8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 10, 2021

Synalloy Corporation

(Exact name of registrant as specified in its charter)

Delaware		0-19687		57-0426694
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(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)
Inapplicable
(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).

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. ¨

Item 2.02.     Results of Operations and Financial Condition

On May 10, 2021, Synalloy Corporation ("the Company") issued a press release announcing financial information for its first quarter ended March 31, 2021. The press release is attached as Exhibit 99.1 to this Form 8-K and is furnished to, but not filed with, the Commission.

Item 9.01.    Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description of Exhibit
99.1	Synalloy Corporation Press Release dated May 10, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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

SYNALLOY CORPORATION

By: /s/ Sally M. Cunningham

Sally M. Cunningham

Chief Financial Officer

Dated: May 10, 2021

EX-99.1

Exhibit 99.1

Synalloy Reports First Quarter 2021 Results

Richmond, Virginia, May 10, 2021 - Synalloy Corporation (Nasdaq: SYNL) (“Synalloy” or the “Company”), an industrials company focused on the production and distribution of piping, tubing and specialty chemicals, is reporting its results for the first quarter ended March 31, 2021.

First Quarter 2021 Summary

(in millions, except per share and margin)	Q1 2021	Q4 2020	Q1 2020
Net Sales	$69.8	$55.9	$74.7
Gross Profit	$8.7	$6.1	$7.2
Gross Profit Margin	12.5%	11.0%	9.6%
Net Income (Loss)	$1.1	$(8.6)	$(1.2)
Diluted Earnings (Loss) per share	$0.12	$(0.94)	$(0.13)
Adjusted EBITDA	$4.9	$3.0	$2.6
Adjusted EBITDA Margin	7.0%	5.4%	3.5%

Management Commentary

“The first quarter marked incremental progress in our ongoing efforts to drive operational efficiencies as we continued to deliver the high-quality products and services that our customers have come to expect,” said Chris Hutter, interim president and CEO of Synalloy. “Despite lingering macroeconomic headwinds resulting from COVID-19 within our end markets in the early part of the quarter, we achieved sequential net sales growth across both of our segments, while simultaneously driving improvements in profitability.

“We firmly believe that growth is driven by high caliber talent across all levels of the business and that our people are pivotal to our success. To that end, I am very proud that we have added a proven steel industry leader, Tim Lynch, to manage the Company’s Metals Segment. Tim brings diverse and relevant experience from global industry leaders, including US Steel and Outokumpu, along with an insatiable drive to win. We are confident Tim will deliver an immediate improvement in operational execution and procurement efficiencies to help the businesses in our Metals Segment realize their potential.

“With the work we’ve put in to start the year, we are instilling a growth-oriented culture that we believe will accelerate future successes. Additionally, we are working towards further improving our customer and vendor relationships to ensure we are delivering best-in-class service and being viewed as a highly valued partner, which we anticipate will lead to a more effective sales process in the coming quarters. We still have much work to do, but we are establishing the necessary foundation that will enable Synalloy to return to profitable growth.”

First Quarter 2021 Financial Results

Net sales were $69.8 million compared to $74.7 million in the prior year period. The decline in sales was primarily attributable to the impact of the second quarter 2020 curtailment of our Palmer operations, as well as lower pipe and tube shipments primarily driven by delays in production and deliveries due to the ongoing macro-economic challenges with COVID-19.

Gross profit increased 22% to $8.7 million, or 12.5% of net sales, compared to $7.2 million, or 9.6% of net sales, in the first quarter of 2020. The increase in both gross profit and gross profit margin was primarily driven by effective cost-control within the supply chain and continuing to gain operational efficiencies in both segments.

Net income increased to $1.1 million, or $0.12 diluted earnings per share, compared to a net loss of $(1.2) million, or $(0.13) diluted earnings per share, in the first quarter of 2020. In addition to the above cited increases in gross margin, net income also benefited from lower corporate expenses.

Adjusted EBITDA increased 85% to $4.9 million compared to $2.6 million in the first quarter of 2020. Adjusted EBITDA margin also improved 350 basis points to 7.0% compared to 3.5% in the prior year period.

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Segment Results

Metals – Net sales in the first quarter of 2021 were $55.2 million compared to $60.7 million in the first quarter of 2020. Net income in the first quarter was $2.5 million compared to $0.9 million in the prior year period. Adjusted EBITDA in the first quarter was $4.9 million compared to $3.3 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA improved 340 basis points to 8.8% compared to 5.4% in the first quarter of 2020.

Specialty Chemicals – Net sales in the first quarter of 2021 increased 4% to $14.6 million compared to $14.0 million in the first quarter of 2020. Net income in the first quarter increased to $1.1 million compared to $0.5 million in the prior year period. Adjusted EBITDA in the first quarter increased to $1.5 million compared to $0.9 million in the prior year period. Adjusted EBITDA margin improved 350 basis points to 10.1% compared to 6.6% in the first quarter of 2020.

