Ascent Industries Reports Second Quarter 2024 Results

Rhea-AI Summary

Ascent Industries Co. (Nasdaq: ACNT) reported its Q2 2024 results, showing signs of stabilization despite soft market conditions. Key highlights include:

- Net sales from continuing operations at $50.2 million, down 0.3% YoY
- Gross profit increased to $5.9 million (11.7% margin) from $(0.8) million in Q2 2023
- Net loss improved to $(0.2) million, or $(0.02) per diluted share
- Adjusted EBITDA rose to $2.1 million (4.2% margin) from $(4.8) million in Q2 2023

The company's cost reduction and optimization efforts have led to significant improvements in profitability. Ascent maintains a healthy balance sheet with no outstanding debt and $62.7 million available under its revolving credit facility.

Positive

• Gross profit margin improved significantly to 11.7% from -1.5% in Q2 2023
• Adjusted EBITDA increased to $2.1 million from $(4.8) million in Q2 2023
• Net loss reduced substantially to $(0.2) million from $(6.1) million in Q2 2023
• No outstanding debt and $62.7 million available under revolving credit facility
• Ascent Chemicals segment's adjusted EBITDA increased to $1.7 million (7.9% of sales) from $0.3 million in Q2 2023
• Ascent Tubular segment's adjusted EBITDA improved to $1.7 million from $(2.5) million in Q2 2023

Negative

• Net sales slightly decreased by 0.3% YoY to $50.2 million
• Company still reported a net loss, albeit reduced, of $(0.2) million

Insights

Financial Analyst

Ascent Industries' Q2 2024 results show significant improvement despite challenging market conditions. The company's gross profit margin increased dramatically to 11.7% from -1.5% year-over-year, demonstrating effective cost management and product mix optimization. While net sales remained relatively flat at $50.2 million, the company narrowed its net loss to just $0.2 million, a 96.8% improvement.

The standout metric is the adjusted EBITDA, which swung from -$4.8 million to $2.1 million, with margin improving by 1360 basis points to 4.2%. This turnaround in profitability, coupled with a debt-free balance sheet and $62.7 million in credit availability, positions Ascent well for future growth opportunities.

However, investors should note that the company is still operating at a slight loss and market conditions remain soft. The sustainability of these improvements and the company's ability to return to profitability will be key factors to watch in upcoming quarters.

Industry Analyst

Ascent's Q2 results reflect a broader trend in the specialty chemicals and industrial tubular products sectors. The company's ability to improve margins in a flat sales environment (-0.3% YoY) suggests successful implementation of operational efficiencies and strategic pricing.

The Ascent Chemicals segment showed resilience with a slight increase in sales and significant improvement in adjusted EBITDA margin to 7.9%. The Ascent Tubular segment, despite a slight sales decline, dramatically improved its adjusted EBITDA from -$2.5 million to $1.7 million.

These improvements, amid what CEO Bryan Kitchen describes as "continued soft market conditions," indicate that Ascent is outperforming its sector. The company's focus on cost reduction, strategic sourcing and product mix optimization appears to be a winning strategy in a challenging market environment. This positions Ascent favorably if market conditions improve, potentially leading to accelerated growth and profitability.

 

OAK BROOK, Ill.--(BUSINESS WIRE)-- 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 second quarter ended June 30, 2024.

Second Quarter 2024 Summary¹

(in millions, except per share and margin)	Q2 2024	Q2 2023	Change
Net Sales	$50.2	$50.4	(0.3)%
Gross Profit	$5.9	$(0.8)	854.2%
Gross Profit Margin	11.7%	(1.5)%	1320bps
Net Loss	$(0.2)	$(6.1)	96.8%
Diluted Loss per Share	$(0.02)	$(0.60)	96.7%
Adjusted EBITDA	$2.1	$(4.8)	144.1%
Adjusted EBITDA Margin	4.2%	(9.4)%	1360bps

_________________________ 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.

Management Commentary

“Our stabilization efforts and aggressive self-help have started to yield tangible results in Q2 2024, despite continued soft market conditions,” said Ascent CEO Bryan Kitchen. “Our relentless efforts to reduce costs, improve strategic sourcing and optimize our product mix have led to a significant year-over-year improvement in adjusted EBITDA and bottom-line results, while also right-sizing the organization for long-term growth.

