Synalloy Corporation (SYNL) research, news, and more from GeoInvesting

Company description

Tue, 26 Oct 2010 04:00:00 GMT

Synalloy Corporation, through its subsidiaries, primarily manufactures and sells pipes and piping systems in the United States and internationally. It operates in two segments, Metals and Specialty Chemicals. The Metals segment manufactures pipe and piping systems from stainless steel and other alloys for the chemical, petrochemical, pulp and paper, mining, power generation, waste water treatment, liquid natural gas, brewery, food processing, petroleum, pharmaceutical, and other industries. The Specialty Chemicals segment produces specialty chemicals, and pigments and dyes for the carpet, chemical, paper, metals, mining, agricultural, fiber, paint, textile, automotive, petroleum, cosmetics, mattress, furniture, janitorial, and other industries. Synalloy Corporation sells its metal products through outside sales employees, manufacturers’ representatives, and authorized stocking distributors, as well as markets directly to engineering firms, construction companies, and project owners. It markets its specialty chemicals directly to various industries through outside sales employees and manufacturers' representatives. The company was formerly known as Blackman Uhler Industries, Inc. and changed its name to Synalloy Corporation in July 1967. Synalloy Corporation was founded in 1945 and is headquartered in Spartanburg, South Carolina

Research

Fri, 24 May 2019 15:58:03 GMT

Synalloy Corporation (NASDAQ:SYNL) ($19.12; $171.4M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, was sent another letter by Privet Management. On April 23, 2019, Privet Fund Management LLC publicly disclosed its interest in acquiring SYNL in a negotiated transaction at a price of $20.00 per share in cash. At the time of the initial offer, it represented a 42% premium to the trading price of the Company’s stock.

In a 13D/A filed yesterday after hours, Privet “reiterated its $20.00 per share acquisition proposal and its belief that its offer represents a premium value for shareholders. Privet Management also stated that the Corporation’s Board of Directors has a fiduciary duty to engage with Privet Management on its offer, as well as all other interested parties, in order to maximize value for shareholders. Privet Management expressed its willingness to receive additional information and work quickly to complete diligence and reach a definitive acquisition agreement and evaluate any additional information that management or its financial advisors may provide that would support a higher value.

Our view from this commentary is that Privet may be willing to make a higher offer if the Company can prove it is worth more.

Research

Tue, 30 Apr 2019 17:30:13 GMT

Synalloy Corporation (NASDAQ:SYNL) ($19.02, marked down 10%; $169.8M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals reported Q1 2019 results:

Sales of $84.8 million vs $58.4 million in the prior year
Adjusted EPS of $0.07 vs $0.43 in the prior year

In yesterday's note, we mentioned that the company issued Q1 2019 guidance in its response letter to the $20.00 buyout offer from Privet Management. The company stated:

"The Company will report first quarter results on the morning of April 30, 2019. That report will show record sales of $85 million and a 77% increase in net income (excluding metal price adjustments), over the first quarter of last year. Every business unit met or exceeded its forecast for the quarter.

We mentioned it was unclear how the company would adjust for the “excluding metal price adjustments). Here is the explanation they give in the release:

“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.”

Comments and Outlook from management:

“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.

“Our forecast for the entire Company for 2019 remains unchanged. We are projecting revenue of $340 million and Adjusted EBITDA of $30 million”

Research

Mon, 29 Apr 2019 15:08:23 GMT

Synalloy Corporation (NASDAQ:SYNL) ($17.00, $151.8M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, received a letter on April 23, 2019 from Privet Management proposing to acquire all shares of the company for $20.00 per share. On Friday, SYNL rejected the offer and issued a response to Privet Management. In the 8-K response, SYNL offered guidance for its upcoming Q1 2019 results, as well as full year 2019 revenue guidance.

"The Company will report first quarter results on the morning of April 30, 2019. That report will show record sales of $85 million and a 77% increase in net income (excluding metal price adjustments), over the first quarter of last year. Every business unit met or exceeded its forecast for the quarter.

The Company’s management team has continuously demonstrated its skill in acquiring and integrating acquisitions. With a robust pipeline of new opportunities and ready access to capital, we are well positioned to continue our growth strategy as a public company. Over the past eight years, the management team has grown revenue from $111 million in 2010 to the forecasted revenue for 2019 of $340 million, or a compounded annual growth rate of 13%. Over the same period, Adjusted EBITDA has increased from $1.4 million in 2010 to $34.0 million forecasted for this year, or a compounded annual growth rate of 41%."

The Q1 2019 guidance of $85 million in sales is vs $58.5 million in Q1 2018. The net income guidance of a 77% increase implies an EPS of $0.83. However, we do want to note that it’s unclear to us on how excluding metal price adjustments will be reflected in the non-GAAP EPS figure.

