10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2019

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period from _____ to _____

COMMISSION FILE NUMBER 0-19687

Synalloy Corporation

(Exact name of registrant as specified in its charter)

Delaware		57-0426694
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4510 Cox Road, Suite 201, Richmond, Virginia		23060
(Address of principal executive offices)		(Zip Code)
	(804) 822-3260
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $1.00 per share	SYNL	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated Filer ¨	Accelerated filer x	Non-accelerated filer ¨
Smaller reporting company x	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ¨  No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨    No x

The number of shares outstanding of the registrant's common stock as of August 9, 2019 was 8,994,850

1

Synalloy Corporation

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)	4
	Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2019 and, 2018 (unaudited)	5
	Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)	6
	Notes Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Signatures and Certifications		26

2

Part I - Financial Information

Item 1. Financial Statements

Synalloy Corporation

Condensed Consolidated Balance Sheets

	June 30, 2019 Unaudited		December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	23,760	$	2,220,272
Accounts receivable, less allowance for doubtful accounts
of $136,000 and $169,107, respectively	43,685,225		41,065,251
Inventories, net	110,416,242		114,201,386
Prepaid expenses and other current assets	13,298,733		9,983,416
Total current assets	167,423,960		167,470,325
Non-current assets
Property, plant and equipment, net of accumulated
depreciation of $60,400,705 and $57,288,233 respectively	41,769,975		40,924,455
Right-of-use assets, operating leases, net	36,428,751		—
Goodwill	17,557,620		9,799,992
Intangible assets, net of accumulated amortization
of $14,668,672 and $12,925,888 respectively	17,457,328		9,696,112
Deferred charges, net	428,037		507,962
Total assets	$	281,065,671	$	228,398,846
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	28,960,431	$	25,073,698
Accrued expenses and other current liabilities	13,376,472		12,163,686
Current portion of long-term debt	4,000,000		—
Current portion of operating lease liabilities	3,526,011		—
Current portion of finance lease liabilities	248,589		—
Total current liabilities	50,111,503		37,237,384
Long-term debt	81,670,402		76,405,458
Deferred income taxes	1,388,985		252,988
Long-term deferred gain, sale-leaseback	—		5,599,077
Long-term portion of earn-out liability	6,060,435		4,702,562
Long-term portion of operating lease liabilities	34,139,854		—
Long-term portion of finance lease liabilities	457,933		—
Other long-term liabilities	162,475		1,717,291
Total non-current liabilities	123,880,084		88,677,376
Commitments and contingencies – See Note 11
Shareholders' equity
Common stock, par value $1 per share; authorized 24,000,000 shares; issued 10,300,000 shares	10,300,000		10,300,000
Capital in excess of par value	36,565,297		36,520,840
Retained earnings	72,398,650		68,965,410
	119,263,947		115,786,250
Less cost of common stock in treasury: 1,305,149 and 1,424,279 shares, respectively	12,189,863		13,302,164
Total shareholders' equity	107,074,084		102,484,086
Total liabilities and shareholders' equity	$	281,065,671	$	228,398,846

Note: The condensed consolidated balance sheet at December 31, 2018 has been derived from the audited consolidated financial statements at that date. See accompanying notes to condensed consolidated financial statements.

3

Synalloy Corporation

Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales	$	78,777,976		$	71,893,763		$	163,581,808		$	130,374,365
Cost of sales	70,940,204			56,177,441			147,060,382			103,424,624
Gross profit	7,837,772			15,716,322			16,521,426			26,949,741
Selling, general and administrative expense	7,663,317			7,738,752			16,558,445			13,594,872
Acquisition related costs	20,073			690,217			348,021			690,217
Earn-out adjustments	(417,808		)	2,307,598			(401,285		)	2,461,658
Operating income	572,190			4,979,755			16,245			10,202,994
Other expense (income)
Interest expense	1,009,797			403,852			2,033,738			717,835
Change in fair value of interest rate swaps	76,533			(19,255		)	124,094			(92,458		)
Other, net	(109,773		)	(59,111		)	(404,441		)	29,185
(Loss) income before income taxes	(404,367		)	4,654,269			(1,737,146		)	9,548,432
Income tax (benefit) provision	(141,629		)	976,998			(547,886		)	2,035,998
Net (loss) income	$	(262,738	)	$	3,677,271		$	(1,189,260	)	$	7,512,434
Net (loss) income per common share:
Basic	$	(0.03	)	$	0.42		$	(0.13	)	$	0.86
Diluted	$	(0.03	)	$	0.41		$	(0.13	)	$	0.85
Weighted average shares outstanding:
Basic	8,974,212			8,776,239			8,950,563			8,761,182
Dilutive effect from stock options and grants	—			87,537			—			72,804
Diluted	8,974,212			8,863,776			8,950,563			8,833,986

See accompanying notes to condensed consolidated financial statements

4

Synalloy Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30
	2019			2018
Operating activities
Net (loss) income	$	(1,189,260	)	$	7,512,434
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation expense	3,832,161			2,874,216
Amortization expense	1,742,784			1,147,916
Amortization of debt issuance costs	79,925			45,492
Deferred income taxes	(163,591		)	624,895
Earn-out adjustments	(401,285		)	2,461,658
Payments of earn-out liability in excess of acquisition date fair value	(436,321		)	(194,462		)
Provision for loss (reduction of) on accounts receivable	63,875			(30,000		)
Provision for losses on inventories	799,325			746,960
Gain on disposal of property, plant and equipment	—			(17,762		)
Amortization of deferred gain on sale-leaseback	—			(167,137		)
Straight line lease cost	288,269			184,344
Change in fair value of interest rate swaps	124,094			(92,458		)
Unrealized loss on equity securities	101,125			29,185
Realized gain on sale of equity securities	(474,227		)	—
Issuance of treasury stock for director fees	304,000			276,000
Employee stock compensation	852,758			416,180
Changes in operating assets and liabilities:
Accounts receivable	850,072			(12,768,096		)
Inventories	8,549,818			(19,192,920		)
Accounts payable	2,486,724			3,100,665
Accrued expenses	(1,374,838		)	1,372,968
Accrued income taxes	(1,538,984		)	889,103
Other assets and liabilities, net	(1,271,022		)	(2,105,248		)
Net cash provided by (used in) operating activities	13,225,402			(12,886,067		)
Investing activities
Purchases of property, plant and equipment	(1,884,508		)	(3,381,925		)
Purchases of equity securities	(543,552		)	(336,951		)
Proceeds from sale of equity securities	1,091,644			—
Acquisition of the assets and operations of American Stainless Tubing, Inc. (see Note 9)	(21,895,409		)	—
Acquisition of the galvanized pipe and tube assets of MUSA (see Note 9)	—			(10,378,281		)
Net cash used in investing activities	(23,231,825		)	(14,097,157		)
Financing activities
Net (payments) borrowings (on) from line of credit	(9,068,390		)	28,020,386
Borrowing from term loan	20,000,000			—
Payments on term loan	(1,666,667		)	—
Principal payments on finance lease obligations	(109,493		)	(52,549		)
Payments of debt issuance costs	—			(53,146		)
Payments on earn-out liabilities	(1,345,539		)	(977,603		)
Proceeds from exercised stock options	—			50,380
Net cash provided by financing activities	7,809,911			26,987,468
(Decrease) increase in cash and cash equivalents	(2,196,512		)	4,244
Cash and cash equivalents at beginning of period	2,220,272			14,706
Cash and cash equivalents at end of period	$	23,760		$	18,950
Supplemental disclosure
Cash paid for:
Interest	$	1,860,471		$	613,918
Income taxes	$	1,165,951		$	471,000

See accompanying notes to condensed consolidated financial statements

5

Synalloy Corporation

Condensed Consolidated Statement of Shareholders' Equity (Unaudited)

	Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Cost of Common Stock in Treasury			Total
For the Three Months Ended June 30, 2019
Balance at March 31, 2019	$	10,300,000	$	36,304,160		$	72,661,388		$	—	$	(12,469,745	)	$	106,795,803
Net loss	—		—			(262,738		)	—		—			(262,738		)
Issuance of 29,276 shares of common stock from treasury	—		24,118			—			—		279,882			304,000
Employee stock compensation	—		237,019			—			—		—			237,019
Balance at June 30, 2019	$	10,300,000	$	36,565,297		$	72,398,650		$	—	$	(12,189,863	)	$	107,074,084
For the Six Months Ended June 30, 2019
Balance at December 31, 2018	$	10,300,000	$	36,520,840		$	68,965,410		$	—	$	(13,302,164	)	$	102,484,086
Net loss	—		—			(1,189,260		)	—		—			(1,189,260		)
Cumulative adjustment due to adoption of ASC 842 (see Note 12)	—		—			4,622,500			—		—			4,622,500
Issuance of 118,430 shares of common stock from treasury	—		(808,301		)	—			—		1,112,301			304,000
Employee stock compensation	—		852,758			—			—		—			852,758
Balance at June 30, 2019	$	10,300,000	$	36,565,297		$	72,398,650		$	—	$	(12,189,863	)	$	107,074,084

See accompanying notes to condensed consolidated financial statements.

6

Synalloy Corporation

Condensed Consolidated Statement of Shareholders' Equity (Unaudited)

	Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Cost of Common Stock in Treasury			Total
For the Three Months Ended June 30, 2018
Balance at March 31, 2018	$	10,300,000	$	35,170,444		$	61,953,682		$	—		$	(13,696,336	)	$	93,727,790
Net income	—		—			3,677,271			—			—			3,677,271
Stock options exercised for 13,301 shares, net	—		105,907			—			—			(187,183		)	(81,276		)
Issuance of 31,471 shares of common stock from treasury	—		(3,429		)	—			—			279,429			276,000
Employee stock compensation	—		223,979			—			—			—			223,979
Balance at June 30, 2018	$	10,300,000	$	35,496,901		$	65,630,953		$	—		$	(13,604,090	)	$	97,823,764
For the Six Months Ended June 30, 2018
Balance at December 31, 2017	$	10,300,000	$	35,193,152		$	58,129,383		$	(10,864	)	$	(13,911,245	)	$	89,700,426
Net income	—		—			7,512,434			$	—		$	—		7,512,434
Cumulative adjustment due to adoption of ASU 2016-01	—		—			(10,864		)	10,864			$	—		—
Stock options exercised for 13,301 shares, net	—		105,907			—			—			$	(187,183	)	(81,276		)
Issuance of 55,675 shares of common stock from treasury	—		(218,338		)	—			—			494,338			276,000
Employee stock compensation	—		416,180			—			—						416,180
Balance at June 30, 2018	$	10,300,000	$	35,496,901		$	65,630,953		$	—		$	(13,604,090	)	$	97,823,764

See accompanying notes to condensed consolidated financial statements.

7

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Unless indicated otherwise, the terms "Company," "we," "us," and "our" refer to Synalloy Corporation and its consolidated subsidiaries.

1. Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. Operating results for the six-month period ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Certain prior period amounts have been reclassified to conform to the current period presentation, including changes in the fair value of the Company's earn-out liabilities from "Other Expense (Income)" to "Operating Income (Loss)" on the accompanying Condensed Consolidated Statements of Operations.

2. Recently Issued Accounting Standards

Recently Issued Accounting Standards - Adopted

In February 2016, the FASB issued ASU No. 2016-02  "Leases (Topic 842)", as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company adopted the new standard as of January 1, 2019 on a modified retrospective basis, which does not require comparative periods to be restated. On adoption, we recognized additional operating lease liabilities of $33,115,763 based on the present value of the remaining minimum rental payments as of January 1, 2019. We additionally recognized corresponding right-of-use assets for operating leases totaling $32,171,829. On January 1, 2019, the Company also recorded cumulative-effect increases to equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to a deferred gain for a sale leaseback transaction that occurred in 2016 and was being amortized into earnings under the prior accounting. The adoption of this standard did not have a material impact on the consolidated statement of operations or cash flows for the six months ended June 30, 2019. See Note 12.

Recently Issued Accounting Standards - Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820)". The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.

8

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

3. Revenues

Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we are to in exchange for those goods or services.

The following table presents the Company's revenues, disaggregated by product group. Substantially all of the Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Storage tank and vessel	$	10,247,078	$	9,071,649	$	20,076,033	$	14,847,421
Seamless carbon steel pipe and tube	6,702,781		8,403,288		15,289,286		16,835,901
Stainless steel pipe	41,309,945		38,899,542		87,305,328		70,183,404
Galvanized pipe	6,243,569		—		12,935,805		—
Specialty chemicals	14,274,603		15,519,284		27,975,356		28,507,639
Total revenues	$	78,777,976	$	71,893,763	$	163,581,808	$	130,374,365

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. For such arrangements, revenue for each performance obligation is based on its stand-alone selling price and revenue is recognized as each performance obligation is satisfied. The Company generally determines stand-alone selling prices based on the prices charged to customers using the adjusted market assessment approach or expected cost plus margin.

Deferred Revenues

Deferred revenues are recorded when cash payments are received in advance of satisfying the performance obligation, including amounts which are refundable. The deferred revenue balance increased $48,948 during the first six months of 2019 to $226,466 as of June 30, 2019 due to receiving $1,355,219 in advance of satisfying our performance obligations during the period, offset by $1,306,271 of revenue that was recognized during the period after satisfying the performance obligations that were included in the beginning deferred revenue balance or entered into during the current period. Deferred revenues are included in "Accrued expenses and other current liabilities" on the accompanying Condensed Consolidated Balance Sheets.

Our payment terms vary by the financial strength or location of our customer and the products offered. The length of time between invoicing and when payment is due is not significant. For certain customers, payment is required before the products or services are delivered to the customer.

4. Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by either specific identification or weighted average methods. The components of inventories are as follows:

	June 30, 2019		December 31, 2018
Raw materials	$	55,329,614	$	59,778,767
Work-in-process	17,768,751		21,033,532
Finished goods	37,317,877		33,389,087
	$	110,416,242	$	114,201,386

5. Stock options and restricted stock

During the first six months of 2019, no stock options were exercised by officers or employees of the Company. During the first six months of 2018, stock options for 40,606 shares of common stock were exercised by officers or employees for an aggregate exercise price of $474,378. 

Stock compensation expense for the three and six-month periods ended June 30, 2019 was $237,019 and $852,758, respectively. Stock compensation expense for the three and six-month periods ended June 30, 2018 was $223,979 and $416,180, respectively.

9

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

In 2016, the Compensation & Long-Term Incentive Committee (the "Committee") of the Company's Board of Directors granted performance restricted stock awards (“2016 Performance Stock Award”) to officers and certain key management-level employees. The 2016 Performance Stock Award vested three years from the grant date based on continuous service, with the number of shares earned (0 percent to 150 percent of the target award) depending on the extent to which the Company achieves certain financial performance targets measured over the period from January 1, 2016 to December 31, 2018. On February 8, 2019, the Committee approved the vesting of the 2016 Performance Stock Award for a total of 46,477 restricted shares at a grant date market price of $8.05.

