Ascent Industries Reports Third Quarter 2024 Results

Ascent Industries Co. (Nasdaq: ACNT) (“Ascent” or the “Company”), an industrials company focused on the production of specialty chemicals and industrial tubular products, is reporting its results for the third quarter ended September 30, 2024.

Third Quarter 2024 Summary1

(in millions, except per share and margin)

Q3 2024

Q3 2023

Change

Net Sales

$42.9

$46.7

(8.2)%

Gross Profit

$6.5

$3.0

116.5%

Gross Profit Margin

15.1%

6.4%

870bps

Net (Loss)

$(7.0)

$(14.7)

(52.2)%

Diluted (Loss) per Share

$(0.69)

$(1.45)

(52.4)%

Adjusted EBITDA

$2.5

$(1.5)

262.8%

Adjusted EBITDA Margin

5.7%

(3.2)%

890bps

Management Commentary

“The third quarter marked another period of positive momentum as we generated our third straight quarter of improving results,” said Ascent CEO Bryan Kitchen. “Although market conditions remained soft across both segments, we continued to strip out unnecessary costs and operate more efficiently through aggressive self-help initiatives, leading to both year-over-year and quarter-over-quarter improvements to our bottom line. We also made notable progress on the business development front within our specialty chemicals segment, which we believe will begin to show revenue growth in 2025 as we remain committed to unlocking the full potential of this segment.

“Overall, we are creating a more predictable, reliable, and profitable operating model, as evidenced by our consistently improving results over the last three quarters. While demand across our end markets isn’t doing us any favors, I’m proud of what we’ve been able to accomplish so far this year in our efforts to stabilize the organization through recapitalizing SG&A, strict cost management, product line optimization, and dynamic pricing adjustments. These actions combined with our healthy balance sheet and no outstanding debt have us well positioned to finish the year on a positive note and move into 2025 with momentum at our back.”

Third Quarter 2024 Financial Results

Net sales from continuing operations were $42.9 million compared to $46.7 million in the third quarter of 2023. The decline was primarily driven by lower volumes and lower pricing as the Company fulfilled low-priced order backlog within the tubular products segment, along with lower volumes in the specialty chemicals segment partially offset by favorable pricing and product mix.

Gross profit from continuing operations increased 117% to $6.5 million, or 15.1% of net sales, compared to $3.0 million, or 6.4% of net sales, in the third quarter of 2023. The increase was primarily attributable to aggressive cost management through improvements in product line management and strategic materials sourcing across both segments.

Net loss from continuing operations improved to $7.0 million, or $0.69 diluted loss per share, compared to a net loss from continuing operations of $14.7 million, or $1.45 diluted loss per share, in the third quarter of 2023. During the quarter, the Company recorded a $6.2 million non-cash, one-time tax charge related to a valuation allowance against the Company’s deferred tax assets. Income from continuing operations before taxes for the third quarter of 2024 was $0.5 million. The year-over-year improvement was primarily attributable to the aforementioned increase in gross profit as well as a year-over-year decrease in interest expense due to lower debt outstanding.

Adjusted EBITDA increased notably to $2.5 million compared to $(1.5) million in the third quarter of 2023, with adjusted EBITDA margin increasing significantly to 5.7% compared to (3.2)% in the prior year period. The improvement was primarily driven by the aforementioned cost and product mix optimization initiatives.

______________________

1 On December 22, 2023, the Company closed on a transaction to sell substantially all of the assets of Specialty Pipe & Tube (“SPT”). As a result, financial results from SPT have been categorized into discontinued operations.

Segment Results

Ascent Chemicals – net sales in the third quarter of 2024 increased 4% to $20.9 million compared to $20.1 million in the third quarter of 2023. Operating income in the third quarter improved significantly to $0.4 million compared to an operating loss of $(11.5) million in the prior year period. Adjusted EBITDA in the third quarter increased 47% to $1.5 million compared to $1.0 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA increased 210 basis points to 7.3% compared to 5.2% in the third quarter of 2023.

