Good day, ladies and gentlemen, and welcome to the Synalloy Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Craig Bram, President and CEO. Sir, you may begin.

Thank you. Good morning, everybody. Welcome to Synalloy Corporation's Third Quarter 2017 Conference Call. With me as always, is Dennis Loughran, our CFO. Dennis will provide a review of the Q3 financials and then I'll provide some comments on our business segments and what we're seeing so far in Q4. We'll then open the call to questions. Dennis?

Hello, everyone. As usual, the financial results will be presented using three different methods: First, GAAP based EPS; second, adjusted net income, a non-GAAP measure as defined in the earnings release; and third, adjusted EBITDA, a non-GAAP measure also defined in the earnings release. Third quarter GAAP-based income was the net loss to $1.2 million or $0.14 per share as compared with losses of $2.6 million or $0.30 per share in the third quarter of 2016. Significant differences in year-over-year performance include, Q3 of this year had a pretax inventory loss of $2 million as compared with an inventory loss of $1.3 million in Q3 of last year. Q3 of this year included unfavorable net one-time adjustments and amortization of prior-period manufacturing variances totaling $0.7 million, compared to a favorable $0.5 million in the third quarter of 2016. Q3 of this year included $186,000 of acquisition-related expenses compared to only $1,000 of such expenses last year. The third quarter of 2017 was impacted by $0.1 million of favorable amortization, a deferred sale-leaseback gain, while last year's third quarter included a one-time loss of $2.5 million related to the initial booking of that transaction. In addition, the current quarter included $0.7 million of rent, pretax, related to the sale-leaseback transaction that were not present in the third quarter of 2016 figures. This will be the last period impacted by that difference. Q3 was also impacted by a realized gain of $0.3 million on sales of equity investments, which was offset by extra expenses related to a one-time increase and allowance for doubtful accounts and legal fees. Third quarter non-GAAP adjusted net income was $0.9 million or $0.10 per share, as compared with adjusted net loss of $0.2 million or $0.03 per share in the third quarter of 2016. Third quarter non-GAAP adjusted EBITDA totaled $3.6 million, or 6.5% of sales, compared to the prior year's third quarter total of $1.5 million or 4.3% of sales. The numbers reflect the ongoing improvement in our business levels in 2017, a trend that we expect to continue into the fourth quarter results. The combined adjusted EBITDA is present -- as a percent of sales for the operating businesses in the third quarter was 8.9% up slightly from prior year's third quarter of 8.8%. At the end of the third quarter, our outstanding borrowings against our ABL facility totaled $26.7 million, down $6.3 million from June 30, 2017 total. The calculated ABL facility remaining availability as of September 30, 2017 was approximately $17.8 million. Had that calculation been done under our newly announced $65 million ABL facility, the availability would have been $30.3 million. I will now turn the call back over to Craig.

Thanks, Dennis. We were pleased to see momentum from Q2 carry over into Q3. Net sales company wide for the third quarter and year-to-date showed continued strength when compared to the same periods last year, up 59% and 41% respectively. The Metals segment drove our top line performance with strong contributions from each of our product lines. Stainless steel pipe and tube sales were up 103% and 69% over the prior year's third quarter and year-to-date respectively. Excluding the Bristol Metals' Munhall acquisition, sales were up 42% over Q3 of last year, and up 29% year-to-date. Seamless carbon pipe and tube sales were up 84% over last year's third quarter, and 70% -- 74% year-to-date, while storage tank and vessel sales were up 69% and 41% respectively. The backlog in the storage tank and vessels business remains at a record level of $17 million, and a backlog for the stainless steel pipe and tube is a healthy $24 million. Chemical sales in the third quarter did not meet our expectations as a new fire-retardant product was slower to ramp than anticipated. Sales were down 4% from the third quarter of last year, and year-to-date sales were off approximately 2%. EBITDA results for the entire company in the third quarter were in line with expectations, excluding the $0.3 million in expenses associated with an increase to allowance for doubtful accounts in the Chemical segment and one time legal fees. In the Metals segment, EBITDA for seamless carbon pipe and tube was up 359% in the quarter, stainless steel pipe and tube was up 150%, and storage tank and vessels was up 126%. Chemicals segment EBITDA was down 10%, excluding the previously mentioned increase to allowance for doubtful accounts and legal fees. While volume and unit pricing have shown excellent improvement in…

Thank you. [Operator Instructions] Our first question comes from Mike Hughes with SGF Capital. Your line is now open

Good morning. Thanks for taking my questions. First, on the stainless business, I’ll be quick, on the stainless business, can you just talk about core pricing excluding commodity moves since there's been some consolidation on your part and then one of your competitors did this year just how pricing is looking?

