Ascent Industries Co. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Ascent Industries Co. filed its quarterly report (10-Q) for the period ending March 31, 2024, providing an update on its financial performance.</b>

AI Summary

ASCENT INDUSTRIES CO. (ACNT) filed a Quarterly Report (10-Q) with the SEC on May 8, 2024. Ascent Industries Co. reported financial results for the period ending March 31, 2024. The filing is a 10-Q, indicating a quarterly report. The company's fiscal year ends on December 31. The filing was submitted on May 8, 2024. Ascent Industries Co. was formerly known as Synalloy Corp and Blackman Uhler Industries Inc.

Why It Matters

For investors and stakeholders tracking ASCENT INDUSTRIES CO., this filing contains several important signals. This 10-Q filing provides crucial insights into Ascent Industries Co.'s financial health and operational performance during the first quarter of 2024. Investors and analysts can use this report to assess the company's revenue, profitability, and any significant changes in its balance sheet or cash flow.

Risk Assessment

Risk Level: — ASCENT INDUSTRIES CO. shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q) which typically contains routine financial information. However, without specific financial details or significant disclosures within the provided text, the risk level is assessed as medium due to the inherent uncertainties in any public company's financial reporting.

Analyst Insight

Review the detailed financial statements and segment information within the full 10-Q filing to understand revenue trends and profitability drivers for Q1 2024.

Key Numbers

• 2024-03-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-05-08 — Filing Date (FILED AS OF DATE)
• 3317 — Standard Industrial Classification (STANDARD INDUSTRIAL CLASSIFICATION)

Key Players & Entities

• ASCENT INDUSTRIES CO. (company) — COMPANY CONFORMED NAME
• SYNALLOY CORP (company) — FORMER COMPANY
• BLACKMAN UHLER INDUSTRIES INC (company) — FORMER COMPANY
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-05-08 (date) — FILED AS OF DATE

FAQ

Industry Context

Ascent Industries Co. operates within the Steel Pipe & Tubes industry, a sector characterized by manufacturing and distribution of steel products.

Regulatory Implications

The filing is a 10-Q, a standard quarterly report required by the Securities and Exchange Commission (SEC) for publicly traded companies in the United States.

What Investors Should Do

1. Analyze the financial statements for revenue, net income, and cash flow for Q1 2024.
2. Review any disclosures regarding discontinued operations or significant business segments.
3. Compare key financial metrics to previous periods to identify trends.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-08: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This is the first 10-Q filing for the period ending March 31, 2024, following the previous 10-K filing for the fiscal year ending December 31, 2023.

Key Financial Figures

• $1.00 — ich registered Common Stock, par value $1.00 per share ACNT NASDAQ Global Market I

Filing Documents

• acnt-20240331.htm (10-Q) — 884KB
• acnt-20240331x10qex311.htm (EX-31.1) — 10KB
• acnt-20240331x10qex312.htm (EX-31.2) — 10KB
• acnt-20240331x10qex321.htm (EX-32.1) — 5KB
• acnt-20240331_g1.jpg (GRAPHIC) — 11KB
• 0000095953-24-000028.txt (&nbsp;) — 5853KB
• acnt-20240331.xsd (EX-101.SCH) — 38KB
• acnt-20240331_cal.xml (EX-101.CAL) — 87KB
• acnt-20240331_def.xml (EX-101.DEF) — 128KB
• acnt-20240331_lab.xml (EX-101.LAB) — 540KB
• acnt-20240331_pre.xml (EX-101.PRE) — 368KB
• acnt-20240331_htm.xml (XML) — 863KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Disclosure Regarding Forward Looking Statements 2 Item 1.

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 3 Condensed Consolidated Statements of Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited) 5 Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited) 6 Notes to Condensed Consolidated Financial Statements (unaudited) Note 1: Basis of Presentation 7 Note 2: Discontinued Operations 8 Note 3: Revenue Recognition 9 Note 4: Fair Value of Financial Instruments 10 Note 5: Inventories 11 Note 6: Property, Plant and Equipment 11 Note 7: Intangible Assets and Deferred Charges 12 Note 8: Debt 13 Note 9: Leases 14 Note 10: Shareholders' Equity 15 Note 11: Earnings Per Share 16 Note 12: Income Taxes 16 Note 13: Commitments and Contingencies 17 Note 14: Industry Segments 17 Note 15: Subsequent Events 18

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 26

Controls and Procedures

Item 4. Controls and Procedures 26

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 27 Item 1A.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 27

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 27

Other Information

Item 5. Other Information 27

Exhibits

Item 6. Exhibits 28

Signatures

Signatures 29 1 Table of Contents

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q includes "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, including without limitation those identified below, 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. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, including risks relating to the impact and spread of and the government's response to COVID-19; inability to weather an economic downturn; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw material availability; financial stability of the Company's customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with acquisitions; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by the Company's debt financing arrangements; and other risks detailed from time-to-time 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. Ascent Industries Co. assumes no oblig

