Discontinued Operations

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

During the fourth quarter of 2022, the Company began a strategic reassessment of certain operations to drive an increased focus on its core operations and to continue to improve overall performance and operating profitability. As a result of this reassessment, management and the Board of Directors decided to pursue an exit of the Company's galvanized pipe and tube operations at its Munhall facility ("Munhall").

During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023. It is anticipated that the complete exit and disposal of all assets at Munhall

will be completed within one year. The strategic decision to cease manufacturing operations at Munhall is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies.

As a result of this decision, during the second quarter ended June 30, 2023, the Company incurred asset impairment charges of $6.4 million related to the write down of inventory and long-lived assets as well as $1.4 million in increased reserves on accounts receivable at the facility. Certain assets of Munhall were also classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented. See Note 4 for further discussion of the assets held for sale and related fair value measurements.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of Munhall:


(in thousands)	June 30, 2023		December 31, 2022
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents	$	—	$	1
Accounts receivable, net	3,265		8,058
Inventories	—		28,880
Prepaid expenses and other current assets	176		1,181
Current assets classified as discontinued operations	3,441		38,120
Property, plant and equipment, net	—		5,301
Right-of-use assets, operating leases, net	13		26
Intangible assets, net	—		386
Other non-current assets, net	—		1,904
Long-term assets classified as discontinued operations	13		7,617
Total assets classified as discontinued operations	$	3,454	$	45,737

Carrying amounts of liabilities included as part of discontinued operations:
Accounts payable	$	641	$	3,108
Accrued expenses and other current liabilities	1,184		521
Current portion of operating lease liabilities	14		27
Total liabilities classified as discontinued operations	$	1,839	$	3,656

The financial results of Munhall are presented as income (loss) from discontinued operations, net of tax on the unaudited condensed consolidated statements of income (loss). The following table summarizes the results of discontinued operations of Munhall:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Net sales	$	7,629	$	31,602	$	22,663	$	64,112
Cost of sales	12,345		30,913		30,228		62,385
Gross profit	(4,716)		689		(7,565)		1,727

Selling, general and administrative expense	2,819		512		4,065		1,104
Asset impairments	6,305		—		6,305		—
Earnout adjustments	—		(109)		—		(7)
Other, net	—		—		74		—
Operating income (loss) of discontinued operations	(13,840)		286		(18,009)		630
Loss on classification as held for sale	83		—		83		—
Income (loss) on discontinued operations before income taxes	(13,923)		286		(18,092)		630
Income tax provision (benefit)	(3,035)		51		(3,954)		142
Net income (loss) from discontinued operations	$	(10,888)	$	235	$	(14,138)	$	488