Liquidity

On January 15, 2021, the Company and its subsidiaries entered into a new Credit Agreement providing the Company with a new four-year revolving credit facility with up to $150 million of borrowing capacity. The Credit Agreement refinances and replaces the Company’s previous $100 million revolving line of credit and the remaining portion of the Company’s $20 million term loan. As of March 31, 2021, total debt was $63.8 million under the Company’s revolving credit facility, compared to $61.4 million in debt at December 31, 2020. As of the end of the first quarter of 2021, the Company had $41.2 million of remaining available borrowing capacity under its revolving credit facility, compared to $11.0 million at December 31, 2020.

Conference Call

Synalloy will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2021.

Synalloy management will host the conference call, followed by a question-and-answer period.

Date: Monday, May 10, 2021

Time: 5:00 p.m. Eastern time

Toll-free dial-in number: 1-877-303-6648

International dial-in number: 1-970-315-0443

Conference ID: 1971498

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.synalloy.com.

About Synalloy Corporation

Synalloy Corporation (Nasdaq: SYNL) is a company that engages in a number of diverse business activities including the production of stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Synalloy Corporation, please visit its website at www.synalloy.com.

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Forward-Looking Statements

This earnings release 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, including risks relating to the impact and spread of and the government’s response to COVID-19; inability to weather an economic downturn; a prolonged decrease in nickel and oil prices; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw materials availability; financial stability of our customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with mergers, acquisitions, dispositions and other expansion activities; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by our debt financing arrangements; and other risks detailed from time-to-time in Synalloy Corporation's Securities and Exchange Commission filings. Synalloy Corporation assumes no obligation to update any forward-looking information included in this release.

Non-GAAP Financial Information

Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures.

Adjusted EBITDA is a non-GAAP measure and excludes goodwill impairment, asset impairment, gain on lease modification, interest expense (including change in fair value of interest rate swap), income taxes, depreciation, amortization, stock-based compensation, non-cash lease cost, acquisition costs and other fees, proxy contest costs and recoveries, shelf registration costs, earn-out adjustments, loss on extinguishment of debt, realized and unrealized (gains) and losses on investments in equity securities, retention costs and restructuring & severance costs from net income.

Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

Company Contact

Sally Cunningham

Senior Vice President & Chief Financial Officer

1-804-822-3260

Investor Relations

Cody Slach or Cody Cree

Gateway Investor Relations

1-949-574-3860

SYNL@gatewayir.com

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SYNALLOY CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

	(Unaudited)
			December 31, 2020
Assets
Cash	$	398	$	236
Accounts receivable, net of allowance for credit losses of $508 and $496, respectively	39,352		28,183
Inventories, net	88,763		85,080
Prepaid expenses and other current assets	9,440		13,384
Total current assets	137,953		126,883
Property, plant and equipment, net	33,477		35,096
Right-of-use assets, operating leases, net	31,429		31,769
Goodwill	1,355		1,355
Intangible assets, net	10,746		11,426
Deferred charges, net	367		455
Total assets	$	215,327	$	206,984
Liabilities and Shareholders' Equity
Accounts payable	$	26,089	$	19,732
Accrued expenses and other current liabilities	5,506		6,123
Current portion of long-term debt	1,313		875
Current portion of earn-out liability	2,773		3,434
Current portion operating lease liabilities	897		867
Current portion of finance lease liabilities	14		19
Total current liabilities	36,592		31,050
Long-term debt	62,454		60,495
Long-term portion of earn-out liability	144		287
Long-term portion of operating lease liabilities	32,524		32,771
Long-term portion of finance lease liabilities	34		37
Deferred income taxes	1,916		1,957
Other long-term liabilities	87		92
Shareholders' equity	81,576		80,295
Total liabilities and shareholders' equity	$	215,327	$	206,984

Note: The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date.

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SYNALLOY CORPORATION

Condensed Consolidated Statement of Operations - Comparative Analysis (Unaudited)

(in thousands, except per share data)

		Three Months Ended March 31,
		2021		2020
Net sales
	Metals Segment	55,213		60,664
	Specialty Chemicals Segment	14,565		14,033
		$	69,778	$	74,697
Operating income
	Metals Segment	2,577		934
	Specialty Chemicals Segment	1,056		466
Unallocated expense (income)
	Corporate	1,767		2,019
	Acquisition costs and other	—		304
	Proxy contest costs and recoveries	(464)		—
	Earn-out adjustments	225		4
	Operating income (loss)	2,105		(927)
	Interest expense	387		719
	Loss on extinguishment of debt	223		—
	Change in fair value of interest rate swap	(2)		85
	Other, net	162		827
Income (loss) before income taxes		1,335		(2,558)
	Income tax provision (benefit)	241		(1,380)
Net income (loss)		$	1,094	$	(1,178)
Net income (loss) per common share
	Basic	$	0.12	$	(0.13)
	Diluted	$	0.12	$	(0.13)
Average shares outstanding
	Basic	9,191		9,074
	Diluted	9,288		9,074
Other data:
	Adjusted EBITDA (1)	$	4,875	$	2,638

(1) The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is included in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings.  The Company includes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense (including change in fair value of interest rate swap), income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, acquisition costs and other fees, loss on extinguishment of debt, proxy contest costs, shelf registration costs, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, stock-based compensation, non-cash lease cost, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.

