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 Second Quarter 2023 Results By: Ascent Industries Co. via Business Wire August 08, 2023 at 16:05 PM EDT 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 second quarter ended June 30, 2023. Second Quarter 2023 Summary – Continuing Operations1 (in millions, expect per share and margin) Q2 2023 Q2 2022 Change Net Sales $60.7 $84.6 -28.3% Gross Profit $3.2 $20.2 -84.0% Gross Profit Margin 5.3% 23.9% -1860bps Net Income (Loss) $(3.7) $10.8 -134.8% Diluted Earnings (Loss) per Share $(0.37) $1.04 -135.6% Adjusted EBITDA $(1.5) $14.8 -110.0% Adjusted EBITDA Margin (2.4)% 17.4% -1980bps 1On June 2, 2023, the Board of Directors of Ascent made the decision to permanently cease operations at the Company’s welded pipe and tube facility located in Munhall, PA (“Munhall”) effective on or around August 31, 2023. As a result, financial results from Munhall have been categorized into discontinued operations. Management Commentary “Challenges related to the strategic changes we’ve implemented over the last several quarters, along with difficult end market conditions impacting demand, continued to persist in the second quarter,” said Chris Hutter, president and CEO of Ascent. “Despite this difficult environment, our organization took action by finalizing the permanent closure of our Munhall operations, as well as managing working capital effectively to generate cash and pay down debt. We believe our tubular products segment is on a path to improve through the remainder of the year, while we continue to work on expanding our sales pipeline within the specialty chemicals segment to drive long-term, profitable growth. “We remain highly committed to executing our strategic goals and believe the operational changes we’ve made will significantly benefit the Company’s value proposition over the long-term. Although the work is never done, we have made tangible progress to right-size our operational footprint, create a more efficient organization, and implement a refreshed culture based on accountability and performance-based results. We believe the largest hurdles are now behind us and expect to begin seeing improvements through the remainder of the year.” Second Quarter 2023 Financial Results Net sales from continuing operations were $60.7 million compared to $84.6 million in the prior year period. The decrease is primarily due to lower overall sales volumes and lower average selling prices within both the tubular products and specialty chemicals segments. Gross profit from continuing operations was $3.2 million, or 5.3% of net sales, compared to $20.2 million, or 23.9% of net sales, in the second quarter of 2022. The decrease is primarily attributable to the decline in net sales in addition to increased raw material and labor costs. Net loss from continuing operations was $3.7 million, or $(0.37) diluted loss per share, compared to net income from continuing operations of $10.8 million, or $1.04 diluted earnings per share, in the second quarter of 2022. The decrease is primarily attributable to the aforementioned decline in gross profit and higher interest expense. Adjusted EBITDA was $(1.5) million compared to $14.8 million in the second quarter of 2022. Adjusted EBITDA margin was (2.4)% compared to 17.4% in the prior year period. The decrease is primarily attributable to the Company’s aforementioned decline in net sales. Segment Results Ascent Tubular – net sales from continuing operations in the second quarter of 2023 were $39.3 million compared to $55.6 million in the second quarter of 2022. Operating loss from continuing operations in the second quarter was $0.1 million compared to operating income from continuing operations of $13.0 million in the prior year period. Adjusted EBITDA from continuing operations in the second quarter was $0.8 million compared to $14.2 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 2.1% compared to 25.6% in the second quarter of 2022. Ascent Chemicals – net sales in the second quarter of 2023 were $21.4 million compared to $29.0 million in the second quarter of 2022. Operating loss in the second quarter was $0.8 million compared to operating income of $2.6 million in the prior year period. Adjusted EBITDA in the second quarter was $0.3 million compared to $3.6 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 1.5% compared to 12.6% in the second quarter of 2022. Liquidity As of June 30, 2023, total debt was $54.5 million under the Company’s revolving credit facility, compared to $71.5 million in debt at December 31, 2022. As of June 30, 2023, the Company had $45.4 million of remaining available borrowing capacity under its revolving credit facility, compared to $37.6 million at December 31, 2022. During the second quarter of 2023, the Company repurchased 18,843 shares at an average cost of $9.34 per share for approximately $0.2 million, bringing total year-to-date repurchases for 2023 to 51,156 shares. The Company currently has 628,823 shares remaining under its share repurchase authorization. 