Good day, ladies and gentlemen, and welcome to the Synalloy’s First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to introduce your host for today's conference Mr. Craig Bram. Synalloy’s CEO. Sir, you may begin.

Good morning, everyone. Welcome to Synalloy Corporation's first quarter 2017 conference call. Dennis Loughran, our CFO is with me today as well. Dennis will provide a review of Q1 financials and then I will provide some comments on our business segments and what we’re seeing so far in Q2. We will then open the call to questions. Dennis?

Hello everybody. As usual the financial results will be presented using three different methods GAAP based EPS, adjusted net income and non-GAAP measure as defined in earnings release and adjusted EBITDA and non-GAAP measure also defined in earnings release. First quarter GAAP based income was $0.7 million or $0.08 per share, as compared with losses of $1.4 million or $0.16 per share in the first quarter of 2016. Significant differences in the year-over-year performance includes, Q1 of this year had a pre-tax inventory gain of $0.09 million as compared with an inventory loss of $2.1 million in Q1 of last year. Inventory cost adjustments primarily lower cost of market for last year represented a gain of $0.8 million as compared to no net impact in this year first quarter results. Q1 of this year included favorable net one-time adjustments and amortization of prior year manufacturing variances totaling $0.4 million compared to an unfavorable $0.3 million in the first quarter of 2016. Q1 of this year included $446,000 of acquisition related expenses compared to no such expenses last year. The first quarter of 2017 was impacted by $0.5 million of rent pretax related to the sale leaseback transaction that was not present in the first quarter of 2016 figures. This will be an ongoing difference through the first three quarter of 2017. First quarter non-GAAP adjusted net income was $0.2 million or $0.03 per share as compared to adjusted net income of $0.2 million or $0.02 per share in the first quarter of 2016. First quarter non-GAAP adjusted EBITDA totaled $2.2 million or 5.1% of sales compared to prior year first quarter total of $2.6 million or 7.2% of sales. While the numbers were close, we're in a more profitable position of having achieved this year's result with a negative adjustment for $9.9 million of inventory profits compared to last year's add back of $2.1 million of inventory losses. The combined adjusted EBITDA as a percent of sales for the operating businesses in the first quarter was 8.2% down from prior year's first quarter of 10.5%, but much improved sequentially from the fourth quarter of 2016 at 1.2%. We believe, we're well down the path to achieving close to our benchmark smart level of profitability 12.4% of sales, which was achieved in 2014 by late 2017 or early in 2018. These comparisons exclude the parent company cost. At the end of the first quarter, our outstanding borrowings against our ABL facility totaled $30 million, calculated ABL facility remaining availability at March 31, 2017 was approximately $15 million. I will now turn the call back over Craig.

Thanks Dennis. We're obviously very pleased with the Company's return to profitability in the first quarter. Actual results are tracking the plan and current positive trends continue for the balance of the year. We're optimistic that we can exceed our plan for 2017. As you know, we completed the acquisition of Marcegaglia USA Stainless Steel pipe and tube business on February 28. The integration of this business is going smoothly and I'm very pleased with this performance in March and April. Operating income for this unit was ahead of plan in March and shipments in April were very strong. Recent order activity for stainless steel welded pipe has been encouraging. In the month of March alone, we booked $23 million of new orders. To put this in perspective, both Bristol and Munhall at 2016 sales of just over $75 million. Recent discussions with distribution customers suggest the pickup in project related activity in the second half of the year. While we had inventory profits in the first quarter from increases in nickel, chrome in Mali, recent downward pressure in nickel prices have reduced surcharges by about 8% from April to June. Antam, Indonesia's state-controlled nickel miner will resume export of nickel order China in May. This follows a three-year ban by the government to encourage investment in domestic smelting capacity. Additionally, the Philippine government has rejected the appointment of an environmental minister who had previously shuttered nickel mines for four industrial practices. On the tank front, order activity has been very robust over the past five months. Monthly bookings have averaged about $2.5 million, not far off the order activity that we enjoyed in 2018. The Permian basin has very busy right now and we have seen lead time stretch out to 12 to 14 weeks. We've ordered a new…

[Operator Instructions] And our first question will come from the line of Mike Hughes with SGF Capital. Your line is now open.

Good quarter, just a couple of questions for you. Is the higher margin project work starting come back and if not, what's your outlook on that front? And then, can you speak to on the chemical side the potential to win new business that might come in later this year or early next year?

