Synalloy Corp. (SYNL, Financial) filed Quarterly Report for the period ended 2009-10-03.
SYNALLOY CORP. operates in 2 principal industry segments: chemical & metal. The chemical segment manufactures dyes, pigments & auxiliaries for the textile industry & a variety of specialty chemicals for the chemical, petroleum & pharmaceutical industries. The metals segment manufactures welded stainless steel pipe & highly specialized products, most of which are custom-produced to individual orders. Products include piping systems, fittings, tanks, pressure vessels and a variety of other components. Synalloy Corp. has a market cap of $53.3 million; its shares were traded at around $8.5101 with and P/S ratio of 0.3. The dividend yield of Synalloy Corp. stocks is 1.2%.
Sale of Blackman Uhler Specialties & Discontinued Operations On October 2, 2009, the Company entered into an Asset Purchase Agreement with SantoLubes Manufacturing, LLC (“SM”) to sell the specialty chemical business of Blackman Uhler Specialties, LLC (“BU”) for a purchase price of $10,366,000, along with certain property, plant and equipment held by Synalloy Corporation for a purchase price of $1,130,000, all located at the Spartanburg, SC location. The purchase price of approximately $11,496,000, payable in cash, was equal to the approximate net book values of the assets sold as of October 3, 2009, the effective date of the sale, and the Company has recorded a loss of approximately $250,000 resulting primarily from transaction fees and other costs related to the transaction. Divesting BU s specialty chemicals business, which had annual sales of approximately $14,500,000, has freed up resources and working capital to allow further expansion into the Company s metals businesses. The Company has entered into a lease agreement with SM to lease office space in Spartanburg for corporate operations and has also entered into an outsourcing agreement with SM to provide SM with certain accounting and administration functions.
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SYNALLOY CORP. operates in 2 principal industry segments: chemical & metal. The chemical segment manufactures dyes, pigments & auxiliaries for the textile industry & a variety of specialty chemicals for the chemical, petroleum & pharmaceutical industries. The metals segment manufactures welded stainless steel pipe & highly specialized products, most of which are custom-produced to individual orders. Products include piping systems, fittings, tanks, pressure vessels and a variety of other components. Synalloy Corp. has a market cap of $53.3 million; its shares were traded at around $8.5101 with and P/S ratio of 0.3. The dividend yield of Synalloy Corp. stocks is 1.2%.
Highlight of Business Operations:
Outlook The Metals Segment s business is highly dependent on capital expenditures which have been significantly impacted by the economic turmoil. Falling stainless steel prices, the depressed economy, and distributors reluctance to restock inventories, have created a poor pricing environment for our commodity pipe. After surcharges increased for six consecutive months since May 2009, they fell in November causing more uncertainty in the market. This has been offset somewhat by the implementation of six percent price increases from our steel suppliers on May 1, 2009 and July 1, 2009, which has been accepted in the market place. Management remains hopeful that the stimulus spending by the Federal Government, which includes a “Buy-American” provision covering iron and steel, will fund increased activity in the water and wastewater treatment area, a significant part of our piping systems business. Although Management is disappointed with the level of profitability in the third quarter and first nine months of 2009, we remain confident that we are in an excellent position to benefit from the eventual improvement in economic conditions. However, the impact from current economic conditions both domestically and worldwide makes it difficult to predict the performance of this Segment for the fourth quarter of 2009 as well as into 2010. We believe we are the largest and most capable domestic producer of non-commodity stainless pipe and an effective producer of commodity stainless pipe which should serve us well in the long run. We also continue to be optimistic about the piping systems business over the long term. Piping systems continues to maintain a strong backlog, with approximately 80 percent of the backlog coming from energy and water and wastewater treatment projects, and as discussed above, the Ram-Fab acquisition should allow us to expand piping systems business. Piping systems backlog was $54,000,000 at the end of the third quarter of 2009, which includes $13,000,000 from the Ram-Fab operation. This compares to $40,300,000 at the end of the second quarter of 2009 and $45,500,000 at the end of 2008. We estimate that approximately 70 percent of the backlog should be completed over the next 12 months.Sale of Blackman Uhler Specialties & Discontinued Operations On October 2, 2009, the Company entered into an Asset Purchase Agreement with SantoLubes Manufacturing, LLC (“SM”) to sell the specialty chemical business of Blackman Uhler Specialties, LLC (“BU”) for a purchase price of $10,366,000, along with certain property, plant and equipment held by Synalloy Corporation for a purchase price of $1,130,000, all located at the Spartanburg, SC location. The purchase price of approximately $11,496,000, payable in cash, was equal to the approximate net book values of the assets sold as of October 3, 2009, the effective date of the sale, and the Company has recorded a loss of approximately $250,000 resulting primarily from transaction fees and other costs related to the transaction. Divesting BU s specialty chemicals business, which had annual sales of approximately $14,500,000, has freed up resources and working capital to allow further expansion into the Company s metals businesses. The Company has entered into a lease agreement with SM to lease office space in Spartanburg for corporate operations and has also entered into an outsourcing agreement with SM to provide SM with certain accounting and administration functions.
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