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, 2023. Ascent management will host the conference call, followed by a question and answer period. Date: Tuesday, August 8, 2023 Time: 5:00 p.m. Eastern time Live Call Registration Link: Here Webcast Registration Link: Here Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. 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 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, 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, except par value and share data) (Unaudited) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 717 $ 1,440 Accounts receivable, net of allowance for credit losses of $734 and $762, respectively 35,053 37,062 Inventories 74,300 85,572 Prepaid expenses and other current assets 9,186 7,802 Assets held for sale 17,398 380 Current assets of discontinued operations 3,441 38,120 Total current assets 140,095 170,376 Property, plant and equipment, net 34,364 37,045 Right-of-use assets, operating leases, net 28,509 29,198 Goodwill 11,389 11,389 Intangible assets, net 9,248 10,001 Deferred income taxes 6,869 1,353 Deferred charges, net 153 203 Other non-current assets, net 1,782 1,861 Long-term assets of discontinued operations 13 7,617 Total assets $ 232,422 $ 269,043 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,242 $ 19,623 Accrued expenses and other current liabilities 5,504 6,039 Current portion of note payable 900 387 Current portion of long-term debt 2,464 2,464 Current portion of operating lease liabilities 1,093 1,029 Current portion of finance lease liabilities 283 280 Current liabilities of discontinued operations 1,839 3,656 Total current liabilities 34,325 33,478 Long-term debt 52,056 69,085 Long-term portion of operating lease liabilities 30,338 30,911 Long-term portion of finance lease liabilities 1,313 1,242 Other long-term liabilities 64 68 Total non-current liabilities 83,771 101,306 Total liabilities $ 118,096 $ 134,784 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,158,219 shares issued and outstanding, respectively $ 11,085 $ 11,085 Capital in excess of par value 46,951 47,021 Retained earnings 65,311 85,146 123,347 143,252 Less: cost of common stock in treasury - 926,884 and 924,504 shares, respectively (9,021 ) (8,993 ) Total shareholders' equity 114,326 134,259 Total liabilities and shareholders' equity $ 232,422 $ 269,043 Note: The condensed consolidated balance sheets at December 31, 2022 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, 2023 2022 2023 2022 Net sales Tubular Products $ 39,302 $ 55,580 $ 82,922 $ 111,454 Specialty Chemicals 21,363 29,020 45,112 56,741 All Other — — 50 114 60,665 84,600 128,084 168,309 Operating income (loss) from continuing operations Tubular Products (105 ) 12,992 1,560 27,120 Specialty Chemicals (806 ) 2,627 546 5,014 All Other (74 ) (235 ) (552 ) (317 ) Corporate Unallocated corporate expenses (2,750 ) (3,322 ) (6,455 ) (6,351 ) Acquisition costs and other (17 ) (157 ) (274 ) (688 ) Total Corporate (2,767 ) (3,479 ) (6,729 ) (7,039 ) Operating income (loss) (3,752 ) 11,905 (5,175 ) 24,778 Interest expense 1,047 407 2,154 810 Other, net (154 ) (23 ) (247 ) (58 ) Income (loss) from continuing operations before income taxes (4,645 ) 11,521 (7,082 ) 24,026 Income tax provision (benefit) (897 ) 699 (1,385 ) 3,197 Income (loss) from continuing operations (3,748 ) 10,822 (5,697 ) 20,829 Income (loss) from discontinued operations, net of tax (10,888 ) 235 (14,138 ) 488 Net income (loss) $ (14,636 ) $ 11,057 $ (19,835 ) $ 21,317 Net income (loss) per common share from continuing operations Basic $ (0.37 ) $ 1.06 $ (0.56 ) $ 2.04 Diluted $ (0.37 ) $ 1.04 $ (0.56 ) $ 2.01 Net income (loss) per common share from discontinued operations Basic $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Diluted $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Net income (loss) per common share Basic $ (1.44 ) $ 1.08 $ (1.95 ) $ 2.08 Diluted $ (1.44 ) $ 1.06 $ (1.95 ) $ 2.05 Average shares outstanding Basic 10,170 10,244 10,159 10,226 Diluted 10,170 10,431 10,159 10,377 Other data: Adjusted EBITDA1 $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 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) Six Months Ended June 30, 2023 2022 Operating activities Net income (loss) $ (19,835 ) $ 21,317 Net income (loss) from discontinued operations, net of tax (14,138 ) 488 Net income (loss) from continuing operations (5,697 ) 20,829 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation expense 3,243 3,201 Amortization expense 753 1,343 Amortization of debt issuance costs 50 49 Deferred income taxes (5,515 ) (642 ) Payments of earn-out liabilities in excess of acquisition date fair value — (372 ) (Reduction of) provision for losses on accounts receivable (28 ) 459 Provision for losses on inventories 1,190 863 Loss (gain) on disposal of property, plant and equipment 182 (5 ) Non-cash lease expense 137 214 Issuance of treasury stock for director fees — 364 Stock-based compensation expense 414 446 