Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Ascent Industries Reports Fourth Quarter and Full Year 2022 Results By: Ascent Industries Co. via Business Wire March 31, 2023 at 07:30 AM EDT Second Consecutive Year of Growth in Net Sales and Net Income Year-Over-Year, Reflecting Continued Improvements Across the Organization Ascent Chemicals Continues to Outperform with Year-Over-Year Growth in Net Sales, Net Income, and Adjusted EBITDA for Full Year 2022 Fourth Quarter Net Income of $0.1 Million and Adjusted EBITDA of Negative $2.0 Million Includes Net Loss of $8.9 Million and Adjusted EBITDA of Negative $7.4 million Attributable to its Munhall Facility1 Ascent Industries Co. (Nasdaq: ACNT) (“Ascent” or the “Company”), an industrials company focused on the production and distribution of industrial tubular products and specialty chemicals, is reporting its results for the fourth quarter and full year ended December 31, 2022. Fourth Quarter 2022 Summary (in millions, expect per share and margin) Q4 2022 Q4 2021 Change Net Sales $81.6 $95.7 -14.7% Gross Profit $1.6 $19.9 -92.0% Gross Profit Margin 2.0% 20.8% -1880bps Net Income $0.1 $8.1 -98.4% Diluted Earnings per Share $0.01 $0.84 -98.5% Adjusted EBITDA $(2.0) $14.9 -113.2% Adjusted EBITDA Margin (2.4)% 15.5% -1790bps Full Year 2022 Summary (in millions, except per share and margin) 2022 2021 Change Net Sales $414.1 $334.7 23.7% Gross Profit $56.5 $60.8 -7.0% Gross Profit Margin 13.7% 18.2% -450bps Net Income $22.1 $20.2 9.0% Diluted Earnings per share $2.12 $2.14 -1.0% Adjusted EBITDA $36.0 $44.3 -18.7% Adjusted EBITDA Margin 8.7% 13.2% -450bps ________________________________ 1 Company management has previously articulated its intent to reduce operations at the Company's facility in Munhall, PA, specifically its galvanized pipe and tube operations. The majority of the galvanized reduction has been completed as of March 31, 2023, and the Company is currently evaluating strategic alternatives for the operations at this facility. Management Commentary “Although we certainly faced some challenges during the last two quarters of the year, I don’t want that to take away from the progress we made throughout 2022 towards operational excellence,” said Chris Hutter, president and CEO of Ascent. “This year proved to be another step in the right direction as we made tangible progress in growing Ascent Chemicals, rebranded our entire organization for a more seamless go-to-market strategy and made significant investments to improve internal processes that we believe will further streamline our operations. While these efforts are ongoing, we believe our top-down approach to eliminating inherited inefficiencies and more purposefully rebuilding the operational mindset of the organization is positioning Ascent for long-term success. “As expected, specific items within our tubular products segment negatively impacted our consolidated financial results to close out the year. That said, the bulk of the financial issues were contained to our Munhall, PA facility where we have previously expressed our frustration with the galvanized business we inherited and our belief that this product line is not a meaningful part of our long-term business plan. As we began the process of evaluating strategic alternatives for the Munhall facility, we significantly reduced our galvanized business there, which led to the facility becoming meaningfully unprofitable in the fourth quarter. As of today, we are no longer producing galvanized products at Munhall and, excluding this facility, our consolidated results were in-line with expectations. “Ascent Chemicals remained a stalwart during the fourth quarter with year-over-year growth across the top line and a minimal decline in the bottom line as the pricing environment continued to stabilize. We are pleased with the overall profile of this segment given its stable customer base and high margin, recurring revenue that we believe can provide a solid base for us to meaningfully grow over the long-term. Our sales pipeline for Ascent Chemicals in 2023 remains strong, and we believe the foundation we have built more easily allows us to incorporate adjacent products and new offerings as the broader M&A landscape begins to open up. We believe that our specialty chemicals segment has significant long-term growth potential, and we are confident in the ability of our team to seize these opportunities. “Overall, we believe we are on a path toward sustained profitable growth over the long-term. To achieve this, we will focus on providing best-in-class products and services, investing in technology and automation to improve efficiencies, and pursuing strategic acquisitions within the specialty chemicals segment that meet our return thresholds. Our dedicated team remains steadfast in their commitment to delivering long-term value to our shareholders through a culture of hard work and performance-based results.” Fourth Quarter 2022 Financial Results Net sales were $81.6 million compared to $95.7 million in the prior year period, primarily attributable to a reduction in low-margin sales within the tubular products segment, partially offset by year-over-year growth in the specialty chemicals segment. Gross profit was $1.6 million, or 2.0% of net sales, compared to $19.9 million, or 20.8% of net sales, in the fourth quarter of 2021. The decrease is primarily attributable to the aforementioned decline in net sales within the tubular products segment, along with increased input and labor costs and a slightly unfavorable product mix over the prior year. Net income was $0.1 million, or $0.01 diluted earnings per share, compared to $8.1 million, or $0.84 diluted earnings per share, in the fourth quarter of 2021. The decline is primarily attributable to the aforementioned lower gross profit, accelerated depreciation and amortization charges related to the strategic reassessment of certain operations within the tubular products segment, and an increase in corporate expenses to optimize internal processes, partially offset by an income tax benefit associated with the ceased Palmer operations. Adjusted EBITDA was $(2.0) million compared to $14.9 million in the fourth quarter of 2021. Adjusted EBITDA margin was (2.4)% compared to 15.5% in the prior year period. The decrease is primarily attributable to the aforementioned lower net sales, the bulk of which were contained in one operating site that the Company is in the process of meaningfully contracting, and an increase in corporate expenses. Full Year 2022 Financial Results Net sales increased 24% to $414.1 million compared to $334.7 million in 2021. The increase was primarily attributable to a more favorable pricing environment in the first half of the year, partially offset by a lower volume of products shipped due to product mix shifts to meet long-term