“It has been our goal to create a more predictable, reliable, and profitable operating model, and I am proud that we are beginning to deliver on that goal. Momentum is building, and we are optimistic about our ability to achieve incremental financial improvements throughout the year while enhancing the quality of our business development pipeline. With a healthy balance sheet and no outstanding debt, we continue to build the foundation for long-term growth. Our actions are positioning Ascent to fully execute our growth strategy, delivering durable value for our shareholders.”

Second Quarter 2024 Financial Results

Net sales from continuing operations were $50.2 million compared to $50.4 million in the second quarter of 2023. The slight decline is primarily attributable to a decrease in pricing partially offset by an increase in volume across both segments.

Gross profit from continuing operations increased to $5.9 million, or 11.7% of net sales, compared to $(0.8) million, or (1.5)% of net sales, in the second quarter of 2023. The increase was primarily attributable to continued cost and product mix optimization initiatives leading to cost improvements across both segments.

Net loss from continuing operations improved to $(0.2) million, or $(0.02) diluted loss per share, compared to net loss from continuing operations of $(6.1) million, or $(0.60) diluted loss per share, in the second quarter of 2023. The improvement was primarily attributable to the aforementioned increase in gross profit and a year-over-year decrease in interest expense due to lower debt outstanding.

Adjusted EBITDA increased to $2.1 million compared to $(4.8) million in the second quarter of 2023, with adjusted EBITDA margin increasing significantly to 4.2% compared to (9.4)% in the prior year period. The improvement was primarily driven by the aforementioned cost and product mix optimization initiatives.

Segment Results

Ascent Chemicals – net sales in the second quarter of 2024 increased slightly to $21.5 million compared to $21.4 million in the second quarter of 2023. Operating income in the second quarter improved to $0.4 million compared to operating loss of $0.8 million in the prior year period. Adjusted EBITDA in the second quarter increased significantly to $1.7 million compared to $0.3 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA increased significantly to 7.9% compared to 1.5% in the second quarter of 2023.

Ascent Tubular – net sales from continuing operations in the second quarter of 2024 were $28.7 million compared to $29.0 million in the second quarter of 2023. Operating income from continuing operations in the second quarter increased to $0.9 million compared to operating loss from continuing operations of $3.3 million in the prior year period. Adjusted EBITDA from continuing operations in the second quarter increased significantly to $1.7 million compared to $(2.5) million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 5.9% compared to (8.5)% in the second quarter of 2023.

Liquidity

As of June 30, 2024, the Company had no debt outstanding under its revolving credit facilities and had $62.7 million in availability under its revolving credit facility.

For the quarter ended June 30, 2024, the Company repurchased 15,233 shares at an average cost of $10.25 per share for approximately $0.2 million.