Changes in operating assets and liabilities: Accounts receivable 2,037 (10,173 ) Inventories 10,279 (27,738 ) Other assets and liabilities (295 ) (755 ) Accounts payable 2,095 14,476 Accrued expenses (587 ) (1,980 ) Accrued income taxes (743 ) 110 Net cash provided by operating activities - continuing operations 7,515 689 Net cash provided by operating activities - discontinued operations 10,557 2,200 Net cash provided by operating activities 18,072 2,889 Investing activities Purchases of property, plant and equipment (1,483 ) (1,981 ) Proceeds from disposal of property, plant and equipment — 5 Net cash used in investing activities - continuing operations (1,483 ) (1,976 ) Net cash used in investing activities - discontinued operations (142 ) (349 ) Net cash used in investing activities (1,625 ) (2,325 ) Financing activities Borrowings from long-term debt 139,137 237,938 Proceeds from note payable 900 967 Proceeds from the exercise of stock options — 161 Payments on long-term debt (156,166 ) (240,017 ) Payments on note payable (387 ) (96 ) Principal payments on finance lease obligations (151 ) (126 ) Payments on earn-out liabilities — (484 ) Repurchase of common stock (504 ) — Net cash used in financing activities - continuing operations (17,171 ) (1,657 ) Net cash used in financing activities - discontinued operations — (683 ) Net cash used in financing activities (17,171 ) (2,340 ) Decrease in cash and cash equivalents (724 ) (1,776 ) Less: Cash and cash equivalents of discontinued operations 1 4 Cash and cash equivalents, beginning of period 1,440 2,017 Cash and cash equivalents, end of period $ 717 $ 245 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2023 2022 2023 2022 Consolidated Net income (loss) from continuing operations $ (3,748 ) $ 10,822 $ (5,697 ) $ 20,687 Adjustments: Interest expense 1,047 407 2,154 810 Income taxes (897 ) 699 (1,385 ) 3,339 Depreciation 1,632 1,621 3,243 3,201 Amortization 376 672 753 1,343 EBITDA (1,590 ) 14,221 (932 ) 29,380 Acquisition costs and other 20 157 280 688 Gain on lease modification — (2 ) — (2 ) Stock-based compensation 24 258 246 390 Non-cash lease expense 68 107 137 214 Restructuring and severance costs 7 10 103 10 Adjusted EBITDA $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 % sales (2.4 )% 17.4 % (0.1 )% 18.2 % Tubular Products Net income (loss) from continuing operations $ (105 ) $ 12,993 $ 1,560 $ 27,120 Adjustments: Depreciation expense 653 688 1,290 1,363 Amortization expense 218 576 436 1,152 EBITDA 766 14,257 3,286 29,635 Acquisition costs and other 4 — 4 — Stock-based compensation 10 (16 ) (9 ) 19 Non-cash lease expense 36 (1 ) 72 (1 ) Restructuring and severance costs — — 97 — Tubular Products Adjusted EBITDA $ 816 $ 14,240 $ 3,450 $ 29,653 % segment sales 2.1 % 25.6 % 4.2 % 26.6 % Specialty Chemicals Net income (loss) $ (818 ) $ 2,617 $ 523 $ 4,995 Adjustments: Interest expense 18 9 31 18 Depreciation expense 956 915 1,908 1,800 Amortization expense 158 96 317 192 EBITDA 314 3,637 2,779 7,005 Acquisition costs and other — — 2 — Stock-based compensation (23 ) 11 (16 ) 18 Non-cash lease expense 22 — 46 — Specialty Chemicals Adjusted EBITDA $ 313 $ 3,648 $ 2,811 $ 7,023 % segment sales 1.5 % 12.6 % 6.2 % 12.4 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230808299203/en/Contacts Company Contact Bill Steckel 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 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 Second Quarter 2023 Results By: Ascent Industries Co. via Business Wire August 08, 2023 at 16:05 PM EDT 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 second quarter ended June 30, 2023. Second Quarter 2023 Summary – Continuing Operations1 (in millions, expect per share and margin) Q2 2023 Q2 2022 Change Net Sales $60.7 $84.6 -28.3% Gross Profit $3.2 $20.2 -84.0% Gross Profit Margin 5.3% 23.9% -1860bps Net Income (Loss) $(3.7) $10.8 -134.8% Diluted Earnings (Loss) per Share $(0.37) $1.04 -135.6% Adjusted EBITDA $(1.5) $14.8 -110.0% Adjusted EBITDA Margin (2.4)% 17.4% -1980bps 1On June 2, 2023, the Board of Directors of Ascent made the decision to permanently cease operations at the Company’s welded pipe and tube facility located in Munhall, PA (“Munhall”) effective on or around August 31, 2023. As a result, financial results from Munhall have been categorized into discontinued operations. Management Commentary “Challenges related to the strategic changes we’ve implemented over the last several quarters, along with difficult end market conditions impacting demand, continued to persist in the second quarter,” said Chris Hutter, president and CEO of Ascent. “Despite this difficult environment, our organization took action by finalizing the permanent closure of our Munhall operations, as well as managing working capital effectively to generate cash and pay down debt. We believe our tubular products segment is on a path to improve through the remainder of the year, while we continue to work on expanding our sales pipeline within the specialty chemicals segment to drive