On February 8, 2019, the Committee approved grants under the Company's 2015 Stock Awards Plan to certain management employees of the Company where 44,949 shares with a market price of $15.72 per share were granted under the Plan. These stock awards vest in either 20 percent or 33 percent increments annually, beginning one year after the date of grant. In order for the awards to vest, the employee must be in the continuous employment of the Company since the date of the award. Any portion of an award that has not vested is forfeited upon termination of employment. The Company may terminate any portion of the award that has not vested upon an employee's failure to comply with all conditions of the award or the 2015 Stock Awards Plan. An employee is not entitled to any voting rights with respect to any shares not yet vested, and the shares are not transferable.

The diluted earnings per share calculations exclude the effect of potentially dilutive shares when the inclusion of those shares in the calculation would have an anti-dilutive effect. For the six-month period ended June 30, 2019 there is no difference in the number of shares used to calculate basic and diluted shares outstanding because their effect would have been anti-dilutive due to the Company reporting a net loss. For the six-month period ended June 30, 2018, the Company had weighted average shares of common stock, in the form of stock grants and options of 36,815 which were not included in the diluted earnings per share calculation as their effect was anti-dilutive.

6. Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal examinations for years before 2014 or state income tax examinations for years before 2013. During the first six months of 2019, the Company did not identify nor reserve for any unrecognized tax benefits.

The effective tax rate was 35 percent and 21 percent for the three months ended June 30, 2019 and 2018, respectively. The June 30, 2019 effective tax rate is higher than the statutory rate of 21 percent due to state taxes, net of the federal benefit, and discrete tax benefits on our stock compensation plans. The June 30, 2018 effective tax rate was approximately equal to the U.S. statutory rate of 21 percent.

The effective tax rate was 32 percent and 21 percent for the six months ended June 30, 2019 and 2018, respectively. The June 30, 2019 effective tax rate is higher than the statutory rate of 21 percent due to state taxes, net of the federal benefit, and discrete tax benefits on our stock compensation plans. The June 30, 2018 effective tax rate was approximately equal t to the U.S. statutory rate of 21 percent.

10

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

7. Segment Information

The following table summarizes certain information regarding segments of the Company's operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales
Metals Segment	$	64,503,373		$	56,374,479		$	135,606,452		$	101,866,726
Specialty Chemicals Segment	14,274,603			15,519,284			27,975,356			28,507,639
	$	78,777,976		$	71,893,763		$	163,581,808		$	130,374,365
Operating income (loss)
Metals Segment	$	1,192,644		$	9,090,516		$	2,629,285		$	15,107,047
Specialty Chemicals Segment	926,032			1,106,672			1,540,246			1,970,161
Unallocated corporate expenses	1,944,221			2,219,618			4,252,643			3,722,339
Acquisition related costs	20,073			690,217			301,928			690,217
Earn-out adjustments	(417,808		)	2,307,598			(401,285		)	2,461,658
Operating income	572,190			4,979,755			16,245			10,202,994
Interest expense	1,009,797			403,852			2,033,738			717,835
Change in fair value of interest rate swaps	76,533			(19,255		)	124,094			(92,458		)
Other (income) loss, net	(109,773		)	(59,111		)	(404,441		)	29,185
(Loss) income before income taxes	$	(404,367	)	$	4,654,269		$	(1,737,146	)	$	9,548,432
	As of
	June 30, 2019			December 31, 2018
Identifiable assets
Metals Segment	$	208,097,980		$	192,195,733
Specialty Chemicals Segment	27,940,364			28,174,675
Corporate (1)	45,027,327			8,028,438
	$	281,065,671		$	228,398,846
Goodwill
Metals Segment	$	16,202,890		$	8,445,262
Specialty Chemicals Segment	1,354,730			1,354,730
	$	17,557,620		$	9,799,992

^{(1) As of June 30, 2019, this amount included 36,428,751 in right-of-use assets that were recorded with the adoption of ASC 842 ("Leases"). Refer to Note 12 for additional information.} 

8. Fair Value of Financial Instruments

The Company makes estimates of fair value in accounting for certain transactions, in testing and measuring impairment and in providing disclosures of fair value in its condensed consolidated financial statements. The Company determines the fair values of its financial instruments for disclosure purposes by maximizing the use of observable inputs and minimizing the use of unobservable inputs. Fair value disclosures for assets and liabilities are grouped into three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are less active.

11

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 3 - Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow methodologies and similar techniques.

The Company's financial instruments include cash and cash equivalents, accounts receivable, derivative instruments, accounts payable, earn-out liabilities, revolving line of credit, term loan, and equity investments.

Level 1 Financial Instruments

For short-term instruments, other than those required to be reported at fair value on a recurring basis and for which additional disclosures are included below, management concluded the historical carrying value is a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization. Therefore, as of June 30, 2019 and December 31, 2018, the carrying amounts for cash and cash equivalents, accounts receivable, accounts payable, the Company's revolving line of credit, which is based on a variable interest rate, and term loan approximate their fair value.

During the first six months of 2019, the Company sold shares of its equity securities investments. Proceeds from the sale totaled $1,091,644 which resulted in a realized gain for the three and six-months of June 30, 2019 $148,416 and $474,227, respectively, that is included in "Other expense (income)" on the accompanying Condensed Consolidated Statements of Operations.

For the three and six-months ended June 30, 2019, the Company also recorded a net unrealized loss of $48,000 and $101,125, respectively, on the investments in equity securities held, which is included in "Other expense (income)" on the accompanying Condensed Consolidated Statements of Operations.

The fair value of equity securities held by the Company as of June 30, 2019 and December 31, 2018 was $2,760,000 and $2,935,000, respectively, and is included in “Prepaid expenses and other current assets” on the accompanying Consolidated Balance Sheets.

Level 2 Financial Instruments

The Company has one interest rate swap contract, which is classified as a Level 2 financial instrument as it is not actively traded and is valued using pricing models that use observable market inputs. The fair value of the contract was an asset of $23,371 and $147,465 at June 30, 2019 and December 31, 2018, respectively. The interest rate swap was priced using discounted cash flow techniques. Changes in its fair value were recorded to other income (expense) with corresponding offsetting entries to current assets or liabilities, as appropriate. Significant inputs to the discounted cash flow model include projected future cash flows based on projected one-month LIBOR and the average margin for companies with similar credit ratings and similar maturities.

To manage the impact on earnings of fluctuating nickel prices, the Company occasionally enters into six-month forward option contracts, which are classified as Level 2. At June 30, 2019 and December 31, 2018, the Company did not have any such contracts in place.

Level 3 Financial Instruments

The fair value of contingent consideration ("earn-out") liabilities resulting from the 2017 MUSA-Stainless acquisition, 2018 MUSA-Galvanized acquisition, and 2019 American Stainless acquisition (see Note 9) are classified as Level 3. The fair value of the MUSA-Stainless earn-out was estimated by applying the Monte Carlo Simulation approach using management's projection of pounds to be shipped and future price per unit. The fair value of the MUSA-Galvanized earn-out and American Stainless earn-out were estimated by applying the probability-weighted expected return method, using management's projection of pounds to be shipped and future price per unit. Each quarter-end, the Company re-evaluates its assumptions for all earn-out liabilities and adjusts to reflect the updated fair values. Changes in the estimated fair value of the earn-out liabilities are reflected in the results of operations in the periods in which they are identified. Changes in the fair value of the earn-out liabilities may materially impact and cause volatility in the Company's operating results.

12

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents a summary of changes in fair value of the Company's earn-out liabilities during the period:

	MUSA-Stainless			MUSA-Galvanized			ASTI			Total
Balance at December 31, 2018	$	4,251,584		$	3,357,800		$	—		$	7,609,384
Fair value of the earn-out liability associated with the American Stainless acquisition	—			—			6,366,324			6,366,324
Earn-out payments during the period	(784,852		)	(378,649		)	(618,359		)	(1,781,860		)
Changes in fair value during the period	(192,065		)	(473,000		)	263,780			(401,285		)
Balance at June 30, 2019	$	3,274,667		$	2,506,151		$	6,011,745		$	11,792,563

For the six-month period ended June 30, 2018, the Company recorded a $2,461,658 charge related to changes in the fair value of the MUSA-Stainless earn-out liability.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 in the three and six-month period ended June 30, 2019 or year ended December 31, 2018. During the first six months of 2019, there have been no changes in the fair value methodologies used by the Company.

9. Acquisitions

Acquisition of the Assets and Operations of American Stainless Tubing, Inc.

On January 1, 2019, the Company's wholly-owned subsidiary, ASTI Acquisition, LLC, a North Carolina limited liability company (“ASTI”), completed the purchase of substantially all of the assets and operations of American Stainless Tubing, Inc., a North Carolina corporation ("American Stainless"), in Statesville and Troutman, North Carolina. The purchase price for the all-cash acquisition was $21,895,409, subject to a post-closing working capital adjustment. The Company funded the acquisition with a new five-year $20,000,000 term note and a draw against asset-based line of credit (see Note 10).

The transaction is accounted for using the acquisition method of accounting for business combinations. Under this method, the total consideration transferred to consummate the acquisition is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the closing date of the acquisition. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed. Accordingly, the allocation of the consideration transferred in the unaudited condensed consolidated financial statements is preliminary and will be adjusted upon completion of the final valuation of the assets acquired and liabilities assumed. Such adjustments could be significant. The final valuation is expected to be completed as soon as practicable but no later than twelve months after the closing date of the acquisition.

The excess of the consideration transferred over the fair value of the net tangible and identifiable intangible assets is reflected as goodwill. Goodwill consists of manufacturing cost synergies expected from combining American Stainless' production capabilities with the Metals Segment current operations. All of the goodwill recognized was assigned to the Company's Metals Segment and is expected to be deductible for income tax purposes.

American Stainless will receive quarterly earn-out payments for a period of three years following closing. Pursuant to the asset purchase agreement between ASTI and American Stainless, earn-out payments will equate to six and one-half percent (6.5 percent) of ASTI’s revenue over the three-year earn-out period. In determining the appropriate discount rate to apply to the contingent payments, the risk associated with the functional form of the earn-out, and the credit risk associated with the payment of the earn-out were all considered. The fair value of the contingent consideration was estimated by applying the probability weighted expected return method using management's estimates of pounds to be shipped and future price per unit.

During the second quarter of 2019, management revised the initial estimate of the fair value of the contingent consideration, resulting in an increase to the earn-out liability of $218,094. Because this adjustment was determined within the measurement period, goodwill was increased by $218,094. At June 30, 2019 the fair value of the contingent consideration totaled $6,011,745 with $2,802,828 of this liability classified as a current liability since the payments will be made quarterly.

The fair value assigned to the customer list intangible will be amortized on an accelerated basis over 15 years. During the second quarter of 2019, management revised the initial estimate of the fair value of the customer list intangible asset, resulting in a decrease

13

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

to the customer list intangible asset of $496,000. Because this adjustment was determined within the measurement period, goodwill was increased by $496,000.

The following table shows the initial estimate of value as reported at March 31, 2019 and revisions made during the second quarter of 2019:

	Initial estimate			Revisions			Revised estimate
Inventories	$	5,564,000		$	—		$	5,564,000
Accounts receivable	3,533,921			—			3,533,921
Other current assets - production and maintenance supplies	605,613			—			605,613
Property, plant and equipment	2,793,173			—			2,793,173
Customer list intangible	10,000,000			(496,000		)	9,504,000
Goodwill	7,043,534			714,094			7,757,628
Contingent consideration (earn-out liability)	(6,148,230		)	(218,094		)	(6,366,324		)
Accounts payable	(1,400,009		)	—			(1,400,009		)
Other liabilities	(96,593		)	—			(96,593		)
	$	21,895,409		$	—		$	21,895,409

ASTI's results of operations since acquisition are reflected in the Company's consolidated statements of operations as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Net sales	$	8,557,027	$	18,070,247
Income before income taxes	992,041		1,099,163

For the three and six-month periods ended June 30, 2019, cost of sales included $1,147,000representing the fair value above predecessor cost associated with acquired inventory that was sold during the quarter.

The following unaudited pro-forma information is provided to present a summary of the combined results of the Company's operations with ASTI as if the acquisition had occurred on January 1, 2018. The unaudited pro-forma financial information is for information purposes only and is not necessarily indicative of what the results would have been had the acquisition been completed on the date indicated above.

Pro-Forma
	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Pro-forma net sales	$	81,083,582	$	148,090,359
Pro-forma net income	$	3,776,621	$	6,984,743
Earnings per share:
Basic	$	0.43	$	0.80
Diluted	$	0.42	$	0.79

Pro-forma net income was reduced for the following:

• Amortization of American Stainless’ customer list intangible of $281,499 and $594,000 for the three and six months June 30, 2018, respectively;

14

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

• Additional rent expense related to the Company’s lease of American Stainless’ real estate from Store Capital of $121,450 and $242,899 for the three and six months ended June 30, 2018, respectively;

• An estimated amount of interest expense associated with the additional borrowings to fund the American Stainless acquisition of $201,192 and $412,162 for the three and six months ended June 30, 2018, respectively;

• Depreciation of$71,150 and $112,402for the three and six months ended June 30, 2018, respectively, related to the incremental fair value above historical cost for acquired property, plant and equipment; and

• A increase in the provision for income taxes for the three months ended June 30, 2018 and a decrease in the provision for income taxes of $143,013 for the six months ended June 30, 2018 related to the impact of the other pro-forma adjustments and American Stainless' previous status as a pass-through entity for income tax purposes prior to the acquisition.

Acquisition of the Galvanized Pipe and Tube Assets of Marcegaglia USA, Inc.

On July 1, 2018, Bristol Metals, LLC ("BRISMET"), a subsidiary of the Company's Metals Segment, acquired Marcegaglia USA, Inc.'s ("MUSA") galvanized tube assets and operations ("MUSA-Galvanized") located in Munhall, PA. The purchase price for the transaction totaled $10,378,281. The assets purchased and liabilities assumed from MUSA include accounts receivable, inventory, equipment, and accounts payable.

10. Long-term Debt

On December 20, 2018, the Company amended its Credit Agreement with its bank to refinance and increase its Line of Credit (the "Line") from $80,000,000 to $100,000,000 and to create a new 5-year term loan in the principal amount of $20,000,000 (the “Term Loan”). The Term Loan was used to finance the purchase of substantially all of the assets of American Stainless (see Note 9). The Term Loan’s maturity date is February 1, 2024 and shall be repaid in 60 consecutive monthly installments. Interest on the Term Loan is calculated using the One Month LIBOR Rate (as defined in the Credit Agreement), plus 1.90 percent. The Line will be used for working capital needs and as a source for funding future acquisitions. The maturity date of the Line has been extended to December 20, 2021. Interest on the Line remains unchanged and is calculated using the One Month LIBOR Rate, plus 1.65 percent. Borrowings under the Line are limited to an amount equal to a Borrowing Base calculation that includes eligible accounts receivable and inventory. As of June 30, 2019, the Company had $20.0 million of remaining available capacity under its line of credit.

Pursuant to the Credit Agreement, the Company is subject to certain covenants including maintaining a minimum fixed charge coverage ratio, maintaining a minimum tangible net worth, and a limitation on the Company’s maximum amount of capital expenditures per year, which is in line with currently projected needs. At June 30, 2019, the Company was in compliance with all debt covenants.

11. Contingencies

The Company is from time-to-time subject to various claims, possible legal actions for product liability and other damages, and other matters arising out of the normal conduct of the Company's business.  

Management is not currently aware of any asserted or unasserted matters which could have a material effect on the financial condition or results of operations of the Company.