Conference Call

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

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

Date: Tuesday, August 6, 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 or 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)
	June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	3,595			$	1,851
Accounts receivable, net of allowance for credit losses of $808 and $463, respectively		30,154				26,604
Inventories		45,917				52,306
Prepaid expenses and other current assets		3,988				4,879
Assets held for sale		1,259				2,912
Current assets of discontinued operations		65				861
Total current assets		84,978				89,413
Property, plant and equipment, net		27,643				29,755
Right-of-use assets, operating leases, net		27,073				27,784
Intangible assets, net		7,752				8,496
Deferred income taxes		7,663				5,808
Deferred charges, net		54				104
Other non-current assets, net		3,075				1,935
Total assets	$	158,238			$	163,295
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	16,790			$	16,416
Accrued expenses and other current liabilities		6,472				5,108
Current portion of note payable		914				360
Current portion of operating lease liabilities		1,194				1,140
Current portion of finance lease liabilities		286				292
Current liabilities of discontinued operations		1,213				1,473
Total current liabilities		26,869				24,789
Long-term portion of operating lease liabilities		29,110				29,729
Long-term portion of finance lease liabilities		1,163				1,307
Other long-term liabilities		54				60
Total non-current liabilities		30,327				31,096
Total liabilities	$	57,196			$	55,885
Commitments and contingencies
Shareholders' equity:
Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,124,737 shares issued and outstanding, respectively	$	11,085			$	11,085
Capital in excess of par value		47,111				47,333
Retained earnings		52,098				58,517
		110,294				116,935
Less: cost of common stock in treasury - 960,366 and 990,282 shares, respectively		(9,252	)			(9,525	)
Total shareholders' equity		101,042				107,410
Total liabilities and shareholders' equity	$	158,238			$	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 June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net sales
Tubular Products	$	28,721			$	28,992			$	52,536			$	60,053
Specialty Chemicals		21,468				21,363				41,764				45,112
All Other		—				—				—				50
		50,189				50,355				94,300				105,215
Operating income (loss) from continuing operations
Tubular Products		889				(3,302	)			(613	)			(6,596	)
Specialty Chemicals		429				(806	)			(1,010	)			546
All Other		(100	)			(74	)			(261	)			(552	)
Corporate
Unallocated corporate expenses		(1,429	)			(2,750	)			(3,579	)			(6,455	)
Acquisition costs and other		(52	)			(17	)			(52	)			(274	)
Total Corporate		(1,481	)			(2,767	)			(3,631	)			(6,729	)
Operating loss		(263	)			(6,949	)			(5,515	)			(13,331	)
Interest expense, net		72				1,047				199				2,154
Other, net		(93	)			(154	)			(212	)			(247	)
Loss from continuing operations before income taxes		(242	)			(7,842	)			(5,502	)			(15,238	)
Income tax benefit		(44	)			(1,693	)			(1,210	)			(3,301	)
Loss from continuing operations		(198	)			(6,149	)			(4,292	)			(11,937	)
Loss from discontinued operations, net of tax		(728	)			(8,487	)			(2,127	)			(7,898	)
Net loss	$	(926	)		$	(14,636	)		$	(6,419	)		$	(19,835	)
Net loss per common share from continuing operations
Basic	$	(0.02	)		$	(0.60	)		$	(0.42	)		$	(1.18	)
Diluted	$	(0.02	)		$	(0.60	)		$	(0.42	)		$	(1.18	)
Net loss per common share from discontinued operations
Basic	$	(0.07	)		$	(0.84	)		$	(0.21	)		$	(0.77	)
Diluted	$	(0.07	)		$	(0.84	)		$	(0.21	)		$	(0.77	)
Net loss per common share
Basic	$	(0.09	)		$	(1.44	)		$	(0.63	)		$	(1.95	)
Diluted	$	(0.09	)		$	(1.44	)		$	(0.63	)		$	(1.95	)
Average shares outstanding
Basic		10,126				10,170				10,110				10,159
Diluted		10,126				10,170				10,110				10,159
Other data:
Adjusted EBITDA1	$	2,112			$	(4,754	)		$	(1,003	)		$	(8,489	)

1 The 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)
	Six Months Ended June 30,
		2024				2023
Operating activities
Net loss	$	(6,419	)		$	(19,835	)
Loss from discontinued operations, net of tax		(2,127	)			(7,898	)
Net loss from continuing operations		(4,292	)			(11,937	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense		3,051				3,112
Amortization expense		744				752
Amortization of debt issuance costs		50				50
Deferred income taxes		(1,210	)			(5,515	)
Provision for losses on accounts receivable		264				32
Provision for losses on inventories		906				1,194
Loss on disposal of property, plant and equipment		—				182
Non-cash lease expense		111				126
Stock-based compensation expense		368				404
Changes in operating assets and liabilities:
Accounts receivable		(3,813	)			2,286
Inventories		5,483				16,086
Other assets and liabilities		(907	)			(251	)
Accounts payable		202				4,780
Accrued expenses		1,364				(402	)
Accrued income taxes		630				(743	)
Net cash provided by operating activities - continuing operations		2,951				10,156
Net cash (used in) provided by operating activities - discontinued operations		(521	)			7,916
Net cash provided by operating activities		2,430				18,072
Investing activities
Purchases of property, plant and equipment		(770	)			(1,235	)
Net cash used in investing activities - continuing operations		(770	)			(1,235	)
Net cash used in investing activities - discontinued operations		—				(390	)
Net cash used in investing activities		(770	)			(1,625	)
Financing activities
Borrowings from long-term debt		107,700				139,137
Proceeds from note payable		914				900
Payments on long-term debt		(107,700	)			(156,166	)
Payments on note payable		(359	)			(387	)
Principal payments on finance lease obligations		(151	)			(151	)
Repurchase of common stock		(320	)			(504	)
Net cash provided by (used in) financing activities		84				(17,171	)
Increase (decrease) in cash and cash equivalents		1,744				(724	)
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	$	3,595			$	717

Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited) ($ in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)		2024				2023				2024				2023
Consolidated
Net loss from continuing operations	$	(198	)		$	(6,149	)		$	(4,292	)		$	(11,937	)
Adjustments:
Interest expense		72				1,047				199				2,154
Income taxes		(44	)			(1,693	)			(1,210	)			(3,301	)
Depreciation		1,531				1,563				3,051				3,112
Amortization		377				376				744				752
EBITDA		1,738				(4,856	)			(1,508	)			(9,220	)
Acquisition costs and other		67				16				79				277
Stock-based compensation		44				16				104				237
Non-cash lease expense		55				63				111				126
Retention expense		—				—				3				—
Restructuring and severance costs		208				7				208				91
Adjusted EBITDA	$	2,112			$	(4,754	)		$	(1,003	)		$	(8,489	)
% sales		4.2	%			(9.4	)%			(1.1	)%			(8.1	)%

Specialty Chemicals
Net income (loss)	$	409			$	(818	)		$	(1,049	)		$	523
Adjustments:
Interest expense		20				18				39				31
Depreciation expense		964				956				1,918				1,908
Amortization expense		179				158				348				317
EBITDA		1,572				314				1,256				2,779
Acquisition costs and other		—				—				—				2
Stock-based compensation		—				(23	)			7				(16	)
Non-cash lease expense		19				22				38				46
Restructuring and severance costs		109				—				109				—
Specialty Chemicals Adjusted EBITDA	$	1,700			$	313			$	1,410			$	2,811
% segment sales		7.9	%			1.5	%			3.4	%			6.2	%
Tubular Products
Net income (loss) from continuing operations	$	889			$	(3,303	)		$	(613	)		$	(6,595	)
Adjustments:
Depreciation expense		546				585				1,091				1,160
Amortization expense		198				218				396				436
EBITDA		1,633				(2,500	)			874				(4,999	)
Acquisition costs and other		15				—				26				—
Stock-based compensation		—				2				11				(18	)
Non-cash lease expense		25				31				50				61
Restructuring and severance costs		31				—				31				84
Tubular Products Adjusted EBITDA	$	1,704			$	(2,467	)		$	992			$	(4,872	)
% segment sales		5.9	%			(8.5	)%			1.9	%			(8.1	)%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806610529/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

Source: Ascent Industries Co.

FAQ

What was Ascent Industries' (ACNT) revenue in Q2 2024?

Ascent Industries (ACNT) reported net sales of $50.2 million from continuing operations in Q2 2024, a slight decrease of 0.3% compared to $50.4 million in Q2 2023.

Did Ascent Industries (ACNT) report a profit or loss in Q2 2024?

Ascent Industries (ACNT) reported a net loss of $(0.2) million, or $(0.02) diluted loss per share, in Q2 2024. This was an improvement from a net loss of $(6.1) million in Q2 2023.

What was Ascent Industries' (ACNT) Adjusted EBITDA for Q2 2024?

Ascent Industries (ACNT) reported an Adjusted EBITDA of $2.1 million in Q2 2024, a significant increase from $(4.8) million in Q2 2023. The Adjusted EBITDA margin improved to 4.2% from -9.4% in the prior year period.

How much debt does Ascent Industries (ACNT) have as of Q2 2024?

As of June 30, 2024, Ascent Industries (ACNT) had no debt outstanding under its revolving credit facilities and had $62.7 million in availability under its revolving credit facility.