long-term, profitable growth. “We remain highly committed to executing our strategic goals and believe the operational changes we’ve made will significantly benefit the Company’s value proposition over the long-term. Although the work is never done, we have made tangible progress to right-size our operational footprint, create a more efficient organization, and implement a refreshed culture based on accountability and performance-based results. We believe the largest hurdles are now behind us and expect to begin seeing improvements through the remainder of the year.” Second Quarter 2023 Financial Results Net sales from continuing operations were $60.7 million compared to $84.6 million in the prior year period. The decrease is primarily due to lower overall sales volumes and lower average selling prices within both the tubular products and specialty chemicals segments. Gross profit from continuing operations was $3.2 million, or 5.3% of net sales, compared to $20.2 million, or 23.9% of net sales, in the second quarter of 2022. The decrease is primarily attributable to the decline in net sales in addition to increased raw material and labor costs. Net loss from continuing operations was $3.7 million, or $(0.37) diluted loss per share, compared to net income from continuing operations of $10.8 million, or $1.04 diluted earnings per share, in the second quarter of 2022. The decrease is primarily attributable to the aforementioned decline in gross profit and higher interest expense. Adjusted EBITDA was $(1.5) million compared to $14.8 million in the second quarter of 2022. Adjusted EBITDA margin was (2.4)% compared to 17.4% in the prior year period. The decrease is primarily attributable to the Company’s aforementioned decline in net sales. Segment Results Ascent Tubular – net sales from continuing operations in the second quarter of 2023 were $39.3 million compared to $55.6 million in the second quarter of 2022. Operating loss from continuing operations in the second quarter was $0.1 million compared to operating income from continuing operations of $13.0 million in the prior year period. Adjusted EBITDA from continuing operations in the second quarter was $0.8 million compared to $14.2 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 2.1% compared to 25.6% in the second quarter of 2022. Ascent Chemicals – net sales in the second quarter of 2023 were $21.4 million compared to $29.0 million in the second quarter of 2022. Operating loss in the second quarter was $0.8 million compared to operating income of $2.6 million in the prior year period. Adjusted EBITDA in the second quarter was $0.3 million compared to $3.6 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 1.5% compared to 12.6% in the second quarter of 2022. Liquidity As of June 30, 2023, total debt was $54.5 million under the Company’s revolving credit facility, compared to $71.5 million in debt at December 31, 2022. As of June 30, 2023, the Company had $45.4 million of remaining available borrowing capacity under its revolving credit facility, compared to $37.6 million at December 31, 2022. During the second quarter of 2023, the Company repurchased 18,843 shares at an average cost of $9.34 per share for approximately $0.2 million, bringing total year-to-date repurchases for 2023 to 51,156 shares. The Company currently has 628,823 shares remaining under its share repurchase authorization. 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, 2023. Ascent management will host the conference call, followed by a question and answer period. Date: Tuesday, August 8, 2023 Time: 5:00 p.m. Eastern time Live Call Registration Link: Here Webcast Registration Link: Here Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. 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 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, 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, except par value and share data) (Unaudited) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 717 $ 1,440 Accounts receivable, net of allowance for credit losses of $734 and $762, respectively 35,053 37,062 Inventories 74,300 85,572 Prepaid expenses and other current assets 9,186 7,802 Assets held for sale 17,398 380 Current assets of discontinued operations 3,441 38,120 Total current assets 140,095 170,376 Property, plant and equipment, net 34,364 37,045 Right-of-use assets, operating leases, net 28,509 29,198 Goodwill 11,389 11,389 Intangible assets, net 9,248 10,001 Deferred income taxes 6,869 1,353 Deferred charges, net 153 203 Other non-current assets, net 1,782 1,861 Long-term assets of discontinued operations 13 7,617 Total assets $ 232,422 $ 269,043 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,242 $ 19,623 Accrued expenses and other current liabilities 5,504 6,039 Current portion of note payable 900 387 Current portion of long-term debt 2,464 2,464 Current portion of operating lease liabilities 1,093 1,029 Current portion of finance lease liabilities 283 280 Current liabilities of discontinued operations 