profitability objectives. Gross profit was $56.5 million, or 13.7% of net sales, compared to $60.8 million or 18.2% of net sales in 2021. The modest decrease was primary attributable to an increase in raw materials and freight costs. Net income increased 9% to $22.1 million, or $2.12 diluted earnings per share, compared to $20.2 million, or $2.14 diluted earnings per share in 2021. The increase was primarily attributable to the aforementioned increase in net sales and an income tax benefit that wasn’t recognized in the prior year period. Adjusted EBITDA was $36.0 million compared to $44.3 million in 2021. Adjusted EBITDA as a percentage of net sales was 8.7% compared to 13.2% in the prior year. The slight decline is primarily attributable to lower operating margins in the tubular products segment compared to the prior year. Segment Results Ascent Tubular – net sales in the fourth quarter of 2022 were $58.1 million compared to $73.8 million in the fourth quarter of 2021. Operating loss in the fourth quarter was $4.3 million compared to operating income of $11.8 million in the prior year period. Adjusted EBITDA in the fourth quarter was $(1.6) million compared to $13.8 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was (2.8)% compared to 18.7% in the fourth quarter of 2021. Net sales in 2022 increased 15% to $306.6 million compared to $267.2 million in 2021. Operating income in 2022 was $27.6 million compared to $33.6 million in the prior year. Adjusted EBITDA in 2022 was $35.8 million compared to $43.0 million in the prior year. As a percentage of segment net sales, adjusted EBITDA was 11.7% compared to 16.1% in 2021. Ascent Chemicals – net sales in the fourth quarter of 2022 increased 7% to $23.5 million compared to $21.9 million in the fourth quarter of 2021. Operating income in the fourth quarter was $0.9 million compared to $1.7 million in the prior year period. Adjusted EBITDA in the fourth quarter was $2.0 million compared to $2.5 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 8.6% compared to 11.7% in the fourth quarter of 2021. Net sales in 2022 increased 59% to $107.5 million compared to $67.5 million in 2021. Operating income in 2022 increased significantly to $7.0 million compared to $3.7 million in the prior year. Adjusted EBITDA in 2022 increased 80% to $11.8 million compared to $6.5 million in the prior year. As a percentage of segment net sales, adjusted EBITDA increased 120 basis points to 10.9% compared to 9.7% in 2021. Liquidity As of December 31, 2022, total debt was $71.5 million under the Company’s revolving credit facility, compared to $70.4 million at December 31, 2021. As of the end of 2022, the Company had $37.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. For the year ended December 31, 2022, the Company repurchased 110,404 shares at an average cost of $12.16 per share for approximately $1.3 million. Conference Call Ascent will conduct a conference call today at 8:30 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2022. Ascent management will host the conference call, followed by a question and answer period. Date: Friday, March 31, 2023 Time: 8:30 a.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 stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Ascent, please visit its web site 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, shelf registration costs, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 1,441 $ 2,021 Accounts receivable, net of allowance for credit losses of $1,250 and $216, respectively 45,120 50,126 Inventories, net 114,452 103,249 Prepaid expenses and other current assets 8,982 3,728 Assets held for sale 380 855 Total current assets 170,375 159,979 Property, plant and equipment, net 42,346 43,720 Right-of-use assets, operating leases, net 29,224 30,811 Goodwill 11,389 12,637 Intangible assets, net 10,387 14,382 Deferred income taxes 1,353 — Deferred charges, net 203 302 Other non-current assets, net 3,766 4,171 Total assets $ 269,043 $ 266,002 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,731 $ 32,318 Accounts payable - related parties — 2 Accrued expenses and other current liabilities 6,560 12,407 Current portion of note payable 387 — Current portion of long-term debt 2,464 2,464 Current portion of earn-out liabilities — 1,961 Current portion of operating lease liabilities 1,056 1,104 Current portion of finance lease liabilities 280 233 Total current liabilities 33,478 50,489 Long-term debt 69,085 67,928 Long-term portion of operating lease liabilities 30,911 32,059 Long-term portion of finance lease liabilities 1,242 1,414 Deferred income taxes — 2,433 Other long-term liabilities 68 89 Total non-current liabilities 101,306 103,923 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; authorized 24,000,000 shares; issued 11,085,103 shares 11,085 11,085 Capital in excess of par value 47,021 46,058 Retained earnings 85,146 63,080 143,252 120,223 Less: cost of common stock in treasury - 924,504 and 918,471 shares, respectively (8,993 ) (8,633 ) Total shareholders' equity 134,259 111,590 Total liabilities and shareholders' equity $ 269,043 $ 266,002 Note: The condensed consolidated balance sheets at December 31, 2022 and 2021 have been derived from the audited consolidated financial statements at that date. Ascent Industries Co. Condensed Consolidated Statements of Income - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net sales Tubular Products $ 58,087 $ 73,799 $ 306,605 $ 267,238 Specialty Chemicals 23,473 21,868 107,542 67,477 $ 81,560 $ 95,667 $ 414,147 $ 334,715 Operating income (loss) Tubular Products $ (4,323 ) $ 11,767 $ 27,607 $ 33,561 Specialty Chemicals 860 1,658 6,971 3,656 Corporate Unallocated corporate expenses (2,761 ) (1,690 ) (12,997 ) (6,828 ) Acquisition costs and other (363 ) (800 ) (1,200 ) (1,001 ) Proxy contest costs and recoveries — — — (168 ) Earn-out adjustments — (442 ) 7 (1,872 ) Total Corporate (3,124 ) (2,932 ) (14,190 ) (9,869 ) Operating income (loss) (6,587 ) 10,493 20,388 27,348 Interest expense 1,104 418 2,742 1,486 Loss on extinguishment of debt — — — 223 Change in fair value of interest rate swap — — — (2 ) Other, net (34 ) (10 ) (209 ) 143 Income (loss) before income taxes (7,657 ) 10,085 17,855 25,498 Income tax provision (benefit) (7,784 ) 2,018 (4,211 ) 5,253 Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Net income per common share Basic $ 0.01 $ 0.85 $ 2.16 $ 2.17 Diluted $ 0.01 $ 0.84 $ 2.12 $ 2.14 Average shares outstanding Basic 10,213 9,518 10,230 9,340 Diluted 10,416 9,617 10,410 9,456 Other data: Adjusted EBITDA1 $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) Year Ended December 31, 2022 2021 Operating activities Net income $ 22,066 $ 20,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 8,722 7,547 Amortization expense 3,995 2,794 Amortization of debt issuance costs 99 95 