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Ascent Industries Reports First Quarter 2024 Results
First Quarter 2024 Summary(1)
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------------------------------------------ -------------------- -------------------- --------------------
(in millions, except per share and margin) Q1 2024 Q1 2023 Change
------------------------------------------ -------------------- -------------------- --------------------
Net Sales $44.1 $54.9 (19.6)%
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Gross Profit $2.5 $1.5 72.4%
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Gross Profit Margin 5.7% 2.7% 300bps
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Net (Loss) $(4.7) $(5.8) 18.6%
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Diluted (Loss) per Share $(0.47) $(0.57) 17.5%
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Adjusted EBITDA $(3.1) $(3.7) 16.6%
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Adjusted EBITDA Margin (7.1)% (6.8)% (30)bps
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____________________________
Management Commentary
"The first quarter of 2024 marked a period of structural cost reduction and stabilization efforts across the enterprise," said Ascent CEO Bryan Kitchen. "Without question, our initial efforts to optimize both cash and costs have helped drive year-over-year improvements across our consolidated gross margin and bottom line, while operating within the confines of our own free cash flow. Aggressive self-help has been at the core of our ability to overcome ongoing market headwinds that have resulted in a year-over-year decline in total net sales.
"As promised, in just a short period of time we have made progress in laying the groundwork for driving profitable growth through the optimization of our product mix while recapitalizing our SG&A across both segments. These actions, coupled with a continued focus on driving efficiencies across all sites and functions, will create a more predictable, reliable, and profitable operating model moving forward. Momentum is building, and we expect continued improvements in our financial results throughout 2024. We believe we are on the right track to create durable value for shareholders."
First Quarter 2024 Financial Results
Net sales from continuing operations were $44.1 million compared to $54.9 million in the first quarter of 2023, primarily attributable to decreased end-market demand and de-stocking trends across both segments.
Gross profit from continuing operations improved to $2.5 million, or 5.7% of net sales, compared to $1.5 million, or 2.7% of net sales, in the first quarter of 2023. The increase was primarily attributable to improved strategic sourcing initiatives and cost improvements.
Net loss from continuing operations decreased to $4.7 million, or $(0.47) diluted loss per share, compared to net loss from continuing operations of $5.8 million, or $(0.57) diluted earnings per share, in the first quarter of 2023. The decrease was primarily attributable to the aforementioned increases in gross profit and a year-over-year decrease in interest expense due to lower debt outstanding.
Adjusted EBITDA improved to $(3.1) million compared to $(3.7) million in the first quarter of 2023, primarily driven by the aforementioned cost optimization efforts. Adjusted EBITDA margin was (7.1)% compared to (6.8)% in the prior year period, with the decline primarily a result of the aforementioned lower net sales base.
Segment Results
Ascent Chemicals - net sales in the first quarter of 2024 were $20.3 million compared to $23.7 million in the first quarter of 2023. Operating loss in the first quarter was $1.4 million compared to operating income of $1.4 million in the prior year period. Adjusted EBITDA in the first quarter was $(0.3) million compared to $2.5 million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was (1.4)% compared to 10.5% in the first quarter of 2023.
Ascent Tubular - net sales from continuing operations in the first quarter of 2024 were $23.8 million compared to $31.1 million in the first quarter of 2023. Operating loss from continuing operations in the first quarter decreased to $1.5 million compared to operating loss from continuing operations of $3.3 million in the prior year period. Adjusted EBITDA from continuing operations in the first quarter was $(0.7) million compared to $(2.4) million in the prior year period. As a percentage of segment net sales, adjusted EBITDA was (3.0)% compared to (7.7)% in the first quarter of 2023.
Liquidity
As of March 31, 2024, the Company had no debt outstanding under its revolving credit facilities and had $63.6 million in availability under its revolving credit facility.
For the quarter ended March 31, 2024, the Company repurchased 16,330 shares at an average cost of $9.97 per share for approximately $0.2 million.
Conference Call
Ascent will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2024.
Ascent management will host the conference call, followed by a question-and-answer period.
Date: Wednesday, May 8, 2024 Time: 5:00 p.m. Eastern time Live Call Registration Link: Here Webcast Registration Link: Here
To access the call by phone, please register via the live call registration link above or here and you will be provided with dial-in instructions and details. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.
The conference call will also be broadcast live and available for replay via the webcast registration link above or here. The webcast will be archived for one year in the investor relations section of the Company's website at www.ascentco.com.
About Ascent Industries Co.
Ascent Industries Co. (Nasdaq: ACNT) is a company that engages in a number of diverse business activities including the production of specialty chemicals and industrial tubular products. For more information about Ascent, please visit its website at www.ascentco.com.
Forward-Looking Statements
This press release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward-looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements and to review the risks as set forth in more detail in Ascent Industries Co.'s Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC or on our website. Ascent Industries Co. assumes no obligation to update any forward-looking information included in this release.
Non-GAAP Financial Information
Financial statement information included in this earnings release includes non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures.
Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense, income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, shelf registration costs, loss on extinguishment of debt, retention costs and restructuring & severance costs from net income.
Management believes that these non-GAAP measures are useful because they are key measures used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions as well as allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
Ascent Industries Co.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share data)
(Unaudited)
March 31, 2024 December 31, 2023
------------------------------------------------------------ ------------------------------------------------------------
Assets
Current assets:
$ 1,299 $ 1,851
Cash and cash equivalents
28,160 26,604
Accounts receivable, net of allowance for credit losses of $792 and $463, respectively
51,197 52,306
Inventories
4,146 4,879
Prepaid expenses and other current assets
1,792 2,912
Assets held for sale
46 861
Current assets of discontinued operations
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
86,640 89,413
Total current assets
28,648 29,755
Property, plant and equipment, net
27,431 27,784
Right-of-use assets, operating leases, net
8,129 8,496
Intangible assets, net
7,366 5,808
Deferred income taxes
79 104
Deferred charges, net
2,678 1,935
Other non-current assets, net
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total assets $ 160,971 $ 163,295
==================== ==================== ==================== ==================== ==================== ====================
Liabilities and Shareholders' Equity
Current liabilities:
$ 20,549 $ 16,416
Accounts payable
4,824 5,108
Accrued expenses and other current liabilities
88 360
Current portion of note payable
1,170 1,140
Current portion of operating lease liabilities
288 292
Current portion of finance lease liabilities
1,376 1,473
Current liabilities of discontinued operations
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
28,295 24,789
Total current liabilities
29,419 29,729
Long-term portion of operating lease liabilities
1,236 1,307
Long-term portion of finance lease liabilities
57 60
Other long-term liabilities
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
30,712 31,096
Total non-current liabilities
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total liabilities $ 59,007 $ 55,885
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Commitments and contingencies
Shareholders' equity:
$ 11,085 $ 11,085
Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,124,781 shares issued and outstanding, respectively
47,097 47,333
Capital in excess of par value
53,024 58,517
Retained earnings
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
111,206 116,935
(9,242 ) (9,525 )
Less: cost of common stock in treasury - 960,323 and 990,282 shares, respectively
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
101,964 107,410
Total shareholders' equity
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total liabilities and shareholders' equity $ 160,971 $ 163,295
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Note: The condensed consolidated balance sheets at December 31, 2023 have been derived from the audited consolidated financial statements at that date.
Ascent Industries Co.
Condensed Consolidated Statements of Income (Loss) - Comparative Analysis (Unaudited)
($ in thousands, except per share data)
Three Months Ended
March 31,
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2024 2023
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Net sales
$ 23,814 $ 31,061
Tubular Products
20,296 23,749
Specialty Chemicals
-- 50
All Other
-------------------- -------------- -------------------- -------------------- ---------- --------------------
44,110 54,860
==================== ============== ==================== ==================== ========== ====================
Operating (loss) income from continuing operations
(1,502 ) (3,293 )
Tubular Products
(1,439 ) 1,352
Specialty Chemicals
(162 ) (479 )
All Other
Corporate
(2,150 ) (3,704 )
Unallocated corporate expenses
-- (259 )
Acquisition costs and other
-------------------- -------------- -------------------- -------------------- ---------- --------------------
(2,150 ) (3,963 )
Total Corporate
-------------------- -------------- -------------------- -------------------- ---------- --------------------
(5,253 ) (6,383 )
Operating loss
127 1,107
Interest expense
(120 ) (95 )
Other, net
-------------------- -------------- -------------------- -------------------- ---------- --------------------
Loss from continuing operations before income taxes (5,260 ) (7,395 )
(1,166 ) (1,607 )
Income tax benefit
-------------------- -------------- -------------------- -------------------- ---------- --------------------
(4,094 ) (5,788 )
Loss from continuing operations
(1,399 ) 589
(Loss) income from discontinued operations, net of tax
-------------------- -------------- -------------------- -------------------- ---------- --------------------
Net loss $ (5,493 ) $ (5,199 )
==================== ============== ==================== ==================== ========== ====================
Net loss per common share from continuing operations
$ (0.41 ) $ (0.57 )
Basic
$ (0.41 ) $ (0.57 )
Diluted
Net (loss) income per common share from discontinued operations
$ (0.14 ) $ 0.06
Basic
$ (0.14 ) $ 0.06
Diluted
Net loss per common share
$ (0.54 ) $ (0.51 )
Basic
$ (0.54 ) $ (0.51 )
Diluted
Average shares outstanding
10,094 10,148
Basic
10,094 10,148
Diluted
Other data:
(1)The term Adjusted EBITDA is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. An item is excluded in the measure if its periodic value is inconsistent and sufficiently material that not identifying the item would render period comparability less meaningful to the reader or if including the item provides a clearer representation of normalized periodic earnings. The Company excludes in Adjusted EBITDA two categories of items: 1) Base EBITDA components, including: interest expense, income taxes, depreciation and amortization, and 2) Material transaction costs including: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, retention costs and restructuring & severance costs from net income. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA.
