Synalloy Corp. maintains a fairly low profile among Richmond-area companies. Only about 15 people work at its unassuming headquarters office in the Innsbrook Corporate Center in western Henrico County.
Yet Synalloy, a holding company for various manufacturing businesses, has its hands in some pretty significant parts of the U.S. economy.
When you fill up your car, fill a glass with water at home, enjoy a beer at a brewery, or buy tissues or a carton of orange juice, there’s a good chance some Synalloy Corp. subsidiary had a role in making or getting that product to you.
The company’s biggest market is industrial-size, welded stainless-steel pipes, manufactured at its Brismet subsidiary, formerly Bristol Metals, which has a factory in Bristol, Tenn., and employs 300 people. The pipes are a vital part of the infrastructure in various industries.
“We are the largest manufacturer of welded stainless-steel pipe and tube in North America,” said Craig C. Bram, the company’s president and CEO. “We have got about a 40 percent market share in North America, among domestic producers.”
The oil and gas industry is a major buyer of the pipes, and Synalloy also supplies pipes for water treatment facilities, the paper industry and the beverage industry.
“Probably every brewery in North America has some component pieces of our pipe,” Bram said.
Besides its metals division, Syn- alloy also has a chemicals division that makes a range of products for different customers. One of its products helps soften tissue paper. Another chemical is used in making the foam in car seats. The company makes the material that gives some containers, such as orange juice cartons, their “waxy” feel. “That is to protect the carton from the acidity of the orange juice,” Bram said.
Yet another Synalloy chemical is used as a cleaning agent for currency.
“We sell that to the U.S. Mint and every once in a while, they wash the paper currency to freshen it up and put it back into circulation,” Bram said. “We always joke that we actually launder money.”
Synalloy employs nearly 600 people in its various businesses and is publicly traded on the Nasdaq under the ticker symbol SYNL, yet it has operated largely under the radar as a Richmond-area company. That’s partly because none of its manufacturing is done in the area — the company’s seven factories are in Texas, Tennessee, South Carolina, Pennsylvania and Ohio. It is a micro-cap stock, and rather thinly traded.
But Bram and the company’s executive team have been building Synalloy into a bigger company in recent years. The company’s financial results were down in 2015 and 2016 because of a market downturn in the energy sector, but demand started rebounding last year, and the company’s sales and profits are on the upswing, along with its stock price.
“It has been a good year so far,” Bram said.
Synalloy’s history dates to 1945, when the company organized as Blackman Uhler Industries, a distributor of textile dyes based in Spartanburg, S.C. The company diversified into specialty chemicals and metals in the 1960s, including buying Bristol Metals, and went public as Synalloy Corp. in 1967.
For most of its history, the company was based in South Carolina, but it started shifting its administrative operations to Henrico when Bram, a Richmond-area businessman and investor, was named its CEO in 2011 after serving six years on the board of directors. Henrico is now officially the headquarters.
“We have got a lot of connections here,” Bram said. “We have a lot of shareholders here in Richmond, so it has worked out well for us to consolidate here.”
Bram, a graduate of James Madison University with an MBA from Virginia Commonwealth University, joined the company after a career that included working at Richmond-based Reynolds Metals Co. in the 1980s, then working as the business manager for a Richmond-based law firm as it added offices around the country. He was CEO of Bizport Ltd., a document management company in Richmond, from 2002 to 2010.
The year before Bram became CEO, Synalloy posted about $151 million in revenue, not enough in his opinion to justify being a publicly traded company. Bram proposed to the board of directors a “growth by acquisition” strategy, focusing on businesses in Synalloy’s existing markets of chemicals and metals.
“When I came on as CEO, my goal was to get the company to at least $500 million in revenue,” Bram said.
The company has completed a series of acquisitions, starting in 2012 when it bought Palmer of Texas, a manufacturer of liquid storage tanks for industrial uses and the oil and gas industry. A year later, Synalloy acquired chemical maker CRI Tolling Inc. in Fountain Inn, S.C., and in 2014, it bought Specialty Pipe & Tube Inc., a provider of seamless carbon pipe for industrial applications, with operations in Ohio and Texas.