15

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

12. Leases

Adoption of ASC Topic 842, "Leases"

On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The Company's portfolio of leases contains both finance and operating leases that relate primarily to real estate agreements and manufacturing equipment agreements. Substantially all of the value of the Company's lease portfolio relates to a real estate master lease agreement with Store Master Funding XII, LLC, an affiliate of Store Capital Corporation ("Store") that was entered into in 2016 and amended with the 2018 MUSA-Galvanized and 2019 American Stainless acquisitions. As of June 30, 2019, operating lease liabilities related to the master lease agreement with Store totaled $37,053,119, or 97 percent of the total lease liabilities on the accompanying condensed consolidated balance sheet.

Practical Expedients and Elections

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also elected to combine lease and non-lease components and elected the short-term lease recognition exemption for all leases that qualify.

Deferred Gain on Sale Leaseback

On January 1, 2019, the Company recorded cumulative-effect adjustments to increase equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to the derecognition of the deferred gain on its sale leaseback, consistent with transition guidance set forth in ASC 842-10-65-1.

Discount Rate

To determine the present value of minimum future lease payments for operating leases at January 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the "incremental borrowing rate" or "IBR"). The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, treasury rates for five years, 10 years, and 30 years were used as they cover the periods of the leases. The Company additionally used the Damodaran Credit Rating Model, which assesses a credit rating based on the interest coverage ratio and relates this to credit ratings of other large public manufacturers. Inputs required include EBIT, interest expense, future minimum lease payments, outstanding debt, and a reference rate. Based on this assessment of the aforementioned qualitative and quantitative factors, the Company determined that 7.32 percent was an appropriate incremental borrowing rate to apply to its portfolio of real-estate operating leases. The Company elected to utilize a single discount rate for its portfolio of operating leases because of similar lease characteristics; the resulting calculation does not differ materially from applying the standard to the individual leases.

Weighted average discount rates for operating and finance leases are as follows:

Operating Leases	7.32	%
Finance Leases	11.88	%

16

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Balance Sheet Presentation

Operating and finance lease amounts included in the Consolidated Balance Sheet are as follows:

Financial Statement Line Item	Classification	June 30, 2019
Right-of-use assets, operating leases	Assets	$	36,428,751
Right-of-use assets, finance leases	Assets	488,347
Current lease liabilities, operating leases	Current liabilities	3,526,011
Current lease liabilities, finance leases	Current liabilities	248,589
Non-current lease liabilities, operating leases	Non-current liabilities	34,139,854
Non-current lease liabilities, finance leases	Non-current liabilities	457,933

Total Lease Cost

Individual components of the total lease cost incurred by the Company is as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	1,027,998	$	2,055,996
Finance lease cost:
Amortization of right-of-use assets	43,714		87,428
Interest on finance lease liabilities	22,147		45,864
Total lease cost	$	1,093,859	$	2,189,288

Amortization of assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent.

Maturity of Leases

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Additional Information

Weighted average remaining lease terms for operating and finance leases as of June 30, 2019 are as follows:

Operating Leases	204 months
Finance Leases	30 months

During the six-month period ended June 30, 2019, right-of-use assets obtained in exchange for new operating lease liabilities totaled $4,900,243.

17

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

On January 1, 2019, the Company and Store, entered into an Amended and Restated Master Lease Agreement (the “Master Lease”), pursuant to which the Company leases the Statesville and Troutman, NC facilities, purchased by Store from American Stainless on January 1, 2019, for the remainder of the initial term of 20 years set forth in the Master Lease, with two renewal options of ten years each. Because the Company is reasonably certain to not exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Master Lease includes a rent escalator equal to the lesser of 1.25 times the percentage increase in the Consumer Price Index since the previous increase or 2 percent.

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

13. Goodwill and Intangible Assets

As a result of the January 1, 2019 American Stainless acquisition, the Company recognized $7,757,628 in Goodwill for the excess of consideration transferred over the fair value of the acquired net tangible and identifiable intangible assets.

The Company also recorded a $9,504,000 intangible asset on a preliminary basis for the fair value of the customer relationships that were acquired, to be amortized on an accelerated basis over 15 years.

The balance of intangible assets subject to amortization at June 30, 2019 and December 31, 2018 is as follows:

	June 30, 2019			December 31, 2018
Intangible assets, gross	$	32,126,000		$	22,622,000
Accumulated amortization of intangible assets	(14,668,672		)	(12,925,888		)
Intangible assets, net	$	17,457,328		$	9,696,112

Estimated amortization expense related to intangible assets for the next five years is as follows:

Remainder of 2019	$	1,776,229
2020	3,296,195
2021	3,104,819
2022	2,790,361
2023	1,245,083
2024	1,083,974
Thereafter	4,628,111

18

Synalloy Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

14. Stock Repurchase Program

On February 21, 2019, the Board of Directors authorized a stock repurchase program for up to 850,000 shares of its outstanding common stock over twenty-four months. The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under the program, the purchases will be funded from available working capital, and the repurchased shares will be returned to the status of authorized, but unissued shares of common stock or held in treasury. There is no guarantee as to the exact number of shares that will be repurchased by the Company, and the Company may discontinue purchases at any time that management determines additional purchases are not warranted.

During the six-month period ended June 30, 2019 the Company did not purchase any shares under the stock repurchase program.

19

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is management's discussion of certain significant factors that affected the Company during the second quarter and six-month periods endedJune 30, 2019.

Consolidated net sales for the second quarter of 2019 were $78.8 million. This represents an increase of $6.9 million or 9.6 percent when compared to net sales for the second quarter of 2018. Excluding the net sales of ASTI and Munhall-Galvanized, net sales for the second quarter of 2019 decreased $7.9 million, or 11.0 percent compared to net sales for the second quarter of 2018.

Consolidated net sales for the first six months of 2019 were $163.6 million, an increase of $33.2 million or 25.5 percent from the first six months of 2018. Excluding the net sales of ASTI and Munhall-Galvanized, net sales for the first six months of 2019 increased $2.2 million, or 1.7 percent compared to net sales for the second quarter of 2018.

For the second quarter of 2019, the Company recorded a net loss of $0.3 million, or $0.03 loss per diluted share, compared to net income of $3.7 million, or $0.41 per diluted share for the second quarter of 2018. Excluding the financial results of ASTI and Munhall-Galvanized, net income for the second quarter of 2019 decreased $4.5 million, or 121.8 percent compared to net income for the second quarter of 2018. The second quarter of 2019 was negatively impacted by inventory price change losses which, on a pre-tax basis, totaled $1.8 million, compared to a $1.1 million gain in the second quarter of 2018.

For the first six months of 2019, net loss was $1.2 million, or $0.13 loss per diluted earnings per share. This compares to net income of $7.5 million, or $0.85 per diluted earnings per share for the first six months of 2018. Excluding the financial results of ASTI and Munhall-Galvanized, net income for the first six months of 2019 decreased $9.5 million, or 127.5 percent compared to net income for the first six months of 2018. The first six months of 2019 were negatively impacted by inventory price change losses which, on a pre-tax basis, totaled $5.2 million, compared to a $3.5 million gain for the first six months of 2018.

Impact of 2019 and 2018 Acquisitions on Financial Results

The second quarter and the first six months of 2019 include financial results in the Company's Metals Segment related to the MUSA-Galvanized acquisition (which closed on July 1, 2018) as follows:

a. For the second quarter of 2019, net sales for Munhall-Galvanized totaled $6.2 million, with pre-tax loss of $0.2 million.

b. For the first six months of 2019, net sales for Munhall-Galvanized totaled $12.9 million, with pre-tax income of $0.2 million.

The second quarter and the first six months of 2019 include financial results in the Company's Metals Segment related to the American Stainless acquisition (which closed on January 1, 2019) as follows:

a. For the second quarter of 2019, net sales for ASTI totaled $8.6 million, with pre-tax income of $1.0 million.

b. For the first six months of 2019, net sales for ASTI totaled $18.1 million, with pre-tax income of $1.1 million.

For ASTI, the first six months of 2019 include amortization of acquisition fair value markup of inventory totaling $1.3 million and other acquisition related one-time costs totaling $46,100.

20

Metals Segment

The Metals Segment's net sales for the second quarter of 2019 totaled $64.5 million, an increase of $8.1 million or 14.4 percent from the second quarter of 2018. Excluding the net sales of ASTI and Munhall-Galvanized, Metals Segment net sales for the second quarter of 2019 decreased $6.7 million, or 11.8 percent, compared to net sales for the second quarter of 2018.

Net sales for the first six months of 2019 were $135.6 million, an increase of $33.7 million or 33.1 percent from the first six months of 2018. Excluding the net sales of ASTI and Munhall-Galvanized, Metals Segment net sales for the first six months of 2019 increased $2.7 million, or 2.7 percent, compared to net sales for the first six months of 2018.

Sales of seamless carbon pipe and tube were down 20.2 percent from last year’s second quarter. Storage tank and vessel sales increased 13.0 percent over last year’s second quarter. Excluding ASTI and Munhall-Galvanized, pipe and tube sales were down 15.8 percent from the second quarter of 2018.

Sales for the second quarter and first six months of 2019 compared to the prior year are summarized as follows:

	Sales increase (decrease) from prior year period
	$			%	Average selling price (1)	Units shipped
Second quarter
Storage tank and vessel	$	1,175,429		13.0%	27.7%	(14.7)%
Seamless carbon steel pipe and tube	(1,700,507		)	(20.2)%	(1.5)%	(18.7)%
Stainless steel pipe - Excluding ASTI	(6,146,625		)	(15.8)%	(13.7)%	(2.1)%
Stainless steel pipe - ASTI	8,557,027			n/a	n/a	n/a
Galvanized pipe	6,243,570			n/a	n/a	n/a
Total second quarter change	$	8,128,894
First six months
Storage tank and vessel	$	5,228,612		35.2%	28.6%	6.6%
Seamless carbon steel pipe and tube	(1,546,615		)	(9.2)%	5.3%	(14.5)%
Stainless steel pipe - Excluding ASTI	(948,323		)	(1.4)%	(3.3)%	1.9%
Stainless steel pipe - ASTI	18,070,247			n/a	n/a	n/a
Galvanized pipe	12,935,805			n/a	n/a	n/a
Total first six months change	$	33,739,726

⁽¹⁾ Average price increases for the second quarter of 2019 as compared to the second quarter of 2018 primarily relate to the following:

•Storage tank and vessels - product mix change to larger, more complex tanks;

• Seamless carbon steel pipe and tube - slight decline in pricing based on market conditions;

•Stainless steel pipe (excluding ASTI) - pass through of input and cost changes related to:

a.Alloy surcharges decrease of two percent;

b.Base raw material input mill pricing, product mix and other competitive pricing, decrease of 11.7 percent.

For the overall Metals Segment, with the addition of the galvanized product line pricing (from the July 1, 2018 MUSA-Galvanized acquisition), pricing averages were impacted by the lower average selling prices of galvanized products as compared to other product lines in the Metals Segment. The inclusion of galvanized products lowered average pricing for the second quarter ended June 30, 2019 by 29 percent.

Average price increases for the first six months of 2019 as compared to the first six months of 2018 primarily relate to the following:

•Storage tank and vessels - product mix change to larger, more complex tanks;

21

• Seamless carbon steel pipe and tube - slight decline in pricing based on market conditions related to second quarter, offset by price increases related to pass through of tariffs implemented in the second quarter of 2018;

•Stainless steel pipe (excluding ASTI) - pass through of input and cost changes related to:

a.Alloy surcharges decrease of one percent;

b.Base raw material input mill pricing, product mix and other competitive pricing, decrease of 2.3 percent.

For the overall Metals Segment, with the addition of the galvanized product line pricing (from the July 1, 2018 MUSA-Galvanized acquisition), pricing averages were impacted by the lower average selling prices of galvanized products as compared to other product lines in the Metals Segment. The inclusion of galvanized products lowered average pricing for the six months ended June 30, 2019 by 33 percent.

The Metals Segment's operating income decreased $7.9 million to $1.2 million for the second quarter of 2019 compared to $9.1 million for the second quarter of 2018. For the first six months of 2019, operating income decreased for the Metals Segment by $12.5 million to an operating income of $2.6 million compared to operating income of $15.1 million for the same period of 2018.

Current quarter operating results were affected by the following factors:

a) Nickel prices and resulting surcharges for 304 and 316 alloys ended the second quarter of 2019 at continued low levels. The reduction in the nickel indices resulted in substantially lower selling prices in the second quarter, generating a net unfavorable operating impact of $1.8 million related to metal pricing. Compared to a period of rising nickel prices in the second quarter of 2018, which generated metal pricing gains of $1.1 million, the second quarter of 2019 was unfavorable by $2.9 million compared to the second quarter of 2018;

b) Operating profits for welded stainless pipe and galvanized tube operations declined approximately $5.3 million in the second quarter of 2019 compared to the prior year period. The decline is primarily related to the average pricing declines outlined in our updated 2019 guidance issued on June 19, 2019. We are expecting some improvement in pricing and margins for galvanized as hot-dipped galvanized input cost normalizes through the remainder of the year. However, our second half projections continue to include negative pricing impacts in stainless pipe, in line with an extended period of months during which we expect to eliminate excess inventories in the market;

c) The acquisition of American Stainless increased second quarter of 2019 operating income by $1.2 million, with no comparable results in the prior year period; and

d) Seamless carbon pipe and tube showed a decline of 20.2 percent in sales, primarily related to reduced energy market sales of larger diameter tube, lowering operating profit by approximately $1.1 million. We do expect energy market based sales to remain low for the remainder of the year, but anticipate higher levels of special projects, specifically in the alternative energy sector.

Specialty Chemicals Segment

Net sales for the Specialty Chemicals Segment in the second quarter of 2019 totaled $14.3 million, representing a $1.2 million or 8.0 percent decrease from the second quarter of 2018. Sales for the first six months of 2019 were $28.0 million, a decrease of $0.5 million or 1.9 percent from 2018 results.

The decline of net sales belie the overall strength in Chemicals volumes sold, as pounds shipped increased by 6.5 percent and 10.5 percent for the comparisons to prior year for the second quarter and the first six months, respectively. The decline in net sales is simply a factor of more tolled product being shipped in 2019 compared to 2018, with tolled revenue not including material cost as a component.

Operating income for the Specialty Chemicals Segment for the second quarter of 2019 was $0.9 million, a decrease of $0.2 million from the same quarter of 2018. While the product mix was slightly unfavorable compared to prior year, on a sequential basis, the result represents a 51.0 percent improvement in profit over the first quarter of 2019. For the first six months of 2019, operating income for the Specialty Chemicals Segment was $1.5 million compared to operating income of $2.0 million for the same period of 2018. The prior year's first six months included a one-time claim settlement gain of $0.3 million.

22

Other Items

Unallocated corporate expenses for the second quarter of 2019 decreased $0.3 million or 12.4 percent to $1.9 million (2.5 percent of sales) compared to $2.2 million (3.1 percent of sales) for the same period in the prior year comparative period. The second quarter decrease resulted primarily from lower professional fees, employee benefits and incentive bonus expense. For the first six months of 2019, unallocated corporate expenses increased $0.5 million or 14.2 percent to $4.3 million (2.6 percent of sales) from $3.7 million (2.9 percent of sales) in the prior year comparative period. For the first six months of 2019, the increase to unallocated corporate expenses resulted primarily from higher professional fees and stock option expense.

