Ascent Industries Co. Files 10-Q for Q2 2024

TL;DR

Ascent Industries 10-Q filed. Financials for Q2 2024 out.

AI Summary

Ascent Industries Co. filed its 10-Q for the period ending June 30, 2024. The company reported financial results for the second quarter and the first half of the year. Key financial data points such as revenue, net income, and cash flow from operations are detailed within the filing.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational details of Ascent Industries Co., crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the inherent risks of the steel pipe and tubes industry and the company's specific financial performance can introduce medium-level risk.

Key Numbers

• P65M — Revenue (Indicates a significant revenue figure for the period, though specific period not detailed in snippet.)

Key Players & Entities

• ASCENT INDUSTRIES CO. (company) — Filer
• 20240630 (date) — Reporting Period End Date
• 20240806 (date) — Filing Date
• SYNALLOY CORP (company) — Former Company Name
• BLACKMAN UHLER INDUSTRIES INC (company) — Former Company Name

FAQ

Key Financial Figures

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

Filing Documents

• acnt-20240630.htm (10-Q) — 1106KB
• acnt-20240630x10qex311.htm (EX-31.1) — 10KB
• acnt-20240630x10qex312.htm (EX-31.2) — 10KB
• acnt-20240630x10qex321.htm (EX-32.1) — 5KB
• acnt-20240630_g1.jpg (GRAPHIC) — 11KB
• 0000095953-24-000051.txt ( ) — 6668KB
• acnt-20240630.xsd (EX-101.SCH) — 40KB
• acnt-20240630_cal.xml (EX-101.CAL) — 87KB
• acnt-20240630_def.xml (EX-101.DEF) — 137KB
• acnt-20240630_lab.xml (EX-101.LAB) — 575KB
• acnt-20240630_pre.xml (EX-101.PRE) — 387KB
• acnt-20240630_htm.xml (XML) — 1065KB

FINANCIAL INFORMATION

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

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 3 Condensed Consolidated Statements of Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited) 5 Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited) 6 Notes to Condensed Consolidated Financial Statements (unaudited) Note 1: Basis of Presentation 8 Note 2: Discontinued Operations 9 Note 3: Revenue Recognition 10 Note 4: Fair Value of Financial Instruments 11 Note 5: Inventories 12 Note 6: Property, Plant and Equipment 12 Note 7: Intangible Assets and Deferred Charges 13 Note 8: Debt 14 Note 9: Leases 15 Note 10: Shareholders' Equity 17 Note 11: Earnings Per Share 17 Note 12: Income Taxes 18 Note 13: Commitments and Contingencies 18 Note 14: Industry Segments 18 Note 15: Subsequent Events 19

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 20

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 28

Controls and Procedures

Item 4. Controls and Procedures 28

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 29 Item 1A.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 29

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 29

Other Information

Item 5. Other Information 29

Exhibits

Item 6. Exhibits 30

Signatures

Signatures 31 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) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 3,595 $ 1,851 Accounts receivable, net of allowance for credit losses of $ 808 and $ 463 , respectively 30,154 26,604 Inventories 45,917 52,306 Prepaid expenses and other current assets 3,988 4,879 Assets held for sale 1,259 2,912 Current assets of discontinued operations 65 861 Total current assets 84,978 89,413 Property, plant and equipment, net 27,643 29,755 Right-of-use assets, operating leases, net 27,073 27,784 Intangible assets, net 7,752 8,496 Deferred income taxes 7,663 5,808 Deferred charges, net 54 104 Other non-current assets, net 3,075 1,935 Total assets $ 158,238 $ 163,295 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 16,790 $ 16,416 Accrued expenses and other current liabilities 6,472 5,108 Current portion of note payable 914 360 Current portion of operating lease liabilities 1,194 1,140 Current portion of finance lease liabilities 286 292 Current liabilities of discontinued operations 1,213 1,473 Total current liabilities 26,869 24,789 Long-term portion of operating lease liabilities 29,110 29,729 Long-term portion of finance lease liabilities 1,163 1,307 Other long-term liabilities 54 60 Total non-current liabilities 30,327 31,096 Total liabilities $ 57,196 $ 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 10,124,737 shares issued and outstanding, respectively $ 11,085 $ 11,085 Capital in excess of par value 47,111 47,333 Retained earnings 52,098 58,517 110,294 116,935 Less: cost of common stock in treasury - 960,366 and 990,282 shares, respectively ( 9,252 ) ( 9,525 ) Total shareholders' equity 101,042 107,410 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 June 30, 2024, the statements of income (loss) and shareholders' equity for the three and six months ended June 30, 2024 and 2023, and the statements of cash flows for the six months ended June 30, 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 ma

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. 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. In May of 2023, the Company was named as a defendant in a lawsuit filed in the U.S. District Court for the Western District of Pennsylvania, asserting various claims for breach of contracts resulting

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 June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Net sales $ 19 $ 17,939 $ 261 $ 45,531 Cost of sales 951 18,654 1,598 43,419 Gross profit ( 932 ) ( 715 ) ( 1,337 ) 2,112 Selling, general and administrative expense ( 41 ) 3,619 141 5,583 Acquisition costs and other 30 4 119 78 Asset impairments — 6,388 1,115 6,388 Loss from discontinued operations before income taxes ( 921 ) ( 10,726 ) ( 2,712 ) ( 9,937 ) Income tax benefit ( 193 ) ( 2,239 ) ( 585 ) ( 2,039 ) Net loss from discontinued operations $ ( 728 ) $ ( 8,487 ) $ ( 2,127 ) $ ( 7,898 ) Note 3: Revenue Recognition Revenue is generated primarily from contracts to produce, ship and deliver stainless 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 ti

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 June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Point-in-time $ 46,511 $ 47,077 $ 85,689 $ 97,433 Over-time $ 3,678 $ 3,278 $ 8,611 $ 7,782 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 pr

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