Asset impairments — 233 Loss on extinguishment of debt — 223 Deferred income taxes (4,211 ) (2,071 ) Earn-out adjustments (7 ) 1,872 Payments of earn-out liabilities in excess of acquisition date fair value (662 ) (138 ) Provision for (reduction of) losses on accounts receivable 1,034 (398 ) Provision for losses on inventories 3,052 1,649 Loss (gain) on disposal of property, plant and equipment 27 (848 ) Non-cash lease expense 414 481 Non-cash lease termination loss — 5 Change in fair value of interest rate swap — (2 ) Payments for termination of interest rate swap — (46 ) Issuance of treasury stock for director fees 364 132 Stock-based compensation expense 1,407 799 Changes in operating assets and liabilities: Accounts receivable 3,972 (16,185 ) Inventories (13,779 ) (18,873 ) Other assets and liabilities (12 ) (55 ) Accounts payable (10,277 ) 10,835 Accounts payable - related parties (2 ) 2 Accrued expenses (2,702 ) 1,506 Accrued income taxes (7,923 ) 9,253 Net cash provided by operating activities 5,577 19,055 Investing activities Purchases of property, plant and equipment (5,074 ) (1,497 ) Proceeds from disposal of property, plant and equipment 99 1,400 Acquisitions, net of cash acquired — (32,564 ) Net cash (used in) provided by investing activities (4,975 ) (32,661 ) Financing activities Borrowings from long-term debt 443,363 215,528 Proceeds from note payable 967 — Proceeds from the issuance of common stock related to Rights Offering — 10,010 Proceeds from the exercise of stock options 175 109 Payments on long-term debt (442,206 ) (206,505 ) Payments on note payable (580 ) — Principal payments on finance lease obligations (266 ) (92 ) Payments on earn-out liabilities (1,292 ) (3,494 ) Repurchase of common stock (1,343 ) — Payments for deferred financing costs — (165 ) Net cash used in financing activities (1,182 ) 15,391 (Decrease) increase in cash and cash equivalents (580 ) 1,785 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,441 $ 2,021 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Consolidated Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Adjustments: Interest expense 1,104 418 2,742 1,486 Change in fair value of interest rate swap — — — (2 ) Income taxes (7,784 ) 2,018 (4,211 ) 5,253 Depreciation 2,343 2,088 8,722 7,547 Amortization 1,407 754 3,995 2,794 EBITDA (2,803 ) 13,345 33,314 37,323 Acquisition costs and other 363 800 1,200 1,001 Proxy contest costs and recoveries1 — — — 168 Shelf registration costs 12 — 12 — Loss on extinguishment of debt — — — 223 Earn-out adjustments — 442 (7 ) 1,872 Loss on investment in equity securities and other investments — — — 363 Asset impairments — — — 233 Gain on lease modification — — (2 ) — Stock-based compensation 308 103 1,016 799 Non-cash lease expense 92 108 414 481 Retention expense — 6 — 500 Restructuring and severance costs 64 57 74 1,345 Adjusted EBITDA $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 % sales (2.4 )% 15.5 % 8.7 % 13.2 % 1Proxy contest costs and recoveries for the year months ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Tubular Products Net income (loss) $ (4,392 ) $ 11,335 $ 27,644 $ 31,893 Adjustments: Interest expense — — 1 — Depreciation expense 1,375 1,293 4,814 5,485 Amortization expense 1,217 680 3,092 2,721 EBITDA (1,800 ) 13,308 35,551 40,099 Acquisition costs and other 96 — 96 — Earn-out adjustments — 442 (7 ) 1,872 Stock-based compensation 36 54 100 129 Retention expense — 6 — 500 Restructuring and severance costs 20 — 20 363 Tubular Products Adjusted EBITDA $ (1,648 ) $ 13,810 $ 35,760 $ 42,963 % segment sales (2.8 )% 18.7 % 11.7 % 16.1 % Specialty Chemicals Net income $ 852 $ 1,588 $ 6,935 $ 3,589 Adjustments: Interest expense 9 9 36 11 Depreciation expense 949 768 3,846 1,932 Amortization expense 191 73 903 73 EBITDA 2,001 2,438 11,720 5,605 Acquisition costs and other — 61 — 61 Asset impairments — — — 233 Stock-based compensation 12 (8 ) 41 165 Non-cash lease expense — — 2 — Restructuring and severance costs 8 57 8 484 Specialty Chemicals Adjusted EBITDA $ 2,021 $ 2,548 $ 11,771 $ 6,548 % segment sales 8.6 % 11.7 % 10.9 % 9.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230331005095/en/Contacts Company Contact Aaron Tam Chief Financial Officer 1-630-884-9181 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 ACNT@gatewayir.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Ascent Industries Reports Fourth Quarter and Full Year 2022 Results By: Ascent Industries Co. via Business Wire March 31, 2023 at 07:30 AM EDT Second Consecutive Year of Growth in Net Sales and Net Income Year-Over-Year, Reflecting Continued Improvements Across the Organization Ascent Chemicals Continues to Outperform with Year-Over-Year Growth in Net Sales, Net Income, and Adjusted EBITDA for Full Year 2022 Fourth Quarter Net Income of $0.1 Million and Adjusted EBITDA of Negative $2.0 Million Includes Net Loss of $8.9 Million and Adjusted EBITDA of Negative $7.4 million Attributable to its Munhall Facility1 Ascent Industries Co. (Nasdaq: ACNT) (“Ascent” or the “Company”), an industrials company focused on the production and distribution of industrial tubular products and specialty chemicals, is reporting its results for the fourth quarter and full year ended December 31, 2022. Fourth Quarter 2022 Summary (in millions, expect per share and margin) Q4 2022 Q4 2021 Change Net Sales $81.6 $95.7 -14.7% Gross Profit $1.6 $19.9 -92.0% Gross Profit Margin 2.0% 20.8% -1880bps Net Income $0.1 $8.1 -98.4% Diluted Earnings per Share $0.01 $0.84 -98.5% Adjusted EBITDA $(2.0) $14.9 -113.2% Adjusted EBITDA Margin (2.4)% 15.5% -1790bps Full Year 2022 Summary (in millions, except per share and margin) 2022 2021 Change Net Sales $414.1 $334.7 23.7% Gross Profit $56.5 $60.8 -7.0% Gross Profit Margin 13.7% 18.2% -450bps Net Income $22.1 $20.2 9.0% Diluted Earnings per share $2.12 $2.14 -1.0% Adjusted EBITDA $36.0 $44.3 -18.7% Adjusted EBITDA Margin 8.7% 13.2% -450bps ________________________________ 1 Company management has previously articulated its intent to reduce operations at the Company's facility in Munhall, PA, specifically its galvanized pipe and tube operations. The majority of the galvanized reduction has been completed as of March 31, 2023, and the Company is currently evaluating strategic alternatives for the operations at this facility. Management Commentary “Although we certainly faced some challenges during the last two quarters of the year, I don’t want that to take away from the progress we made throughout 2022 towards operational excellence,” said Chris Hutter, president and CEO of Ascent. “This year proved to be another step in the right direction as we made tangible progress in growing Ascent Chemicals, rebranded our entire organization for a more seamless go-to-market strategy and made significant investments to improve internal processes