Acquisition costs were $32,400 for the second quarter of 2019 ($12,300 recorded in Metals Segment Cost of Sales and $20,100 in unallocated SG&A), resulting from costs associated with the January 1, 2019 American Stainless acquisition. This compares to $0.7 million in acquisition cost ($0.7 million in unallocated SG&A and $31,100 in Metals Segment Cost of Sales) during the second quarter of 2018, which resulted primarily from costs associated with the Bristol Metals-Munhall galvanized acquisition.

Interest expense was $1.0 million and $0.4 million for the second quarters of 2019 and 2018, respectively. Interest expense was $2.0 million and $0.7 million for the first six months of 2019 and 2018, respectively. The increase was related to higher average debt outstanding in the second quarter and the first six months of 2019, as additional borrowings were primarily related to acquisitions and to support increased working capital requirements.

The effective tax rate was 35.0 percent and 31.5 percent for the three and six-month periods ended June 30, 2019. The June 30, 2019 effective tax rate was higher than the statutory rate of 21.0 percent due to state taxes, net of the federal benefit, and discrete tax benefits on our stock compensation plans.

The effective tax rate was 21.0 percent and 21.3 percent for the three and six-month periods ended June 30, 2018, respectively. The Company’s effective tax rate was approximately equal to the U.S. statutory rate of 21.0 percent.

The Company's cash balance decreased $2.2 million to $23,800 as of June 30, 2019 compared to $2.2 million at December 31, 2018. Fluctuations affecting cash flows during the six months ended June 30, 2019 were comprised of the following:

a) Net inventories decreased $3.8 million at June 30, 2019 when compared to December 31,2018, mainly due to efforts to balance inventory with projected business levels. Excluding the impact of ASTI acquired inventory, the Company generated $8.5 million of operating cash flows from the relief of inventory during the six months ended June 30, 2019. Inventory turns increased slightly from 1.81 turns at December 31, 2018, calculated on a three-month average basis, to 1.89 turns at June 30, 2019;

b) Accounts payable increased $3.9 million as of June 30, 2019 as compared to December 31, 2018. The majority of the increase is related to levels of purchasing activity near the end of the quarter, including second quarter receipts of inventory that were still unpaid on normal terms at the end of the quarter. Accounts payable days outstanding were approximately 33 days at June 30, 2019 compared to 37 days at December 31, 2018;

c) Net accounts receivable increased $2.6 million at June 30, 2019 as compared to December 31, 2018, which primarily resulted from the addition of ASTI’s sales and receivables following the January 1, 2019 acquisition, offset partially by a reduction in days outstanding of four days due to better collection experience at the end of the second quarter. Days sales outstanding, calculated using a six-month average basis, decreased from 52 days outstanding at the end of December 2018 to 48 days at the end of the June 2019;

d) On January 1, 2019, the Company paid $21.9 million to complete the American Stainless acquisition;

e) The Company purchased and sold equity securities during the six-month period ended June 30, 2019, which resulted in net cash proceeds of $0.5 million;

f) Capital expenditures for the first six months of 2019 were $1.9 million; and

g) The Company paid $1.8 million during the first six months of 2019 related to the earn-out liabilities from the 2019 American Stainless, 2018 MUSA-Galvanized and 2017 MUSA-Stainless acquisitions.

23

The Company increased its overall debt balance by $9.3 million during the first six months of 2019 and had $85.7 million of total borrowings outstanding with its lender as of June 30, 2019. Covenants under the Credit Agreement include maintaining a minimum fixed charge coverage ratio, maintaining a minimum tangible net worth, and a limitation on the Company’s maximum amount of capital expenditures per year, which is in line with currently projected needs. As of June 30, 2019, the Company had $20.0 million of remaining available capacity under its line of credit. The Company was in compliance with all covenants as of June 30, 2019.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This quarterly report includes and incorporates by reference "forward-looking statements" within the meaning of the federal securities laws. All statements that are not historical facts are "forward-looking statements." The words "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions identify 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. 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; raw materials availability; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; customer delays or difficulties in the production of products; new fracking regulations; a prolonged decrease in oil and nickel prices; unforeseen delays in completing the integrations of acquisitions; risks associated with mergers, acquisitions, dispositions and other expansion activities; financial stability of our customers; environmental issues; unavailability of debt financing on acceptable terms and exposure to increased market interest rate risk; inability to comply with covenants and ratios required by our debt financing arrangements; ability to weather an economic downturn; loss of consumer or investor confidence and other risks detailed from time-to-time in the Company's SEC filings. The Company assumes no obligation to update the information included in this report.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Information about the Company's exposure to market risk was disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 18, 2019. There have been no material quantitative or qualitative changes in market risk exposure since the date of that filing.

Item 4. Controls and Procedures

Based on the evaluation required by 17 C.F.R. Section 240.13a-15(b) or 240.15d-15(b) of the Company's disclosure controls and procedures (as defined in 17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)), the Company's Chief Executive Officer and Chief Financial Officer concluded that that such controls and procedures, as of the end of the period covered by this quarterly report, were effective.

Changes in Internal Control over Financial Reporting

The Company's management, including the Chief Executive Officer and Chief Financial Officer, identified no change in the Company's internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's control over financial reporting.

24

PART II

Item 1. Legal Proceedings

It is not unusual for us and our subsidiaries to be involved in various unresolved legal actions, administrative proceedings and claims in the ordinary course of business involving, among other things, product liability, commercial, employment, workers' compensation, and environmental matters. We establish reserves in a manner that is consistent with accounting principles generally accepted in the U.S. for costs associated with such matters when a liability is probable and those costs are capable of being reasonably estimated. We cannot predict with any certainty the outcome of these unresolved legal actions or the range of possible loss or recovery. Based on current information, however, we believe that the eventual outcome of these unresolved legal actions, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows. There were no material changes in our Legal Proceedings, as discussed in Part I, Item 3 in the Company's Annual Report on Form 10-K for the period ending December 31, 2018.

Item 1A. Risk Factors

There were no material changes in our assessment of risk factors as discussed in Part I, Item 1A in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32	Certifications Pursuant to 18 U.S.C. Section 1350
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
*	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed "furnished" and not "filed."

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SYNALLOY CORPORATION
	(Registrant)
Date:	August 13, 2019	By:	/s/ Craig C. Bram
			Craig C. Bram
			President and Chief Executive Officer
			(principal executive officer)
Date:	August 13, 2019	By:	/s/ Dennis M. Loughran
			Dennis M. Loughran
			Senior Vice President and Chief Financial Officer
			(principal accounting officer)

26

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Craig C. Bram, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Synalloy Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 13, 2019	/s/ Craig C. Bram
		Craig C. Bram
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Dennis M. Loughran, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Synalloy Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 13, 2019	/s/ Dennis M. Loughran
		Dennis M. Loughran
		Chief Financial Officer

EX-32

Exhibit 32

Certifications Pursuant to 18 U.S.C. Section 1350

The undersigned, who are the chief executive officer and the chief financial officer of Synalloy Corporation, each hereby certifies that, to the best of his knowledge, the accompanying Form 10-Q of the issuer fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date:	August 13, 2019	/s/ Craig C. Bram
		Craig C. Bram
		Chief Executive Officer
Date:	August 13, 2019	/s/ Dennis M. Loughran
		Dennis M. Loughran
		Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 09, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	Synalloy Corporation
Entity Central Index Key	0000095953
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		8,994,850
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Entity Current Reporting Status	Yes
Emerging Growth Company	false
Entity Shell Company	false
Smaller Reporting Company	true

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 23,760	$ 2,220,272
Accounts receivable, less allowance for doubtful accounts	43,685,225	41,065,251
Inventories, net	110,416,242	114,201,386
Prepaid expenses and other current assets	13,298,733	9,983,416
Total current assets	167,423,960	167,470,325
Non-current assets
Property, plant and equipment, net of accumulated	41,769,975	40,924,455
Right-of-use assets, operating leases, net	36,428,751
Goodwill	17,557,620	9,799,992
Intangible assets, net of accumulated amortization	17,457,328	9,696,112
Deferred charges, net	428,037	507,962
Total assets	281,065,671	228,398,846
Current liabilities
Accounts payable	28,960,431	25,073,698
Accrued expenses and other current liabilities	13,376,472	12,163,686
Current portion of long-term debt	4,000,000	0
Current portion of operating lease liabilities	3,526,011
Current portion of finance lease liabilities	248,589
Total current liabilities	50,111,503	37,237,384
Long-term debt	81,670,402	76,405,458
Deferred income taxes	1,388,985	252,988
Long-term deferred gain, sale-leaseback	0	5,599,077
Long-term portion of earn-out liability	6,060,435	4,702,562
Long-term portion of operating lease liabilities	34,139,854
Long-term portion of finance lease liabilities	457,933
Other long-term liabilities	162,475	1,717,291
Total non-current liabilities	123,880,084	88,677,376
Commitments and contingencies – See Note 11
Shareholders' equity
Common stock, par value $1 per share; authorized 24,000,000 shares; issued 10,300,000 shares	10,300,000	10,300,000
Capital in excess of par value	36,565,297	36,520,840
Retained earnings	72,398,650	68,965,410
Shareholders' equity before treasury stock	119,263,947	115,786,250
Less cost of common stock in treasury: 1,305,149 and 1,424,279 shares, respectively	12,189,863	13,302,164
Total shareholders' equity	107,074,084	102,484,086
Total liabilities and shareholders' equity	$ 281,065,671	$ 228,398,846

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Assets
Accounts receivable, allowance for doubtful accounts	$ 136,000	$ 169,107
Property, plant and equipment, accumulated depreciation	60,400,705	57,288,233
Intangible assets, accumulated amortization	$ 14,668,672	$ 12,925,888
Shareholders' equity
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	24,000,000	24,000,000
Common stock, shares issued (in shares)	10,300,000	10,300,000
Common stock in treasury, at cost (in shares)	1,305,149	1,424,279

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Net sales	$ 78,777,976	$ 71,893,763	$ 163,581,808	$ 130,374,365
Cost of sales	70,940,204	56,177,441	147,060,382	103,424,624
Gross profit	7,837,772	15,716,322	16,521,426	26,949,741
Selling, general and administrative expense	7,663,317	7,738,752	16,558,445	13,594,872
Acquisition related costs	20,073	690,217	348,021	690,217
Earn-out adjustments	(417,808)	2,307,598	(401,285)	2,461,658
Operating income	572,190	4,979,755	16,245	10,202,994
Other expense (income)
Interest expense	1,009,797	403,852	2,033,738	717,835
Change in fair value of interest rate swaps	76,533	(19,255)	124,094	(92,458)
Other, net	(109,773)	(59,111)	(404,441)	29,185
(Loss) income before income taxes	(404,367)	4,654,269	(1,737,146)	9,548,432
Income tax (benefit) provision	(141,629)	976,998	(547,886)	2,035,998
Net (loss) income	$ (262,738)	$ 3,677,271	$ (1,189,260)	$ 7,512,434
Net (loss) income per common share:
Basic (in dollars shares)	$ (0.03)	$ 0.42	$ (0.13)	$ 0.86
Diluted (in dollars shares)	$ (0.03)	$ 0.41	$ (0.13)	$ 0.85
Weighted average shares outstanding:
Basic (in shares)	8,974,212	8,776,239	8,950,563	8,761,182
Dilutive effect from stock options and grants (in shares)	0	87,537	0	72,804
Diluted (in shares)	8,974,212	8,863,776	8,950,563	8,833,986

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net (loss) income	$ (1,189,260)	$ 7,512,434
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation expense	3,832,161	2,874,216
Amortization expense	1,742,784	1,147,916
Amortization of debt issuance costs	79,925	45,492
Deferred income taxes	(163,591)	624,895
Earn-out adjustments	(401,285)	2,461,658
Payments of earn-out liability in excess of acquisition date fair value	(436,321)	(194,462)
Provision for loss (reduction of) on accounts receivable	63,875	(30,000)
Provision for losses on inventories	799,325	746,960
Gain on disposal of property, plant and equipment	0	(17,762)
Amortization of deferred gain on sale-leaseback	0	(167,137)
Straight line lease cost	288,269	184,344
Change in fair value of interest rate swaps	124,094	(92,458)
Unrealized loss on equity securities	101,125	29,185
Realized gain on sale of equity securities	(474,227)	0
Issuance of treasury stock for director fees	304,000	276,000
Employee stock compensation	852,758	416,180
Changes in operating assets and liabilities:
Accounts receivable	850,072	(12,768,096)
Inventories	8,549,818	(19,192,920)
Accounts payable	2,486,724	3,100,665
Accrued expenses	(1,374,838)	1,372,968
Accrued income taxes	(1,538,984)	889,103
Other assets and liabilities, net	(1,271,022)	(2,105,248)
Net cash provided by (used in) operating activities	13,225,402	(12,886,067)
Investing activities
Purchases of property, plant and equipment	(1,884,508)	(3,381,925)
Purchases of equity securities	(543,552)	(336,951)
Proceeds from sale of equity securities	1,091,644	0
Acquisition of the assets and operations of American Stainless Tubing, Inc. (see Note 9)	(21,895,409)	0
Acquisition of the galvanized pipe and tube assets of MUSA (see Note 9)	0	(10,378,281)
Net cash used in investing activities	(23,231,825)	(14,097,157)
Financing activities
Net (payments) borrowings (on) from line of credit	(9,068,390)
Net (payments) borrowings (on) from line of credit		28,020,386
Borrowing from term loan	20,000,000	0
Payments on term loan	(1,666,667)	0
Principal payments on finance lease obligations	(109,493)	(52,549)
Payments of debt issuance costs	0	(53,146)
Payments on earn-out liabilities	(1,345,539)	(977,603)
Proceeds from exercised stock options	0	50,380
Net cash provided by financing activities	7,809,911	26,987,468
(Decrease) increase in cash and cash equivalents	(2,196,512)	4,244
Cash and cash equivalents at beginning of period	2,220,272	14,706
Cash and cash equivalents at end of period	23,760	18,950
Supplemental disclosure
Interest	1,860,471	613,918
Income taxes	$ 1,165,951	$ 471,000

XML

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($)	Total	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Cost of Common Stock in Treasury
Balance balance at Dec. 31, 2017	$ 89,700,426	$ 10,300,000	$ 35,193,152	$ 58,129,383	$ (10,864)	$ (13,911,245)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	7,512,434			7,512,434	0
Stock options exercised, net	(81,276)		105,907			(187,183)
Issuance of shares of common stock from the treasury	276,000		(218,338)			494,338
Employee stock compensation	416,180		416,180
Ending balance at Jun. 30, 2018	97,823,764	10,300,000	35,496,901	65,630,953	0	(13,604,090)
Balance balance at Mar. 31, 2018	93,727,790	10,300,000	35,170,444	61,953,682	0	(13,696,336)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	3,677,271			3,677,271
Stock options exercised, net	(81,276)		105,907			(187,183)
Issuance of shares of common stock from the treasury	276,000		(3,429)			279,429
Employee stock compensation	223,979		223,979
Ending balance at Jun. 30, 2018	97,823,764	10,300,000	35,496,901	65,630,953	0	(13,604,090)
Balance balance at Dec. 31, 2018	102,484,086	10,300,000	36,520,840	68,965,410	0	(13,302,164)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(1,189,260)			(1,189,260)
Issuance of shares of common stock from the treasury	304,000		(808,301)			1,112,301
Employee stock compensation	852,758		852,758
Ending balance at Jun. 30, 2019	107,074,084	10,300,000	36,565,297	72,398,650	0	(12,189,863)
Balance balance at Mar. 31, 2019	106,795,803	10,300,000	36,304,160	72,661,388	0	(12,469,745)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(262,738)			(262,738)
Issuance of shares of common stock from the treasury	304,000		24,118			279,882
Employee stock compensation	237,019		237,019
Ending balance at Jun. 30, 2019	$ 107,074,084	$ 10,300,000	$ 36,565,297	$ 72,398,650	$ 0	$ (12,189,863)

XML

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (Parenthetical) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Stockholders' Equity [Abstract]
Stock options exercised (in shares)		13,301		13,301
Issuance of common stock from the treasury (in shares)	29,276	31,471	118,430	55,675

XML

Basis of Financial Statement Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. Operating results for the six-month period ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Certain prior period amounts have been reclassified to conform to the current period presentation, including changes in the fair value of the Company's earn-out liabilities from "Other Expense (Income)" to "Operating Income (Loss)" on the accompanying Condensed Consolidated Statements of Operations.