Sure. There have been several price increases this fall, Mike, the first one was September 1. That was about a 4% increase, and then again, on October 1, which was about a 3% increase. So those increases have held. It's difficult from quarter-to-quarter to be able to isolate those increases in the results simply because our product mix changes pretty dramatically quarter-to-quarter. So as the alloy mix changes, as the size mix changes, it can mask what's going on behind the scenes in the base prices. But we've been pleased so far with the upward trajectory in those base prices and the fact that they've been holding.

Okay. So if the mix in the fourth quarter were the same as the third quarter the 7% accumulative price increase because it compounds a little bit more than 7%, would fall to the bottom line, or is it offsetting something? I assume if its base, it's just -- it's all falls to the bottom line.

Yes. That's -- it's a good way of looking at it, Mike. The bulk of that should fall to the bottom line.

Okay. And when was the last time you saw that -- cumulative price increase a little over 7%, when was the last time you had that type of pricing power?

It's been several years for sure.

Okay, okay. And then the project business, you said you are assuming a little bit of a pickup in the 2018 forecast. What are you actually seeing out there? Are you starting to see orders?

Yes. We -- our guys spend a lot of time in Houston. Obviously, that's an important market for us and the feedback has been positive, optimistic about what folks are expecting what they are seeing right now. We also look at some of the larger E&C companies and what they are saying about their order book. Floor is one we look at quite a bit. And in their Q3 report, their CEO reported that he believes that they are at the start of the next commodity cycle as it relates to the mining business. And then he also talked about the oil and gas side and the downstream petrochemical market. And they're seeing a fair amount of final investment decisions that folks are making on chemical facilities, LNG and pipeline projects in North America right now. So they tend to be kind of on the front end of the curve. They are seeing more activity on design and that kind of work. So that's consistent with what we're hearing from our customers out in the market right now.

Okay. And then turning to the chemical side of the business. The $300,000 charge that was all within that division, is that correct?

That's right. That charge was about $225,000. And there were some legal fees in that same segment of about $80,000.

Okay. Can you speak to -- about that?

The customer -- at the time we took the charge was considering a bankruptcy filing. They have since filed. At the same time, they had another entity that operates out of Europe. And I expect that they're going to be ramping some activity in North America. Obviously if we were to continue making the product we made for them was a biocide that goes into paints. If we were to start doing work with them again post bankruptcy, obviously, we would require payment upfront, funds wired into the accounts. So we expect that business to actually develop again, but because of the bankruptcy filing, we had to take that charge.

Okay. So you don't have any exposure left on your books to be done at this point.

No.

Okay, good. And then the implied guidance for the Chemicals business in the fourth quarter. If I adjust for that item, it still looks pretty robust up, I don't know $600,000 to $700,000 at least sequentially, what will drive that?

Well, the continued ramping of the fire retardant business that was slower coming out of the gate than we expected. We actually -- part of it was on the client end. They had a problem with a plant in Mexico. They asked us to stop what we were doing on the product that we're going to be making for them going forward and ask for our assistance when that Mexican plant ran into some production issues. Then they flip-flopped, they got production issue resolved. And in the meantime, had built up some inventory from their former supplier to make sure that they recovered. So as a result, they didn't need some product from us as early as we had expected to be the case. And then we've had a couple of minor issues that have since been worked out where the color of the product that we were producing needed to be revised and so we've gotten that issue addressed. So we expect to see that ramping continue into the fourth quarter and the first quarter of next year. The agreement calls for them to give us about 3 million pounds a year of volume, and we expect to be running at that rate sometime in the first quarter of next year.

Okay. And then my last question just on the Metals segment, same type of question. The guidance implies about $1 million sequential increase. I think seasonally, I thought the fourth quarter was typically a little bit weaker. Is that a reflection of the pricing actions that have stuck over the last 2 pricing actions that have stuck?

Mike, it's probably not so much the pricing action as it is. We've got a certain amount of backlog in both the stainless steel pipe and tube side and in the vessel business. And because of those backlogs, we actually expect the fourth quarters to be a little stronger than what they've historically been. So that's really driving the sequential gain.

Okay. So you're not assuming the 7% price increase in the fourth quarter because part of that's covered by backlog. It did not include the price increase, is that correct?

That's right.

Okay. Okay, I’ll turn it over. Thank you very much.

Thank you.

[Operator Instructions] I'm not showing any further questions. I would now like to turn the call back over to Craig Bram for any further remarks.

As always, we appreciate your interest in the company and look forward to finishing the balance of the year strongly. Thank you.