Ascent Tubular – net sales from continuing operations in the third quarter of 2024 were $22.0 million compared to $26.7 million in the third quarter of 2023. Operating income from continuing operations in the third quarter improved to $1.7 million compared to an operating loss from continuing operations of $(0.6) million in the prior year period. Adjusted EBITDA from continuing operations in the third quarter increased significantly to $2.4 million compared to $0.2 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA increased significantly to 10.7% compared to 0.7% in the third quarter of 2023.

Liquidity

As of September 30, 2024, the Company had $8.5 million in cash and cash equivalents, no debt outstanding under its revolving credit facilities and had $57.5 million in availability under its revolving credit facility.

For the quarter ended September 30, 2024, the Company repurchased 42,623 shares at an average cost of $9.79 per share for approximately $0.4 million.

Conference Call

Ascent will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2024.

Ascent management will host the conference call, followed by a question-and-answer period.

Date: Tuesday, November 12, 2024 Time: 5:00 p.m. Eastern time Live Call Registration Link: Here Webcast Registration Link: Here

To access the call by phone, please register via the live call registration link above or here and you will be provided with dial-in instructions and details. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.

The conference call will also be broadcast live and available for replay via the webcast registration link above here. The webcast will be archived for one year in the investor relations section of the Company’s website at www.ascentco.com.

About Ascent Industries Co.

Ascent Industries Co. (Nasdaq: ACNT) is a company that engages in a number of diverse business activities including the production of specialty chemicals and industrial tubular products. For more information about Ascent, please visit its website at www.ascentco.com.

Forward-Looking Statements

This press release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements and to review the risks as set forth in more detail in Ascent Industries Co.’s Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC or on our website. Ascent Industries Co. assumes no obligation to update any forward-looking information included in this release.

Non-GAAP Financial Information

Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures.

Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense, income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, shelf registration costs, loss on extinguishment of debt, retention costs and restructuring & severance costs from net income.

Management believes that these non-GAAP measures are useful because they are key measures used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions as well as allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

Ascent Industries Co.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share data)

 

(Unaudited)

 

 

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

8,547

 

 

$

1,851

 

Accounts receivable, net of allowance for credit losses of $583 and $463, respectively

 

27,768

 

 

 

26,604

 

Inventories

 

42,968

 

 

 

52,306

 

Prepaid expenses and other current assets

 

3,483

 

 

 

4,879

 

Assets held for sale

 

—

 

 

 

2,912

 

Current assets of discontinued operations

 

56

 

 

 

861

 

Total current assets

 

82,822

 

 

 

89,413

 

Property, plant and equipment, net

 

26,654

 

 

 

29,755

 

Right-of-use assets, operating leases, net

 

28,623

 

 

 

27,784

 

Intangible assets, net

 

7,380

 

 

 

8,496

 

Deferred income taxes

 

—

 

 

 

5,808

 

Deferred charges, net

 

29

 

 

 

104

 

Other non-current assets, net

 

3,108

 

 

 

1,935

 

Total assets

$

148,616

 

 

$

163,295

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

12,286

 

 

$

16,416

 

Accrued expenses and other current liabilities

 

7,081

 

 

 

5,108

 

Current portion of note payable

 

641

 

 

 

360

 

Current portion of operating lease liabilities

 

1,448

 

 

 

1,140

 

Current portion of finance lease liabilities

 

288

 

 

 

292

 

Current liabilities of discontinued operations

 

222

 

 

 

1,473

 

Total current liabilities

 

21,966

 

 

 

24,789

 

Long-term portion of operating lease liabilities

 

30,433

 

 

 

29,729

 

Long-term portion of finance lease liabilities

 

1,089

 

 

 

1,307

 

Deferred income taxes

 

369

 

 

 

—

 

Other long-term liabilities

 

54

 

 

 

60

 

Total non-current liabilities

 

31,945

 

 

 

31,096

 

Total liabilities

$

53,911

 

 