1,839 3,656 Total current liabilities 34,325 33,478 Long-term debt 52,056 69,085 Long-term portion of operating lease liabilities 30,338 30,911 Long-term portion of finance lease liabilities 1,313 1,242 Other long-term liabilities 64 68 Total non-current liabilities 83,771 101,306 Total liabilities $ 118,096 $ 134,784 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,158,219 shares issued and outstanding, respectively $ 11,085 $ 11,085 Capital in excess of par value 46,951 47,021 Retained earnings 65,311 85,146 123,347 143,252 Less: cost of common stock in treasury - 926,884 and 924,504 shares, respectively (9,021 ) (8,993 ) Total shareholders' equity 114,326 134,259 Total liabilities and shareholders' equity $ 232,422 $ 269,043 Note: The condensed consolidated balance sheets at December 31, 2022 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, 2023 2022 2023 2022 Net sales Tubular Products $ 39,302 $ 55,580 $ 82,922 $ 111,454 Specialty Chemicals 21,363 29,020 45,112 56,741 All Other — — 50 114 60,665 84,600 128,084 168,309 Operating income (loss) from continuing operations Tubular Products (105 ) 12,992 1,560 27,120 Specialty Chemicals (806 ) 2,627 546 5,014 All Other (74 ) (235 ) (552 ) (317 ) Corporate Unallocated corporate expenses (2,750 ) (3,322 ) (6,455 ) (6,351 ) Acquisition costs and other (17 ) (157 ) (274 ) (688 ) Total Corporate (2,767 ) (3,479 ) (6,729 ) (7,039 ) Operating income (loss) (3,752 ) 11,905 (5,175 ) 24,778 Interest expense 1,047 407 2,154 810 Other, net (154 ) (23 ) (247 ) (58 ) Income (loss) from continuing operations before income taxes (4,645 ) 11,521 (7,082 ) 24,026 Income tax provision (benefit) (897 ) 699 (1,385 ) 3,197 Income (loss) from continuing operations (3,748 ) 10,822 (5,697 ) 20,829 Income (loss) from discontinued operations, net of tax (10,888 ) 235 (14,138 ) 488 Net income (loss) $ (14,636 ) $ 11,057 $ (19,835 ) $ 21,317 Net income (loss) per common share from continuing operations Basic $ (0.37 ) $ 1.06 $ (0.56 ) $ 2.04 Diluted $ (0.37 ) $ 1.04 $ (0.56 ) $ 2.01 Net income (loss) per common share from discontinued operations Basic $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Diluted $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Net income (loss) per common share Basic $ (1.44 ) $ 1.08 $ (1.95 ) $ 2.08 Diluted $ (1.44 ) $ 1.06 $ (1.95 ) $ 2.05 Average shares outstanding Basic 10,170 10,244 10,159 10,226 Diluted 10,170 10,431 10,159 10,377 Other data: Adjusted EBITDA1 $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 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) Six Months Ended June 30, 2023 2022 Operating activities Net income (loss) $ (19,835 ) $ 21,317 Net income (loss) from discontinued operations, net of tax (14,138 ) 488 Net income (loss) from continuing operations (5,697 ) 20,829 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation expense 3,243 3,201 Amortization expense 753 1,343 Amortization of debt issuance costs 50 49 Deferred income taxes (5,515 ) (642 ) Payments of earn-out liabilities in excess of acquisition date fair value — (372 ) (Reduction of) provision for losses on accounts receivable (28 ) 459 Provision for losses on inventories 1,190 863 Loss (gain) on disposal of property, plant and equipment 182 (5 ) Non-cash lease expense 137 214 Issuance of treasury stock for director fees — 364 Stock-based compensation expense 414 446 Changes in operating assets and liabilities: Accounts receivable 2,037 (10,173 ) Inventories 10,279 (27,738 ) Other assets and liabilities (295 ) (755 ) Accounts payable 2,095 14,476 Accrued expenses (587 ) (1,980 ) Accrued income taxes (743 ) 110 Net cash provided by operating activities - continuing operations 7,515 689 Net cash provided by operating activities - discontinued operations 10,557 2,200 Net cash provided by operating activities 18,072 2,889 Investing activities Purchases of property, plant and equipment (1,483 ) (1,981 ) Proceeds from disposal of property, plant and equipment — 5 Net cash used in investing activities - continuing operations (1,483 ) (1,976 ) Net cash used in investing activities - discontinued operations (142 ) (349 ) Net cash used in investing activities (1,625 ) (2,325 ) Financing activities Borrowings from long-term debt 139,137 237,938 Proceeds from note payable 900 967 Proceeds from the exercise of stock options — 161 Payments on long-term debt (156,166 ) (240,017 ) Payments on note payable (387 ) (96 ) Principal payments on finance lease obligations (151 ) (126 ) Payments on earn-out liabilities — (484 ) Repurchase of common stock (504 ) — Net cash used in financing activities - continuing operations (17,171 ) (1,657 ) Net cash used in financing activities - discontinued operations — (683 ) Net cash used in financing activities (17,171 ) (2,340 ) Decrease in cash and cash equivalents (724 ) (1,776 ) Less: Cash and cash equivalents of discontinued operations 1 4 Cash and cash equivalents, beginning of period 1,440 2,017 Cash and cash equivalents, end of period $ 717 $ 245 