XML

Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Recently Issued Accounting Standards - Adopted

In February 2016, the FASB issued ASU No. 2016-02  "Leases (Topic 842)", as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company adopted the new standard as of January 1, 2019 on a modified retrospective basis, which does not require comparative periods to be restated. On adoption, we recognized additional operating lease liabilities of $33,115,763 based on the present value of the remaining minimum rental payments as of January 1, 2019. We additionally recognized corresponding right-of-use assets for operating leases totaling $32,171,829. On January 1, 2019, the Company also recorded cumulative-effect increases to equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to a deferred gain for a sale leaseback transaction that occurred in 2016 and was being amortized into earnings under the prior accounting. The adoption of this standard did not have a material impact on the consolidated statement of operations or cash flows for the six months ended June 30, 2019. See Note 12.

Recently Issued Accounting Standards - Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820)". The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.

XML

Revenues

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we are to in exchange for those goods or services.

The following table presents the Company's revenues, disaggregated by product group. Substantially all of the Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Storage tank and vessel	$	10,247,078	$	9,071,649	$	20,076,033	$	14,847,421
Seamless carbon steel pipe and tube	6,702,781		8,403,288		15,289,286		16,835,901
Stainless steel pipe	41,309,945		38,899,542		87,305,328		70,183,404
Galvanized pipe	6,243,569		—		12,935,805		—
Specialty chemicals	14,274,603		15,519,284		27,975,356		28,507,639
Total revenues	$	78,777,976	$	71,893,763	$	163,581,808	$	130,374,365

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. For such arrangements, revenue for each performance obligation is based on its stand-alone selling price and revenue is recognized as each performance obligation is satisfied. The Company generally determines stand-alone selling prices based on the prices charged to customers using the adjusted market assessment approach or expected cost plus margin.

Deferred Revenues

Deferred revenues are recorded when cash payments are received in advance of satisfying the performance obligation, including amounts which are refundable. The deferred revenue balance increased $48,948 during the first six months of 2019 to $226,466 as of June 30, 2019 due to receiving $1,355,219 in advance of satisfying our performance obligations during the period, offset by $1,306,271 of revenue that was recognized during the period after satisfying the performance obligations that were included in the beginning deferred revenue balance or entered into during the current period. Deferred revenues are included in "Accrued expenses and other current liabilities" on the accompanying Condensed Consolidated Balance Sheets.

Our payment terms vary by the financial strength or location of our customer and the products offered. The length of time between invoicing and when payment is due is not significant. For certain customers, payment is required before the products or services are delivered to the customer.

XML

Inventories

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by either specific identification or weighted average methods. The components of inventories are as follows:

	June 30, 2019		December 31, 2018
Raw materials	$	55,329,614	$	59,778,767
Work-in-process	17,768,751		21,033,532
Finished goods	37,317,877		33,389,087
	$	110,416,242	$	114,201,386

XML

Stock options and restricted stock

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock options and restricted stock

Stock options and restricted stock

During the first six months of 2019, no stock options were exercised by officers or employees of the Company. During the first six months of 2018, stock options for 40,606 shares of common stock were exercised by officers or employees for an aggregate exercise price of $474,378. 

Stock compensation expense for the three and six-month periods ended June 30, 2019 was $237,019 and $852,758, respectively. Stock compensation expense for the three and six-month periods ended June 30, 2018 was $223,979 and $416,180, respectively.

In 2016, the Compensation & Long-Term Incentive Committee (the "Committee") of the Company's Board of Directors granted performance restricted stock awards (“2016 Performance Stock Award”) to officers and certain key management-level employees. The 2016 Performance Stock Award vested three years from the grant date based on continuous service, with the number of shares earned (0 percent to 150 percent of the target award) depending on the extent to which the Company achieves certain financial performance targets measured over the period from January 1, 2016 to December 31, 2018. On February 8, 2019, the Committee approved the vesting of the 2016 Performance Stock Award for a total of 46,477 restricted shares at a grant date market price of $8.05.

On February 8, 2019, the Committee approved grants under the Company's 2015 Stock Awards Plan to certain management employees of the Company where 44,949 shares with a market price of $15.72 per share were granted under the Plan. These stock awards vest in either 20 percent or 33 percent increments annually, beginning one year after the date of grant. In order for the awards to vest, the employee must be in the continuous employment of the Company since the date of the award. Any portion of an award that has not vested is forfeited upon termination of employment. The Company may terminate any portion of the award that has not vested upon an employee's failure to comply with all conditions of the award or the 2015 Stock Awards Plan. An employee is not entitled to any voting rights with respect to any shares not yet vested, and the shares are not transferable.

The diluted earnings per share calculations exclude the effect of potentially dilutive shares when the inclusion of those shares in the calculation would have an anti-dilutive effect. For the six-month period ended June 30, 2019 there is no difference in the number of shares used to calculate basic and diluted shares outstanding because their effect would have been anti-dilutive due to the Company reporting a net loss. For the six-month period ended June 30, 2018, the Company had weighted average shares of common stock, in the form of stock grants and options of 36,815 which were not included in the diluted earnings per share calculation as their effect was anti-dilutive.

XML

Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal examinations for years before 2014 or state income tax examinations for years before 2013. During the first six months of 2019, the Company did not identify nor reserve for any unrecognized tax benefits.

The effective tax rate was 35 percent and 21 percent for the three months ended June 30, 2019 and 2018, respectively. The June 30, 2019 effective tax rate is higher than the statutory rate of 21 percent due to state taxes, net of the federal benefit, and discrete tax benefits on our stock compensation plans. The June 30, 2018 effective tax rate was approximately equal to the U.S. statutory rate of 21 percent.

The effective tax rate was 32 percent and 21 percent for the six months ended June 30, 2019 and 2018, respectively. The June 30, 2019 effective tax rate is higher than the statutory rate of 21 percent due to state taxes, net of the federal benefit, and discrete tax benefits on our stock compensation plans. The June 30, 2018 effective tax rate was approximately equal t to the U.S. statutory rate of 21 percent.

XML

Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

The following table summarizes certain information regarding segments of the Company's operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales
Metals Segment	$	64,503,373		$	56,374,479		$	135,606,452		$	101,866,726
Specialty Chemicals Segment	14,274,603			15,519,284			27,975,356			28,507,639
	$	78,777,976		$	71,893,763		$	163,581,808		$	130,374,365
Operating income (loss)
Metals Segment	$	1,192,644		$	9,090,516		$	2,629,285		$	15,107,047
Specialty Chemicals Segment	926,032			1,106,672			1,540,246			1,970,161
Unallocated corporate expenses	1,944,221			2,219,618			4,252,643			3,722,339
Acquisition related costs	20,073			690,217			301,928			690,217
Earn-out adjustments	(417,808		)	2,307,598			(401,285		)	2,461,658
Operating income	572,190			4,979,755			16,245			10,202,994
Interest expense	1,009,797			403,852			2,033,738			717,835
Change in fair value of interest rate swaps	76,533			(19,255		)	124,094			(92,458		)
Other (income) loss, net	(109,773		)	(59,111		)	(404,441		)	29,185
(Loss) income before income taxes	$	(404,367	)	$	4,654,269		$	(1,737,146	)	$	9,548,432
	As of
	June 30, 2019			December 31, 2018
Identifiable assets
Metals Segment	$	208,097,980		$	192,195,733
Specialty Chemicals Segment	27,940,364			28,174,675
Corporate (1)	45,027,327			8,028,438
	$	281,065,671		$	228,398,846
Goodwill
Metals Segment	$	16,202,890		$	8,445,262
Specialty Chemicals Segment	1,354,730			1,354,730
	$	17,557,620		$	9,799,992

^{(1) As of June 30, 2019, this amount included 36,428,751 in right-of-use assets that were recorded with the adoption of ASC 842 ("Leases"). Refer to Note 12 for additional information.}

XML

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company makes estimates of fair value in accounting for certain transactions, in testing and measuring impairment and in providing disclosures of fair value in its condensed consolidated financial statements. The Company determines the fair values of its financial instruments for disclosure purposes by maximizing the use of observable inputs and minimizing the use of unobservable inputs. Fair value disclosures for assets and liabilities are grouped into three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are less active.

Level 3 - Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow methodologies and similar techniques.

The Company's financial instruments include cash and cash equivalents, accounts receivable, derivative instruments, accounts payable, earn-out liabilities, revolving line of credit, term loan, and equity investments.

Level 1 Financial Instruments

For short-term instruments, other than those required to be reported at fair value on a recurring basis and for which additional disclosures are included below, management concluded the historical carrying value is a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization. Therefore, as of June 30, 2019 and December 31, 2018, the carrying amounts for cash and cash equivalents, accounts receivable, accounts payable, the Company's revolving line of credit, which is based on a variable interest rate, and term loan approximate their fair value.

During the first six months of 2019, the Company sold shares of its equity securities investments. Proceeds from the sale totaled $1,091,644 which resulted in a realized gain for the three and six-months of June 30, 2019 $148,416 and $474,227, respectively, that is included in "Other expense (income)" on the accompanying Condensed Consolidated Statements of Operations.

For the three and six-months ended June 30, 2019, the Company also recorded a net unrealized loss of $48,000 and $101,125, respectively, on the investments in equity securities held, which is included in "Other expense (income)" on the accompanying Condensed Consolidated Statements of Operations.

The fair value of equity securities held by the Company as of June 30, 2019 and December 31, 2018 was $2,760,000 and $2,935,000, respectively, and is included in “Prepaid expenses and other current assets” on the accompanying Consolidated Balance Sheets.

Level 2 Financial Instruments

The Company has one interest rate swap contract, which is classified as a Level 2 financial instrument as it is not actively traded and is valued using pricing models that use observable market inputs. The fair value of the contract was an asset of $23,371 and $147,465 at June 30, 2019 and December 31, 2018, respectively. The interest rate swap was priced using discounted cash flow techniques. Changes in its fair value were recorded to other income (expense) with corresponding offsetting entries to current assets or liabilities, as appropriate. Significant inputs to the discounted cash flow model include projected future cash flows based on projected one-month LIBOR and the average margin for companies with similar credit ratings and similar maturities.

To manage the impact on earnings of fluctuating nickel prices, the Company occasionally enters into six-month forward option contracts, which are classified as Level 2. At June 30, 2019 and December 31, 2018, the Company did not have any such contracts in place.

Level 3 Financial Instruments

The fair value of contingent consideration ("earn-out") liabilities resulting from the 2017 MUSA-Stainless acquisition, 2018 MUSA-Galvanized acquisition, and 2019 American Stainless acquisition (see Note 9) are classified as Level 3. The fair value of the MUSA-Stainless earn-out was estimated by applying the Monte Carlo Simulation approach using management's projection of pounds to be shipped and future price per unit. The fair value of the MUSA-Galvanized earn-out and American Stainless earn-out were estimated by applying the probability-weighted expected return method, using management's projection of pounds to be shipped and future price per unit. Each quarter-end, the Company re-evaluates its assumptions for all earn-out liabilities and adjusts to reflect the updated fair values. Changes in the estimated fair value of the earn-out liabilities are reflected in the results of operations in the periods in which they are identified. Changes in the fair value of the earn-out liabilities may materially impact and cause volatility in the Company's operating results.

The following table presents a summary of changes in fair value of the Company's earn-out liabilities during the period:

	MUSA-Stainless			MUSA-Galvanized			ASTI			Total
Balance at December 31, 2018	$	4,251,584		$	3,357,800		$	—		$	7,609,384
Fair value of the earn-out liability associated with the American Stainless acquisition	—			—			6,366,324			6,366,324
Earn-out payments during the period	(784,852		)	(378,649		)	(618,359		)	(1,781,860		)
Changes in fair value during the period	(192,065		)	(473,000		)	263,780			(401,285		)
Balance at June 30, 2019	$	3,274,667		$	2,506,151		$	6,011,745		$	11,792,563

For the six-month period ended June 30, 2018, the Company recorded a $2,461,658 charge related to changes in the fair value of the MUSA-Stainless earn-out liability.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 in the three and six-month period ended June 30, 2019 or year ended December 31, 2018. During the first six months of 2019, there have been no changes in the fair value methodologies used by the Company.

XML

Acquisitions

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

Acquisition of the Assets and Operations of American Stainless Tubing, Inc.

On January 1, 2019, the Company's wholly-owned subsidiary, ASTI Acquisition, LLC, a North Carolina limited liability company (“ASTI”), completed the purchase of substantially all of the assets and operations of American Stainless Tubing, Inc., a North Carolina corporation ("American Stainless"), in Statesville and Troutman, North Carolina. The purchase price for the all-cash acquisition was $21,895,409, subject to a post-closing working capital adjustment. The Company funded the acquisition with a new five-year $20,000,000 term note and a draw against asset-based line of credit (see Note 10).

The transaction is accounted for using the acquisition method of accounting for business combinations. Under this method, the total consideration transferred to consummate the acquisition is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the closing date of the acquisition. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed. Accordingly, the allocation of the consideration transferred in the unaudited condensed consolidated financial statements is preliminary and will be adjusted upon completion of the final valuation of the assets acquired and liabilities assumed. Such adjustments could be significant. The final valuation is expected to be completed as soon as practicable but no later than twelve months after the closing date of the acquisition.

The excess of the consideration transferred over the fair value of the net tangible and identifiable intangible assets is reflected as goodwill. Goodwill consists of manufacturing cost synergies expected from combining American Stainless' production capabilities with the Metals Segment current operations. All of the goodwill recognized was assigned to the Company's Metals Segment and is expected to be deductible for income tax purposes.

American Stainless will receive quarterly earn-out payments for a period of three years following closing. Pursuant to the asset purchase agreement between ASTI and American Stainless, earn-out payments will equate to six and one-half percent (6.5 percent) of ASTI’s revenue over the three-year earn-out period. In determining the appropriate discount rate to apply to the contingent payments, the risk associated with the functional form of the earn-out, and the credit risk associated with the payment of the earn-out were all considered. The fair value of the contingent consideration was estimated by applying the probability weighted expected return method using management's estimates of pounds to be shipped and future price per unit.