- Financial Information

Part I - Financial Information

Financial Statements

Item 1. Financial Statements 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: Cash and cash equivalents $ 1,299 $ 1,851 Accounts receivable, net of allowance for credit losses of $ 792 and $ 463 , respectively 28,160 26,604 Inventories 51,197 52,306 Prepaid expenses and other current assets 4,146 4,879 Assets held for sale 1,792 2,912 Current assets of discontinued operations 46 861 Total current assets 86,640 89,413 Property, plant and equipment, net 28,648 29,755 Right-of-use assets, operating leases, net 27,431 27,784 Intangible assets, net 8,129 8,496 Deferred income taxes 7,366 5,808 Deferred charges, net 79 104 Other non-current assets, net 2,678 1,935 Total assets $ 160,971 $ 163,295 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 20,549 $ 16,416 Accrued expenses and other current liabilities 4,824 5,108 Current portion of note payable 88 360 Current portion of operating lease liabilities 1,170 1,140 Current portion of finance lease liabilities 288 292 Current liabilities of discontinued operations 1,376 1,473 Total current liabilities 28,295 24,789 Long-term portion of operating lease liabilities 29,419 29,729 Long-term portion of finance lease liabilities 1,236 1,307 Other long-term liabilities 57 60 Total non-current liabilities 30,712 31,096 Total liabilities $ 59,007 $ 55,885 Commitments and contingencies – See Note 13 Shareholders' equity: Common stock, par value $ 1 per share; 24,000,000 shares authorized; 11,085,103 and 10,124,781 shares issued and outstanding, respectively $ 11,085 $ 11,085 Capital in excess of par value 47,097 47,333 Retained earnings 53,024 58,517 111,206 116,935 Less: cost of common stock in treasury - 960,323 and 990,282 shares, respectively ( 9,242 ) ( 9,525 ) Total shareholders' equity 101,964 107,410 Total liabilitie

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) Unless indicated otherwise, the terms "Company," "we," "us," and "our" refer to Ascent Industries Co. and its consolidated subsidiaries. Note 1: Basis of Presentation Basis of Financial Statement Presentation The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The unaudited condensed consolidated financial statements, in the opinion of management, contain all normal recurring adjustments necessary to present a fair statement of the condensed consolidated balance sheets as of March 31, 2024, the statements of income (loss) and shareholders' equity for the three months ended March 31, 2024 and 2023, and the statements of cash flows for the three months ended March 31, 2024 and 2023. The December 31, 2023 condensed consolidated balance sheet was derived from the audited financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"). The financial results for the interim periods may not be indicative of the financial results for the entire year as our future assessment of our current expectations could result in material impacts to our consolidated financial statements in future reporting periods. Use of Estimates The preparation of the Company's financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures. Recent accounting pronouncements pending adoption not discussed in this Form 10-Q are either not applicable to the Company or are not expected to have a material impact on the Company. Note 2: Discontinued Operations Munhall Closure During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023. It is anticipated that the complete exit and disposal of all assets at Munhall will be completed within one year from the date the decision was made. The strategic decision to cease manufacturing operations at Munhall is part of the Company's ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies. As a result of this decision, during the second quarter ended June 30, 2023, the Company incurred asset impairment charges of $ 6.4 million related to the write down of inventory and long-lived assets as well as $ 1.4 million in increased reserves on accounts receivable at the facility. During the third quarter of 2023, the Company incurred additional asset impairment charges of $ 2.4 million related to the write down of inventory to net realizable value. During the first quarter of 2024, the Company incurred additional asset impairment charges of $ 1.1 million related to the write down of the remaining long-lived assets at the facility. Certain assets of Munhall were also classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented. See Note 4 for further discussion of the assets held for sale and related fair value measurements. Divestiture of Specialty Pipe & Tube, Inc. On Dec

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) The financial results are presented as loss from discontinued operations, net of tax on the unaudited condensed consolidated statements of income (loss). The following table summarizes the results of the Company's discontinued operations: Three Months Ended March 31, (in thousands) 2024 2023 Net sales $ 242 $ 27,592 Cost of sales 647 24,765 Gross profit ( 405 ) 2,827 Selling, general and administrative expense 182 1,964 Acquisition costs and other 89 74 Asset impairments 1,115 — (Loss) income on discontinued operations before income taxes ( 1,791 ) 789 Income tax (benefit) expense ( 392 ) 200 Net (loss) income from discontinued operations $ ( 1,399 ) $ 589 Note 3: Revenue Recognition Revenue is generated primarily from contracts to produce, ship and deliver steel and specialty chemical products. Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time or over-time. For certain contracts under which the Company produces product with no alternative use and for which the Company has an enforceable right to payment during the production cycle, product in which the material is customer owned or in which the customer simultaneously consumes the benefits throughout the production cycle, progress toward satisfying the performance obligation is measured using an output method of units produced. Certain customer arrangements consist of bill-and-hold characteristics under which transfer of control has been met (including the passing of title and significant risk and reward of ownership to the customers). Therefore, the customers can direct the use of the bill-and-hold inventory while we retain physical poss

Notes to Consolidated Financial Statements (Unaudited )

Notes to Consolidated Financial Statements (Unaudited ) Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. The following table represents the Company's revenue recognized at a point-in-time and over-time: Three Months Ended March 31, (in thousands) 2024 2023 Point-in-time $ 40,139 $ 49,437 Over-time $ 3,971 $ 5,423 Note 4: Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs: Level 1 - Unadjusted quoted prices that are available in active markets for identical assets or liabilities at the measurement date. Level 2 - Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in non-active markets; Inputs other than quoted prices that are observable for the asset or liability; and Inputs that are derived principally from or corroborated by other observable market data. Level 3 - Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using model-based techniques, including option pricing models, discounted cash flow models, probability weighted models, and Monte Carlo simulations. Assets and Liabilities Measured at Fair Value on

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