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2023 2022 2023 2022 Consolidated Net income (loss) from continuing operations $ (3,748 ) $ 10,822 $ (5,697 ) $ 20,687 Adjustments: Interest expense 1,047 407 2,154 810 Income taxes (897 ) 699 (1,385 ) 3,339 Depreciation 1,632 1,621 3,243 3,201 Amortization 376 672 753 1,343 EBITDA (1,590 ) 14,221 (932 ) 29,380 Acquisition costs and other 20 157 280 688 Gain on lease modification — (2 ) — (2 ) Stock-based compensation 24 258 246 390 Non-cash lease expense 68 107 137 214 Restructuring and severance costs 7 10 103 10 Adjusted EBITDA $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 % sales (2.4 )% 17.4 % (0.1 )% 18.2 % Tubular Products Net income (loss) from continuing operations $ (105 ) $ 12,993 $ 1,560 $ 27,120 Adjustments: Depreciation expense 653 688 1,290 1,363 Amortization expense 218 576 436 1,152 EBITDA 766 14,257 3,286 29,635 Acquisition costs and other 4 — 4 — Stock-based compensation 10 (16 ) (9 ) 19 Non-cash lease expense 36 (1 ) 72 (1 ) Restructuring and severance costs — — 97 — Tubular Products Adjusted EBITDA $ 816 $ 14,240 $ 3,450 $ 29,653 % segment sales 2.1 % 25.6 % 4.2 % 26.6 % Specialty Chemicals Net income (loss) $ (818 ) $ 2,617 $ 523 $ 4,995 Adjustments: Interest expense 18 9 31 18 Depreciation expense 956 915 1,908 1,800 Amortization expense 158 96 317 192 EBITDA 314 3,637 2,779 7,005 Acquisition costs and other — — 2 — Stock-based compensation (23 ) 11 (16 ) 18 Non-cash lease expense 22 — 46 — Specialty Chemicals Adjusted EBITDA $ 313 $ 3,648 $ 2,811 $ 7,023 % segment sales 1.5 % 12.6 % 6.2 % 12.4 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230808299203/en/Contacts Company Contact Bill Steckel 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
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 second quarter ended June 30, 2023. Second Quarter 2023 Summary – Continuing Operations1 (in millions, expect per share and margin) Q2 2023 Q2 2022 Change Net Sales $60.7 $84.6 -28.3% Gross Profit $3.2 $20.2 -84.0% Gross Profit Margin 5.3% 23.9% -1860bps Net Income (Loss) $(3.7) $10.8 -134.8% Diluted Earnings (Loss) per Share $(0.37) $1.04 -135.6% Adjusted EBITDA $(1.5) $14.8 -110.0% Adjusted EBITDA Margin (2.4)% 17.4% -1980bps 1On June 2, 2023, the Board of Directors of Ascent made the decision to permanently cease operations at the Company’s welded pipe and tube facility located in Munhall, PA (“Munhall”) effective on or around August 31, 2023. As a result, financial results from Munhall have been categorized into discontinued operations. Management Commentary “Challenges related to the strategic changes we’ve implemented over the last several quarters, along with difficult end market conditions impacting demand, continued to persist in the second quarter,” said Chris Hutter, president and CEO of Ascent. “Despite this difficult environment, our organization took action by finalizing the permanent closure of our Munhall operations, as well as managing working capital effectively to generate cash and pay down debt. We believe our tubular products segment is on a path to improve through the remainder of the year, while we continue to work on expanding our sales pipeline within the specialty chemicals segment to drive long-term, profitable growth. “We remain highly committed to executing our strategic goals and believe the operational changes we’ve made will significantly benefit the Company’s value proposition over the long-term. Although the work is never done, we have made tangible progress to right-size our operational footprint, create a more efficient organization, and implement a refreshed culture based on accountability and performance-based results. We believe the largest hurdles are now behind us and expect to begin seeing improvements through the remainder of the year.” Second Quarter 2023 Financial Results Net sales from continuing operations were $60.7 million compared to $84.6 million in the prior year period. The decrease is primarily due to lower overall sales volumes and lower average selling prices within both the tubular products and specialty chemicals segments. Gross profit from continuing operations was $3.2 million, or 5.3% of net sales, compared to $20.2 million, or 23.9% of net sales, in the second quarter of 2022. The decrease is primarily attributable to the decline in net sales in addition to increased raw material and labor costs. Net loss from continuing operations was $3.7 million, or $(0.37) diluted loss per share, compared to net income from continuing operations of $10.8 million, or $1.04 diluted earnings per share, in the second quarter of 2022. The decrease is primarily attributable to the aforementioned decline in gross profit and higher interest expense. Adjusted EBITDA was $(1.5) million compared to $14.8 million in the second quarter of 2022. Adjusted EBITDA margin was (2.4)% compared to 17.4% in the prior year period. The decrease is primarily attributable to the Company’s aforementioned decline in net sales. Segment Results Ascent Tubular – net sales