During the second quarter of 2019, management revised the initial estimate of the fair value of the contingent consideration, resulting in an increase to the earn-out liability of $218,094. Because this adjustment was determined within the measurement period, goodwill was increased by $218,094. At June 30, 2019 the fair value of the contingent consideration totaled $6,011,745 with $2,802,828 of this liability classified as a current liability since the payments will be made quarterly.

The fair value assigned to the customer list intangible will be amortized on an accelerated basis over 15 years. During the second quarter of 2019, management revised the initial estimate of the fair value of the customer list intangible asset, resulting in a decrease to the customer list intangible asset of $496,000. Because this adjustment was determined within the measurement period, goodwill was increased by $496,000.

The following table shows the initial estimate of value as reported at March 31, 2019 and revisions made during the second quarter of 2019:

	Initial estimate			Revisions			Revised estimate
Inventories	$	5,564,000		$	—		$	5,564,000
Accounts receivable	3,533,921			—			3,533,921
Other current assets - production and maintenance supplies	605,613			—			605,613
Property, plant and equipment	2,793,173			—			2,793,173
Customer list intangible	10,000,000			(496,000		)	9,504,000
Goodwill	7,043,534			714,094			7,757,628
Contingent consideration (earn-out liability)	(6,148,230		)	(218,094		)	(6,366,324		)
Accounts payable	(1,400,009		)	—			(1,400,009		)
Other liabilities	(96,593		)	—			(96,593		)
	$	21,895,409		$	—		$	21,895,409

ASTI's results of operations since acquisition are reflected in the Company's consolidated statements of operations as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Net sales	$	8,557,027	$	18,070,247
Income before income taxes	992,041		1,099,163

For the three and six-month periods ended June 30, 2019, cost of sales included $1,147,000representing the fair value above predecessor cost associated with acquired inventory that was sold during the quarter.

The following unaudited pro-forma information is provided to present a summary of the combined results of the Company's operations with ASTI as if the acquisition had occurred on January 1, 2018. The unaudited pro-forma financial information is for information purposes only and is not necessarily indicative of what the results would have been had the acquisition been completed on the date indicated above.

Pro-Forma
	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Pro-forma net sales	$	81,083,582	$	148,090,359
Pro-forma net income	$	3,776,621	$	6,984,743
Earnings per share:
Basic	$	0.43	$	0.80
Diluted	$	0.42	$	0.79

Pro-forma net income was reduced for the following:

• Amortization of American Stainless’ customer list intangible of $281,499 and $594,000 for the three and six months June 30, 2018, respectively;

• Additional rent expense related to the Company’s lease of American Stainless’ real estate from Store Capital of $121,450 and $242,899 for the three and six months ended June 30, 2018, respectively;

• An estimated amount of interest expense associated with the additional borrowings to fund the American Stainless acquisition of $201,192 and $412,162 for the three and six months ended June 30, 2018, respectively;

• Depreciation of$71,150 and $112,402for the three and six months ended June 30, 2018, respectively, related to the incremental fair value above historical cost for acquired property, plant and equipment; and

• A increase in the provision for income taxes for the three months ended June 30, 2018 and a decrease in the provision for income taxes of $143,013 for the six months ended June 30, 2018 related to the impact of the other pro-forma adjustments and American Stainless' previous status as a pass-through entity for income tax purposes prior to the acquisition.

Acquisition of the Galvanized Pipe and Tube Assets of Marcegaglia USA, Inc.

On July 1, 2018, Bristol Metals, LLC ("BRISMET"), a subsidiary of the Company's Metals Segment, acquired Marcegaglia USA, Inc.'s ("MUSA") galvanized tube assets and operations ("MUSA-Galvanized") located in Munhall, PA. The purchase price for the transaction totaled $10,378,281. The assets purchased and liabilities assumed from MUSA include accounts receivable, inventory, equipment, and accounts payable.

XML

Long-term Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-term Debt

Long-term Debt

On December 20, 2018, the Company amended its Credit Agreement with its bank to refinance and increase its Line of Credit (the "Line") from $80,000,000 to $100,000,000 and to create a new 5-year term loan in the principal amount of $20,000,000 (the “Term Loan”). The Term Loan was used to finance the purchase of substantially all of the assets of American Stainless (see Note 9). The Term Loan’s maturity date is February 1, 2024 and shall be repaid in 60 consecutive monthly installments. Interest on the Term Loan is calculated using the One Month LIBOR Rate (as defined in the Credit Agreement), plus 1.90 percent. The Line will be used for working capital needs and as a source for funding future acquisitions. The maturity date of the Line has been extended to December 20, 2021. Interest on the Line remains unchanged and is calculated using the One Month LIBOR Rate, plus 1.65 percent. Borrowings under the Line are limited to an amount equal to a Borrowing Base calculation that includes eligible accounts receivable and inventory. As of June 30, 2019, the Company had $20.0 million of remaining available capacity under its line of credit.

Pursuant to the Credit Agreement, the Company is subject to certain covenants including maintaining a minimum fixed charge coverage ratio, maintaining a minimum tangible net worth, and a limitation on the Company’s maximum amount of capital expenditures per year, which is in line with currently projected needs. At June 30, 2019, the Company was in compliance with all debt covenants.

XML

Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is from time-to-time subject to various claims, possible legal actions for product liability and other damages, and other matters arising out of the normal conduct of the Company's business.  

Management is not currently aware of any asserted or unasserted matters which could have a material effect on the financial condition or results of operations of the Company.

XML

Lease

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

Adoption of ASC Topic 842, "Leases"

On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The Company's portfolio of leases contains both finance and operating leases that relate primarily to real estate agreements and manufacturing equipment agreements. Substantially all of the value of the Company's lease portfolio relates to a real estate master lease agreement with Store Master Funding XII, LLC, an affiliate of Store Capital Corporation ("Store") that was entered into in 2016 and amended with the 2018 MUSA-Galvanized and 2019 American Stainless acquisitions. As of June 30, 2019, operating lease liabilities related to the master lease agreement with Store totaled $37,053,119, or 97 percent of the total lease liabilities on the accompanying condensed consolidated balance sheet.

Practical Expedients and Elections

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also elected to combine lease and non-lease components and elected the short-term lease recognition exemption for all leases that qualify.

Deferred Gain on Sale Leaseback

On January 1, 2019, the Company recorded cumulative-effect adjustments to increase equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to the derecognition of the deferred gain on its sale leaseback, consistent with transition guidance set forth in ASC 842-10-65-1.

Discount Rate

To determine the present value of minimum future lease payments for operating leases at January 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the "incremental borrowing rate" or "IBR"). The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, treasury rates for five years, 10 years, and 30 years were used as they cover the periods of the leases. The Company additionally used the Damodaran Credit Rating Model, which assesses a credit rating based on the interest coverage ratio and relates this to credit ratings of other large public manufacturers. Inputs required include EBIT, interest expense, future minimum lease payments, outstanding debt, and a reference rate. Based on this assessment of the aforementioned qualitative and quantitative factors, the Company determined that 7.32 percent was an appropriate incremental borrowing rate to apply to its portfolio of real-estate operating leases. The Company elected to utilize a single discount rate for its portfolio of operating leases because of similar lease characteristics; the resulting calculation does not differ materially from applying the standard to the individual leases.

Weighted average discount rates for operating and finance leases are as follows:

Operating Leases	7.32	%
Finance Leases	11.88	%

Balance Sheet Presentation

Operating and finance lease amounts included in the Consolidated Balance Sheet are as follows:

Financial Statement Line Item	Classification	June 30, 2019
Right-of-use assets, operating leases	Assets	$	36,428,751
Right-of-use assets, finance leases	Assets	488,347
Current lease liabilities, operating leases	Current liabilities	3,526,011
Current lease liabilities, finance leases	Current liabilities	248,589
Non-current lease liabilities, operating leases	Non-current liabilities	34,139,854
Non-current lease liabilities, finance leases	Non-current liabilities	457,933

Total Lease Cost

Individual components of the total lease cost incurred by the Company is as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	1,027,998	$	2,055,996
Finance lease cost:
Amortization of right-of-use assets	43,714		87,428
Interest on finance lease liabilities	22,147		45,864
Total lease cost	$	1,093,859	$	2,189,288

Amortization of assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent.

Maturity of Leases

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Additional Information

Weighted average remaining lease terms for operating and finance leases as of June 30, 2019 are as follows:

Operating Leases	204 months
Finance Leases	30 months

During the six-month period ended June 30, 2019, right-of-use assets obtained in exchange for new operating lease liabilities totaled $4,900,243.

On January 1, 2019, the Company and Store, entered into an Amended and Restated Master Lease Agreement (the “Master Lease”), pursuant to which the Company leases the Statesville and Troutman, NC facilities, purchased by Store from American Stainless on January 1, 2019, for the remainder of the initial term of 20 years set forth in the Master Lease, with two renewal options of ten years each. Because the Company is reasonably certain to not exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Master Lease includes a rent escalator equal to the lesser of 1.25 times the percentage increase in the Consumer Price Index since the previous increase or 2 percent.

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

Leases

Leases

Adoption of ASC Topic 842, "Leases"

On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The Company's portfolio of leases contains both finance and operating leases that relate primarily to real estate agreements and manufacturing equipment agreements. Substantially all of the value of the Company's lease portfolio relates to a real estate master lease agreement with Store Master Funding XII, LLC, an affiliate of Store Capital Corporation ("Store") that was entered into in 2016 and amended with the 2018 MUSA-Galvanized and 2019 American Stainless acquisitions. As of June 30, 2019, operating lease liabilities related to the master lease agreement with Store totaled $37,053,119, or 97 percent of the total lease liabilities on the accompanying condensed consolidated balance sheet.

Practical Expedients and Elections

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also elected to combine lease and non-lease components and elected the short-term lease recognition exemption for all leases that qualify.

Deferred Gain on Sale Leaseback

On January 1, 2019, the Company recorded cumulative-effect adjustments to increase equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to the derecognition of the deferred gain on its sale leaseback, consistent with transition guidance set forth in ASC 842-10-65-1.

Discount Rate

To determine the present value of minimum future lease payments for operating leases at January 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the "incremental borrowing rate" or "IBR"). The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, treasury rates for five years, 10 years, and 30 years were used as they cover the periods of the leases. The Company additionally used the Damodaran Credit Rating Model, which assesses a credit rating based on the interest coverage ratio and relates this to credit ratings of other large public manufacturers. Inputs required include EBIT, interest expense, future minimum lease payments, outstanding debt, and a reference rate. Based on this assessment of the aforementioned qualitative and quantitative factors, the Company determined that 7.32 percent was an appropriate incremental borrowing rate to apply to its portfolio of real-estate operating leases. The Company elected to utilize a single discount rate for its portfolio of operating leases because of similar lease characteristics; the resulting calculation does not differ materially from applying the standard to the individual leases.

Weighted average discount rates for operating and finance leases are as follows:

Operating Leases	7.32	%
Finance Leases	11.88	%

Balance Sheet Presentation

Operating and finance lease amounts included in the Consolidated Balance Sheet are as follows:

Financial Statement Line Item	Classification	June 30, 2019
Right-of-use assets, operating leases	Assets	$	36,428,751
Right-of-use assets, finance leases	Assets	488,347
Current lease liabilities, operating leases	Current liabilities	3,526,011
Current lease liabilities, finance leases	Current liabilities	248,589
Non-current lease liabilities, operating leases	Non-current liabilities	34,139,854
Non-current lease liabilities, finance leases	Non-current liabilities	457,933

Total Lease Cost

Individual components of the total lease cost incurred by the Company is as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	1,027,998	$	2,055,996
Finance lease cost:
Amortization of right-of-use assets	43,714		87,428
Interest on finance lease liabilities	22,147		45,864
Total lease cost	$	1,093,859	$	2,189,288

Amortization of assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent.

Maturity of Leases

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Additional Information

Weighted average remaining lease terms for operating and finance leases as of June 30, 2019 are as follows:

Operating Leases	204 months
Finance Leases	30 months

During the six-month period ended June 30, 2019, right-of-use assets obtained in exchange for new operating lease liabilities totaled $4,900,243.

On January 1, 2019, the Company and Store, entered into an Amended and Restated Master Lease Agreement (the “Master Lease”), pursuant to which the Company leases the Statesville and Troutman, NC facilities, purchased by Store from American Stainless on January 1, 2019, for the remainder of the initial term of 20 years set forth in the Master Lease, with two renewal options of ten years each. Because the Company is reasonably certain to not exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Master Lease includes a rent escalator equal to the lesser of 1.25 times the percentage increase in the Consumer Price Index since the previous increase or 2 percent.

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

Leases

Leases

Adoption of ASC Topic 842, "Leases"

On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The Company's portfolio of leases contains both finance and operating leases that relate primarily to real estate agreements and manufacturing equipment agreements. Substantially all of the value of the Company's lease portfolio relates to a real estate master lease agreement with Store Master Funding XII, LLC, an affiliate of Store Capital Corporation ("Store") that was entered into in 2016 and amended with the 2018 MUSA-Galvanized and 2019 American Stainless acquisitions. As of June 30, 2019, operating lease liabilities related to the master lease agreement with Store totaled $37,053,119, or 97 percent of the total lease liabilities on the accompanying condensed consolidated balance sheet.

Practical Expedients and Elections

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also elected to combine lease and non-lease components and elected the short-term lease recognition exemption for all leases that qualify.

Deferred Gain on Sale Leaseback

On January 1, 2019, the Company recorded cumulative-effect adjustments to increase equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to the derecognition of the deferred gain on its sale leaseback, consistent with transition guidance set forth in ASC 842-10-65-1.

Discount Rate

To determine the present value of minimum future lease payments for operating leases at January 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the "incremental borrowing rate" or "IBR"). The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, treasury rates for five years, 10 years, and 30 years were used as they cover the periods of the leases. The Company additionally used the Damodaran Credit Rating Model, which assesses a credit rating based on the interest coverage ratio and relates this to credit ratings of other large public manufacturers. Inputs required include EBIT, interest expense, future minimum lease payments, outstanding debt, and a reference rate. Based on this assessment of the aforementioned qualitative and quantitative factors, the Company determined that 7.32 percent was an appropriate incremental borrowing rate to apply to its portfolio of real-estate operating leases. The Company elected to utilize a single discount rate for its portfolio of operating leases because of similar lease characteristics; the resulting calculation does not differ materially from applying the standard to the individual leases.

Weighted average discount rates for operating and finance leases are as follows:

Operating Leases	7.32	%
Finance Leases	11.88	%

Balance Sheet Presentation

Operating and finance lease amounts included in the Consolidated Balance Sheet are as follows:

Financial Statement Line Item	Classification	June 30, 2019
Right-of-use assets, operating leases	Assets	$	36,428,751
Right-of-use assets, finance leases	Assets	488,347
Current lease liabilities, operating leases	Current liabilities	3,526,011
Current lease liabilities, finance leases	Current liabilities	248,589
Non-current lease liabilities, operating leases	Non-current liabilities	34,139,854
Non-current lease liabilities, finance leases	Non-current liabilities	457,933

Total Lease Cost

Individual components of the total lease cost incurred by the Company is as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	1,027,998	$	2,055,996
Finance lease cost:
Amortization of right-of-use assets	43,714		87,428
Interest on finance lease liabilities	22,147		45,864
Total lease cost	$	1,093,859	$	2,189,288

Amortization of assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent.

