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
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