that we believe will further streamline our operations. While these efforts are ongoing, we believe our top-down approach to eliminating inherited inefficiencies and more purposefully rebuilding the operational mindset of the organization is positioning Ascent for long-term success. “As expected, specific items within our tubular products segment negatively impacted our consolidated financial results to close out the year. That said, the bulk of the financial issues were contained to our Munhall, PA facility where we have previously expressed our frustration with the galvanized business we inherited and our belief that this product line is not a meaningful part of our long-term business plan. As we began the process of evaluating strategic alternatives for the Munhall facility, we significantly reduced our galvanized business there, which led to the facility becoming meaningfully unprofitable in the fourth quarter. As of today, we are no longer producing galvanized products at Munhall and, excluding this facility, our consolidated results were in-line with expectations. “Ascent Chemicals remained a stalwart during the fourth quarter with year-over-year growth across the top line and a minimal decline in the bottom line as the pricing environment continued to stabilize. We are pleased with the overall profile of this segment given its stable customer base and high margin, recurring revenue that we believe can provide a solid base for us to meaningfully grow over the long-term. Our sales pipeline for Ascent Chemicals in 2023 remains strong, and we believe the foundation we have built more easily allows us to incorporate adjacent products and new offerings as the broader M&A landscape begins to open up. We believe that our specialty chemicals segment has significant long-term growth potential, and we are confident in the ability of our team to seize these opportunities. “Overall, we believe we are on a path toward sustained profitable growth over the long-term. To achieve this, we will focus on providing best-in-class products and services, investing in technology and automation to improve efficiencies, and pursuing strategic acquisitions within the specialty chemicals segment that meet our return thresholds. Our dedicated team remains steadfast in their commitment to delivering long-term value to our shareholders through a culture of hard work and performance-based results.” Fourth Quarter 2022 Financial Results Net sales were $81.6 million compared to $95.7 million in the prior year period, primarily attributable to a reduction in low-margin sales within the tubular products segment, partially offset by year-over-year growth in the specialty chemicals segment. Gross profit was $1.6 million, or 2.0% of net sales, compared to $19.9 million, or 20.8% of net sales, in the fourth quarter of 2021. The decrease is primarily attributable to the aforementioned decline in net sales within the tubular products segment, along with increased input and labor costs and a slightly unfavorable product mix over the prior year. Net income was $0.1 million, or $0.01 diluted earnings per share, compared to $8.1 million, or $0.84 diluted earnings per share, in the fourth quarter of 2021. The decline is primarily attributable to the aforementioned lower gross profit, accelerated depreciation and amortization charges related to the strategic reassessment of certain operations within the tubular products segment, and an increase in corporate expenses to optimize internal processes, partially offset by an income tax benefit associated with the ceased Palmer operations. Adjusted EBITDA was $(2.0) million compared to $14.9 million in the fourth quarter of 2021. Adjusted EBITDA margin was (2.4)% compared to 15.5% in the prior year period. The decrease is primarily attributable to the aforementioned lower net sales, the bulk of which were contained in one operating site that the Company is in the process of meaningfully contracting, and an increase in corporate expenses. Full Year 2022 Financial Results Net sales increased 24% to $414.1 million compared to $334.7 million in 2021. The increase was primarily attributable to a more favorable pricing environment in the first half of the year, partially offset by a lower volume of products shipped due to product mix shifts to meet long-term profitability objectives. Gross profit was $56.5 million, or 13.7% of net sales, compared to $60.8 million or 18.2% of net sales in 2021. The modest decrease was primary attributable to an increase in raw materials and freight costs. Net income increased 9% to $22.1 million, or $2.12 diluted earnings per share, compared to $20.2 million, or $2.14 diluted earnings per share in 2021. The increase was primarily attributable to the aforementioned increase in net sales and an income tax benefit that wasn’t recognized in the prior year period. Adjusted EBITDA was $36.0 million compared to $44.3 million in 2021. Adjusted EBITDA as a percentage of net sales was 8.7% compared to 13.2% in the prior year. The slight decline is primarily attributable to lower operating margins in the tubular products segment compared to the prior year. Segment Results Ascent Tubular – net sales in the fourth quarter of 2022 were $58.1 million compared to $73.8 million in the fourth quarter of 2021. Operating loss in the fourth quarter was $4.3 million compared to operating income of $11.8 million in the prior year period. Adjusted EBITDA in the fourth quarter was $(1.6) million compared to $13.8 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was (2.8)% compared to 18.7% in the fourth quarter of 2021. Net sales in 2022 increased 15% to $306.6 million compared to $267.2 million in 2021. Operating income in 2022 was $27.6 million compared to $33.6 million in the prior year. Adjusted EBITDA in 2022 was $35.8 million compared to $43.0 million in the prior year. As a percentage of segment net sales, adjusted EBITDA was 11.7% compared to 16.1% in 2021. Ascent Chemicals – net sales in the fourth quarter of 2022 increased 7% to $23.5 million compared to $21.9 million in the fourth quarter of 2021. Operating income in the fourth quarter was $0.9 million compared to $1.7 million in the prior year period. Adjusted EBITDA in the fourth quarter was $2.0 million compared to $2.5 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 8.6% compared to 11.7% in the fourth quarter of 2021. Net sales in 2022 increased 59% to $107.5 million compared to $67.5 million in 2021. Operating income in 2022 increased significantly to $7.0 million compared to $3.7 million in the prior year. Adjusted EBITDA in 2022 increased 80% to $11.8 million compared to $6.5 million in the prior year. As a percentage of segment net sales, adjusted EBITDA increased 120 basis points to 10.9% compared to 9.7% in 2021. Liquidity As of December 31, 2022, total debt was $71.5 million under the Company’s revolving credit facility, compared to $70.4 million at December 31, 2021. As of the end of 2022, the Company had $37.