$

55,885

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,092,966 shares issued and outstanding, respectively

$

11,085

 

 

$

11,085

 

Capital in excess of par value

 

47,238

 

 

 

47,333

 

Retained earnings

 

45,946

 

 

 

58,517

 

 

 

104,269

 

 

 

116,935

 

Less: cost of common stock in treasury - 992,137 and 990,282 shares, respectively

 

(9,564

)

 

 

(9,525

)

Total shareholders' equity

 

94,705

 

 

 

107,410

 

Total liabilities and shareholders' equity

$

148,616

 

 

$

163,295

 

Note: The condensed consolidated balance sheets at December 31, 2023 have been derived from the audited consolidated financial statements at that date.

Ascent Industries Co.

Condensed Consolidated Statements of Income (Loss) - Comparative Analysis (Unaudited)

($ in thousands, except per share data)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Net sales

 

 

 

 

 

 

 

Tubular Products

$

22,023

 

 

$

26,695

 

 

$

74,559

 

 

$

86,748

 

Specialty Chemicals

 

20,878

 

 

 

20,052

 

 

 

62,642

 

 

 

65,165

 

All Other

 

—

 

 

 

—

 

 

 

—

 

 

 

50

 

 

 

42,901

 

 

 

46,747

 

 

 

137,201

 

 

 

151,963

 

Operating income (loss) from continuing operations

 

 

 

 

 

 

Tubular Products

 

1,653

 

 

 

(620

)

 

 

1,040

 

 

 

(7,215

)

Specialty Chemicals

 

385

 

 

 

(11,481

)

 

 

(625

)

 

 

(10,935

)

All Other

 

(117

)

 

 

(132

)

 

 

(378

)

 

 

(684

)

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

Unallocated corporate expenses

 

(1,490

)

 

 

(2,859

)

 

 

(5,070

)

 

 

(9,314

)

Acquisition costs and other

 

(2

)

 

 

—

 

 

 

(53

)

 

 

(274

)

Gain on lease modification

 

67

 

 

 

—

 

 

 

67

 

 

 

—

 

Total Corporate

 

(1,425

)

 

 

(2,859

)

 

 

(5,056

)

 

 

(9,588

)

Operating income (loss)

 

496

 

 

 

(15,092

)

 

 

(5,019

)

 

 

(28,422

)

Interest expense, net

 

124

 

 

 

1,063

 

 

 

323

 

 

 

3,217

 

Other, net

 

(91

)

 

 

(97

)

 

 

(303

)

 

 

(344

)

Income (loss) from continuing operations before income taxes

 

463

 

 

 

(16,058

)

 

 

(5,039

)

 

 

(31,295

)

Income tax expense (benefit)

 

7,479

 

 

 

(1,380

)

 

 

6,270

 

 

 

(4,680

)

Loss from continuing operations

 

(7,016

)

 

 

(14,678

)

 

 

(11,309

)

 

 

(26,615

)

Income (loss) from discontinued operations, net of tax

 

864

 

 

 

(3,254

)

 

 

(1,262

)

 

 

(11,152

)

Net loss

$

(6,152

)

 

$

(17,932

)

 

$

(12,571

)

 

$

(37,767

)

 

 

 

 

 

 

 

 

Net loss per common share from continuing operations

 

 

 

 

 

 

 

Basic

$

(0.69

)

 

$

(1.45

)

 

$

(1.12

)

 

$

(2.62

)

Diluted

$

(0.69

)

 

$

(1.45

)

 

$

(1.12

)

 

$

(2.62

)

 

 

 

 

 

 

 

 

Net income (loss) per common share from discontinued operations

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

(0.32

)

 

$

(0.12

)

 

$

(1.10

)

Diluted

$

0.08

 

 

$

(0.32

)

 

$

(0.12

)

 

$

(1.10

)

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

Basic

$

(0.61

)

 

$

(1.77

)

 

$

(1.24

)

 

$

(3.72

)

Diluted

$

(0.61

)

 

$

(1.77

)

 

$

(1.24

)

 

$

(3.72

)

 

 

 

 

 

 

 

 

Average shares outstanding

 

 

 

 

 

 

 

Basic

 

10,114

 

 

 

10,135

 

 

 

10,111

 

 

 

10,151

 

Diluted

 

10,114

 

 

 

10,135

 

 

 

10,111

 

 

 

10,151

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

Adjusted EBITDA1

$

2,450

 

 

$

(1,505

)

 

$

1,446

 

 

$

(9,993

)

1The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense, income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.