Ascent Industries Co.
Consolidated Statements of Cash Flows (Unaudited)
($ in thousands)
Three Months Ended March 31,
-------------------------------------------------------------------------------------------------------------------------
2024 2023
------------------------------------------------------ -----------------------------------------------
Operating activities
Net loss $ (5,493 ) $ (5,199 )
(Loss) income from discontinued operations, net of tax (1,399 ) 589
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net loss from continuing operations (4,094 ) (5,788 )
Adjustments to reconcile net loss to net cash provided by operating activities:
1,522 1,549
Depreciation expense
367 376
Amortization expense
25 25
Amortization of debt issuance costs
(1,166 ) 353
Deferred income taxes
330 (57 )
Provision for (reduction of) losses on accounts receivable
(73 ) 791
(Reduction of) provision for losses on inventories
-- 182
Loss on disposal of property, plant and equipment
55 64
Non-cash lease expense
209 319
Stock-based compensation expense
Changes in operating assets and liabilities:
(1,885 ) (1,072 )
Accounts receivable
1,182 9,492
Inventories
(73 ) 297
Other assets and liabilities
4,022 6,827
Accounts payable
(283 ) 1,629
Accrued expenses
78 (2,577 )
Accrued income taxes
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net cash provided by operating activities - continuing operations 216 12,410
Net cash provided by operating activities - discontinued operations 47 980
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net cash provided by operating activities 263 13,390
-------------------- -------------- -------------------- -------------------- ------- --------------------
Investing activities
(305 ) (586 )
Purchases of property, plant and equipment
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net cash used in investing activities - continuing operations (305 ) (586 )
Net cash used in investing activities - discontinued operations -- (238 )
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net cash used in investing activities (305 ) (824 )
-------------------- -------------- -------------------- -------------------- ------- --------------------
Financing activities
50,950 67,488
Borrowings from long-term debt
(50,950 ) (80,384 )
Payments on long-term debt
(271 ) (289 )
Payments on note payable
(76 ) (74 )
Principal payments on finance lease obligations
(163 ) (327 )
Repurchase of common stock
-------------------- -------------- -------------------- -------------------- ------- --------------------
Net cash used in financing activities (510 ) (13,586 )
-------------------- -------------- -------------------- -------------------- ------- --------------------
(552 ) (1,020 )
Decrease in cash and cash equivalents
-- 1
Less: Cash and cash equivalents of discontinued operations
Cash and cash equivalents, beginning of period 1,851 1,440
-------------------- -------------- -------------------- -------------------- ------- --------------------
Cash and cash equivalents, end of period $ 1,299 $ 421
==================== ============== ==================== ==================== ======= ====================
Ascent Industries Co.
Non-GAAP Financial Measures Reconciliation
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
($ in thousands)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 2024 2023
------------------------------------------------------ ------------------------------------------------------
Consolidated
Net loss from continuing operations $ (4,094 ) $ (5,788 )
Adjustments:
127 1,106
Interest expense
(1,166 ) (1,607 )
Income taxes
1,522 1,549
Depreciation
367 376
Amortization
-------------------- -------------- -------------------- -------------------- -------------- --------------------
EBITDA (3,244 ) (4,364 )
12 261
Acquisition costs and other
59 220
Stock-based compensation
55 64
Non-cash lease expense
3 --
Retention expense
-- 84
Restructuring and severance costs
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted EBITDA $ (3,115 ) $ (3,735 )
==================== ============== ==================== ==================== ============== ====================
Specialty Chemicals
Net (loss) income $ (1,458 ) $ 1,342
Adjustments:
19 12
Interest expense
954 952
Depreciation expense
169 158
Amortization expense
-------------------- -------------- -------------------- -------------------- -------------- --------------------
EBITDA (316 ) 2,464
-- 2
Acquisition costs and other
7 8
Stock-based compensation
19 24
Non-cash lease expense
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Specialty Chemicals Adjusted EBITDA $ (290 ) $ 2,498
==================== ============== ==================== ==================== ============== ====================
(1.4 )% 10.5 %
% segment sales
Tubular Products
Net loss from continuing operations $ (1,502 ) $ (3,293 )
Adjustments:
544 575
Depreciation expense
198 218
Amortization expense
-------------------- -------------- -------------------- -------------------- -------------- --------------------
EBITDA (760 ) (2,500 )
12 --
Acquisition costs and other
11 (20 )
Stock-based compensation
25 31
Non-cash lease expense
-- 84
Restructuring and severance costs
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Tubular Products Adjusted EBITDA $ (712 ) $ (2,405 )
==================== ============== ==================== ==================== ============== ====================
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508735760/en/
SOURCE: Ascent Industries Co.
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Company Contact Ryan Kavalauskas Chief Financial Officer 1-630-884-9181 Investor Relations Cody Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860 ACNT@gateway-grp.com
COMTEX_452079760/1006/2024-05-08T16:05:19