Good afternoon, everyone, and thank you for participating in today's conference call to discuss Synalloy's Financial Results for the First Quarter Ended March 31, 2022. Joining us today are Synalloy's, Executive Chairman of the Board, Ben Rosenzweig; President and CEO, Chris Hutter; CFO, Aaron Tam; and the company's outside Investor Relations adviser, Cody Cree. Following their remarks, we'll open the call for your questions. Before we go first, I'd like to turn the call over to Mr. Cree, as he reads the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Adrienne. Before we continue, I'd like to remind all participants that the discussion today may contain certain forward-looking statements, pursuant to the safe harbor provisions of the federal securities law. These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. Synalloy advises all of those listening to this call to review the latest 10-Q and 10-K posted on its website for a summary of these risks and uncertainties. Synalloy does not undertake the responsibility to update any forward-looking statements. Further, the discussion today may include non-GAAP measures. In accordance with Regulation G, the company has reconciled these amounts back to the closest GAAP-based measurement. The reconciliations can be found in the earnings press release issued earlier today, and posted on the Investors section of the company's website at synalloy.com. Please note that, this call is available for replay via a webcast link that is also posted on the Investors section of the company's website. With that, I'd like to turn the call over to Synalloy's, Executive Chairman of the Board, Ben Rosenzweig. Ben, over to you.

Thank you, Cody, and good afternoon, everyone. Synalloy had a very strong start to 2022 leading to our fourth consecutive quarter of year-over-year growth and second consecutive quarter of record results for revenue, net income and adjusted EBITDA. We're very pleased that our dedicated employees are able to see the fruits of their labor, manifest in our record results. They worked tirelessly to set this company up for sustained success and continue to transform Synalloy into the premier provider of pipe tube and specialty chemical solutions. Throughout the quarter, we capitalized on a favorable pricing environment, due to the significant progress we've made in our operations since the start of our turnaround. This market dynamic drove higher-than-expected margins, and allowed us to benefit at a much greater rate from the continued elevated demand we experienced. We believe we can continue to improve productivity, but I'm pleased with our efforts in enhancing our sales and operations, planning to unlock greater efficiency within our platform. A prime example of this has been our efforts across both divisions to break down prior silos and operate as one cohesive unit. We've made meaningful progress in manufacturing and selling certain products across multiple sites in order to better control costs and improve lead times. And I wanted to take a moment to commend, Tim and John for the one team unified mentality that they bring to their respective organizations, ensuring that we fully capitalize on our broad manufacturing and distribution capabilities, to become a full-service solutions provider for our customers. Providing solutions will always prove more durable and profitable than just selling products. Our finance team continues to focus on monitoring the pricing environment and developing better ways to refine our pricing adjustments in real time. We continue to prioritize investments that automate our forecasting…

Thanks, Ben, and thank you all for joining today's call. Like Ben said, we continued our momentum and capitalized on the strong market environment to drive our record results for this quarter. Let's start by discussing our Metals segment. While the entire supply chain experienced higher material costs, we worked with our customers to pass-through the increased indirect expenses often realizing a greater contribution margin on those incremental sales, taking place at higher prices. With our improved delivery time lines, reliability and overall product quality, our hope is that we can provide some level of differentiation so that pricing becomes stickier, even as the macro environment normalizes. We've previously discussed several initiatives that we were working on that will help position this segment for long-term success. We maintain our focus on improving manufacturing efficiency and prudent cost control procedures, which includes finding favorable material costing in our supply chain, investing in new technologies and automation upgrades and having disciplined inventory management systems. Also with our capacity growing each day, we have and will continue to invest in our sales and business development teams, to go out into the market and secure orders from large blue-chip customers in the space. We anticipate material pricing may begin to normalize for the second half of 2022. And we have made good progress in our deliberate shift from producing to stock to producing for specific orders. We are optimistic that moving toward a manufacturing model where we do not even begin to order certain materials until the booking is in hand, will help us to remove certain portions of the earnings risks that come with a volatile raw material pricing environment. Obviously, that shift cannot be successful unless we are dialed in with our sales and operations planning, so we can effectively manage our…

Thank you Chris, and good afternoon everyone. Let's jump right into our first quarter financial results. Net sales increased significantly to $116.2 million, compared to $69.8 million in the prior year period. The increase was primarily attributable to continued strong demand and increased input prices, which drove favorable average selling prices. Also, it's important to note that our net sales included $7.5 million in DanChem sales that obviously weren't there in the prior year period. Gross profit increased significantly to $22.5 million, compared to $8.7 million in the first quarter of 2021, while gross margin increased 690 basis points to 19.4% from 12.5% in the prior year period. The improvement in both gross profit and gross margin was primarily attributable to the aforementioned strong pricing environment, partially offset by increased raw material and freight costs. Net income in the first quarter increased considerably to $10.3 million, or $0.99 diluted earnings per share compared to net income of $1.1 million, or $0.12 diluted earnings per share for the first quarter of 2021. The increase was primarily driven by record revenue and gross profit results partially offset by increased SG&A spending from the hiring of additional sales and operational personnel in both segments. Adjusted EBITDA in the first quarter increased significantly to $17 million from $4.9 million in the year-ago quarter and adjusted EBITDA margin also improved 760 basis points to 14.6% from 7% in the year-ago quarter. For reference DanChem contributed $0.8 million in adjusted EBITDA for the first quarter of 2022. Lastly, looking at our liquidity position as of March 31, 2022 total debt was $71.1 million, compared to $70.4 million at December 31, 2021. As of March 31, 2022, we had $38.6 million of borrowing capacity under our revolving credit facility, compared to $39.4 million at December 31, 2021. As you can see we invested heavily in our working capital to support our strong sales demand. Even with these investments, we were still right about cash flow neutral for the quarter. I'd expect free cash flow to accelerate over the balance of the year in event pricing normalizes to some extent. With that now, I'll turn it back over to the operator, Adrienne for Q&A.