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. For the year ended December 31, 2022, the Company repurchased 110,404 shares at an average cost of $12.16 per share for approximately $1.3 million. Conference Call Ascent will conduct a conference call today at 8:30 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2022. Ascent management will host the conference call, followed by a question and answer period. Date: Friday, March 31, 2023 Time: 8:30 a.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 stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Ascent, please visit its web site 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, shelf registration costs, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 1,441 $ 2,021 Accounts receivable, net of allowance for credit losses of $1,250 and $216, respectively 45,120 50,126 Inventories, net 114,452 103,249 Prepaid expenses and other current assets 8,982 3,728 Assets held for sale 380 855 Total current assets 170,375 159,979 Property, plant and equipment, net 42,346 43,720 Right-of-use assets, operating leases, net 29,224 30,811 Goodwill 11,389 12,637 Intangible assets, net 10,387 14,382 Deferred income taxes 1,353 — Deferred charges, net 203 302 Other non-current assets, net 3,766 4,171 Total assets $ 269,043 $ 266,002 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,731 $ 32,318 Accounts payable - related parties — 2 Accrued expenses and other current liabilities 6,560 12,407 Current portion of note payable 387 — Current portion of long-term debt 2,464 2,464 Current portion of earn-out liabilities — 1,961 Current portion of operating lease liabilities 1,056 1,104 Current portion of finance lease liabilities 280 233 Total current liabilities 33,478 50,489 Long-term debt 69,085 67,928 Long-term portion of operating lease liabilities 30,911 32,059 Long-term portion of finance lease liabilities 1,242 1,414 Deferred income taxes — 2,433 Other long-term liabilities 68 89 Total non-current liabilities 101,306 103,923 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; authorized 24,000,000 shares; issued 11,085,103 shares 11,085 11,085 Capital in excess of par value 47,021 46,058 Retained earnings 85,146 63,080 143,252 120,223 Less: cost of common stock in treasury - 924,504 and 918,471 shares, respectively (8,993 ) (8,633 ) Total shareholders' equity 134,259 111,590 Total liabilities and shareholders' equity $ 269,043 $ 266,002 Note: The condensed consolidated balance sheets at December 31, 2022 and 2021 have been derived from the audited consolidated financial statements at that date. Ascent Industries Co. Condensed Consolidated Statements of Income - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net sales Tubular Products $ 58,087 $ 73,799 $ 306,605 $ 267,238 Specialty Chemicals 23,473 21,868 107,542 67,477 $ 81,560 $ 95,667 $ 414,147 $ 334,715 Operating income (loss) Tubular Products $ (4,323 ) $ 11,767 $ 27,607 $ 33,561 Specialty Chemicals 860 1,658 6,971 3,656 Corporate Unallocated corporate expenses (2,761 ) (1,690 ) (12,997 ) (6,828 ) Acquisition costs and other (363 ) (800 ) (1,200 ) (1,001 ) Proxy contest costs and recoveries — — — (168 ) Earn-out adjustments — (442 ) 7 (1,872 ) Total Corporate (3,124 ) (2,932 ) (14,190 ) (9,869 ) Operating income (loss) (6,587 ) 10,493 20,388 27,348 Interest expense 1,104 418 2,742 1,486 Loss on extinguishment of debt — — — 223 Change in fair value of interest rate swap — — — (2 ) Other, net (34 ) (10 ) (209 ) 143 Income (loss) before income taxes (7,657 ) 10,085 17,855 25,498 Income tax provision (benefit) (7,784 ) 2,018 (4,211 ) 5,253 Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Net income per common share Basic $ 0.01 $ 0.85 $ 2.16 $ 2.17 Diluted $ 0.01 $ 0.84 $ 2.12 $ 2.14 Average shares outstanding Basic 10,213 9,518 10,230 9,340 Diluted 10,416 9,617 10,410 9,456 Other data: Adjusted EBITDA1 $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) Year Ended December 31, 2022 2021 Operating activities Net income $ 22,066 $ 20,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 8,722 7,547 Amortization expense 3,995 2,794 Amortization of debt issuance costs 99 95 Asset impairments — 233 Loss on extinguishment of debt — 223 Deferred income taxes (4,211 ) (2,071 ) Earn-out adjustments (7 ) 1,872 Payments of earn-out liabilities in excess of acquisition date fair value (662 ) (138 ) Provision for (reduction of) losses on accounts receivable 1,034 (398 ) Provision for losses on inventories 3,052 1,649 Loss (gain) on disposal of property, plant and equipment 27 (848 ) Non-cash lease expense 414 481 Non-cash lease termination loss — 5 Change in fair value of interest rate swap — (2 ) Payments for termination of interest rate swap — (46 ) Issuance of treasury stock for director fees 364 132 Stock-based compensation expense 1,407 799 Changes in operating assets and liabilities: Accounts receivable 3,972 (16,185 ) Inventories (13,779 ) (18,873 ) Other assets and liabilities (12 ) (55 ) Accounts payable (10,277 ) 10,835 Accounts payable - related parties (2 ) 2 Accrued expenses (2,702 ) 1,506 Accrued income taxes (7,923 ) 9,253 Net cash provided by operating activities 5,577 19,055 Investing activities Purchases of property, plant and equipment (5,074 ) (1,497 ) Proceeds from disposal of property, plant and equipment 99 1,400 Acquisitions, net of cash acquired — (32,564 ) Net cash (used in) provided by investing activities (4,975 ) (32,661 ) Financing activities Borrowings from long-term debt 443,363 215,528 Proceeds from note payable 967 — Proceeds from the issuance of common stock related to Rights Offering — 10,010 Proceeds from the exercise of stock options 175 109 Payments on long-term debt (442,206 ) (206,505 ) Payments on note payable (580 ) — Principal payments on finance lease obligations (266 ) (92 ) Payments on earn-out liabilities (1,292 ) (3,494 ) Repurchase of common stock (1,343 ) — Payments for deferred financing costs — (165 ) Net cash used in financing activities (1,182 ) 15,391 (Decrease) increase in cash and cash equivalents (580 ) 1,785 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,441 $ 2,021 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Consolidated Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Adjustments: Interest expense 1,104 418 2,742 1,486 Change in fair value of interest rate swap — — — (2 ) Income taxes (7,784 ) 2,018 (4,211 ) 5,253 Depreciation 2,343 2,088 8,722 7,547 Amortization 1,407 754 3,995 2,794 EBITDA (2,803 ) 13,345 33,314 37,323 Acquisition costs and other 363 800 1,200 1,001 Proxy contest costs and recoveries1 — — — 168 Shelf registration costs 12 — 12 — Loss on extinguishment of debt — — — 223 Earn-out