Annual report pursuant to Section 13 and 15(d)

Industry Segments

v3.8.0.1
Industry Segments
 12 Months Ended
Dec. 31, 2017
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 and tube 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. During 2015, the Company recorded an impairment charge of $17,158,249 of the total Metals Segment's goodwill as a result of the annual impairment analysis performed in the fourth quarter; see Note 4. The Metals Segment's identifiable assets did not include any goodwill in 2016. In relation to the acquisition of the stainless pipe and tube assets of MUSA (see Note 18), the Metals Segment recognized goodwill of $4,648,795 in 2017. The Specialty Chemicals Segment's identifiable assets include goodwill of $1,354,730 in 2017 and 2016. 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 $37,748, $48,000 and $1,332 for
2017, 2016 and 2015, respectively. 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 2017 or 2016. The Specialty Chemicals Segment has one customer that accounted for approximately 23 percent, 25 percent and 31 percent of revenues for 2017, 2016 and 2015. The concentration of sales to this customer declined in 2016 as a result of this customer moving production of the certain 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 80 percent of total dollar purchases of raw materials, with one supplier furnishing 40 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 52 percent of total purchases are from its top 15 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.
 
2017
 
2016
 
2015
Net sales
 
 
 
 
 
Metals Segment
$
152,957,195

 
$
90,214,537

 
$
114,908,258

Specialty Chemicals Segment
48,190,487

 
48,351,245

 
60,552,180

 
$
201,147,682

 
$
138,565,782

 
$
175,460,438

Operating income (loss)
 

 
 

 
 

Metals Segment
$
5,424,624

 
$
(4,820,374
)
 
$
2,821,879

  Goodwill impairment
—

 
—

 
(17,158,249
)
Business interruption proceeds
—

 
—

 
1,246,024

Gain (loss) on sale-leaseback
239,604

 
(2,166,136
)
 
—

   Total Metals Segment
5,664,228

 
(6,986,510
)
 
(13,090,346
)
Specialty Chemicals Segment
4,295,576

 
4,887,143

 
5,664,843

Gain (loss) on sale-leaseback
94,669

 
(205,642
)
 
—

   Total Specialty Chemicals Segment
4,390,245

 
4,681,501

 
5,664,843

 
10,054,473

 
(2,305,009
)
 
(7,425,503
)
Unallocated straight line lease cost
397,071

 
101,633

 
—

Unallocated corporate expenses
6,116,768

 
5,733,529

 
5,105,935

Acquisition related costs
794,983

 
106,227

 
499,761

Operating income (loss)
2,745,651

 
(8,246,398
)
 
(13,031,199
)
Interest expense
985,366

 
932,572

 
1,352,806

Change in fair value of interest rate swap
(96,696
)
 
12,997

 
41,580

Earn-out adjustments
688,523

 
—

 
(4,897,448
)
Casualty insurance gain
—

 
—

 
(923,470
)
Other income, net
(310,043
)
 
—

 
(134,389
)
Income (loss) before income taxes
$
1,478,501

 
$
(9,191,967
)
 
$
(8,470,278
)
 
 
 
 
 
 
Identifiable assets
 

 
 

 
 

Metals Segment
$
130,456,857

 
$
109,689,477

 
 
Specialty Chemicals Segment
25,394,078

 
22,907,672

 
 
Corporate
4,023,215

 
6,040,914

 
 
 
$
159,874,150

 
$
138,638,063

 
 
Depreciation and amortization
 

 
 

 
 

Metals Segment
$
6,280,681

 
$
5,132,506

 
$
5,172,251

Specialty Chemicals Segment
1,302,579

 
1,449,437

 
1,376,167

Corporate
154,552

 
113,047

 
85,973

 
$
7,737,812

 
$
6,694,990

 
$
6,634,391

Capital expenditures
 

 
 

 
 

Metals Segment
$
3,405,552

 
$
2,198,535

 
$
7,398,517

Specialty Chemicals Segment
1,649,967

 
475,703

 
3,439,260

Corporate
223,089

 
370,173

 
67,453

 
$
5,278,608

 
$
3,044,411

 
$
10,905,230

Sales by product group
 
 
 
 
 
Specialty chemicals
$
48,190,487

 
$
48,351,245

 
$
60,552,180

Stainless steel pipe
100,523,823

 
56,065,642

 
77,849,443

Seamless carbon steel pipe and tube
25,103,641

 
14,913,133

 
18,013,326

Liquid storage tanks and separation equipment
27,599,731

 
19,235,762

 
19,045,489

 
$
201,417,682

 
$
138,565,782

 
$
175,460,438

Geographic sales
 

 
 

 
 

United States
$
196,172,279

 
$
132,313,157

 
$
167,185,319

Elsewhere
4,975,403

 
6,252,625

 
8,275,119

 
$
201,147,682

 
$
138,565,782

 
$
175,460,438