Net sales, net income and adjusted EBITDA at the end of 2021 increase year-over-year for the third quarter in a row
2021 results for all of 2021 Highest net sales, net income and adjusted EBITDA in Synalloy history
RICHMOND, Virginia, March 29, 2022 – (BUSINESS WIRE) – Synalloy Corporation (Nasdaq: SYNL) (“Synalloy” or the “Company”), a pipeline, pipe and chemical manufacturing company, an industrial company that manufactures and distributes specialty products , presents results for the fourth quarter and full year ended December 31, 2021.
_____________________________1 The fourth quarter of 2021 includes net sales of $5.7 million, net income of $0.6 million and adjusted EBITDA of $1.1 million as a result of the acquisition of DanChem (ended 22 October 2021 of the year). 2 Q4 2020 revenue was $0.01 compared to prior reporting. Impact on diluted loss per share from rights issue ended 17 December 2021
“In the fourth quarter, we experienced another period of profitable growth in 2020 and maintained strong results from the third quarter throughout the year,” said Chris Hutter, President and CEO of Synalloy. “A meaningful transformation is coming to an end.” “We continue to capitalize on strong demand in both business areas, which we can capitalize on by expanding our manufacturing capacity and improving efficiency. began to capitalize on the efficiencies and opportunities associated with the merger, allowing us to offer a wider range of manufacturing capabilities and engineering services to our combined clients.
“Both segments continue to show signs of strength through 2022 as demand for products remains strong. We are focusing heavily on our operational efficiency, expanding presence and accelerating business development efforts. Macroeconomic forecasts have become difficult, but we expect a favorable pricing environment for the first half of 2022 normalization is expected by the middle of the year. As we continue to work to better match our increased commercial efforts, we are close to achieving the goal of maintaining a competitive rate of return at all price points.
“Looking back at my first year at the helm of Synalloy, I am proud of the foundation we have laid and the progress we have made since we began implementing our recovery strategy. We are prioritizing continued profitable growth by delivering best-in-class products, by continuing to invest in technology and automation to further improve efficiency and offer new products, and opportunistically through acquisitions that meet our internal return thresholds. Our team is committed to delivering long-term value and results-driven performance for our shareholders by creating high- level of culture, and we look forward to keeping that promise.”
Net sales increased 71% to $95.7 million from $55.9 million in the fourth quarter of 2020. This is primarily due to the continued favorable commodity price environment and the company’s adjustment of its steel segment product mix to better meet end-market demand.
Gross profit increased significantly to $19.9 million, or 20.8% of net sales, from $6.1 million, or 11.0% of net sales, in the fourth quarter of 2020. Both gross margin and gross margin benefited from electricity demand pricing and operational efficiency improvements to offset higher raw material costs due to increased customer numbers.
Net income increased significantly to $8.1 million, or $0.84 per diluted share, from a fourth-quarter 2020 net loss of $86,000, or $0.93 per diluted share. Excluding a $5.5 million non-Q4 2020 cash goodwill impairment loss, fourth quarter 2021 net income increased by $11.2 million year-on-year. The increase was mainly due to strong net sales and cost management initiatives. There was also the impact of a diluted loss per share of $0.01 for the prior year period due to the closing of the issue of rights on December 17, 2021, compared to the company’s previously reported situation.
Adjusted EBITDA increased significantly to $14.9 million from $3.0 million in the fourth quarter of 2020. Adjusted EBITDA as a percentage of net sales increased by 1,010 basis points to 15.5% from 5.4% a year earlier.
Net sales increased 31% to $334.7 million from $256 million in 2020. This increase was primarily due to strong prices and consumer demand during the year, as well as various initiatives to refocus the company on growth opportunities.
Gross margin increased significantly to $60.8 million, or 18.2% of net sales, from $22.7 million, or 8.8% of net sales, in 2020. This was primarily due to the aforementioned increase in net sales and the company’s efforts to improve operating efficiency during the year.
Net income increased significantly to $20.2 million or $2.14 per diluted share from a 2020 net loss of $27.3 or $2.98 per diluted share. Growth was driven by the company’s high prices and consumer demand during the year, which offset difficulties with personnel and supply chains.
Adjusted EBITDA increased significantly to $44.3 million from $9.2 million in 2020. Adjusted EBITDA as a percentage of net sales rose 960 basis points to 13.2% from 3.6% last year.
