SPARTANBURG, S.C., April 19, 2013 (GLOBE NEWSWIRE) -- Synalloy Corporation (SYNL), a holding company owning subsidiaries that engage in a number of diverse business activities including the production of stainless steel pipe, fiberglass and steel storage tanks, specialty chemicals and fabrication of stainless and carbon steel piping systems, announces that the first quarter of 2013 produced net sales of $57,836,000, up 22% compared to net sales of $47,372,000 for the first quarter of 2012. Net earnings for the first quarter of 2013 were $1,465,000 or $0.23 per share, up 10% over net earnings of $1,337,000, or $0.21 per share for 2012's first quarter. Earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure of earnings, was $3,749,000 in the first quarter of 2013, or $0.58 per share. This was an increase of 33% over the first quarter of 2012 when EBITDA was $2,816,000, or $0.44 per share.
Metals Segment
Sales in the first quarter of 2013 totaled $44,659,000, an increase of 24% from the same quarter last year. Operating income was $1,935,000 and $1,571,000 for the first quarter of 2013 and 2012, respectively. As described in more detail below, the Company purchased 100% of the common stock of Palmer of Texas ("Palmer") on August 21, 2012. Excluding Palmer's sales results, sales for the first quarter 2013 would have been 1% higher than the prior year. The sales increase resulted from a 15% increase in unit volumes almost entirely offset by a 13% decrease in average selling prices. In the first quarter, the Segment experienced non-commodity unit volumes increasing 36% while commodity unit volume increased 2%. Selling prices for non-commodity and commodity pipe decreased approximately 20% and 12%, respectively, from the prior year. During the first quarter of 2013, the Segment began shipping carbon steel pipe associated with the Bechtel nuclear project. These sales are included in the non-commodity category and resulted in the large unit volume increase. Since the selling price for the carbon steel pipe used on this project is considerably below typical non-commodity sales levels, which would include a majority of higher-priced special alloy pipe sales, average non-commodity selling prices decreased from the first quarter of 2012. First quarter 2013 shipments of stainless steel pipe were constrained as distributors continued to monitor nickel prices and kept their large re-stocking buys on hold, as surcharges fluctuated each month. The Segment remains focused on international sales efforts which show year-over-year growth. Special alloy bookings, backlog and shipments were strong in the first quarter of 2013.World Steel Tube Report
Operating income, which increased $364,000 for the first quarter of 2013 when compared to the same quarter of 2012, was impacted by the following factors:
a) Palmer was acquired August 21, 2012. Its first quarter results were included in the 2013 Segment information while nothing was included for first quarter of the prior year. Palmer's operating income in the first quarter exceeded the forecast prepared at the time of acquisition. The integration plan has been a primary focus of the management team and has progressed well.
b) Associated with the acquisition of Palmer, an intangible asset of $9,000,000 was recorded for the customer base acquired by the Company. This asset is being amortized on an accelerated basis which resulted in an amortization charge of $383,000 in the first quarter 2013. This additional amortization, net of taxes, reduced first quarter 2013 earnings per share by $0.04 per share.World Steel Tube Report
c) Margins were affected in the first quarter from foreign imports. Stainless steel pipe received from Malaysia, Vietnam and Thailand are entering the country at significantly reduced prices. This factor forced the Segment to reduce their prices accordingly to retain market share. The Company, along with two other manufacturers, is pursuing legal action against these manufacturers to stop the illegal dumping of pipe in the United States.World Steel Tube Report
d) During the first quarter of 2013, Bristol Metals ("BRISMET") added 30 production employees to support the Bechtel nuclear project. Additional costs were incurred as the Company prepared for this initiative. With less than 15% of the estimated revenue from the project realized in the first quarter, the Company expects labor efficiencies and margins to improve in the second and third quarters of this year when the balance of the project is completed.
e) With the import pricing pressure and the start-up costs associated with the Bechtel project, operating income for BRISMET declined by 63% in the first quarter of 2013 as compared with the same quarter last year.
f) Declining nickel prices resulted in inventory losses in the first quarter of this year of approximately $566,000 compared to an inventory loss of $907,000 in the first quarter of 2012. The impact to reported earnings was a positive swing of approximately $0.03 per share for the first quarter 2013.World Steel Tube Report
g) The fabrication unit continued to struggle with lower margin projects in both of its facilities. Cost cutting efforts allowed the unit to generate a small operating profit in the first quarter of 2013 as compared with a small loss in the first quarter of 2012.