Good day, ladies and gentlemen and welcome to the Synalloy Second Quarter Earnings Conference Call. At this time all participants are in a listen-only, later we will conduct a question-and-answer session and instruction will follow at that time. [Operator Instructions] I would now like to introduce your host for today’s presentation, Craig Bram, President and CEO. You may begin.

Good morning, everyone. Welcome to Synalloy Corporation’s Second Quarter 2019 Conference Call. Dennis Loughran our CFO will provide a review of the Q2 financials, and then I will provide some comments on our business segments. We will 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. Second quarter GAAP-based income was a net loss of $0.3 million or $0.03 per diluted share as compared with income of $3.7 million or $0.41 per share in the second quarter of 2018. Second quarter non-GAAP adjusted net loss was $0.3 million or $0.04 per diluted share as compared with adjusted net income of $6.3 million or $0.71 per diluted share in the second quarter of 2018. Second quarter non-GAAP adjusted EBITDA totaled $3.4 million or 4.3% of sales compared to the prior year’s second quarter total of $10.3 million or 14.4% of sales. As pointed out in the earnings release, inventory price change losses impacted results total on a pre-tax basis $1.8 million in the second quarter of 2019 compared to a gain of $1.1 million in last year’s second quarter. On an after-tax basis, that represents an unfavorable $2.3 million difference between the two quarters. The combined adjusted EBITDA as a percent of sales for the operating businesses in the second quarter was 6.3% compared to the prior year’s second quarter of 17.1%, the primary factor in the decline being the inventory price change differential mentioned above. The average pricing declined experienced in the welded stainless pipe to Galvanized tube operations described in our press release and the June 19th guidance update, as well as inclusion of more commodity volumes brought in with the Galvanized acquisition that were not in our prior year second quarter. At the end of the second quarter, our outstanding borrowings against our ABL facility totaled $ 67.3 million down $9.1 million from the December 31, 2018 total. The decrease is primarily related to decreased working capital, basically inventory. The calculated ABL facility remaining available as of June 30, 2019 was approximately $20 million. In addition, the balance of the $20 million term loan drawn on January 1st to support the acquisition of ASTI stood at $18.3 million. I will now turn the call back over to Craig.

Thanks, Dennis. The Company experienced what we believe to be temporary headwinds in our welded stainless steel pipe business in the second quarter. This is primarily responsible for the downward revision in our annual forecast, which we reported in our press release on June 19th. For sharing some details on this product line, I would like to comment on our other businesses. The addition of ASTI and its ornamental tubing products in January has made a solid contribution to overall results. Sales and profit margins are equal to or better than our original forecast and the order book remained strong. The more consumer-oriented end markets for this product line had been an excellent complement to the heavier industrial markets served by our welded stainless steel and seamless carbon pipe and tube product. In June, we implemented a Company-wide ERP system for this unit and the transition has gone very well. Our Storage Tank business in West Texas produced much improved results in Q2 and year-to-date. Revenue and profit margins exceeded the original forecast for both periods. However, new order activity in July has been slow and several customers have reduced the number of tanks on previous orders. Oil production growth in the Permian has slowed considerably over the pace of 2018. The Energy Information Administration projects that oil production in the Permian will grow by 34,000 barrels per day in August, with legacy well seeing a decline of 268,000 barrels per day and production from new wells coming in at 302,000 barrels per day. The oil rig count in the Permian peaked in the second quarter of 2018 and has been on the decline ever since. In response to the slowing activity, we have started to rationalize production and cost and we will monitor this closely in the coming weeks.…

Thank you. [Operator Instructions] Our first question comes from the line of [Michael Lucero] (Ph) who is a Private Investor. Your line is now open.

Yes, good morning. My question has to do the tax rate in the second quarter and first six months of this year. There were some explanation in the press release, I’m wondering if you could elaborate a little bit more about why it is high as what it was?

Yes. This is Dennis Loughran. With the income figures being so low - relatively low, the discrete items which were only a few hundred thousand dollars have a fairly significant impact on the overall effective rate, if income and the tax were higher at the statutory rate it would have been spread over a much large tax base. So, that is basically it.

Okay. Thank you.

Thank you. [Operator Instructions] And we have no questions in the queue at this time. We do have a follow-up question from the line of Michael Lucero, The Private Investor. Your line is now open.

Another question is with the possible new tariffs on Chinese imports starting as early as September 1st. I’m wondering if you could elaborate a little bit upon the impact of additional steel imports if they are coming in rapidly to beat that possible tariff increase.

Yes. Michael, the tariff increase you are speaking to would not impact any steel products.

Alright. Okay. Thank you.

Thank you And we have no further questions at this time.

It looks like there is a question from Charles Gold?

[indiscernible] line is now open.

Hi Craig, it looks like your…

Hi, Charles.

How are you doing? It looks like your forecast is for roughly $14 million of EBITDA in the second half is that right?

Yes.

That is right.

Alright. So, you said last year would have been 41, if the acquisition had been there all year. Is 28 a better current run rate for [San Jose] (Ph), it’s obviously it’s not the run rate. I know you are not ready to put out the 2020 forecast, but it looks like revenues is in the $320 million to $350 million range and is it fair to say we are operating in run rate of 25 to 35 EBITDA, is that sort of where we are.

If you exclude metal profits and losses Charles, you know it is a good estimate.

Yes. I guess have been fixated too much on the nickel price making a one year high, and it has been holding here and when you look at the London inventory that number just keeps on coming down. So it is like Winchester back a little bit.

If those prices hold, we will definitely start to see some pick up and some inventory profits probably towards the end of Q3, but definitely into Q4.

Alright. Thanks so much.

Thank you. [Operator Instructions] Okay I would now like to turn the call back to Craig Bram for any closing remarks.

Thank you for your interest in Synalloy and we look forward to hearing from you in the future. Thank you.

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