Ascent Industries Co.

Consolidated Statements of Cash Flows (Unaudited)

($ in thousands)

 

Nine Months Ended September 30,

 

2024

 

2023

Operating activities

 

 

 

Net loss

$

(12,571

)

 

$

(37,767

)

Loss from discontinued operations, net of tax

 

(1,262

)

 

 

(11,152

)

Net loss from continuing operations

 

(11,309

)

 

 

(26,615

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation expense

 

4,489

 

 

 

4,634

 

Amortization expense

 

1,116

 

 

 

1,128

 

Amortization of debt issuance costs

 

75

 

 

 

75

 

Goodwill impairment

 

—

 

 

 

11,389

 

Deferred income taxes

 

6,639

 

 

 

(7,864

)

Provision for losses on accounts receivable

 

121

 

 

 

327

 

Provision for losses on inventories

 

1,300

 

 

 

1,980

 

Loss on disposal of property, plant and equipment

 

—

 

 

 

182

 

Non-cash lease expense

 

171

 

 

 

190

 

Stock-based compensation expense

 

601

 

 

 

701

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(1,283

)

 

 

3,754

 

Inventories

 

8,038

 

 

 

5,880

 

Other assets and liabilities

 

(918

)

 

 

358

 

Accounts payable

 

(4,237

)

 

 

8,872

 

Accrued expenses

 

1,973

 

 

 

(217

)

Accrued income taxes

 

669

 

 

 

(772

)

Net cash provided by operating activities - continuing operations

 

7,445

 

 

 

4,002

 

Net cash (used in) provided by operating activities - discontinued operations

 

(1,587

)

 

 

17,525

 

Net cash provided by operating activities

 

5,858

 

 

 

21,527

 

Investing activities

 

 

 

Purchases of property, plant and equipment

 

(1,281

)

 

 

(2,411

)

Net cash used in investing activities - continuing operations

 

(1,281

)

 

 

(2,411

)

Net cash provided by (used in) investing activities - discontinued operations

 

2,797

 

 

 

(394

)

Net cash provided by (used in) investing activities

 

1,516

 

 

 

(2,805

)

Financing activities

 

 

 

Borrowings from long-term debt

 

156,923

 

 

 

201,588

 

Proceeds from note payable

 

914

 

 

 

900

 

Payments on long-term debt

 

(156,923

)

 

 

(220,130

)

Payments on note payable

 

(633

)

 

 

(657

)

Principal payments on finance lease obligations

 

(221

)

 

 

(231

)

Repurchase of common stock

 

(738

)

 

 

(903

)

Net cash used in financing activities

 

(678

)

 

 

(19,433

)

Increase (decrease) in cash and cash equivalents

 

6,696

 

 

 

(711

)

Less: Cash and cash equivalents of discontinued operations

 

—

 

 

 

1

 

Cash and cash equivalents, beginning of period

 

1,851

 

 

 

1,440

 

Cash and cash equivalents, end of period

$

8,547

 

 

$

730

 

 

Ascent Industries Co.

