Good day, ladies and gentlemen. And welcome to the Synalloy Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions]. As a reminder this call is being recorded. I would now like to the conference over to, Craig Bram, President and CEO. Please go ahead.

Good morning, everyone. Welcome to Synalloy Corporation's third quarter 2015 conference call. With me today is Dennis Loughran, our CFO. For today's agenda, Dennis will first provide a review of the third quarter and year-to-date financials and then I will offer some general comments about the quarter and provide an overview of our key initiatives for the remainder of this year and into 2016. Following my comments we will open the call to questions. Dennis?

Hello, everyone. In comparing this year's financial performance to last year's, last year's results will be for continuing operations of Synalloy. As usual the financial results will be presented using three different methods; GAAP based EPS, adjusted net income and non-GAAP measures defined in the earnings and adjusted EBIDTA, a non-GAAP measure also defined in the earnings release. Third quarter GAAP based earnings were $1.36 million or $0.16 per share as compared with earnings of $3.18 million or $0.36 per share in the third quarter of 2014. Q3 of this year includes a pre-tax gain of $2.41 million for the Specialty Pipe & Tube acquisition earn-out adjustment. Also Q3 of last year included a pre-tax inventory gain of $0.81 million as compared with an inventory loss of $2.21 million in the Q3 of this year. Year-to-date GAAP based earnings were $7.45 million or $0.85 per share as compared with earnings of $11.21 million or $1.29 per share in the first nine months of 2014. Inventory losses in the first nine months of 2014 were $0.12 million as compared with $5.72 million in the first nine months of 2015. The Palmer acquisition earn-out adjustment resulted in a pre-tax gain of $3.48 million in the first nine months of 2014 as compared with cumulative pre-tax gains for both Palmer and SPT earn-out adjustments of $4.90 million in the first nine months of this year. Third quarter non-GAAP adjusted net income was $1.06 million or $0.12 per share down 58% as compared with adjusted net income of $2.53 million or $0.29 per share in the third quarter of 2014. Year-to-date non-GAAP adjusted net income was $7.35 million or $0.84 per share down 11% as compared with adjusted net income of $8.21 million or $0.94 per share in the first nine months of 2014.…

[Operator Instructions] Our first question comes from the line of Nic Prendergast of BB&T. Your line is now open.

Just a quick question on your distributor restocking comments. Just a lot of distributors out there are cutting back, and I am just curious if you could provide somewhat a little bit more color on that because that seems kind of outside the norm I guess in this environment.

Yes, Nic. Obviously I am speaking to the stainless steel pipe area, and not so much the carbon seamless area. But yes, we had recently received in more increase of stocking buys. They are not quite as large as what we would typically see, but they have definitely been larger than what occurred the prior two quarters. And I would attribute some of that to what's happening in the -- with our dumping suit. Folks have been focused on that. Obviously they are interested and to see what this ruling -- initial ruling looks like probably later this month. But I think the expectation is then that the [speculative] imports from India are likely to be turned off and so there are turning to the domestic manufacturers for new supply.

And then I guess on that India anti-dumping thing, obviously you said you expect some kind of ruling within a month or so. But I guess, last time we had talked you had suggested that the importers might have changed their behavior simply on your filing a complaint, because I guess it could have been retroactively applied to them, the negative pricing, or the imports could have been -- there would have been a tariff retroactively applied. Have you seen any change in behavior on that yet or is it not until we actually see a ruling?

Yes. We can't really state to what they are doing on the imports side but we can certainly speak to what's happening on the order book side. And I think as I said earlier, I think the sense is that that -- the ability for that product to come in specifically from India at the depressed prices is likely to change very soon. So they are other more focused on what the domestic manufacturers can provide over the next couple of quarters.

In your prepared comments you had -- I am switching over to the fiberglass tanks. I think you said that you are eyeing some product expansions in 2016 and you are targeting about $5 million in non-tank business. Can you provide some more color on that? What exactly is that?

There is two areas in particular we are focused on. The one that's the furthest along is the aqua culture zoological market. We have been making tanks for SeaWorld. We are also doing some sand filter work for them. These are additional tanks that are part of the process. We also -- the same company who is purchasing those tanks is also doing work with Cabela's and Bass Pro for all of their retail locations. So that's that one example of the fiberglass product lines that we see expanding behind -- beyond the energy sector. The other area involves chemical and water and wastewater applications. So we are pretty intently focused on identifying some additional markets beyond the oil and gas side over the next 12 to 18 months, so that we can begin to diversify a little bit away from the energy concentration that, that facility has out in Andrews, Texas.

Sure. You said that was -- I believe you had said there was about $5 million opportunity and you see that as a potential $5 million opportunity over the next 12, 18 months?

The aquaculture piece is probably $2 million to $3 million kind of opportunity. So the balance of that $5 million is going to have to come from the Chemicals sector or from the water and wastewater sector.

Then I guess one final question here. Did you say the Chemicals segment you see volume marginally higher in '16 versus '15?

That's right.

Okay. All right.

What we do there is we categorize the new products we are working on. Phase 1 is the initial enquiry. Phase 2 we've done some preliminary testing and Phase 3, products -- products that we have completely tested and we've actually gotten indications from the customer that they are going to start production at some future quarter. So we build our 2016 forecast, we have got those Phase 3 products that are included in that analysis and then we also have indications from current customers of declining volume or even volume that may actually move in-house due to them having excess capacity. We have seen a few instances where an existing customer who also does oil and gas work, because of the decline in oil and gas chemicals some of their capacity in their own facilities has been freed up. And so the first thing they look towards whether or not they can bring any outsourced towing capacity back in-house. So we've had some preliminary indications of that taking place in the last 30 to 45 days. And so we have built that into the 2016 forecast to arrive at the marginal increase in volume year-over-year. But I will say the analysis we've done so far suggests that the product mix and the associated gross margins on what we are picking up versus what we are losing will actually result in about a 9% increase in gross margin year-over-year and that will float back down to the bottom line as well for the Chemicals segment.

Wow. Okay. 9% increase in gross profit in the Chemicals segment just based on kind of current early indications, is my understanding of that correctly, is that about right?

That's right.

I think that's about it for me.

[Operator Instructions]. And I am showing no further questions at this time. I would now like to turn the conference over to Craig Bram for any closing remarks.

Everyone thanks for your participation today. We look forward to finishing up the year as strongly as we possibly can. Thank you.

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