The Company also issued the $340 million full year guidance vs $280 million in 2018. The guidance implies that the remaining quarters in 2019 will all be close to this $85 million record Q1 level.

Management’s letter also stated that Privet, in prior conversations with management, stated that they felt the company was worth at least $30.00.

“Finally, in recent meetings with myself and other members of our Board, you have stated that the Company’s shares should be trading at $30.00, or more. While the market rarely provides an accurate reflection of value in the short-term, the spread between Privet’s current valuation in the Indication of Interest and your market commentary, indicates an unreasonable discount for a business performing as well as our Company.”

Will continue to monitor the situation to see if Privet ups its offer.

Research

Wed, 24 Apr 2019 15:13:14 GMT

Synalloy Corporation (NASDAQ:SYNL) ($14.56, $130.0M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, received a letter from Privet Management proposing to acquire all shares of the company for $20.00 per share.

Research

Fri, 16 Nov 2018 17:02:08 GMT

Synalloy Corporation (NASDAQ:SYNL) ($16.52, $146.5M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, announced it has increased its annual dividend to $0.25 from $0.13 and has cancelled its ATM offering.

The company has been reporting strong quarterly results, but announced an ATM offering at the end of August which we believed killed the momentum in the stock and was likely the cause for additional selling pressure coupled with the decline in the Russell 2000 since early September.

Shares reached a high of $24.80 in August prior to the ATM and market downturn.

Research

Tue, 06 Nov 2018 16:50:34 GMT

Synalloy Corporation (NASDAQ:SYNL) ($20.75, $182.6M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, announced Q3 2018 results:

Sales of $77.8 million vs $54.6 million in the prior year
Non-GAAP EPS of $0.65 vs non-GAAP net loss of $0.12

“The company had another excellent quarter, with results matching or exceeding in several areas the record performance of the prior quarter,” said Craig C. Bram, President and CEO. “Total revenue for the third quarter was a new record and Adjusted EBITDA matched the record posted in the previous quarter. Backlogs in the Metals Segment continued to improve, while new product introductions in the Specialty Chemicals Segment contributed to substantial gains in sales over the same period last year.

We remain on course to generate annual sales of $285.0 million and Adjusted EBITDA of $37.0 million for 2018. Our M&A pipeline has some attractive opportunities, which we expect to share more details on as we approach year-end. Our end markets remain strong and are poised for continued growth in 2019. The potential for growth in both the galvanized and ornamental tubing markets is promising, and we look for more project-related spending in the downstream energy markets for our stainless-steel product line. New product activity in the Specialty Chemical Segment has been very steady. Recently, we signed a three-year agreement with a long-time customer to increase production of a current product from 500,000 pounds annually to 5.0 million pounds annually. The customer will be paying for the production cap-ex over the term of the agreement and we expect to be at full production by the end of next year’s second quarter.”

SYNL has had an outstanding ATM for the last several months which has been capping the stock’s upside, in our opinion.

They addressed this on the call, when management stated that they have no plans to use the ATM at current levels and that if they issued any shares it would be in conjunction with an accretive acquisition and count against shares planned in ATM offering.

Research

Mon, 20 Aug 2018 04:00:00 GMT

Synalloy Corporation (NASDAQ:SYNL) ($22.05, $193M market cap), a company engaged in a number of diverse business activities, including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, announced its subsidiary Bristol Metals was awarded an $8 million contract, the single largest contract Bristol has received since being acquired by SYNL.

Research

Fri, 10 Aug 2018 04:00:00 GMT

Synalloy Corporation (NASDAQ:SYNL) ($24.25, $213.4M market cap), a company engaged in a number of diverse business activities including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, announced today that it has filed a prospectus supplement under which it may issue and sell, from time to time, up to an aggregate of $10 million of its common stock under an “at-the-market” equity offering program through BB&T Capital Markets, a division of BB&T Securities, LLC, and Ladenburg Thalmann & Co. Inc.

We will be reviewing the prospectus and future details of this offering going forward.

On August 7th, we reported on the company’s great quarterly results. Prior to that, on May 3, we had highlighted the company’s impressive Q1 and on April 10, 2018 we highlighted the company’s first significant raise in guidance for the full year 2018. You can read all of our coverage on SYNL here.