Thank you, sir. We will now begin question-and-answer session. [Operator Instructions] And our first question is from David Shepherd [ph]. Your line is open.

How’s it going today?

Hey, David.

Hey, Chris. How’s it going today?

Good. How are you?

Nice quarter. Thanks. Good.

Thank you.

I noticed you moved your corporate offices to Chicago. So my question is the former corporate office in Richmond and also the manufacturing space there in Texas that Palmer facility and any other the extra footprint that you may have. Have you been able to sublease some of that to free up some of that expense?

Yes. We've subleased a portion of our Texas facility and our Richmond lease expires this year in a few months, so the obligation there terminates in a few months. And then we're working on -- there's a little bit of space left in our Texas the former Palmer operation that we're working on subleasing the balance of that.

Good. Okay. That new high frequency mill that was discussed last quarter in Munhall is that -- has that installation started yet?

Yes. We're in the process of mapping out in the facility where it's going as well as operating some of equipment that needs to go along with installing the new mill, but that is anticipated to be operational this year.

Got it. Okay. And then the automation the investments that you've been making in your facilities, what type of payback do you expect? Like a one-year payback, or is that something that's more long-term oriented?

Some of it is shorter-term and then some of it is longer-term. It depends on what we're installing or putting in place. Obviously, our preferred is the shortest possible payback as possible, but majority of it is two areas of focus. One is safety for our employees, taking out higher risk, repetitive tasks that can be accomplished through automation which those -- some of those have a little bit longer payback. And the other is pure efficiency implementation of automation that has a shorter-term payback.

Got it. The earn-out liability has -- that last one, is that dropping off here in the second quarter?

Aaron, I believe so.

Yes, it is. We have just remaining -- ASTI is no longer obligated and all we have left are a couple of payments for Munhall. Both of them will be booked in Q2, although the last one actually from a cash standpoint won't be paid until July.

Okay. All right. Another question. Recently the administration has said that the infrastructure package -- product that needs to be -- that's procured through that package needs to be American-made. So my question is, can you source enough raw material from the US to go into Chemicals and Metals to meet that demand?

Yes, it's a great question. From a supply chain, we're primarily procuring hot-rolled and cold-rolled stainless and we have sufficient North American supply base to handle the projects that we're looking at to be awarded from a production standpoint.

Okay. Has the internal control issues been rectified yet?

Aaron?

We have developed a detailed remediation plan with the help of EY, as well as our internal resources and been mapping out what's required to make sure that we remediate all of those internal control concerns. They will be tested internally by the end of the second quarter and then we'll begin to work with our auditor BDO to test those thereafter to make sure that they are fully tested and vetted by year-end.

Okay. Good. So it's well in hand then.

Correct.

One other -- two other questions. So regarding -- with the market turmoil recently, do you think some of the market turmoil can actually maybe soften up the pricing a little bit for some of your acquisition targets to make them perhaps more attractive?

I think, potentially. I think the one thing it will definitely do is obviously with higher interest rates going into certain buyer profiles that competed against us for deals in the past changes their economics and what they're willing to pay for on a multiple standpoint. But also, I think we're seeing some of the market participants from a competitive standpoint from a bid side, you're seeing some of them fall out of the process. So, I mean anecdotally, I've seen a couple of transactions that are coming back to market because of failed processes. So, I think hopefully, the deal flow does accelerate. And I think Ben and I are very involved in active discussions with potential targets and it's significantly greater volume than it was two months ago.

Okay. Good. One last question. You did $44 million in EBITDA in 2021, $17 million adjusted EBITDA in first quarter and a market cap of $150 million. Do you think that -- what do you think it will take for others to see the disconnect?

It's a great question. I wish I knew the answer. I complain about it to Ben all the time.

Yes. I mean David -- there's no question that the stock is way too cheap. We're expecting to generate more cash over the course of the year as Aaron said. Right now, our LTM adjusted EBITDA is north of $56 million. So we're, I guess trading at enterprise value to LTM adjusted EBITDA of about four times. It's a pretty conservative leverage profile about 1.25 times. So, we're feeling really good about what we've done. We've done everything that we feel like we said we were going to do and hopefully more. And now it's on us, right? We can't just sit here and wait for people to recognize that. We're going to go out and spread the gospel. We feel like, we've been unfairly characterized as potentially maybe a metals company. Chris and I talk about this all the time. We're a manufacturing company. We've got a great presence in specialty chemicals. We're providing value-add solutions on the pipe and tube side with commodity inputs that are very unique and a pricing and solution provider that has an amazing reputation. So, we feel like, there aren't maybe a ton of pure-play, type two or metals manufacturing peers that are out there, but we do feel the valuation is especially punitive and even more so potentially on the specialty chemicals side.

Yes. Well, I see you have a conference -- Sidoti conference Thursday I believe, so -- or Wednesday. So that's -- I suppose that will help get some transparency and get the word out there. Well, thank you, guys. Great quarter. Excellent quarter. Good talking with you.

Thanks David.

Thank you, David.

Thanks.

[Operator Instructions] And currently we have no questions. This concludes our question-and-answer session. I'll now turn the call back over to Mr. Hutter for closing remarks.

Thank you, Adrienne. We'd like to thank everyone for listening to today's call and we look forward to speaking with you again when we report our second quarter 2022 results.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect. Speakers, please stand by for your post.