Synalloy Announces First Quarter Results

Apr 18, 2001, 01:00 ET from Synalloy Corporation

    SPARTANBURG, S.C., April 18 /PRNewswire/ --
     Synalloy Corporation (Nasdaq: SYNC), a producer of specialty chemicals,
 dyes and pigments, stainless steel pipe, vessels and process equipment,
 announces that net income was $.08 per share for the quarter, down 53% from
 last year's first quarter.  On a sequential basis, per share income was up 33%
 from last quarter's $.06 before special charges.
 
     Chemicals Segment
     Sales in the Colors Group were down 9% from a year earlier and an
 operating loss of $62,000 was incurred compared to the modest $40,000 profit
 reported in 2000's first quarter.  Reduced unit volume demand and lower prices
 that were evident through the end of last year led to these weaker results.
 On a sequential basis, the first quarter showed improvement in sales and
 substantially less operating loss than was reported in the fourth quarter of
 2000.  During the quarter we saw the first signs that prices may be bottoming
 after a prolonged declined that began in 1995.  We have seen a rare price
 increase on a dye from China and a major dye supplier is attempting to
 institute a modest price increase.  However, it will take a significant
 increase in prices and further consolidation of domestic dye suppliers for our
 Colors Group and the industry overall to return to acceptable profitability.
     The Specialty Chemicals Group had a 9% decline in sales, but operating
 income was up 100% from the comparable quarter last year.  The profit
 improvement came from eliminating the losses incurred last year at the
 Augusta, Georgia plant.  That plant is being closed and a provision to cover
 the costs of closedown was recorded at last year end.
     Although this product group is currently being impacted by weak conditions
 in the chemical industry, management believes it is now positioned to
 reestablish the growth posture evident prior to the problems encountered in
 recent years.
 
     Metals Segment
     Dollar sales declined 31% from a year earlier as a result of 37% lower
 unit volumes partially offset by 11% higher average selling prices.  Demand
 was negatively impacted by a continuation of the inventory liquidation that
 began in the second half of last year.  End-use demand is also probably weaker
 than a year ago because of the economic slowdown.  The higher sales prices
 resulted from a more favorable product mix with higher-priced special alloys
 and piping systems contributing a greater percentage of sales than in the
 first quarter of 2000.  Commodity stainless pipe sales prices were actually
 only up 4% from a year earlier.
     Operating income of $1,100,000 was about half the amount of last year's
 first quarter.  The decline came from the lower sales together with negative
 cost variances that resulted from substantially lower production levels.
 Beginning in the fourth quarter of last year, the Company began an inventory
 reduction plan that led to production levels of commodity pipe substantially
 below the level of sales.  The low production level necessarily led to
 negative cost variances as fixed costs were spread over lower unit volumes.
 At quarter end, the inventory was $7,005,000 lower than six months earlier,
 which represents a 35% decline.
     Market conditions are very competitive and stainless pipe prices have
 continued their decline.  On a positive note, sequential unit volume sales of
 pipe were up 10% over the fourth quarter which, in turn, were up 10% from the
 third quarter of 2000 when inventory liquidation was most intense.  The
 inventory reduction will be completed in April and production will be ramped
 up to equal expected sales.  This should reduce the impact of negative cost
 variances.
     At this time, the most promising industrial construction activity seems to
 be power generation.  The bulk of the piping requirements for this activity
 are carbon pipe as opposed to the stainless pipe.  However, our piping systems
 operation does have some potential to get business from the power market.  We
 have been awarded jobs totaling $430,000 at two separate new power plants for
 stainless piping systems.  We are actively pursuing this market, but have not
 yet determined if its potential could be significant to us.
 
     Other Matters
     For the last two quarters, management has been focused on inventory
 reduction to get the levels to a desirable percentage of sales.  Inventories
 have been reduced by approximately $4,000,000 in each of these quarters, which
 has reduced capital utilized, increased cash flow from operations and improved
 liquidity.
     For more information about Synalloy Corporation, please visit our web site
 at www.synalloy.com.
 
     Safe Harbor Statement under the Private Securities Litigation Reform Act
     of 1995
 
     The statements contained in this release that are not historical facts may
 be 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, which speak only as of their
 dates.  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, customer delays or difficulties
 in the production of products, and other risks detailed from time to time in
 Synalloy's Securities and Exchange Commission filings.  The preliminary
 earnings shown herein are forward looking statements and are subject to change
 for any adjustments resulting from the auditing process.  Synalloy Corporation
 assumes no obligation to update the information included in this release.
 