Non-GAAP Financial Measures Reconciliation

Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)

($ in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

($ in thousands)

2024

 

2023

 

2024

 

2023

Consolidated

 

 

 

 

 

 

 

Net loss from continuing operations

$

(7,016

)

 

$

(14,678

)

 

$

(11,309

)

 

$

(26,615

)

Adjustments:

 

 

 

 

 

 

 

Interest expense, net

 

124

 

 

 

1,063

 

 

 

323

 

 

 

3,217

 

Income taxes

 

7,479

 

 

 

(1,380

)

 

 

6,270

 

 

 

(4,680

)

Depreciation

 

1,438

 

 

 

1,522

 

 

 

4,489

 

 

 

4,634

 

Amortization

 

372

 

 

 

376

 

 

 

1,116

 

 

 

1,128

 

EBITDA

 

2,397

 

 

 

(13,097

)

 

 

889

 

 

 

(22,316

)

Acquisition costs and other

 

5

 

 

 

—

 

 

 

83

 

 

 

277

 

Goodwill impairment

 

—

 

 

 

11,389

 

 

 

—

 

 

 

11,389

 

Gain on lease modification

 

(67

)

 

 

—

 

 

 

(67

)

 

 

—

 

Stock-based compensation

 

55

 

 

 

134

 

 

 

158

 

 

 

371

 

Non-cash lease expense

 

60

 

 

 

63

 

 

 

171

 

 

 

190

 

Retention expense

 

—

 

 

 

6

 

 

 

4

 

 

 

6

 

Restructuring and severance costs

 

—

 

 

 

—

 

 

 

208

 

 

 

90

 

Adjusted EBITDA

$

2,450

 

 

$

(1,505

)

 

$

1,446

 

 

$

(9,993

)

% sales

 

5.7

%

 

 

(3.2

)%

 

 

1.1

%

 

 

(6.6

)%

Specialty Chemicals

 

 

 

 

 

 

 

Net income (loss)

$

367

 

 

$

(11,498

)

 

$

(682

)

 

$

(10,974

)

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

19

 

 

 

21

 

 

 

57

 

 

 

52

 

Depreciation expense

 

945

 

 

 

942

 

 

 

2,863

 

 

 

2,850

 

Amortization expense

 

174

 

 

 

159

 

 

 

522

 

 

 

475

 

EBITDA

 

1,505

 

 

 

(10,376

)

 

 

2,760

 

 

 

(7,597

)

Acquisition costs and other

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Goodwill impairment

 

—

 

 

 

11,389

 

 

 

—

 

 

 

11,389

 

Stock-based compensation

 

—

 

 

 

3

 

 

 

7

 

 

 

(13

)

Non-cash lease expense

 

19

 

 

 

23

 

 

 

58

 

 

 

69

 

Restructuring and severance costs

 

—

 

 

 

—

 

 

 

109

 

 

 

—

 

Specialty Chemicals Adjusted EBITDA

$

1,524

 

 

$

1,039

 

 

$

2,934

 

 

$

3,850

 

% segment sales

 

7.3

%

 

 

5.2

%

 

 

4.7

%

 

 

5.9

%

 

 

 

 

 

 

 

 

Tubular Products

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

1,653

 

 

$

(620

)

 

$

1,040

 

 

$

(7,215

)

Adjustments:

 

 

 

 

 

 

 

Depreciation expense

 

476

 

 

 

558

 

 

 

1,566

 

 

 

1,717

 

Amortization expense

 

198

 

 

 

218

 

 

 

594

 

 

 

653

 

EBITDA

 

2,327

 

 

 

156

 

 

 

3,200

 

 

 

(4,845

)

Acquisition costs and other

 

3

 

 

 

—

 

 

 

29

 

 

 

—

 

Stock-based compensation

 

—

 

 

 

2

 

 

 

11

 

 

 

(15

)

Non-cash lease expense

 

25

 

 

 

31

 

 

 

75

 

 

 

93

 

Restructuring and severance costs

 

—

 

 

 

—

 

 

 

31

 

 

 

84

 

Tubular Products Adjusted EBITDA

$

2,355

 

 

$

189

 

 

$

3,346

 

 

$

(4,683

)

% segment sales

 

10.7

%

 

 

0.7

%

 

 

4.5

%

 

 

(5.4

)%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241112707607/en/

Company Contact Ryan Kavalauskas Chief Financial Officer 1-630-884-9181 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 [e-mail]