adjustments — 442 (7 ) 1,872 Loss on investment in equity securities and other investments — — — 363 Asset impairments — — — 233 Gain on lease modification — — (2 ) — Stock-based compensation 308 103 1,016 799 Non-cash lease expense 92 108 414 481 Retention expense — 6 — 500 Restructuring and severance costs 64 57 74 1,345 Adjusted EBITDA $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 % sales (2.4 )% 15.5 % 8.7 % 13.2 % 1Proxy contest costs and recoveries for the year months ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Tubular Products Net income (loss) $ (4,392 ) $ 11,335 $ 27,644 $ 31,893 Adjustments: Interest expense — — 1 — Depreciation expense 1,375 1,293 4,814 5,485 Amortization expense 1,217 680 3,092 2,721 EBITDA (1,800 ) 13,308 35,551 40,099 Acquisition costs and other 96 — 96 — Earn-out adjustments — 442 (7 ) 1,872 Stock-based compensation 36 54 100 129 Retention expense — 6 — 500 Restructuring and severance costs 20 — 20 363 Tubular Products Adjusted EBITDA $ (1,648 ) $ 13,810 $ 35,760 $ 42,963 % segment sales (2.8 )% 18.7 % 11.7 % 16.1 % Specialty Chemicals Net income $ 852 $ 1,588 $ 6,935 $ 3,589 Adjustments: Interest expense 9 9 36 11 Depreciation expense 949 768 3,846 1,932 Amortization expense 191 73 903 73 EBITDA 2,001 2,438 11,720 5,605 Acquisition costs and other — 61 — 61 Asset impairments — — — 233 Stock-based compensation 12 (8 ) 41 165 Non-cash lease expense — — 2 — Restructuring and severance costs 8 57 8 484 Specialty Chemicals Adjusted EBITDA $ 2,021 $ 2,548 $ 11,771 $ 6,548 % segment sales 8.6 % 11.7 % 10.9 % 9.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230331005095/en/Contacts Company Contact Aaron Tam Chief Financial Officer 1-630-884-9181 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 ACNT@gatewayir.com
Second Consecutive Year of Growth in Net Sales and Net Income Year-Over-Year, Reflecting Continued Improvements Across the Organization Ascent Chemicals Continues to Outperform with Year-Over-Year Growth in Net Sales, Net Income, and Adjusted EBITDA for Full Year 2022 Fourth Quarter Net Income of $0.1 Million and Adjusted EBITDA of Negative $2.0 Million Includes Net Loss of $8.9 Million and Adjusted EBITDA of Negative $7.4 million Attributable to its Munhall Facility1
Ascent Industries Co. (Nasdaq: ACNT) (“Ascent” or the “Company”), an industrials company focused on the production and distribution of industrial tubular products and specialty chemicals, is reporting its results for the fourth quarter and full year ended December 31, 2022. Fourth Quarter 2022 Summary (in millions, expect per share and margin) Q4 2022 Q4 2021 Change Net Sales $81.6 $95.7 -14.7% Gross Profit $1.6 $19.9 -92.0% Gross Profit Margin 2.0% 20.8% -1880bps Net Income $0.1 $8.1 -98.4% Diluted Earnings per Share $0.01 $0.84 -98.5% Adjusted EBITDA $(2.0) $14.9 -113.2% Adjusted EBITDA Margin (2.4)% 15.5% -1790bps Full Year 2022 Summary (in millions, except per share and margin) 2022 2021 Change Net Sales $414.1 $334.7 23.7% Gross Profit $56.5 $60.8 -7.0% Gross Profit Margin 13.7% 18.2% -450bps Net Income $22.1 $20.2 9.0% Diluted Earnings per share $2.12 $2.14 -1.0% Adjusted EBITDA $36.0 $44.3 -18.7% Adjusted EBITDA Margin 8.7% 13.2% -450bps ________________________________ 1 Company management has previously articulated its intent to reduce operations at the Company's facility in Munhall, PA, specifically its galvanized pipe and tube operations. The majority of the galvanized reduction has been completed as of March 31, 2023, and the Company is currently evaluating strategic alternatives for the operations at this facility. Management Commentary “Although we certainly faced some challenges during the last two quarters of the year, I don’t want that to take away from the progress we made throughout 2022 towards operational excellence,” said Chris Hutter, president and CEO of Ascent. “This year proved to be another step in the right direction as we made tangible progress in growing Ascent Chemicals, rebranded our entire organization for a more seamless go-to-market strategy and made significant investments to improve internal processes that we believe will further streamline our operations. While these efforts are ongoing, we believe our top-down approach to eliminating inherited inefficiencies and more purposefully rebuilding the operational mindset of the organization is positioning Ascent for long-term success. “As expected, specific items within our tubular products segment negatively impacted our consolidated financial results to close out the year. That said, the bulk of the financial issues were contained to our Munhall, PA facility where we have previously expressed our frustration with the galvanized business we inherited and our belief that this product line is not a meaningful part of our long-term business plan. As we began the process of evaluating strategic alternatives for the Munhall facility, we significantly reduced our galvanized business there, which led to the facility becoming meaningfully unprofitable in the fourth quarter. As of today, we are no longer producing galvanized products at Munhall and, excluding this facility, our consolidated results were in-line with expectations. “Ascent Chemicals remained a stalwart during the fourth quarter with year-over-year growth across the top line and a minimal decline in the bottom line as the pricing environment continued to stabilize. We are pleased with the overall profile of this segment given its stable customer base and high margin, recurring revenue that we believe can provide a solid base for us to meaningfully grow over the long-term. Our sales pipeline for Ascent Chemicals in 2023 remains strong, and we believe the foundation we have built more easily allows us to incorporate adjacent products and new offerings as the broader M&A landscape begins to open up. We believe that our specialty chemicals segment has significant long-term growth potential, and we are confident in the ability of our team to seize these opportunities. “Overall, we believe we are on a path toward sustained profitable growth over the long-term. To achieve this, we will focus on providing best-in-class products and services, investing in technology and automation to improve efficiencies, and pursuing strategic acquisitions within the specialty chemicals segment that meet our return thresholds. Our dedicated team remains steadfast in their commitment to delivering long-term value to our shareholders through a culture of hard work and performance-based results.” Fourth Quarter 2022 Financial Results Net sales were $81.6 million compared to $95.7 million in the prior year period, primarily attributable to a reduction in low-margin sales within the tubular products segment, partially offset by year-over-year growth in the specialty chemicals segment. Gross profit was $1.6 