Mike, this is Craig. As far as the project where it goes, we had in the first quarter an LNG project that we booked in the later part of last year. What we're hearing out in the marketplace right now is a pickup in activity for projects expected in the second half of the year. Our distribution customers are getting that from some of the construction folks that they deal with directly. I can't pinpoint exactly where those projects are likely to come from although there are a lot of project on the drawing board and the gulf coast area. So, we would expect to see some activity there more than likely in downstream in energy markets, petrochemical facilities, chemical plants that kind of things. So, while we have not booked anything specifically related to those projects in the first quarter, we would expect to start seeing some activity in that project area in the second half of the year. As far as the chemical operations goes, the fire retardant project that I mentioned that is progressing very well, that involves a resin material that used as a protective sheet on computer and other types of cable. We've been handling the CapEx on that. It's been paid for about customer and we'll actually start billing the customer next month on some other CapEx payments. So, that is progressing well and we would expect to see that business ramping up starting in the probably the later part of June or early part of July. When it's fully ramped that project is going to represent about £3 million a year for us. We've also got some other products that are moving along that collectively represent some decent volume individually. They are not particularly large. They're probably 0.5 million to 1 million pound products. But we continue to feel really good about the pipeline and continue to believe that you're going to see some good sequential growth as well as year-over-year growth in the chemical guys going forward.

Okay. And can you remind me, what's the current run rate from the pound standpoint on the chemical side roughly?

The plan right now for this year for both the facilities is right at 65 million pounds.

Okay, great. And then just two other quick ones for you. Can you just speak to pricing in general and then at Marcegaglia, I think they were maybe more little aggressive out there as a standalone entity. So, if you can make any changes there? That's my first question. And secondarily, your goal for I believe was 12.4% of sales. Can you just speak to what level of revenue you'd need to hit that and was that just the metal segment? I was little confused where is that a companywide number?

The 12.4% is a companywide number and that's based on us achieving our targeted plan for total revenue for the Company, which Dennis, I believe is a $180 million.

Yes.

$185 million, Mike. Let's see your other question was what now, I'm sorry?

Just speak that to pricing on the -- side of the business and then the Marcegaglia acquisition, what if you've made any changes there in their pricing structure?

Yes, as far as Marcegaglia goes, yes, there has been firming of prices, I think we mentioned maybe on the last call that we expected inability to move their prices up as much as 10%. We've been able to accomplish that. The shipments for Marcegaglia in April were very strong. They were north of $2.5 million. And we only had on for one month in the quarter and really it was only about two weeks of strong activity due to the fact that when we brought them live, we had to bring each of their mills up individually into our new ERP system. So, we didn't get some of the initial pop in the first month, and the other factor was that not surprisingly they sold down a lot of their finished goods inventory leading up to the close. And so, we didn't have as much finished goods inventory to sell from. But the pricing from Marcegaglia has exceeded our plan. We're really pleased with how that business has performed. And generally speaking on the stainless steel side, there has been some firming in prices in the first quarter. On the tank and vessel side, much of the work that we did in the first quarter was quoted back in the fourth quarter. And as you would expect as the lead time lengthen out, and our competitors capacity builds up, that has to occur before we start seeing an improvement in pricing. So, the projects, the work that we've been bidding on in the tanks business for the last 60 days, we have been able to realize improved pricing that’s going to benefit us as we report the second quarter numbers. We're seeing the same kind of pricing firming activity in our heavy wall seamless carbon business as well. So, yes just across the Board, there has been price firming whether its stainless steel pipe or tanks and pipe that is primarily going into the energy market.

Okay and if I can just sneak in one last question. Just I am not sure, if it's in the press release, no, I don’t think it is just the Palmer revenue for the quarter?

Palmer revenue for the quarter, Dennis, do you have that handy?.

No, we just talked about the segment in the release and stuff like that.

On that tank sales, it had to be somewhere in the neighborhood of $8 million and we can -- Mike, if you want to follow up with me, I'll try and pull that together but I think it's in the $8 million range.

Okay. From the sounds of things, you would be able to sustain that level of revenue or little bit higher upfront for the balance of the year at a higher margin?

Yes.

Thank you. [Operator Instructions] And I’m showing no further questions at this time. I’d now like to turn the call back over to Mr. Bram for further remarks.

Thank you everybody for your time today. We appreciate as always your support and look forward to sharing more with you at the Annual Meeting next month. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude your program. You may all disconnect. Everyone have a great day.