Consolidated net sales increased 30.7%, or $78.7 million, compared to 2020 driven by increases in average selling price and pounds shipped as well as the Company's acquisition of DanChem, which is discussed in more detail below and in
Note 2 of the notes to the consolidated financial statements. Excluding the DanChem acquisition, net sales increased 28.5%, or $73.0 million, over 2020.
For 2021, cash flows from operating activities were $19.1 million, with $1.5 million used for capital expenditures.
•The Acceleration of Product Development Capabilities - DanChem brings leading engineering and process development capabilities with a demonstrated track record of rapidly developing products for commercialization.
•The Expansion of Process Offerings - DanChem's production plants and horizontal reactors drastically accelerate the long-term investment plans of Synalloy Chemicals, providing differentiated assets, rail access and meaningful site acreage for continued expansion.
•refinancing and expanding its revolving line of credit with a new lender to give the Company more favorable terms and increased liquidity;
•making the decision to permanently cease operations at the curtailed Palmer facility as of December 31, 2021 and to sublease the facility; and
•divesting the Company's ownership interest in N845BB Partners, LLC.
Comparison of 2021 to 2020 - Consolidated
•Increases in incentive bonus expense of $1.3 million primarily driven by higher attainment of performance goals in the current year over the prior year;
•Increases in personnel costs related to salaries, commissions and employee benefit costs of $1.1 million;
•Increases in professional fees of $0.2 million primarily driven by acquisition related costs; and,
•Increases in other expenses of $0.4 million primarily driven by increases in taxes, licenses and insurance.
The full-year increases were partially offset by:
•Decreases in share-based payment expense of $1.0 million primarily driven by a reduction of awards outstanding in the current year;
•Increases on gains recognized on the sale of assets of $0.8 million primarily driven by wind down activities at the Palmer facility; and,
•Decreases in bad debt expense of $0.2 million due to lower levels of uncollectible accounts in the current year.
Consolidated operating income for the full-year 2021 totaled $27.4 million compared to an operating loss of $31.1 million for the full-year 2020. The operating income increase for the full-year 2021 was primarily driven by increased demand driven sales, increases in average selling prices, a continued favorable surcharge market environment and goodwill and asset impairment expenses in 2020 that did not occur in 2021.
Comparison of 2021 to 2020 - Metals Segment
The net sales increase (decrease) for the full-year 2021 compared to the full-year 2020 is summarized as follows:
(1) Average price increases (decreases) for the full-year 2021 as compared to the full-year 2020 relate to the following:
•Fiberglass and steel liquid storage tanks and separation equipment - due to the curtailment of Palmer operations and decision to sublease facility;
•Heavy wall seamless carbon steel pipe and tube - increase due to demand driven price increases and raw material availability;
•Stainless steel pipe and tube - increase due to demand driven price increases and raw material availability, and;
•Galvanized pipe and tube - increase due to improvement in indexed pricing.
SG&A expense increased $0.3 million, or 1.7%, for the full-year 2021 when compared to 2020. SG&A as a percentage of sales was 6.7% of sales for 2021 and 8.6% of sales for 2020. The changes in SG&A expense were primarily driven by:
•Increases in personnel costs related to salaries, commissions and employee benefit costs of $1.5 million; and,
•Increases in incentive bonus of $1.0 million primarily driven by higher attainment of performance goals in the current year over the prior year.
The full-year increases were partially offset by:
•Increases on gains recognized on the sale of assets of $1.0 million related to wind down activities at the Palmer facility;
•Decreases in bad debt expense of $0.6 million due to lower levels of uncollectible accounts in the current year; and,
•Decreases in share-based payment expense of $0.2 million primarily driven by a reduction of awards outstanding in the current year.
Comparison of 2021 to 2020 - Specialty Chemicals Segment
•Increases in personnel costs related to salaries, commissions and employee benefit costs of $1.4 million;
•Increases in bad debt expense of $0.3 million primarily driven by an increase in uncollectible accounts in the current year;
•Increases in travel expense of $0.1 million; and,
•Increases in professional fees of $0.1 million.
The full-year increases were partially offset by:
•Decreases in incentive bonus of $0.2 million primarily driven by lower attainment of performance goals in the current year over the prior year; and,
•Decreases in share-based payment expense of $0.1 million primarily driven by a reduction of awards outstanding in the current year.
Comparison of 2021 to 2020 - Corporate
•Decreases in share-based compensation of $0.8 million over the prior year driven by a reduction in awards outstanding; and,
•Decreases in travel expense of $0.3 million due to continued reductions in non-essential travel in response to the on-going COVID-19 pandemic.
The full-year decreases were partially offset by increases in :
•Incentive bonus expense of $0.6 million as a result of higher attainment of performance goals in the current year over the prior year; and,
•Other corporate overhead expenses of $0.8 million driven primarily by increases in taxes and licenses and insurance expense.
Consolidated EBITDA and Adjusted EBITDA are as follows:
Metals Segment EBITDA and Adjusted EBITDA are as follows:
Specialty Chemicals Segment EBITDA and Adjusted EBITDA are as follows:
We closely manage our liquidity and capital resources. Our liquidity requirements depend on key variables, including level of investment required to support our business strategies, the performance of our business, capital expenditures, credit facilities and working capital management. Capital expenditures and share repurchases are a component of our cash flow and capital.
As of December 31, 2021, the Company has $39.4 million of remaining availability under it credit facility.
Stock repurchase activity was as follows:
At the end of each fiscal year, the Board reviews the financial performance and capital needed to support future growth to determine the amount of cash dividend, if any, which is appropriate. In 2021 and 2020, no dividends were declared or paid by the Company.
Below are additional financial measures that we believe are important in understanding the Company's liquidity position from year to year. The metrics are defined as:
Results of these additional financial measures are as follows:
Material Cash Requirements from Contractual and Other Obligations
As of December 31, 2021, our material cash requirements for our known contractual and other obligations were as follows:
Critical Accounting Policies and Estimates
•Significant negative industry or economic trends;
•A significant change in the use of the acquired assets or our strategy;
•A significant divestiture or other disposition activity;
•A significant decrease in the market value of the asset;
•A significant change in legal factors or the business climate that could affect the value of the asset; and
•A change in segment by one or more reporting unit
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