Synalloy (NASDAQ: SYNL) reported Q2 EPS of $0.70. Revenue for the quarter came in at $71.9 million.

• Adjusted Net Income for the second quarter of 2018 was $6.2 million, or $0.70 per share (diluted), an increase of $4.9 million or 377% from $1.3 million, or $0.15 per share for the second quarter of 2017. For the first six months of 2018, Adjusted Net Income was $10.5 million, or $1.19 per share (diluted), compared to $2.4 million, or $0.27 per share for the first six months of 2017.
• Adjusted EBITDA increased $5.9 million or 135% for the second quarter of 2018 to $10.3 million (14.4% of sales), from $4.4 million (8.5% of sales) for the second quarter of 2017. For the first six months of 2018, Adjusted EBITDA was $17.9 million (13.8% of sales) compared to $7.9 million (8.4% of sales) for the first six months of 2017.

"The earnings capacity of our operating units in an environment with reasonably good end market demand was on display in the second quarter,” said Craig Bram, President and CEO. "Pricing across all product lines in the Metals Segment showed improvement over the first quarter. Backlogs remained at elevated levels as well, with a continued upward bias in pricing. The backlog for our storage tanks and vessels product line is at the highest level since we acquired the business back in 2012. Product mix in the second quarter began to show some improvement in our stainless steel pipe business, specifically at the Bristol, Tennessee facility. Special alloys represented about 6.5% of Bristol’s pounds shipped in the second quarter, up from 3.4% in the first quarter. Special alloys as a percentage of the backlog at Bristol is currently at 11.4% of pounds booked. Our subsidiary, Bristol Metals LLC, recently booked a $3 million order for a mining project, and we continue to hear that project work is expected to rebound later this year and into 2019. We experienced substantial revenue growth in the Specialty Chemicals Segment in the second quarter, with operating profit as a percentage of sales marginally higher than the first quarter of this year. We remain encouraged by the pipeline of products in development across multiple end markets.”

We are, again, raising our forecast for 2018. Sales for the year are now expected to be $285.0 million, with Adjusted EBITDA of $37.0 million. These projections include six months of contributions from the previously announced third quarter acquisition of Marcegaglia USA's galvanized tube business as well as our plans to add ornamental stainless items to our product line. With favorable market conditions and a full year of contributions from the recent business expansions, revenue in 2019 should exceed $300 million. The integration of this new business is well under way and we are optimistic that it will perform in line with plan. We remain active on the M&A front and have several targets under review. The Company will remain disciplined in its approach, both from a valuation and leverage perspective. We only consider acquisitions that we expect to be accretive in the first year.

GUIDANCE:

Synalloy sees FY2018 revenue of $285 million, versus the consensus of $0 million.

Synalloy sees FY2019 revenue of $300 million, versus the consensus of $0 million.

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