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 ACNT@gateway-grp.com
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