Maturity of Leases

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Additional Information

Weighted average remaining lease terms for operating and finance leases as of June 30, 2019 are as follows:

Operating Leases	204 months
Finance Leases	30 months

During the six-month period ended June 30, 2019, right-of-use assets obtained in exchange for new operating lease liabilities totaled $4,900,243.

On January 1, 2019, the Company and Store, entered into an Amended and Restated Master Lease Agreement (the “Master Lease”), pursuant to which the Company leases the Statesville and Troutman, NC facilities, purchased by Store from American Stainless on January 1, 2019, for the remainder of the initial term of 20 years set forth in the Master Lease, with two renewal options of ten years each. Because the Company is reasonably certain to not exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Master Lease includes a rent escalator equal to the lesser of 1.25 times the percentage increase in the Consumer Price Index since the previous increase or 2 percent.

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

XML

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

As a result of the January 1, 2019 American Stainless acquisition, the Company recognized $7,757,628 in Goodwill for the excess of consideration transferred over the fair value of the acquired net tangible and identifiable intangible assets.

The Company also recorded a $9,504,000 intangible asset on a preliminary basis for the fair value of the customer relationships that were acquired, to be amortized on an accelerated basis over 15 years.

The balance of intangible assets subject to amortization at June 30, 2019 and December 31, 2018 is as follows:

	June 30, 2019			December 31, 2018
Intangible assets, gross	$	32,126,000		$	22,622,000
Accumulated amortization of intangible assets	(14,668,672		)	(12,925,888		)
Intangible assets, net	$	17,457,328		$	9,696,112

Estimated amortization expense related to intangible assets for the next five years is as follows:

Remainder of 2019	$	1,776,229
2020	3,296,195
2021	3,104,819
2022	2,790,361
2023	1,245,083
2024	1,083,974
Thereafter	4,628,111

XML

Stock Repurchase Program

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stock Repurchase Program

Stock Repurchase Program

On February 21, 2019, the Board of Directors authorized a stock repurchase program for up to 850,000 shares of its outstanding common stock over twenty-four months. The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under the program, the purchases will be funded from available working capital, and the repurchased shares will be returned to the status of authorized, but unissued shares of common stock or held in treasury. There is no guarantee as to the exact number of shares that will be repurchased by the Company, and the Company may discontinue purchases at any time that management determines additional purchases are not warranted.

During the six-month period ended June 30, 2019 the Company did not purchase any shares under the stock repurchase program.

XML

Basis of Financial Statement Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. Operating results for the six-month period ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation, including changes in the fair value of the Company's earn-out liabilities from "Other Expense (Income)" to "Operating Income (Loss)" on the accompanying Condensed Consolidated Statements of Operations.

Recently Issued and Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards - Adopted

In February 2016, the FASB issued ASU No. 2016-02  "Leases (Topic 842)", as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company adopted the new standard as of January 1, 2019 on a modified retrospective basis, which does not require comparative periods to be restated. On adoption, we recognized additional operating lease liabilities of $33,115,763 based on the present value of the remaining minimum rental payments as of January 1, 2019. We additionally recognized corresponding right-of-use assets for operating leases totaling $32,171,829. On January 1, 2019, the Company also recorded cumulative-effect increases to equity and deferred tax assets totaling $4,622,500 and $1,310,850, respectively, related to a deferred gain for a sale leaseback transaction that occurred in 2016 and was being amortized into earnings under the prior accounting. The adoption of this standard did not have a material impact on the consolidated statement of operations or cash flows for the six months ended June 30, 2019. See Note 12.

Recently Issued Accounting Standards - Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820)". The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.

Revenues

Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we are to in exchange for those goods or services.

XML

Revenues (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue by Product Group

The following table presents the Company's revenues, disaggregated by product group. Substantially all of the Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Storage tank and vessel	$	10,247,078	$	9,071,649	$	20,076,033	$	14,847,421
Seamless carbon steel pipe and tube	6,702,781		8,403,288		15,289,286		16,835,901
Stainless steel pipe	41,309,945		38,899,542		87,305,328		70,183,404
Galvanized pipe	6,243,569		—		12,935,805		—
Specialty chemicals	14,274,603		15,519,284		27,975,356		28,507,639
Total revenues	$	78,777,976	$	71,893,763	$	163,581,808	$	130,374,365

XML

Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Components of Inventories

The components of inventories are as follows:

	June 30, 2019		December 31, 2018
Raw materials	$	55,329,614	$	59,778,767
Work-in-process	17,768,751		21,033,532
Finished goods	37,317,877		33,389,087
	$	110,416,242	$	114,201,386

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Information

The following table summarizes certain information regarding segments of the Company's operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales
Metals Segment	$	64,503,373		$	56,374,479		$	135,606,452		$	101,866,726
Specialty Chemicals Segment	14,274,603			15,519,284			27,975,356			28,507,639
	$	78,777,976		$	71,893,763		$	163,581,808		$	130,374,365
Operating income (loss)
Metals Segment	$	1,192,644		$	9,090,516		$	2,629,285		$	15,107,047
Specialty Chemicals Segment	926,032			1,106,672			1,540,246			1,970,161
Unallocated corporate expenses	1,944,221			2,219,618			4,252,643			3,722,339
Acquisition related costs	20,073			690,217			301,928			690,217
Earn-out adjustments	(417,808		)	2,307,598			(401,285		)	2,461,658
Operating income	572,190			4,979,755			16,245			10,202,994
Interest expense	1,009,797			403,852			2,033,738			717,835
Change in fair value of interest rate swaps	76,533			(19,255		)	124,094			(92,458		)
Other (income) loss, net	(109,773		)	(59,111		)	(404,441		)	29,185
(Loss) income before income taxes	$	(404,367	)	$	4,654,269		$	(1,737,146	)	$	9,548,432
	As of
	June 30, 2019			December 31, 2018
Identifiable assets
Metals Segment	$	208,097,980		$	192,195,733
Specialty Chemicals Segment	27,940,364			28,174,675
Corporate (1)	45,027,327			8,028,438
	$	281,065,671		$	228,398,846
Goodwill
Metals Segment	$	16,202,890		$	8,445,262
Specialty Chemicals Segment	1,354,730			1,354,730
	$	17,557,620		$	9,799,992

^{(1) As of June 30, 2019, this amount included 36,428,751 in right-of-use assets that were recorded with the adoption of ASC 842 ("Leases"). Refer to Note 12 for additional information.}

XML

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Summary of Changes in Fair Value of Company's Earn-Out Liability

The following table presents a summary of changes in fair value of the Company's earn-out liabilities during the period:

	MUSA-Stainless			MUSA-Galvanized			ASTI			Total
Balance at December 31, 2018	$	4,251,584		$	3,357,800		$	—		$	7,609,384
Fair value of the earn-out liability associated with the American Stainless acquisition	—			—			6,366,324			6,366,324
Earn-out payments during the period	(784,852		)	(378,649		)	(618,359		)	(1,781,860		)
Changes in fair value during the period	(192,065		)	(473,000		)	263,780			(401,285		)
Balance at June 30, 2019	$	3,274,667		$	2,506,151		$	6,011,745		$	11,792,563

XML

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of Preliminary Allocation of Total Consideration of Assets Acquired and Liabilities Assumed

	Initial estimate			Revisions			Revised estimate
Inventories	$	5,564,000		$	—		$	5,564,000
Accounts receivable	3,533,921			—			3,533,921
Other current assets - production and maintenance supplies	605,613			—			605,613
Property, plant and equipment	2,793,173			—			2,793,173
Customer list intangible	10,000,000			(496,000		)	9,504,000
Goodwill	7,043,534			714,094			7,757,628
Contingent consideration (earn-out liability)	(6,148,230		)	(218,094		)	(6,366,324		)
Accounts payable	(1,400,009		)	—			(1,400,009		)
Other liabilities	(96,593		)	—			(96,593		)
	$	21,895,409		$	—		$	21,895,409

Schedule of Pro-Forma and Results of Operations Since Acquisition

ASTI's results of operations since acquisition are reflected in the Company's consolidated statements of operations as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Net sales	$	8,557,027	$	18,070,247
Income before income taxes	992,041		1,099,163

The unaudited pro-forma financial information is for information purposes only and is not necessarily indicative of what the results would have been had the acquisition been completed on the date indicated above.

Pro-Forma
	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Pro-forma net sales	$	81,083,582	$	148,090,359
Pro-forma net income	$	3,776,621	$	6,984,743
Earnings per share:
Basic	$	0.43	$	0.80
Diluted	$	0.42	$	0.79

XML

Lease (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of Operating and Finance Leases Discount Rates, Total Lease Cost and Weighted Average Remaining Lease Terms

Weighted average discount rates for operating and finance leases are as follows:

Operating Leases	7.32	%
Finance Leases	11.88	%

Weighted average remaining lease terms for operating and finance leases as of June 30, 2019 are as follows:

Operating Leases	204 months
Finance Leases	30 months

Individual components of the total lease cost incurred by the Company is as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	1,027,998	$	2,055,996
Finance lease cost:
Amortization of right-of-use assets	43,714		87,428
Interest on finance lease liabilities	22,147		45,864
Total lease cost	$	1,093,859	$	2,189,288

Schedule of Operating and Finance Leases Recorded in Consolidated Balance Sheet

Operating and finance lease amounts included in the Consolidated Balance Sheet are as follows:

Financial Statement Line Item	Classification	June 30, 2019
Right-of-use assets, operating leases	Assets	$	36,428,751
Right-of-use assets, finance leases	Assets	488,347
Current lease liabilities, operating leases	Current liabilities	3,526,011
Current lease liabilities, finance leases	Current liabilities	248,589
Non-current lease liabilities, operating leases	Non-current liabilities	34,139,854
Non-current lease liabilities, finance leases	Non-current liabilities	457,933

Schedule of Maturities For Operating Leases After Adoption of 842

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Schedule of Maturities For Finance Leases After Adoption of 842

The amounts of undiscounted future minimum lease payments under leases as of June 30, 2019 are as follows:

	Operating		Finance
2019 (excluding the six months ending June 30, 2019)	1,754,079		$	153,993
2020	3,562,092		329,534
2021	3,635,376		335,462
2022	3,672,731		11,998
2023	3,563,383		—
Thereafter	52,188,270		—
Total undiscounted minimum future lease payments	68,375,931		830,987
Imputed Interest	30,710,066		124,465
Total lease liabilities recorded as of June 30, 2019	$	37,665,865	$	706,522

Schedule of Undiscounted Future Minimum Lease Payments for Operating Leases Before Adoption of 842

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

Schedule of Undiscounted Future Minimum Lease Payments for Capital Leases Before Adoption of 842

Undiscounted future minimum lease payments under non-cancellable operating and capital leases as of December 31, 2018 accounted for under ASC 840 "Leases" were as follows:

	Operating		Capital
2019	$	3,207,053	$	354,299
2020	3,243,694		329,534
2021	3,238,745		335,462
2022	3,224,810		11,998
2023	3,102,815		—
Thereafter	45,337,403		—
Total undiscounted minimum future operating lease payments			1,031,293
Imputed Interest			164,826
Total lease liabilities recorded as of December 31, 2018			$	866,467

XML

Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets Subject to Amortization

The balance of intangible assets subject to amortization at June 30, 2019 and December 31, 2018 is as follows:

	June 30, 2019			December 31, 2018
Intangible assets, gross	$	32,126,000		$	22,622,000
Accumulated amortization of intangible assets	(14,668,672		)	(12,925,888		)
Intangible assets, net	$	17,457,328		$	9,696,112

Schedule of Estimated Amortization Expense

Estimated amortization expense related to intangible assets for the next five years is as follows:

Remainder of 2019	$	1,776,229
2020	3,296,195
2021	3,104,819
2022	2,790,361
2023	1,245,083
2024	1,083,974
Thereafter	4,628,111

XML

Recently Issued Accounting Standards - Narrative (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018	Jan. 01, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease liabilities recognized	$ 37,665,865
Right-of-use assets, operating leases	36,428,751
Cumulative adjustment due to adoption of ASU				$ 0
Cumulative-effect adjustment to deferred taxes	$ 1,388,985		$ 252,988
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease liabilities recognized		$ 33,115,763
Right-of-use assets, operating leases		32,171,829
Cumulative-effect adjustment to deferred taxes		1,310,850
Retained Earnings | Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative adjustment due to adoption of ASU		$ 4,622,500

XML

Revenues - Schedule of Disaggregated Revenues by Source (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Net sales	$ 78,777,976	$ 71,893,763	$ 163,581,808	$ 130,374,365
Storage tank and vessel
Disaggregation of Revenue [Line Items]
Net sales	10,247,078	9,071,649	20,076,033	14,847,421
Seamless carbon steel pipe and tube
Disaggregation of Revenue [Line Items]
Net sales	6,702,781	8,403,288	15,289,286	16,835,901
Stainless steel pipe
Disaggregation of Revenue [Line Items]
Net sales	41,309,945	38,899,542	87,305,328	70,183,404
Galvanized pipe
Disaggregation of Revenue [Line Items]
Net sales	6,243,569	0	12,935,805	0
Specialty chemicals
Disaggregation of Revenue [Line Items]
Net sales	$ 14,274,603	$ 15,519,284	$ 27,975,356	$ 28,507,639

XML

Revenues - Narrative (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Increase in deferred revenue balance	$ 48,948
Deferred revenue	226,466
Payments received in advance of satisfying performance obligations	1,355,219
Deferred revenue, revenue recognized in period	$ 1,306,271

XML

Inventories (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 55,329,614	$ 59,778,767
Work-in-process	17,768,751	21,033,532
Finished goods	37,317,877	33,389,087
Total inventories	$ 110,416,242	$ 114,201,386

XML

Stock options and restricted stock (Details) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 08, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercised (in shares)				0	40,606
Share-based compensation arrangement, exercise price					$ 474,378
Allocated share-based compensation expense		$ 237,019	$ 223,979	$ 852,758	$ 416,180
Antidilutive securities excluded from computation of earnings per share, amount (in shares)					36,815
2016 Performance Stock Awards Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period						3 years
Equity instruments other options, grants in period (in shares)	46,477
Equity instruments other than options, grants in period, weighted average grant date fair value (in dollars per share)	$ 8.05
2016 Performance Stock Awards Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target award						0.00%
2016 Performance Stock Awards Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target award						150.00%
2015 Stock Awards Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other options, grants in period (in shares)	44,949
Equity instruments other than options, grants in period, weighted average grant date fair value (in dollars per share)	$ 15.72
Period after option grant before options can be exercised (in years)	1 year
2015 Stock Awards Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting rate (percent)	20.00%
2015 Stock Awards Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting rate (percent)	33.00%

XML

Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Effective tax rate	35.00%	21.00%	32.00%	21.00%
Statutory rate			21.00%

