Annual report pursuant to Section 13 and 15(d)

Industry Segments

v3.3.1.900
Industry Segments
 12 Months Ended
Dec. 31, 2015
Segment Reporting [Abstract]  
Industry Segments
Industry Segments
The Company's business is divided into two reportable operating segments: Metals and Specialty Chemicals. The Company identifies such segments based on products and services, long-term financial performance and end markets targeted. The Metals Segment operates as three reporting units including Synalloy Metals, Inc., a wholly-owned subsidiary which owns 100 percent of BRISMET, Palmer and Specialty, both wholly-owned subsidiaries of the Company. BRISMET manufactures pipe from stainless steel and other alloys, Palmer produces fiberglass and steel storage tanks and Specialty is a master distributor of seamless carbon pipe and tube. The Metal Segment's products, some of which are custom-produced to individual orders and required for corrosive and high-purity processes, are used principally by the chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and wastewater treatment, liquid natural gas, brewery, food processing, petroleum, pharmaceutical and other industries. Products include pipe, storage tanks, pressure vessels and a variety of other components. The Specialty Chemicals Segment operates as one reporting unit which includes MS&C, a wholly owned subsidiary of the Company which owns 100 percent of MC, and CRI Tolling, a wholly owned subsidiary of the Company. The Specialty Chemicals Segment manufactures a wide variety of specialty chemicals for the carpet, chemical, paper, metals, mining, agricultural, fiber, paint, textile, automotive, petroleum, cosmetics, mattress, furniture, janitorial and other industries. MC manufactures lubricants, surfactants, defoamers, reaction intermediaries and sulfated fats and oils. CRI Tolling provides chemical tolling manufacturing resources to global and regional companies and contracts with other chemical companies to manufacture certain pre-defined products.
The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measure being operating income (loss). The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Segment operating income is the segment's total revenue less operating expenses, excluding interest expense and income taxes. Identifiable assets, all of which are located in the United States, are those assets used in operations by each segment. The Metals Segment's identifiable assets did not include any goodwill in 2015 and reflected $21,895,000 of goodwill in 2014. During 2015, the Company recorded an impairment charge of approximately $17,158,000 of the total Metals Segment's goodwill as a result of the two-step annual impairment analysis performed in the fourth quarter; see Note 4. The Specialty Chemicals Segment's identifiable assets include goodwill of $1,355,000 in 2015 and 2014. Centralized data processing and accounting expenses are allocated to the two segments based upon estimates of their percentage of usage. Unallocated corporate expenses include environmental charges of $93,000 and $17,000 for 2015 and 2013, respectively, and environmental income of $13,000 for 2014. Corporate assets consist principally of cash, certain investments and equipment.
The Metals Segment has one customer that accounted for approximately 14 percent of revenues for 2015 and a different customer accounting for approximately ten percent in 2013. There were no customers representing more than ten percent of the Metals Segment's revenues in 2014. The Specialty Chemicals Segment has one customer that accounted for approximately 31 percent of revenues for 2015 and 2014 and a different customer representing 40 percent of revenues in 2013. The change in customers resulted from two of the three product lines which use the Company's products being sold to another company in early 2014. The Specialty Chemicals Segment successfully retained the acquiring company's business. This new customer is a large global company, and the purchases by this customer are derived from two different business units that operate autonomously from each other. Even so, loss of this customer's revenues would have a material adverse effect on the Specialty Chemicals Segment and the Company.
In order to establish stronger business relationships, the Metals Segment uses only a few raw material suppliers. Seven suppliers furnish about 78 percent of total dollar purchases of raw materials, with one supplier furnishing 34 percent. However, the Company does not believe that the loss of this supplier would have a materially adverse effect on the Company as raw materials are readily available from a number of different sources, and the Company anticipates no difficulties in fulfilling its requirements. For the Specialty Chemicals Segment, most raw materials are generally available from numerous independent suppliers and about 45 percent of total purchases are from its top eight suppliers. While some raw material needs are met by a sole supplier or only a few suppliers, the Company anticipates no difficulties in fulfilling its raw material requirements. 
Segment Information:
All values are for continuing operations only.
(Amounts in thousands)
2015
 
2014
 
2013
Net sales
 
 
 
 
 
Metals Segment
$
114,908

 
$
134,304

 
$
140,233

Specialty Chemicals Segment
60,552

 
65,201

 
56,518

 
$
175,460

 
$
199,505

 
$
196,751

Operating (loss) income
 

 
 

 
 

Metals Segment
$
2,822

 
$
13,511

 
$
1,263

  Goodwill impairment
(17,158
)
 
—

 
—

Business interruption proceeds
1,246

 
—

 
—

Total Metals Segment
(13,090
)
 
13,511

 
1,263

Specialty Chemicals Segment
5,665

 
6,130

 
5,743

 
(7,425
)
 
19,641

 
7,006

Less unallocated corporate expenses
5,227

 
3,300

 
3,243

Acquisition related costs
500

 
302

 
264

Operating (loss) income
(13,152
)
 
16,039

 
3,499

Interest expense
1,232

 
1,092

 
1,357

Change in fair value of interest rate swap
42

 
426

 
(741
)
Specialty and Palmer earn-out adjustments
(4,897
)
 
(3,476
)
 
—

Casualty insurance gain
(923
)
 
—

 
—

Gain on bargain purchase, net of taxes
—

 
—

 
(1,077
)
Other income, net
(136
)
 
(8
)
 
(148
)
(Loss) income before income taxes
$
(8,470
)
 
$
18,005

 
$
4,108

 
 
 
 
 
 
Identifiable assets
 

 
 

 
 

Metals Segment
$
112,591

 
$
145,558

 
 
Specialty Chemicals Segment
33,391

 
32,504

 
 
Corporate
3,039

 
9,787

 
 
 
$
149,021

 
$
187,849

 
 
Depreciation and amortization
 

 
 

 
 

Metals Segment
$
5,173

 
$
4,078

 
$
3,809

Specialty Chemicals Segment
1,376

 
974

 
659

Corporate
206

 
139

 
204

 
$
6,755

 
$
5,191

 
$
4,672

Capital expenditures
 

 
 

 
 

Metals Segment
$
7,399

 
$
3,123

 
$
4,194

Specialty Chemicals Segment
3,439

 
4,913

 
1,397

Corporate
67

 
30

 
57

 
$
10,905

 
$
8,066

 
$
5,648

Sales by product group
 
 
 
 
 
Specialty chemicals
$
60,552

 
$
65,201

 
$
56,517

Stainless steel pipe
77,850

 
101,035

 
106,874

Seamless carbon steel pipe and tube
18,013

 
2,524

 
—

Liquid storage tanks and separation equipment
19,045

 
30,745

 
33,360

 
$
175,460

 
$
199,505

 
$
196,751

Geographic sales
 

 
 

 
 

United States
$
167,185

 
$
191,032

 
$
189,447

Elsewhere
8,275

 
8,473

 
7,304

 
$
175,460

 
$
199,505

 
$
196,751