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SYNALLOY CORPORATION

Consolidated Statement of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
(in thousands)	2021		2020
Operating activities
Net income (loss)	$	1,094	$	(1,178)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense	1,817		1,958
Amortization expense	680		810
Amortization of debt issuance costs	21		40
Loss on extinguishment of debt	223		—
Unrealized loss on equity securities	—		852
Deferred income taxes	(41)		1,319
Earn-out adjustments	225		4
Payments of earn-out liabilities in excess of acquisition date fair value	—		(292)
Provision for losses on accounts receivable	12		141
Provision for losses on inventories	184		358
Loss on disposal of property, plant and equipment	28		—
Non-cash lease expense	124		128
Non-cash lease termination loss	—		11
Change in fair value of interest rate swap	(2)		85
Stock-based compensation expense	187		336
Changes in operating assets and liabilities:
Accounts receivable	(11,181)		(7,737)
Inventories	(3,866)		676
Other assets and liabilities	38		2
Accounts payable	6,357		5,668
Accrued expenses	(569)		(1,085)
Accrued income taxes	3,901		(2,738)
Net cash used in operating activities	(768)		(642)
Investing activities
Purchases of property, plant and equipment	(245)		(587)
Proceeds from disposal of property, plant and equipment	18		—
Net cash used in investing activities	(227)		(587)
Financing activities
Borrowings from line of credit	14,730		3,201
Payments on long-term debt	(12,333)		(1,000)
Principal payments on finance lease obligations	(10)		(64)
Payments for finance lease terminations	—		(14)
Payments on earn-out liabilities	(1,029)		(863)
Payments for termination of interest rate swap	(46)		—
Repurchase of common stock	—		(635)
Payments for deferred financing costs	(155)		—
Net cash provided by financing activities	1,157		625
Increase (decrease) in cash and cash equivalents	162		(604)
Cash and cash equivalents at beginning of year	236		626
Cash and cash equivalents at end of year	$	398	$	22

6

SYNALLOY CORPORATION

Non-GAAP Financial Measures Reconciliation

Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)

($ in thousands)

		Three Months Ended March 31,
		2021			2020
Consolidated
Net income (loss)		$	1,094		$	(1,178)
Adjustments:
	Interest expense	387			719
	Change in fair value of interest rate swap	(2)			85
	Income taxes	241			(1,380)
	Depreciation	1,817			1,958
	Amortization	680			810
EBITDA		4,217			1,014
	Acquisition costs and other	—			304
	Proxy contest costs and recoveries (1)	(464)			—
	Loss on extinguishment of debt	223			—
	Earn-out adjustments	225			4
	Loss on investment in equity securities and other investments	363			852
	Stock-based compensation	187			336
	Non-cash lease expense	124			128
Adjusted EBITDA		$	4,875		$	2,638
	% sales	7.0		%	3.5		%
Metals Segment
Net income		$	2,538		$	926
Adjustments:
	Interest expense	—			4
	Depreciation expense	1,393			1,511
	Amortization expense	680			810
EBITDA		4,611			3,251
	Acquisition costs and other	—			4
	Earn-out adjustments	225			4
	Stock-based compensation	38			41
Metals Segment Adjusted EBITDA		$	4,874		$	3,300
	% segment sales	8.8		%	5.4		%
Specialty Chemicals Segment
Net income		$	1,055		$	480
Adjustments:
	Interest expense	—			8
	Depreciation expense	386			403
EBITDA		1,441			891
	Stock-based compensation	31			38
Specialty Chemicals Segment Adjusted EBITDA		$	1,472		$	929
	% segment sales	10.1		%	6.6		%

(1) Proxy contest costs and recoveries for the three months ended March 31, 2021 are insurance recoveries related to the 2020 shareholder activism costs.

7

XML

Cover Page	May 10, 2021
Cover [Abstract]
Document Type	8-K
Document Period End Date	May 10, 2021
Entity Registrant Name	Synalloy Corporation
Entity Incorporation, State or Country Code	DE
Entity File Number	0-19687
Entity Tax Identification Number	57-0426694
Entity Address, Address Line One	4510 Cox Road,
Entity Address, Address Line Two	Suite 201,
Entity Address, City or Town	Richmond,
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23060
City Area Code	(804)
Local Phone Number	822-3260
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	SYNL
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000095953
Amendment Flag	false