Research

Tue, 07 Aug 2018 14:25:32 GMT

Synalloy Corporation (NASDAQ:SYNL) ($22.05, $193M market cap), a company engaged in a number of diverse business activities including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, this morning announced second quarter results:

EPS of $0.76 vs. $0.14
Revenue of $71.89M vs. $51.51M

Management’s commentary:

"The earnings capacity of our operating units in an environment with reasonably good end market demand was on display in the second quarter,” said Craig Bram, President and CEO. "Pricing across all product lines in the Metals Segment showed improvement over the first quarter. Backlogs remained at elevated levels as well, with a continued upward bias in pricing. The backlog for our storage tanks and vessels product line is at the highest level since we acquired the business back in 2012. Product mix in the second quarter began to show some improvement in our stainless steel pipe business, specifically at the Bristol, Tennessee facility. Special alloys represented about 6.5% of Bristol’s pounds shipped in the second quarter, up from 3.4% in the first quarter. Special alloys as a percentage of the backlog at Bristol is currently at 11.4% of pounds booked. Our subsidiary, Bristol Metals LLC, recently booked a $3 million order for a mining project, and we continue to hear that project work is expected to rebound later this year and into 2019. We experienced substantial revenue growth in the Specialty Chemicals Segment in the second quarter, with operating profit as a percentage of sales marginally higher than the first quarter of this year. We remain encouraged by the pipeline of products in development across multiple end markets.”

The company again raised its full year guidance:

“We are, again, raising our forecast for 2018. Sales for the year are now expected to be $285.0 million, with Adjusted EBITDA of $37.0 million. These projections include six months of contributions from the previously announced third quarter acquisition of Marcegaglia USA's galvanized tube business as well as our plans to add ornamental stainless items to our product line. With favorable market conditions and a full year of contributions from the recent business expansions, revenue in 2019 should exceed $300 million. The integration of this new business is well under way and we are optimistic that it will perform in line with plan. We remain active on the M&A front and have several targets under review. The Company will remain disciplined in its approach, both from a valuation and leverage perspective.”

On May 3, we had highlighted the company’s impressive Q1 and on April 10, 2018 we highlighted the company’s first significant raise in guidance for the full year 2018. You can read all of our coverage on SYNL here.

Research

Thu, 03 May 2018 15:33:29 GMT

Synalloy Corporation (NASDAQ:SYNL) ($17.15, $151.0M market cap), a company engaged in a number of diverse business activities including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, announced Q1 2018 results:

Sales of $58.4 million vs $42.4 million in the prior year
Non GAAP EPS of $0.49 vs $0.15 in the prior year

Quotes from management:

“While the first quarter results were exceptionally good, there remains considerable upside to the Company's performance. In the Metals Segment, we have yet to see the level of project activity that we enjoyed in 2014 and the associated spending on special alloys and larger OD product sizes. In recent years, Bristol Metals has invested heavily in expanding its total production capacity. Just this month, we acquired a high frequency laser mill which will be installed at Munhall in the third quarter. While we anticipate total shipments greater than 65 million pounds in 2018 at our Bristol Metals unit, our total capacity is now approaching 110 million pounds annually, allowing us to further support our distribution customers and fill any voids that may develop from fewer imports. For the Specialty Chemicals Segment, new product additions like the one recently announced, should drive meaningful organic growth in the current and subsequent years. On the acquisition front, we have identified a high impact "bolt-on" that offers strong earnings potential at a reasonable price. We expect to have more to share regarding this opportunity before the end of the current quarter.”

On April 10, 2018 we highlighted the company’s significant raise in guidance for the full year 2018, expecting net sales of between $240 and $245 million and net income of between $13.6 and $15.2 million, compared to previous guidance for net sales of $231 million and net income of $8.0 million, respectively.

Research

Tue, 10 Apr 2018 04:00:00 GMT

Synalloy Corporation (NASDAQ:SYNL) ($14.10, $123.5M market cap), a company engaged in a number of diverse business activities including the production of stainless steel pipe and tubing, fiberglass and steel storage tanks and specialty chemicals, upped its financial guidance for the full year 2018.

“...expected net sales of between $240 and $245 million and net income of between $13.6 and $15.2 million, compared to previous guidance for net sales of $231 million and for net income of $8.0 million, respectively.”

Management outlook:

“We are very optimistic that our 2018 financial results will achieve the revised guidance targets. Our primary end markets continue to point toward increasing demand and improving prices. The recent actions against dumping of imported stainless steel pipe and tube are already resulting in improved market dynamics for this critical product line. The Specialty Chemicals Segment performed well in the first quarter 2018, generating unaudited sales approximating plan, and slightly ahead of 2017. Excluding contributions from any acquisitions, our current forecast for 2018 calls for between a 19% to 22% increase in revenue and between a 124% and 140% increase in Adjusted EBITDA. The Company’s balance sheet is in excellent shape and we have ample borrowing capacity to meet our needs going forward.”