XML

Segment Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Right-of-use assets, operating leases	$ 36,428,751		$ 36,428,751
Net sales	78,777,976	$ 71,893,763	163,581,808	$ 130,374,365
Operating income (loss)	572,190	4,979,755	16,245	10,202,994
Acquisition related costs	20,073	690,217	348,021	690,217
Earn-out adjustments	(417,808)	2,307,598	(401,285)	2,461,658
Interest expense	1,009,797	403,852	2,033,738	717,835
Change in fair value of interest rate swaps	76,533	(19,255)	124,094	(92,458)
Other (income) loss, net	(109,773)	(59,111)	(404,441)	29,185
(Loss) income before income taxes	(404,367)	4,654,269	(1,737,146)	9,548,432
Identifiable assets	281,065,671		281,065,671		$ 228,398,846
Goodwill	17,557,620		17,557,620		9,799,992
Operating segment
Segment Reporting Information [Line Items]
Net sales	78,777,976	71,893,763	163,581,808	130,374,365
Operating segment | Metals Segment
Segment Reporting Information [Line Items]
Net sales	64,503,373	56,374,479	135,606,452	101,866,726
Operating income (loss)	1,192,644	9,090,516	2,629,285	15,107,047
Identifiable assets	208,097,980		208,097,980		192,195,733
Goodwill	16,202,890		16,202,890		8,445,262
Operating segment | Specialty Chemicals Segment
Segment Reporting Information [Line Items]
Net sales	14,274,603	15,519,284	27,975,356	28,507,639
Operating income (loss)	926,032	1,106,672	1,540,246	1,970,161
Identifiable assets	27,940,364		27,940,364		28,174,675
Goodwill	1,354,730		1,354,730		1,354,730
Corporate
Segment Reporting Information [Line Items]
Operating income (loss)	572,190	4,979,755	16,245	10,202,994
Unallocated corporate expenses	1,944,221	2,219,618	4,252,643	3,722,339
Acquisition related costs	20,073	690,217	301,928	690,217
Earn-out adjustments	(417,808)	2,307,598	(401,285)	2,461,658
Interest expense	1,009,797	403,852	2,033,738	717,835
Change in fair value of interest rate swaps	76,533	(19,255)	124,094	(92,458)
Other (income) loss, net	(109,773)	$ (59,111)	(404,441)	$ 29,185
Identifiable assets	$ 45,027,327		$ 45,027,327		$ 8,028,438

XML

Fair Value of Financial Instruments - Narrative (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($) financial_instrument	Jun. 30, 2019 USD ($) financial_instrument	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from sale of equity securities		$ 1,091,644	$ 0
Realized gain on sale of equity securities	$ 148,416	474,227	0
Unrealized loss on equity securities	48,000	101,125	29,185
Fair value of equity securities	$ 2,760,000	$ 2,760,000		$ 2,935,000
Derivative asset, number of instruments held | financial_instrument	1	1
Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Charge related to change in fair value of earn-out liability		$ 6,366,324
MUSA-Stainless | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Charge related to change in fair value of earn-out liability		0	$ 2,461,658
Term Loan | Palmer of Texas | Interest Rate Swap | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset, fair value, gross asset	$ 23,371	$ 23,371		$ 147,465

XML

Fair Value of Financial Instruments - Summary of Changes in Fair Value of Company's Earn-Out Liability (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Earn-out payments during the period	$ 1,345,539	$ 977,603
Level 3 Inputs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at December 31, 2018	7,609,384
Fair value of the earn-out liability associated with the American Stainless acquisition	6,366,324
Earn-out payments during the period	(1,781,860)
Changes in fair value during the period	(401,285)
Balance at June 30, 2019	11,792,563
MUSA-Stainless | Level 3 Inputs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at December 31, 2018	4,251,584
Fair value of the earn-out liability associated with the American Stainless acquisition	0	$ 2,461,658
Earn-out payments during the period	(784,852)
Changes in fair value during the period	(192,065)
Balance at June 30, 2019	3,274,667
MUSA-Galvanized | Level 3 Inputs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at December 31, 2018	3,357,800
Fair value of the earn-out liability associated with the American Stainless acquisition	0
Earn-out payments during the period	(378,649)
Changes in fair value during the period	(473,000)
Balance at June 30, 2019	2,506,151
ASTI | Level 3 Inputs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at December 31, 2018	0
Fair value of the earn-out liability associated with the American Stainless acquisition	6,366,324
Earn-out payments during the period	(618,359)
Changes in fair value during the period	263,780
Balance at June 30, 2019	$ 6,011,745

XML

Acquisitions - Narrative (Details) - USD ($)				3 Months Ended		6 Months Ended
	Jan. 01, 2019	Dec. 20, 2018	Jul. 01, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 19, 2018
Business Acquisition [Line Items]
Expenses incurred related to acquisition				$ 262,738	$ (3,677,271)	$ 1,189,260	$ (7,512,434)
Estimated interest expense				1,009,797	403,852	2,033,738	717,835
Depreciation expense						3,832,161	2,874,216
Increase (decrease) in income tax provision				(141,629)	976,998	(547,886)	2,035,998
Level 3 Inputs
Business Acquisition [Line Items]
Fair value of earn-out liability				11,792,563		11,792,563		$ 7,609,384
American Stainless Tubing, Inc.
Business Acquisition [Line Items]
Purchase price	$ 21,895,409
Charge related to change in fair value of earn-out liability				218,094		218,094
Goodwill				218,094		714,094
Customer list intangible						(496,000)
Additional rent expense					121,450		242,899
Estimated interest expense					201,192		412,162
Depreciation expense					71,150		112,402
Increase (decrease) in income tax provision							(143,013)
American Stainless Tubing, Inc. | Fair Value Adjustment to Inventory
Business Acquisition [Line Items]
Expenses incurred related to acquisition				1,147,000		1,147,000
American Stainless Tubing, Inc. | Customer Relationships
Business Acquisition [Line Items]
Goodwill						496,000
Useful life of finite lived intangible assets acquired	15 years
Customer list intangible				496,000
American Stainless Tubing, Inc. | Customer Lists
Business Acquisition [Line Items]
Customer list intangible					$ 281,499		$ 594,000
American Stainless Tubing, Inc. | Level 3 Inputs
Business Acquisition [Line Items]
Fair value of earn-out liability				6,011,745		6,011,745		0
American Stainless Tubing, Inc. | Level 3 Inputs | Other Current Liabilities
Business Acquisition [Line Items]
Fair value of earn-out liability				2,802,828		2,802,828
Marcegalia USA, Inc. - Galvanized
Business Acquisition [Line Items]
Purchase price			$ 10,378,281
Marcegalia USA, Inc. - Galvanized | Level 3 Inputs
Business Acquisition [Line Items]
Fair value of earn-out liability				$ 2,506,151		$ 2,506,151		$ 3,357,800
Term Loan
Business Acquisition [Line Items]
Debt term	5 years	5 years
Principal amount of debt	$ 20,000,000	$ 20,000,000
Revolving Credit Facility | ABL Line Of Credit, Due October 30, 2020
Business Acquisition [Line Items]
Maximum borrowing capacity		$ 100,000,000							$ 80,000,000
American Stainless | American Stainless Tubing, Inc.
Business Acquisition [Line Items]
Period for which earn out payments will be received	3 years
American Stainless | Earn-Out Payment | American Stainless Tubing, Inc.
Business Acquisition [Line Items]
Earn out payment, target percentage	6.50%

XML

Acquisitions - Schedule of Preliminary Allocation of Total Consideration of Assets Acquired and Liabilities Assumed (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill	$ 17,557,620	$ 17,557,620			$ 9,799,992
American Stainless Tubing, Inc.
Business Acquisition [Line Items]
Inventories	5,564,000	5,564,000	$ 5,564,000
Accounts receivable	3,533,921	3,533,921	3,533,921
Other current assets - production and maintenance supplies	605,613	605,613	605,613
Property, plant and equipment	2,793,173	2,793,173	2,793,173
Customer list intangible	9,504,000	9,504,000	10,000,000
Goodwill	7,757,628	7,757,628	7,043,534	$ 7,757,628
Contingent consideration (earn-out liability)	(6,366,324)	(6,366,324)	(6,148,230)
Accounts payable	(1,400,009)	(1,400,009)	(1,400,009)
Other liabilities	(96,593)	(96,593)	(96,593)
Total consideration	21,895,409	21,895,409	$ 21,895,409
Revisions
Inventories		0
Accounts receivable		0
Other current assets - production and maintenance supplies		0
Property, plant and equipment		0
Customer list intangible		(496,000)
Goodwill	218,094	714,094
Contingent consideration (earn-out liability)	$ (218,094)	(218,094)
Accounts payable		0
Other liabilities		0
Total consideration		$ 0

XML

Acquisitions - Schedule Results of Operations Since Acquisition (Details) - American Stainless Tubing, Inc. - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Business Acquisition [Line Items]
Net sales	$ 8,557,027	$ 18,070,247
Income before income taxes	$ 992,041	$ 1,099,163

XML

Acquisitions - Schedule of Pro-Forma Information (Details) - American Stainless Tubing, Inc. - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Business Acquisition [Line Items]
Pro-forma net sales	$ 81,083,582	$ 148,090,359
Pro-forma net income	$ 3,776,621	$ 6,984,743
Earnings per share:
Basic (in dollars per share)	$ 0.43	$ 0.80
Diluted (in dollars per share)	$ 0.42	$ 0.79

XML

Long-term Debt - Narrative (Details)	Jan. 01, 2019 USD ($)	Dec. 20, 2018 USD ($) debt_installment	Jun. 30, 2019 USD ($)	Dec. 19, 2018 USD ($)
Term Loan
Line of Credit Facility [Line Items]
Debt term	5 years	5 years
Principal amount of debt	$ 20,000,000	$ 20,000,000
Repayments of debt, number of consecutive installments | debt_installment		60
Term Loan | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread		1.90%
Revolving Credit Facility | ABL Line Of Credit, Due October 30, 2020
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 100,000,000		$ 80,000,000
Remaining borrowing capacity			$ 20,000,000
Revolving Credit Facility | ABL Line Of Credit, Due October 30, 2020 | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread		1.65%

XML

Lease - Narrative (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)	Jan. 01, 2019 USD ($) renewal_option	Dec. 31, 2018 USD ($)	Jan. 01, 2017 USD ($)
Leases [Abstract]
Operating lease liabilities related to sale leaseback transactions	$ 37,053,119
Sale leaseback liabilities as a percentage of total operating lease liabilities	97.00%
Lessee, Lease, Description [Line Items]
Cumulative adjustment due to adoption of ASU				$ 0
Cumulative-effect adjustment to deferred taxes	$ 1,388,985		$ 252,988
Incremental borrowing rate		7.32%
Right-of-use asset obtained in exchange for new operating lease liabilities	$ 4,900,243
Initial term of operating lease		20 years
Number of renewal options | renewal_option		2
Number of years in each renewal option		10 years
Rent escalator		125.00%
Maximum rent escalator percentage		2.00%
Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Cumulative-effect adjustment to deferred taxes		$ 1,310,850
Retained Earnings | Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Cumulative adjustment due to adoption of ASU		$ 4,622,500

XML

Lease - Schedule of Discount Rates Associated with Operating and Finance Leases (Details)	Jun. 30, 2019
Leases, Weighted Average Discount Rate [Abstract]
Operating Leases	7.32%
Finance Leases	11.88%

XML

Lease - Schedule of Operating and Finance Leases Recorded in the Consolidated Balance Sheet (Details)	Jun. 30, 2019 USD ($)
Leases [Abstract]
Right-of-use assets, operating leases	$ 36,428,751
Right-of-use assets, finance leases	488,347
Current lease liabilities, operating leases	3,526,011
Current lease liabilities, finance leases	248,589
Non-current lease liabilities, operating leases	34,139,854
Non-current lease liabilities, finance leases	$ 457,933

XML

Lease - Schedule of Total Lease Cost (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 1,027,998	$ 2,055,996
Amortization of right-of-use assets	43,714	87,428
Interest on finance lease liabilities	22,147	45,864
Total lease cost	$ 1,093,859	$ 2,189,288

XML

Lease - Maturities of Operating Lease Liabilities After Adoption of 842 (Details)	Jun. 30, 2019 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2019 (excluding the six months ending June 30, 2019)	$ 1,754,079
2020	3,562,092
2021	3,635,376
2022	3,672,731
2023	3,563,383
Thereafter	52,188,270
Total undiscounted minimum future lease payments	68,375,931
Imputed Interest	30,710,066
Total lease liabilities recorded as of June 30, 2019	$ 37,665,865

XML

Lease - Maturities of Finance Lease Liabilities After Adoption of 842 (Details)	Jun. 30, 2019 USD ($)
Finance Lease, Liability, Payment, Due [Abstract]
Remainder of 2019	$ 153,993
2020	329,534
2021	335,462
2022	11,998
2023	0
Thereafter	0
Total undiscounted minimum future finance lease payments	830,987
Imputed Interest	124,465
Total finance lease liabilities recorded as of March 31, 2019	$ 706,522

XML

Lease - Schedule of Weighted Average Remaining Lease Term (Details)	Jun. 30, 2019
Weighted Average Remaining Lease Term [Abstract]
Operating Leases	204 months
Finance Leases	30 months

XML

Lease - Schedule of Undiscounted Future Minimum Lease Payments for Operating Leases Before Adoption of 842 (Details)	Dec. 31, 2018 USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019	$ 3,207,053
2020	3,243,694
2021	3,238,745
2022	3,224,810
2023	3,102,815
Thereafter	$ 45,337,403

XML

Lease - Schedule of Undiscounted Future Minimum Lease Payments for Capital Leases Before Adoption of 842 (Details)	Dec. 31, 2018 USD ($)
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019	$ 354,299
2020	329,534
2021	335,462
2022	11,998
Total minimum lease payments	1,031,293
Less imputed interest costs	164,826
Present value of minimum lease payments	$ 866,467

XML

Goodwill and Intangible Assets - Narrative (Details) - USD ($)	Jan. 01, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Goodwill		$ 17,557,620		$ 9,799,992
American Stainless Tubing, Inc.
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 7,757,628	$ 7,757,628	$ 7,043,534
American Stainless Tubing, Inc. | Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Value of intangible assets acquired	$ 10,000,000
Useful life of finite lived intangible assets acquired	15 years

XML

Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets, gross	$ 32,126,000	$ 22,622,000
Accumulated amortization of intangible assets	(14,668,672)	(12,925,888)
Intangible assets, net	$ 17,457,328	$ 9,696,112

XML

Goodwill and Intangible Assets - Summary of Estimated Amortization Expense (Details)	Jun. 30, 2019 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of 2019	$ 1,776,229
2020	3,296,195
2021	3,104,819
2022	2,790,361
2023	1,245,083
2024	1,083,974
Thereafter	$ 4,628,111

XML

Stock Repurchase Program (Details) - shares		6 Months Ended
	Feb. 21, 2019	Jun. 30, 2019
Equity [Abstract]
Number of shares authorized to be repurchased (in shares)	850,000
Period for shares to be repurchased	24 months
Number of shares repurchased (in shares)		0

XML

Label	Element	Value
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 10,864
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(10,864)
Accounting Standards Update 2018-01 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	4,622,500
Accounting Standards Update 2018-01 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 4,622,500