million, or 2.0% of net sales, compared to $19.9 million, or 20.8% of net sales, in the fourth quarter of 2021. The decrease is primarily attributable to the aforementioned decline in net sales within the tubular products segment, along with increased input and labor costs and a slightly unfavorable product mix over the prior year. Net income was $0.1 million, or $0.01 diluted earnings per share, compared to $8.1 million, or $0.84 diluted earnings per share, in the fourth quarter of 2021. The decline is primarily attributable to the aforementioned lower gross profit, accelerated depreciation and amortization charges related to the strategic reassessment of certain operations within the tubular products segment, and an increase in corporate expenses to optimize internal processes, partially offset by an income tax benefit associated with the ceased Palmer operations. Adjusted EBITDA was $(2.0) million compared to $14.9 million in the fourth quarter of 2021. Adjusted EBITDA margin was (2.4)% compared to 15.5% in the prior year period. The decrease is primarily attributable to the aforementioned lower net sales, the bulk of which were contained in one operating site that the Company is in the process of meaningfully contracting, and an increase in corporate expenses. Full Year 2022 Financial Results Net sales increased 24% to $414.1 million compared to $334.7 million in 2021. The increase was primarily attributable to a more favorable pricing environment in the first half of the year, partially offset by a lower volume of products shipped due to product mix shifts to meet long-term profitability objectives. Gross profit was $56.5 million, or 13.7% of net sales, compared to $60.8 million or 18.2% of net sales in 2021. The modest decrease was primary attributable to an increase in raw materials and freight costs. Net income increased 9% to $22.1 million, or $2.12 diluted earnings per share, compared to $20.2 million, or $2.14 diluted earnings per share in 2021. The increase was primarily attributable to the aforementioned increase in net sales and an income tax benefit that wasn’t recognized in the prior year period. Adjusted EBITDA was $36.0 million compared to $44.3 million in 2021. Adjusted EBITDA as a percentage of net sales was 8.7% compared to 13.2% in the prior year. The slight decline is primarily attributable to lower operating margins in the tubular products segment compared to the prior year. Segment Results Ascent Tubular – net sales in the fourth quarter of 2022 were $58.1 million compared to $73.8 million in the fourth quarter of 2021. Operating loss in the fourth quarter was $4.3 million compared to operating income of $11.8 million in the prior year period. Adjusted EBITDA in the fourth quarter was $(1.6) million compared to $13.8 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was (2.8)% compared to 18.7% in the fourth quarter of 2021. Net sales in 2022 increased 15% to $306.6 million compared to $267.2 million in 2021. Operating income in 2022 was $27.6 million compared to $33.6 million in the prior year. Adjusted EBITDA in 2022 was $35.8 million compared to $43.0 million in the prior year. As a percentage of segment net sales, adjusted EBITDA was 11.7% compared to 16.1% in 2021. Ascent Chemicals – net sales in the fourth quarter of 2022 increased 7% to $23.5 million compared to $21.9 million in the fourth quarter of 2021. Operating income in the fourth quarter was $0.9 million compared to $1.7 million in the prior year period. Adjusted EBITDA in the fourth quarter was $2.0 million compared to $2.5 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 8.6% compared to 11.7% in the fourth quarter of 2021. Net sales in 2022 increased 59% to $107.5 million compared to $67.5 million in 2021. Operating income in 2022 increased significantly to $7.0 million compared to $3.7 million in the prior year. Adjusted EBITDA in 2022 increased 80% to $11.8 million compared to $6.5 million in the prior year. As a percentage of segment net sales, adjusted EBITDA increased 120 basis points to 10.9% compared to 9.7% in 2021. Liquidity As of December 31, 2022, total debt was $71.5 million under the Company’s revolving credit facility, compared to $70.4 million at December 31, 2021. As of the end of 2022, the Company had $37.6 million of remaining available borrowing capacity under its revolving credit facility, compared to $39.4 million at December 31, 2021. For the year ended December 31, 2022, the Company repurchased 110,404 shares at an average cost of $12.16 per share for approximately $1.3 million. Conference Call Ascent will conduct a conference call today at 8:30 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2022. Ascent management will host the conference call, followed by a question and answer period. Date: Friday, March 31, 2023 Time: 8:30 a.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 stainless steel and galvanized pipe and tube, the master distribution of seamless carbon pipe and tube, and the production of specialty chemicals. For more information about Ascent, please visit its web site 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, shelf registration costs, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 1,441 $ 2,021 Accounts receivable, net of allowance for credit losses of $1,250 and $216, respectively 45,120 50,126 Inventories, net 114,452 103,249 Prepaid expenses and other current assets 8,982 3,728 Assets held for sale 380 855 Total current assets 170,375 159,979 Property, plant and equipment, net 42,346 43,720 Right-of-use assets, operating leases, net 29,224 30,811 Goodwill 11,389 12,637 Intangible assets, net 10,387 14,382 Deferred income taxes 1,353 — Deferred charges, net 203 302 Other non-current assets, net 3,766 4,171 Total assets $ 269,043 $ 266,002 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,731 $ 32,318 Accounts payable - related parties — 2 Accrued expenses and other current liabilities 6,560 12,407 Current portion of note payable 387 — Current portion of long-term debt 2,464 2,464 Current portion of earn-out liabilities — 1,961 Current portion of operating lease liabilities 1,056 1,104 Current portion of finance lease liabilities 280 233 Total current liabilities 33,478 50,489 Long-term debt 69,085 67,928 Long-term portion of operating lease liabilities 30,911 32,059 Long-term portion of finance lease liabilities 1,242 1,414 Deferred income taxes — 2,433 Other long-term liabilities 68 89 Total non-current liabilities 101,306 103,923 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; authorized 24,000,000 shares; issued 11,085,103 shares 11,085 11,085 Capital in excess of par value 47,021 46,058 Retained earnings 85,146 63,080 143,252 120,223 Less: cost of common stock in treasury - 924,504 and 918,471 shares, respectively (8,993 ) (8,633 ) Total shareholders' equity 134,259 