Annual report pursuant to Section 13 and 15(d)

Industry Segments

v3.6.0.2
Industry Segments
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Industry Segments
Industry Segments
The Company's business is divided into two 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 or 2016. 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 2016 and 2015. 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 $48,000 and $1,000 for 2016 and 2015, respectively, and environmental income of $13,000 for 2014. Corporate assets consist principally of cash, certain investments and equipment.
The Metals Segment had one customer that accounted for approximately 14 percent of revenues in 2015. There were no customers representing more than ten percent of the Metals Segment's revenues in 2016 or 2014. The Specialty Chemicals Segment has one customer that accounted for approximately 25 percent of revenues for 2016 and the same customer accounted for approximately 31 percent of revenues for 2015 and 2014. The concentration of sales to this customer declined in 2016 as a result of this customer moving production of the products previously produced and sold by the Specialty Chemicals Segment in house. The loss of this customer would have a material adverse effect on the revenues of the Specialty Chemicals Segment and the Company.
In order to establish stronger business relationships, the Metals Segment uses only a few raw material suppliers. Nine suppliers furnish about 77 percent of total dollar purchases of raw materials, with one supplier furnishing 42 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 46 percent of total purchases are from its top eleven 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)
2016
 
2015
 
2014
Net sales
 
 
 
 
 
Metals Segment
$
90,215

 
$
114,908

 
$
134,304

Specialty Chemicals Segment
48,351

 
60,552

 
65,201

 
$
138,566

 
$
175,460

 
$
199,505

Operating (loss) income
 

 
 

 
 

Metals Segment
$
(4,821
)
 
$
2,822

 
$
13,511

  Goodwill impairment
—

 
(17,158
)
 
—

Business interruption proceeds
—

 
1,246

 
—

Loss on sale-leaseback
(2,166
)
 
—

 
—

   Total Metals Segment
(6,987
)
 
(13,090
)
 
13,511

Specialty Chemicals Segment
4,888

 
5,665

 
6,130

Loss on sale-leaseback
(206
)
 
—

 
—

   Total Specialty Chemicals Segment
4,682

 
5,665

 
6,130

Unallocated straight line lease cost
(102
)
 
—

 
—

 
(2,407
)
 
(7,425
)
 
19,641

Less unallocated corporate expenses
5,733

 
5,106

 
3,241

Acquisition related costs
106

 
500

 
302

Operating (loss) income
(8,246
)
 
(13,031
)
 
16,098

Interest expense
933

 
1,353

 
1,151

Change in fair value of interest rate swap
13

 
42

 
426

Specialty and Palmer earn-out adjustments
—

 
(4,897
)
 
(3,476
)
Casualty insurance gain
—

 
(923
)
 
—

Other income, net
—

 
(136
)
 
(8
)
(Loss) income before income taxes
$
(9,192
)
 
$
(8,470
)
 
$
18,005

 
 
 
 
 
 
Identifiable assets
 

 
 

 
 

Metals Segment
$
109,689

 
$
112,749

 
 
Specialty Chemicals Segment
22,908

 
33,391

 
 
Corporate
6,041

 
2,903

 
 
 
$
138,638

 
$
149,043

 
 
Depreciation and amortization
 

 
 

 
 

Metals Segment
$
5,133

 
$
5,173

 
$
4,078

Specialty Chemicals Segment
1,449

 
1,376

 
974

Corporate
113

 
85

 
80

 
$
6,695

 
$
6,634

 
$
5,132

Capital expenditures
 

 
 

 
 

Metals Segment
$
2,201

 
$
7,399

 
$
3,123

Specialty Chemicals Segment
476

 
3,439

 
4,913

Corporate
367

 
67

 
30

 
$
3,044

 
$
10,905

 
$
8,066

Sales by product group
 
 
 
 
 
Specialty chemicals
$
48,351

 
$
60,552

 
$
65,201

Stainless steel pipe
56,066

 
77,850

 
101,035

Seamless carbon steel pipe and tube
14,913

 
18,013

 
2,524

Liquid storage tanks and separation equipment
19,236

 
19,045

 
30,745

 
$
138,566

 
$
175,460

 
$
199,505

Geographic sales
 

 
 

 
 

United States
$
132,313

 
$
167,185

 
$
191,032

Elsewhere
6,253

 
8,275

 
8,473

 
$
138,566

 
$
175,460

 
$
199,505