Metallurgy. Net sales in Q4 2021 increased 65% to $73.8 million from $44.7 million in Q4 2020. Net income for the fourth quarter increased significantly to $11.3 million compared to a net loss of $4.6 million in the previous year. Adjusted EBITDA also increased significantly in the fourth quarter to $13.8 million compared to $2.9 million in the same period last year. As a percentage of segment net sales, adjusted EBITDA increased by 1,210 basis points to 18.7% from 6.6% in the fourth quarter of 2020.
Net sales in 2021 increased by 30% to $267.2 million compared to $204.5 million in 2020. Net profit in 2021 increased significantly to $31.9 million compared to a net loss of $224,000 the previous year. Adjusted EBITDA also increased significantly in 2021 to $43 million, up from $8 million the previous year. As a percentage of segment net sales, Adjusted EBITDA increased by 1,220 basis points to 16.1% from 3.9% in 2020.
Specialized chemicals. Q4 2021 net sales increased 95% to $21.9 million from $11.2 million in Q4 2020, including $5.7 million of net sales in Q4 2021 in connection with the acquisition of DanChem. Fourth quarter net income increased significantly to $1.6 million from $0.5 million in the same period last year, with fourth quarter 2021 net income of $0.6 million driven by the acquisition of DanChem. Adjusted EBITDA in the fourth quarter increased significantly to $2.5 million compared to $0.9 million in the same period last year, of which $1.1 million of adjusted EBITDA in the fourth quarter of 2021 was attributable to the acquisition of DanChem . As a percentage of segment net sales, adjusted EBITDA improved 303 basis points to 11.7% from 8.4% in the fourth quarter of 2020.
Net sales in 2021 increased by 31% to $67.5 million compared to $51.5 million in 2020. Net income in 2021 was $3.6 million compared to $4 million last year. Adjusted EBITDA for 2021 increased by 12% to $6.5 million compared to $5.8 million in the previous year. As a percentage of segment net sales, Adjusted EBITDA was 9.7% compared to 11.3% in 2020.
The company’s total revolving credit line debt was $70.4 million as of December 31, 2021, compared to $61.4 million as of December 31, 2020, with the increase due to DanChem’s acquisition in October 2021 of for approximately US$33 million. The company’s remaining available borrowing capacity under the revolving facility was $39.4 million at the end of 2021, compared to $11.0 million at 31 December 2020.
Synalloy will host a conference call today at 5:00 pm ET to discuss fourth quarter and full year results for the quarter ended December 31, 2021.
Date: Tuesday, March 29, 2022 Time: 5:00 pm ET Toll Free: 1-877-303-6648 International: 1-970-315-0443 Conference ID: 2845778
Please dial the conference phone number 5-10 minutes before the start. The operator will register your name and organization. If you are having difficulty connecting to a conference call, please contact the Gateway team at 1-949-574-3860.
The conference call will be streamed live and replayed here and on the Investor Relations section of the company’s website at www.synalloy.com.
Synalloy Corporation (Nasdaq: SYNL) is a company with a variety of activities including stainless steel and galvanized pipe manufacturing, seamless carbon pipe primary distribution, and specialty chemicals manufacturing. For more information about Synalloy Corporation, please visit www.synalloy.com.
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward-looking statements can be identified by the use of words such as “estimate”, “project”, “intend”, “anticipate”, “believe”, “should”, “anticipate”, “hope”, “optimistic”, etc. other words . Plan, “expect”, “should”, “may”, “may” and similar expressions. Forward-looking statements are subject to certain risks and uncertainties, including but not limited to those indicated below, which could cause actual results to differ materially from past or expected results. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from past or expected results: adverse economic conditions, including risks related to the impact and spread of COVID-19 and government response to COVID-19; inability to withstand the economic downturn; competitive products. Impact of pricing, product demand and risk taking, increased costs of raw materials and other materials, availability of raw materials, financial stability of the company’s customers, delays or difficulties for customers in the production of products, loss of consumer or investor confidence, relationships. between employees; Opportunity to retain the workforce by hiring well-trained employees; Labor efficiency; Acquisition-related risks; Environmental problems; Negative or unintended consequences of tax law changes; Other risks detailed from time to time in Corporation Securities and Exchange Commission filings, including our Form 10-K annual report, which is available from the SEC. Synalloy Corporation undertakes no obligation to update any forward-looking information contained in this press release.