 
                   SYNALLOY CORPORATION COMPARATIVE ANALYSIS
 
 
                                                      THREE MONTHS ENDED
                                                 Mar 31, 2001    Apr 1, 2000
     Net sales
       Colors Group                              $  6,028,000   $  6,608,000
       Specialty Chemicals Group                    5,592,000      6,126,000
         Chemicals Segment                         11,620,000     12,734,000
       Metals Segment                              13,483,000     19,537,000
                                                 $ 25,103,000   $ 32,271,000
     Operating income
       Colors Group                                   (62,000)        40,000
       Specialty Chemicals Group                      248,000        124,000
         Chemicals Segment                            186,000        164,000
       Metals Segment                               1,100,000      2,182,000
                                                    1,286,000      2,346,000
     Unallocated expenses
       Corporate                                      250,000        433,000
       Interest and debt expense,
         net of interest income                       285,000        246,000
 
     Income before income taxes                       751,000      1,667,000
 
     Provision for income taxes                       265,000        593,000
 
     Net income                                   $   486,000   $  1,074,000
 
     Net income per common share:
       Basic                                      $       .08   $        .17
       Diluted                                    $       .08   $        .17
       Average diluted
        shares outstanding                          5,964,368      6,292,257
 
     Backlog-Piping Systems & Process Equipment   $ 9,100,000   $ 15,600,000
 
 
     Balance Sheet                               Mar 31, 2001   Dec 30, 2000
     Assets
       Cash and sundry current assets             $ 1,814,000    $ 1,880,000
       Accounts receivable, net                    13,279,000     13,260,000
       Inventories                                 25,319,000     28,860,000
     Total current assets                          40,412,000     44,000,000
     Property, plant and equipment, net            22,226,000     22,233,000
     Other assets                                   6,763,000      6,835,000
     Total assets                                 $69,401,000    $73,068,000
 
     Liabilities and shareholders' equity
       Notes payable                              $ 3,608,000    $ 8,230,000
       Accounts payable and accrued expenses       11,424,000     10,287,000
     Total current liabilities                     15,032,000     18,517,000
     Long-term debt, less current portion          10,000,000     10,000,000
     Other long-term liabilities                    4,000,000      4,378,000
     Shareholders' equity                          40,369,000     40,173,000
     Total liabilities & shareholders' equity     $69,401,000    $73,068,000
 
 

SOURCE Synalloy Corporation
    SPARTANBURG, S.C., April 18 /PRNewswire/ --
     Synalloy Corporation (Nasdaq: SYNC), a producer of specialty chemicals,
 dyes and pigments, stainless steel pipe, vessels and process equipment,
 announces that net income was $.08 per share for the quarter, down 53% from
 last year's first quarter.  On a sequential basis, per share income was up 33%
 from last quarter's $.06 before special charges.
 
     Chemicals Segment
     Sales in the Colors Group were down 9% from a year earlier and an
 operating loss of $62,000 was incurred compared to the modest $40,000 profit
 reported in 2000's first quarter.  Reduced unit volume demand and lower prices
 that were evident through the end of last year led to these weaker results.
 On a sequential basis, the first quarter showed improvement in sales and
 substantially less operating loss than was reported in the fourth quarter of
 2000.  During the quarter we saw the first signs that prices may be bottoming
 after a prolonged declined that began in 1995.  We have seen a rare price
 increase on a dye from China and a major dye supplier is attempting to
 institute a modest price increase.  However, it will take a significant
 increase in prices and further consolidation of domestic dye suppliers for our
 Colors Group and the industry overall to return to acceptable profitability.
     The Specialty Chemicals Group had a 9% decline in sales, but operating
 income was up 100% from the comparable quarter last year.  The profit
 improvement came from eliminating the losses incurred last year at the
 Augusta, Georgia plant.  That plant is being closed and a provision to cover
 the costs of closedown was recorded at last year end.
     Although this product group is currently being impacted by weak conditions
 in the chemical industry, management believes it is now positioned to
 reestablish the growth posture evident prior to the problems encountered in
 recent years.
 