111,590 Total liabilities and shareholders' equity $ 269,043 $ 266,002 Note: The condensed consolidated balance sheets at December 31, 2022 and 2021 have been derived from the audited consolidated financial statements at that date. Ascent Industries Co. Condensed Consolidated Statements of Income - Comparative Analysis (Unaudited) ($ in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net sales Tubular Products $ 58,087 $ 73,799 $ 306,605 $ 267,238 Specialty Chemicals 23,473 21,868 107,542 67,477 $ 81,560 $ 95,667 $ 414,147 $ 334,715 Operating income (loss) Tubular Products $ (4,323 ) $ 11,767 $ 27,607 $ 33,561 Specialty Chemicals 860 1,658 6,971 3,656 Corporate Unallocated corporate expenses (2,761 ) (1,690 ) (12,997 ) (6,828 ) Acquisition costs and other (363 ) (800 ) (1,200 ) (1,001 ) Proxy contest costs and recoveries — — — (168 ) Earn-out adjustments — (442 ) 7 (1,872 ) Total Corporate (3,124 ) (2,932 ) (14,190 ) (9,869 ) Operating income (loss) (6,587 ) 10,493 20,388 27,348 Interest expense 1,104 418 2,742 1,486 Loss on extinguishment of debt — — — 223 Change in fair value of interest rate swap — — — (2 ) Other, net (34 ) (10 ) (209 ) 143 Income (loss) before income taxes (7,657 ) 10,085 17,855 25,498 Income tax provision (benefit) (7,784 ) 2,018 (4,211 ) 5,253 Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Net income per common share Basic $ 0.01 $ 0.85 $ 2.16 $ 2.17 Diluted $ 0.01 $ 0.84 $ 2.12 $ 2.14 Average shares outstanding Basic 10,213 9,518 10,230 9,340 Diluted 10,416 9,617 10,410 9,456 Other data: Adjusted EBITDA1 $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 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 (including change in fair value of interest rate swap), 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, proxy contest costs and recoveries, loss on extinguishment of debt, earn-out adjustments, realized and unrealized (gains) and losses on investments in equity securities and other investments, 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) Year Ended December 31, 2022 2021 Operating activities Net income $ 22,066 $ 20,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 8,722 7,547 Amortization expense 3,995 2,794 Amortization of debt issuance costs 99 95 Asset impairments — 233 Loss on extinguishment of debt — 223 Deferred income taxes (4,211 ) (2,071 ) Earn-out adjustments (7 ) 1,872 Payments of earn-out liabilities in excess of acquisition date fair value (662 ) (138 ) Provision for (reduction of) losses on accounts receivable 1,034 (398 ) Provision for losses on inventories 3,052 1,649 Loss (gain) on disposal of property, plant and equipment 27 (848 ) Non-cash lease expense 414 481 Non-cash lease termination loss — 5 Change in fair value of interest rate swap — (2 ) Payments for termination of interest rate swap — (46 ) Issuance of treasury stock for director fees 364 132 Stock-based compensation expense 1,407 799 Changes in operating assets and liabilities: Accounts receivable 3,972 (16,185 ) Inventories (13,779 ) (18,873 ) Other assets and liabilities (12 ) (55 ) Accounts payable (10,277 ) 10,835 Accounts payable - related parties (2 ) 2 Accrued expenses (2,702 ) 1,506 Accrued income taxes (7,923 ) 9,253 Net cash provided by operating activities 5,577 19,055 Investing activities Purchases of property, plant and equipment (5,074 ) (1,497 ) Proceeds from disposal of property, plant and equipment 99 1,400 Acquisitions, net of cash acquired — (32,564 ) Net cash (used in) provided by investing activities (4,975 ) (32,661 ) Financing activities Borrowings from long-term debt 443,363 215,528 Proceeds from note payable 967 — Proceeds from the issuance of common stock related to Rights Offering — 10,010 Proceeds from the exercise of stock options 175 109 Payments on long-term debt (442,206 ) (206,505 ) Payments on note payable (580 ) — Principal payments on finance lease obligations (266 ) (92 ) Payments on earn-out liabilities (1,292 ) (3,494 ) Repurchase of common stock (1,343 ) — Payments for deferred financing costs — (165 ) Net cash used in financing activities (1,182 ) 15,391 (Decrease) increase in cash and cash equivalents (580 ) 1,785 Cash and cash equivalents, beginning of period 2,021 236 Cash and cash equivalents, end of period $ 1,441 $ 2,021 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Consolidated Net income $ 127 $ 8,067 $ 22,066 $ 20,245 Adjustments: Interest expense 1,104 418 2,742 1,486 Change in fair value of interest rate swap — — — (2 ) Income taxes (7,784 ) 2,018 (4,211 ) 5,253 Depreciation 2,343 2,088 8,722 7,547 Amortization 1,407 754 3,995 2,794 EBITDA (2,803 ) 13,345 33,314 37,323 Acquisition costs and other 363 800 1,200 1,001 Proxy contest costs and recoveries1 — — — 168 Shelf registration costs 12 — 12 — Loss on extinguishment of debt — — — 223 Earn-out adjustments — 442 (7 ) 1,872 Loss on investment in equity securities and other investments — — — 363 Asset impairments — — — 233 Gain on lease modification — — (2 ) — Stock-based compensation 308 103 1,016 799 Non-cash lease expense 92 108 414 481 Retention expense — 6 — 500 Restructuring and severance costs 64 57 74 1,345 Adjusted EBITDA $ (1,964 ) $ 14,861 $ 36,021 $ 44,308 % sales (2.4 )% 15.5 % 8.7 % 13.2 % 1Proxy contest costs and recoveries for the year months ended December 31, 2021 are reimbursements of documented, out-of-pocket costs to Privet and UPG partially offset by insurance recoveries for costs related to the 2020 shareholder activism. Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended December 31, Year Ended December 31, ($ in thousands) 2022 2021 2022 2021 Tubular Products Net income (loss) $ (4,392 ) $ 11,335 $ 27,644 $ 31,893 Adjustments: Interest expense — — 1 — Depreciation expense 1,375 1,293 4,814 5,485 Amortization expense 1,217 680 3,092 2,721 EBITDA (1,800 ) 13,308 35,551 40,099 Acquisition costs and other 96 — 96 — Earn-out adjustments — 442 (7 ) 1,872 Stock-based compensation 36 54 100 129 Retention expense — 6 — 500 Restructuring and severance costs 20 — 20 363 Tubular Products Adjusted EBITDA $ (1,648 ) $ 13,810 $ 35,760 $ 42,963 % segment sales (2.8 )% 18.7 % 11.7 % 16.1 % Specialty Chemicals Net income $ 852 $ 1,588 $ 6,935 $ 3,589 Adjustments: Interest expense 9 9 36 11 Depreciation expense 949 768 3,846 1,932 Amortization expense 191 73 903 73 EBITDA 2,001 2,438 11,720 5,605 Acquisition costs and other — 61 — 61 Asset impairments — — — 233 Stock-based compensation 12 (8 ) 41 165 Non-cash lease expense — — 2 — Restructuring and severance costs 8 57 8 484 Specialty Chemicals Adjusted EBITDA $ 2,021 $ 2,548 $ 11,771 $ 6,548 % segment sales 8.6 % 11.7 % 10.9 % 9.7 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230331005095/en/
Company Contact Aaron Tam Chief Financial Officer 1-630-884-9181 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 ACNT@gatewayir.com