The financial statement information contained in this income statement includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read in conjunction with the accompanying table, which reconciles non-GAAP measures with GAAP measures.
Adjusted EBITDA is a non-GAAP financial measure that a company believes helps investors evaluate its results to determine a company’s value. An element will be excluded if its periodic cost is variable and significant enough that the lack of identification of the element may reduce the relevance of period comparability to readers, or if the inclusion of the element provides a clearer representation of normalized periodic benefits in the measurement standard. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (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, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (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, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. The Company excludes two categories of items from Adjusted EBITDA: 1) Components of Underlying EBITDA, including: interest expense (including the change in the fair value of the interest rate swap), taxes on income, depreciation and amortization, and 2) Significant transaction costs, including: impairment goodwill, impairment of assets, lease modification gains, share-based compensation, non-cash value of leases, acquisition costs and other fees, indirect costs of litigation and recovery, loss on debt repayment, adjustments to earnings, realized and unrealized (gains) and losses on investments in equity securities and other investments, holding costs and restructuring costs and severance pay from net income. The Company excludes two categories of adjusted EBITDA items: 1) underlying components of EBITDA, including: interest expense (including changes in the fair value of interest rate swaps), taxes on income, depreciation and amortization, and 2) significant transaction costs, including: goodwill impairment , asset impairment, lease modification gains, share-based compensation, non-cash lease costs, acquisition costs and other expenses, indirect costs of competition and recovery, debt settlement losses, income adjustments, realized and unrealized (income) and losses on equity securities investments and other investments, holding costs, and restructuring costs and severance pay are included in net income.
Management believes that these non-GAAP measures provide additional useful information that enables readers to compare financial results over time. Non-GAAP measures should not be considered a substitute for any measures of performance or financial condition disclosed in accordance with GAAP, and investors should consider a company’s performance and financial condition as presented in accordance with GAAP when evaluating performance or financial condition. Information about the company. Non-GAAP measures have limitations as analytical tools and should not be considered by investors in isolation or as a substitute for an analysis of a company’s performance or financial condition as reported under GAAP.
Note. The condensed consolidated balance sheets as at 31 December 2021 and 2020 are based on the audited consolidated financial statements as at that date.
1 In the fourth quarter of 2021, the Company granted ordinary share holders subscription rights to purchase additional ordinary shares at a below-market price. Due to the discount, rights issues contain a dividend element similar to stock dividends. Accordingly, basic and diluted earnings per share have been retrospectively adjusted to reflect the dividend element for all prior periods. 2 The term “Adjusted EBITDA” is a non-GAAP financial measure that the company believes is useful for investors in evaluating its results to determine the value of the company. An element will be excluded if its periodic cost is variable and significant enough that the lack of identification of the element may reduce the relevance of period comparability to readers, or if the inclusion of the element provides a clearer representation of normalized periodic benefits in the measurement standard. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (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, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (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, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, retention costs and restructuring & severance costs from net income. The Company excludes two categories of items from Adjusted EBITDA: 1) Components of Underlying EBITDA, including: interest expense (including the change in the fair value of the interest rate swap), taxes on income, depreciation and amortization, and 2) Significant transaction costs, including: impairment goodwill, impairment of assets, lease modification gains, share-based compensation, non-cash value of leases, acquisition costs and other fees, indirect costs of litigation and recovery, loss on debt repayment, adjustments to earnings, realized and unrealized (gains) and losses on investments in equity securities and other investments, holding costs and restructuring costs and severance pay from net income. The Company excludes two categories of adjusted EBITDA items: 1) underlying EBITDA components, including: interest expense (including changes in the fair value of interest rate swaps), taxes on income, depreciation and amortization, and 2) significant transaction costs, including: Goodwill impairment, asset impairment, lease modification gains, share-based compensation, non-cash lease costs, acquisition costs and other expenses, indirect costs of competition and recovery, debt settlement losses, earnings adjustments, realized and unrealized (earnings) and equity losses securities investments and other investments, holding costs, as well as restructuring costs and severance pay in net income. For a reconciliation of this non-GAAP measure with the most comparable GAAP equivalent, see “Reconciliation of Net Income (Loss) to Adjusted EBITDA”.
1 Proxy bidding and reimbursement costs for the year ended 31 December 2021 represented reimbursement of Privet and UPG’s recognized out-of-pocket expenses partially offset by shareholder activity insurance claims in 2020.
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