     Metals Segment
     Dollar sales declined 31% from a year earlier as a result of 37% lower
 unit volumes partially offset by 11% higher average selling prices.  Demand
 was negatively impacted by a continuation of the inventory liquidation that
 began in the second half of last year.  End-use demand is also probably weaker
 than a year ago because of the economic slowdown.  The higher sales prices
 resulted from a more favorable product mix with higher-priced special alloys
 and piping systems contributing a greater percentage of sales than in the
 first quarter of 2000.  Commodity stainless pipe sales prices were actually
 only up 4% from a year earlier.
     Operating income of $1,100,000 was about half the amount of last year's
 first quarter.  The decline came from the lower sales together with negative
 cost variances that resulted from substantially lower production levels.
 Beginning in the fourth quarter of last year, the Company began an inventory
 reduction plan that led to production levels of commodity pipe substantially
 below the level of sales.  The low production level necessarily led to
 negative cost variances as fixed costs were spread over lower unit volumes.
 At quarter end, the inventory was $7,005,000 lower than six months earlier,
 which represents a 35% decline.
     Market conditions are very competitive and stainless pipe prices have
 continued their decline.  On a positive note, sequential unit volume sales of
 pipe were up 10% over the fourth quarter which, in turn, were up 10% from the
 third quarter of 2000 when inventory liquidation was most intense.  The
 inventory reduction will be completed in April and production will be ramped
 up to equal expected sales.  This should reduce the impact of negative cost
 variances.
     At this time, the most promising industrial construction activity seems to
 be power generation.  The bulk of the piping requirements for this activity
 are carbon pipe as opposed to the stainless pipe.  However, our piping systems
 operation does have some potential to get business from the power market.  We
 have been awarded jobs totaling $430,000 at two separate new power plants for
 stainless piping systems.  We are actively pursuing this market, but have not
 yet determined if its potential could be significant to us.
 
     Other Matters
     For the last two quarters, management has been focused on inventory
 reduction to get the levels to a desirable percentage of sales.  Inventories
 have been reduced by approximately $4,000,000 in each of these quarters, which
 has reduced capital utilized, increased cash flow from operations and improved
 liquidity.
     For more information about Synalloy Corporation, please visit our web site
 at www.synalloy.com.
 
     Safe Harbor Statement under the Private Securities Litigation Reform Act
     of 1995
 
     The statements contained in this release that are not historical facts may
 be 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, which speak only as of their
 dates.  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, customer delays or difficulties
 in the production of products, and other risks detailed from time to time in
 Synalloy's Securities and Exchange Commission filings.  The preliminary
 earnings shown herein are forward looking statements and are subject to change
 for any adjustments resulting from the auditing process.  Synalloy Corporation
 assumes no obligation to update the information included in this release.
 
 
                   SYNALLOY CORPORATION COMPARATIVE ANALYSIS
 
 
                                                      THREE MONTHS ENDED
                                                 Mar 31, 2001    Apr 1, 2000
     Net sales
       Colors Group                              $  6,028,000   $  6,608,000
       Specialty Chemicals Group                    5,592,000      6,126,000
         Chemicals Segment                         11,620,000     12,734,000
       Metals Segment                              13,483,000     19,537,000
                                                 $ 25,103,000   $ 32,271,000
     Operating income
       Colors Group                                   (62,000)        40,000
       Specialty Chemicals Group                      248,000        124,000
         Chemicals Segment                            186,000        164,000
       Metals Segment                               1,100,000      2,182,000
                                                    1,286,000      2,346,000
     Unallocated expenses
       Corporate                                      250,000        433,000
       Interest and debt expense,
         net of interest income                       285,000        246,000
 
     Income before income taxes                       751,000      1,667,000
 
     Provision for income taxes                       265,000        593,000
 
     Net income                                   $   486,000   $  1,074,000
 
     Net income per common share:
       Basic                                      $       .08   $        .17
       Diluted                                    $       .08   $        .17
       Average diluted
        shares outstanding                          5,964,368      6,292,257
 
     Backlog-Piping Systems & Process Equipment   $ 9,100,000   $ 15,600,000
 
 
     Balance Sheet                               Mar 31, 2001   Dec 30, 2000
     Assets
       Cash and sundry current assets             $ 1,814,000    $ 1,880,000
       Accounts receivable, net                    13,279,000     13,260,000
       Inventories                                 25,319,000     28,860,000
     Total current assets                          40,412,000     44,000,000
     Property, plant and equipment, net            22,226,000     22,233,000
     Other assets                                   6,763,000      6,835,000
     Total assets                                 $69,401,000    $73,068,000
 
     Liabilities and shareholders' equity
       Notes payable                              $ 3,608,000    $ 8,230,000
       Accounts payable and accrued expenses       11,424,000     10,287,000
     Total current liabilities                     15,032,000     18,517,000
     Long-term debt, less current portion          10,000,000     10,000,000
     Other long-term liabilities                    4,000,000      4,378,000
     Shareholders' equity                          40,369,000     40,173,000
     Total liabilities & shareholders' equity     $69,401,000    $73,068,000
 
 SOURCE  Synalloy Corporation