Synalloy Corporation (NASDAQ:SYNL) Q2 2020 Earnings Conference Call - Final Transcript
Sep 03, 2020 • 09:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Synalloy's Second Quarter 2020 Earnings Conference Call.
I will now turn today's call over to your speaker today Craig Bram, President and CEO. Thank you. Please go ahead, sir.
Craig C. Bram
Good morning, everyone. Welcome to Synalloy Corporation's second quarter 2020 conference call.
Joining me today is Sally Cunningham, Sally is Synalloy's new CFO taking on that role as of July 1st. Prior to joining Synalloy almost five years ago, Sally worked extensively in finance and accounting for several public companies. Coupled with her knowledge of our businesses and management teams, she's a natural fit to step into this position. I know that she will do a great job.
Before turning the call over to Sally, I'd like to make a few general remarks. Second quarter was without a doubt the most challenging that I've experienced during my time with Synalloy. Even prior to the arrival of the COVID-19 pandemic, we anticipated a difficult year for manufacturing. While the ISM Manufacturing Index rose to 56 in August, confidence in the recovery appears weak as manufacturers continue to reduce employment levels. Chemical products and fabricated metals products both showed growth during August, for the first time since the outbreak of the pandemic. Demand for welded stainless steel pipe in North America is tracking very closely to the recessionary levels witnessed in 2016.
The Saudi Russian oil price war along with the virus's catastrophic here to oil demand, has created an environment where producers are unable to earn their cost of capital. Activity in the Permian Basin has come to an abrupt halt, and there's no sign of a quick return to pre-COVID-19 production levels. Against this backdrop, we've had to make some difficult decisions. We've reduced our headcount by more than 10% since the beginning of the year. The executive team and other highly paid employees have reduced their salaries by between 8% and 25%, and we have eliminated the Company's 401(k) match for the second half of 2020.
At the end of June, the Company made the decision to exit the Palmer Texas business. The assets are currently being marketed for sale and the proceeds will be used to reduce our line of credit. During the second quarter, the executive team and Board of Directors spent considerable time and money on the proxy contest. Total cost of this effort was approximately $3 million.
We are most pleased to have this behind us and look forward to working with the newly constituted Board of Directors led by our new Chairman, Henry Guy. Despite everything that has occurred in 2020, the Company made excellent progress on multiple fronts. After Sally reviews the financial results, I'll spend some time commenting on the performance of our business segments. We will then open the call to questions.
I'll now turn the call over to Sally.
Sally M. Cunningham
Thank you, Craig. Good morning. As is usual practice, I will present the financial results using three different methods;