Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.23.3
Discontinued Operations
 9 Months Ended
Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
During the fourth quarter of 2022, the Company began a strategic reassessment of certain operations to drive an increased focus on its core operations and to continue to improve overall performance and operating profitability. As a result of this reassessment, management and the Board of Directors decided to pursue an exit of the Company's galvanized pipe and tube operations at its Munhall facility ("Munhall").
During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023. It is anticipated that the complete exit and disposal of all assets at Munhall
will be completed within one year from the date the decision was made. The strategic decision to cease manufacturing operations at Munhall is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies.
As a result of this decision, during the second quarter ended June 30, 2023, the Company incurred asset impairment charges of $6.4 million related to the write down of inventory and long-lived assets as well as $1.4 million in increased reserves on accounts receivable at the facility. During the third quarter ended September 30, 2023, the Company incurred additional asset impairment charges of $2.4 million related to the write down of inventory to net realizable value. Certain assets of Munhall were also classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented. See Note 4 for further discussion of the assets held for sale and related fair value measurements.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of Munhall:
(in thousands) September 30, 2023 December 31, 2022
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents $ —  $ 1 
Accounts receivable, net 500  8,058 
Inventories —  28,880 
Prepaid expenses and other current assets 120  1,181 
Current assets classified as discontinued operations 620  38,120 
Property, plant and equipment, net —  5,301 
Right-of-use assets, operating leases, net 6 26
Intangible assets, net —  386
Other non-current assets, net —  1904
Long-term assets classified as discontinued operations 6  7,617 
Total assets classified as discontinued operations $ 626  $ 45,737 
Carrying amounts of current liabilities included as part of discontinued operations:
Accounts payable $ 348  $ 3,108 
Accrued expenses and other current liabilities 615  521 
Current portion of operating lease liabilities 7  27 
Total current liabilities classified as discontinued operations $ 970  $ 3,656 

The financial results of Munhall are presented as loss from discontinued operations, net of tax on the unaudited condensed consolidated statements of income (loss). The following table summarizes the results of discontinued operations of Munhall:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Net sales $ 2,650  $ 21,945  $ 25,313  $ 86,057 
Cost of sales 6,640  24,469  36,868  86,854 
Gross profit (3,990) (2,524) (11,555) (797)
Selling, general and administrative expense 170  595  4,310  1,699 
Asset impairments 2,416  —  8,720  — 
Earnout adjustments —  —  —  (7)
Operating loss of discontinued operations (6,576) (3,119) (24,585) (2,489)
Loss on classification as held for sale —  —  83  — 
Loss on discontinued operations before income taxes (6,576) (3,119) (24,668) (2,489)
Income tax benefit (1,413) (638) (5,367) (496)
Net loss from discontinued operations $ (5,163) $ (2,481) $ (19,301) $ (1,993)