, 2011 by $8,638,000. Inventory levels increased $10,447,000 during the first nine months of 2011 in support of higher Metals Segment activity, especially in higher priced special alloy materials. Higher inventory purchases during the third quarter of 2011 increased accounts payable at the end of the quarter by $3,437,000 when compared to the 2010 year-end balance. Capital expenditures for the first nine months of 2011 were $1,985,000. These items resulted in the Company having to borrow $8,688,000 during the first nine months of 2011 and had $8,907,000 of bank debt outstanding as of October 1, 2011.
The Metals Segment s business is highly dependent on its customers capital expenditures which have begun to show some improvement. Excess capacity in the pipe manufacturing industry continues to present a difficult operating environment. Stainless steel surcharges, which affect our costs of raw materials and selling prices, increased through April and declined in May through November of 2011 with the exception of a slight increase in September. We expect surcharges to stabilize in December and into the first quarter of 2012. We believe we are the largest and most capable domestic producer of non-commodity stainless steel pipe and an effective producer of commodity stainless steel pipe which should serve us well in the long run. Our market position remains strong in the commodity pipe market and we are experiencing a significant upswing in project and special alloy demand. We also continue to be optimistic about the piping systems business over the long term. During the third quarter of 2011, piping systems added two new salesmen that have already yielded positive results in new inquiries and customer relations. We anticipate continued strong activity on the new sales front in the paper and wastewater treatment areas as well as power generation projects. Approximately 76 percent of the piping systems backlog comes from paper and wastewater treatment projects. Piping systems backlog was $18,147,000 at October 1, 2011, $23,654,000 at July 2, 2011, $25,306,000 at January 1, 2011 and $33,398,000 at October 2, 2010. We expect our backlog to increase over the next quarter or two as our additional salesmen successfully convert the previously mentioned new inquiries into firm orders. We estimate that approximately 80 percent of the backlog should be completed over the next 12 months.
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