To pursue the growth strategy, Bram brought on a new executive team over several years — many with Richmond-area professional backgrounds. Robby Peay, who has a law degree and an MBA from the University of Richmond, joined the company as general counsel in 2012.
“M&A [mergers and acquisitions] is what I enjoy doing, and that is Craig’s passion and the company’s growth model,” Peay said. “We do deals fast.”
Mike Padden joined the company in 2012 as chief information officer and director of IT after a 13-year tenure with Smithfield Packing Co.
Sally Cunningham, an accountant with degrees from the College of William & Mary and UR, joined the company in 2015 as vice president of corporate administration and corporate secretary.
Dennis Loughran joined in 2015 as senior vice president and chief financial officer. A UR graduate, Loughran worked with Bram at Reynolds Metals and served as vice president of finance and supply chain at Alcoa Inc. after its acquisition of Reynolds Metals. Later, he worked in private equity and was CFO of specialty materials company Rogers Corp.
“We have the advantage of having a lot of folks with experience at big companies,” Loughran said of Synalloy. “We’ve been able to use that experience as a much more efficient, small cadre that can make quick decisions. So the stuff that might take a big corporation months to do, we have been able to do in days.”
In March 2017, Synalloy completed an important acquisition, when its Brismet subsidiary bought the U.S. stainless-steel pipe operations of Italy-based Marcegaglia for $14.95 million. The acquisition of the Marcegaglia operations in Munhall, Pa., has helped bring some stability to the U.S. pipe market, which Bram said has long been affected by “irrational” players that set prices at below production costs just to grab volume.
“The whole market has consolidated into stronger hands now,” he said.
While the Trump administration’s decision to put tariffs on imported steel has been controversial, raising fears of an escalating trade war, Syn- alloy is among the U.S. companies likely to benefit. Bram said Synalloy and other pipe makers have been hurt by unfair trade practices, such as the practice of “dumping” pipe from overseas into U.S. markets, at prices below production costs.
Three times in the past eight years, Synalloy has brought dumping complaints before the International Trade Commission, first against China, then against several countries in Southeast Asia, then against India, and it has won every case.
“We have spent millions of dollars in legal fees battling the dumping of stainless-steel pipe and tube,” said Bram, who says the practice is ongoing. He sees the tariffs as a way to enforce a competitive but even playing field for U.S. producers.
For 2017, Synalloy posted revenue of $201 million, crossing the $200 million mark for the first time. Revenue was up from $138.5 million in 2016. The company turned a profit of $1.34 million for 2017, compared with a loss of about $7 million in 2016. The upswing continued in the first quarter of 2018, when the company posted profit of $3.8 million, up 421 percent compared to the first quarter of 2017.
In April, Synalloy increased its estimates for its full-year 2018 results, saying it expects revenue of between $240 million and $245 million and profit of between $13.6 million and $15.2 million.
“If we hit our targets next year, we will be at $300 million-plus in revenue,” Bram said. The company’s stock also has risen as its business results have improved. Synalloy shares were trading at a little more than $20 per share last week, up from about $11 per share at the same time last year, and up from single digits through much of 2015 and 2016.
The company reached another milestone in June when it was named to the Russell 2000, an index of 2,000 small-cap companies. Being on the Russell 2000 should increase awareness of Synalloy in the investment community and improve the liquidity of the stock, Bram said.
“It is confirmation that our growth strategy is producing results,” he said. “Over the past five years, our market cap has increased from $80 million to $180 million.”
A larger market cap also enables the company to pursue bigger acquisitions, but the company’s executive team stresses that it only goes after deals that make sense for long-term growth.
“When we are trying to acquire a company, we often compete with private equity [firms],” Bram said. “One of the things we say when we acquire a company is that we intend to own it forever. We are not going to flip the company five years from now, and I think that message resonates with employees. We have a great employee base now — people who really want to see the company do well, and they are invested in their communities.”