from continuing operations in the second quarter of 2023 were $39.3 million compared to $55.6 million in the second quarter of 2022. Operating loss from continuing operations in the second quarter was $0.1 million compared to operating income from continuing operations of $13.0 million in the prior year period. Adjusted EBITDA from continuing operations in the second quarter was $0.8 million compared to $14.2 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 2.1% compared to 25.6% in the second quarter of 2022. Ascent Chemicals – net sales in the second quarter of 2023 were $21.4 million compared to $29.0 million in the second quarter of 2022. Operating loss in the second quarter was $0.8 million compared to operating income of $2.6 million in the prior year period. Adjusted EBITDA in the second quarter was $0.3 million compared to $3.6 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was 1.5% compared to 12.6% in the second quarter of 2022. Liquidity As of June 30, 2023, total debt was $54.5 million under the Company’s revolving credit facility, compared to $71.5 million in debt at December 31, 2022. As of June 30, 2023, the Company had $45.4 million of remaining available borrowing capacity under its revolving credit facility, compared to $37.6 million at December 31, 2022. During the second quarter of 2023, the Company repurchased 18,843 shares at an average cost of $9.34 per share for approximately $0.2 million, bringing total year-to-date repurchases for 2023 to 51,156 shares. The Company currently has 628,823 shares remaining under its share repurchase authorization. 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, 2023. Ascent management will host the conference call, followed by a question and answer period. Date: Tuesday, August 8, 2023 Time: 5:00 p.m. Eastern time Live Call Registration Link: Here Webcast Registration Link: Here Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. 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 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, 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, except par value and share data) (Unaudited) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 717 $ 1,440 Accounts receivable, net of allowance for credit losses of $734 and $762, respectively 35,053 37,062 Inventories 74,300 85,572 Prepaid expenses and other current assets 9,186 7,802 Assets held for sale 17,398 380 Current assets of discontinued operations 3,441 38,120 Total current assets 140,095 170,376 Property, plant and equipment, net 34,364 37,045 Right-of-use assets, operating leases, net 28,509 29,198 Goodwill 11,389 11,389 Intangible assets, net 9,248 10,001 Deferred income taxes 6,869 1,353 Deferred charges, net 153 203 Other non-current assets, net 1,782 1,861 Long-term assets of discontinued operations 13 7,617 Total assets $ 232,422 $ 269,043 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 22,242 $ 19,623 Accrued expenses and other current liabilities 5,504 6,039 Current portion of note payable 900 387 Current portion of long-term debt 2,464 2,464 Current portion of operating lease liabilities 1,093 1,029 Current portion of finance lease liabilities 283 280 Current liabilities of discontinued operations 1,839 3,656 Total current liabilities 34,325 33,478 Long-term debt 52,056 69,085 Long-term portion of operating lease liabilities 30,338 30,911 Long-term portion of finance lease liabilities 1,313 1,242 Other long-term liabilities 64 68 Total non-current liabilities 83,771 101,306 Total liabilities $ 118,096 $ 134,784 Commitments and contingencies Shareholders' equity: Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,158,219 shares issued and outstanding, respectively $ 11,085 $ 11,085 Capital in excess of par value 46,951 47,021 Retained earnings 65,311 85,146 123,347 143,252 Less: cost of common stock in treasury - 926,884 and 924,504 shares, respectively (9,021 ) (8,993 ) Total shareholders' equity 114,326 134,259 Total liabilities and shareholders' equity $ 232,422 $ 269,043 Note: The condensed consolidated balance sheets at December 31, 2022 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, 2023 2022 2023 2022 Net sales Tubular Products $ 39,302 $ 55,580 $ 82,922 $ 111,454 Specialty Chemicals 21,363 29,020 45,112 56,741 All Other — — 50 114 60,665 84,600 128,084 168,309 Operating income (loss) from continuing operations Tubular Products (105 ) 12,992 1,560 27,120 Specialty Chemicals (806 ) 2,627 546 5,014 All Other (74 ) (235 ) (552 ) (317 ) Corporate Unallocated corporate expenses (2,750 ) (3,322 ) (6,455 ) (6,351 ) Acquisition costs and other (17 ) (157 ) (274 ) (688 ) Total Corporate (2,767 ) (3,479 ) (6,729 ) (7,039 ) Operating income (loss) (3,752 ) 11,905 (5,175 ) 24,778 Interest expense 1,047 407 2,154 810 Other, net (154 ) (23 ) (247 ) (58 ) Income (loss) from continuing operations before income taxes (4,645 ) 11,521 (7,082 ) 24,026 Income tax provision (benefit) (897 ) 699 (1,385 ) 3,197 Income (loss) from continuing operations (3,748 ) 10,822 (5,697 ) 20,829 Income (loss) from discontinued operations, net of tax (10,888 ) 235 (14,138 ) 488 Net income (loss) $ (14,636 ) $ 11,057 $ (19,835 ) $ 21,317 Net income (loss) per common share from continuing operations Basic $ (0.37 ) $ 1.06 $ (0.56 ) $ 2.04 Diluted $ (0.37 ) $ 1.04 $ (0.56 ) $ 2.01 Net income (loss) per common share from discontinued operations Basic $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Diluted $ (1.07 ) $ 0.02 $ (1.39 ) $ 0.05 Net income (loss) per common share Basic $ (1.44 ) $ 1.08 $ (1.95 ) $ 2.08 Diluted $ (1.44 ) $ 1.06 $ (1.95 ) $ 2.05 Average shares outstanding Basic 10,170 10,244 10,159 10,226 Diluted 10,170 10,431 10,159 10,377 Other data: Adjusted EBITDA1 $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 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) Six Months Ended June 30, 2023 2022 Operating activities Net income (loss) $ (19,835 ) $ 21,317 Net income (loss) from discontinued operations, net of tax (14,138 ) 488 Net income (loss) from continuing operations (5,697 ) 20,829 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation expense 3,243 3,201 Amortization expense 753 1,343 Amortization of debt issuance costs 50 49 Deferred income taxes (5,515 ) (642 ) Payments of earn-out liabilities in excess of acquisition date fair value — (372 ) (Reduction of) provision for losses on accounts receivable (28 ) 459 Provision for losses on inventories 1,190 863 Loss (gain) on disposal of property, plant and equipment 182 (5 ) Non-cash lease expense 137 214 Issuance of treasury stock for director fees — 364 Stock-based compensation expense 414 446 Changes in operating assets and liabilities: Accounts receivable 2,037 (10,173 ) Inventories 10,279 (27,738 ) Other assets and liabilities (295 ) (755 ) Accounts payable 2,095 14,476 Accrued expenses (587 ) (1,980 ) Accrued income taxes (743 ) 110 Net cash provided by operating activities - continuing operations 7,515 689 Net cash provided by operating activities - discontinued operations 10,557 2,200 Net cash provided by operating activities 18,072 2,889 Investing activities Purchases of property, plant and equipment (1,483 ) (1,981 ) Proceeds from disposal of property, plant and equipment — 5 Net cash used in investing activities - continuing operations (1,483 ) (1,976 ) Net cash used in investing activities - discontinued operations (142 ) (349 ) Net cash used in investing activities (1,625 ) (2,325 ) Financing activities Borrowings from long-term debt 139,137 237,938 Proceeds from note payable 900 967 Proceeds from the exercise of stock options — 161 Payments on long-term debt (156,166 ) (240,017 ) Payments on note payable (387 ) (96 ) Principal payments on finance lease obligations (151 ) (126 ) Payments on earn-out liabilities — (484 ) Repurchase of common stock (504 ) — Net cash used in financing activities - continuing operations (17,171 ) (1,657 ) Net cash used in financing activities - discontinued operations — (683 ) Net cash used in financing activities (17,171 ) (2,340 ) Decrease in cash and cash equivalents (724 ) (1,776 ) Less: Cash and cash equivalents of discontinued operations 1 4 Cash and cash equivalents, beginning of period 1,440 2,017 Cash and cash equivalents, end of period $ 717 $ 245 Ascent Industries Co. Non-GAAP Financial Measures Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2023 2022 2023 2022 Consolidated Net income (loss) from continuing operations $ (3,748 ) $ 10,822 $ (5,697 ) $ 20,687 Adjustments: Interest expense 1,047 407 2,154 810 Income taxes (897 ) 699 (1,385 ) 3,339 Depreciation 1,632 1,621 3,243 3,201 Amortization 376 672 753 1,343 EBITDA (1,590 ) 14,221 (932 ) 29,380 Acquisition costs and other 20 157 280 688 Gain on lease modification — (2 ) — (2 ) Stock-based compensation 24 258 246 390 Non-cash lease expense 68 107 137 214 Restructuring and severance costs 7 10 103 10 Adjusted EBITDA $ (1,471 ) $ 14,751 $ (166 ) $ 30,680 % sales (2.4 )% 17.4 % (0.1 )% 18.2 % Tubular Products Net income (loss) from continuing operations $ (105 ) $ 12,993 $ 1,560 $ 27,120 Adjustments: Depreciation expense 653 688 1,290 1,363 Amortization expense 218 576 436 1,152 EBITDA 766 14,257 3,286 29,635 Acquisition costs and other 4 — 4 — Stock-based compensation 10 (16 ) (9 ) 19 Non-cash lease expense 36 (1 ) 72 (1 ) Restructuring and severance costs — — 97 — Tubular Products Adjusted EBITDA $ 816 $ 14,240 $ 3,450 $ 29,653 % segment sales 2.1 % 25.6 % 4.2 % 26.6 % Specialty Chemicals Net income (loss) $ (818 ) $ 2,617 $ 523 $ 4,995 Adjustments: Interest expense 18 9 31 18 Depreciation expense 956 915 1,908 1,800 Amortization expense 158 96 317 192 EBITDA 314 3,637 2,779 7,005 Acquisition costs and other — — 2 — Stock-based compensation (23 ) 11 (16 ) 18 Non-cash lease expense 22 — 46 — Specialty Chemicals Adjusted EBITDA $ 313 $ 3,648 $ 2,811 $ 7,023 % segment sales 1.5 % 12.6 % 6.2 % 12.4 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230808299203/en/
Company Contact Bill Steckel 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