Financial Performance Summary

Overview

Ascent Industries Co. is a diverse industrials company focused on the production of specialty chemicals and industrial tubular products. The company operates through two business segments - Specialty Chemicals and Tubular Products.

In 2023, the company made strategic decisions to exit the Munhall facility and divest Specialty Pipe & Tube, Inc. (SPT) to focus more on core operations, drive profitability and improve operational efficiencies.

The company faced significant macroeconomic challenges in 2023 and 2024 year-to-date including volatility in global markets, inflationary pressures, reduced demand and inventory management by customers - all resulting in declined revenue, margins and net income. The company continues efforts to mitigate these challenges through sourcing improvements, working capital management, evaluating opportunities to maintain and improve financial performance.

Financial Highlights

• Consolidated Q1 2024 net sales declined 19.6% driven by 15.3% lower average selling prices and 7.7% lower volumes
• Consolidated Q1 2024 gross profit increased to 5.7% from 2.7% in prior year quarter driven by lower raw material and productions costs
• Operating loss reduced from $6.4 million in Q1 2023 to $5.3 million in Q1 2024 due to higher gross profit
• Specialty Chemicals Q1 2024 operating income declined from $1.4 million to operating loss of $1.4 million
• Tubular Products Q1 2024 operating loss reduced from $3.3 million to $1.5 million
• Cash used in operations was $0.2 million in Q1 2024 compared to cash provided by operations of $12.4 million in Q1 2023

Results of Operations

Net Sales

• Consolidated Q1 2024 net sales declined 19.6% to $44.1 million
• Specialty Chemicals Q1 2024 net sales declined 14.5% to $20.3 million
• Tubular Products Q1 2024 net sales declined 23.3% to $23.8 million

Gross Profit

• Consolidated Q1 2024 gross profit increased to 5.7% from 2.7% in prior year quarter
• Specialty Chemicals Q1 2024 gross profit margin declined from 13.1% to 7.6%
• Tubular Products Q1 2024 gross profit margin improved from (4.4%) to 4.8%
  

Selling, General & Administrative Expenses

• Consolidated Q1 2024 SG&A increased slightly by $0.2 million
• Specialty Chemicals Q1 2024 SG&A increased significantly to 14.7% of sales
• Tubular Products Q1 2024 SG&A increased to 11.1% of sales

Liquidity and Capital Resources

• Cash and cash equivalents were $1.3 million as of March 31, 2024
• Available capacity under credit facilities was $63.6 million
• Operating activities used cash of $0.2 million in Q1 2024
• Investing activities used cash of $0.3 million in Q1 2024
• Financing activities used cash of $0.5 million in Q1 2024

Outlook

The company expects continued challenging market conditions through 2024 which could further impact financial results. Management continues to take actions to improve working capital, evaluate opportunities to maintain and improve financial performance while also investing $6.2 million in capital projects.