Second Consecutive Year of Growth in Net Sales
and Net Income Year-Over-Year, Reflecting Continued Improvements
Across the Organization
Ascent Chemicals Continues to Outperform with
Year-Over-Year Growth in Net Sales, Net Income, and Adjusted EBITDA
for Full Year 2022
Fourth Quarter Net Income of $0.1 Million and
Adjusted EBITDA of Negative $2.0 Million Includes Net Loss of $8.9
Million and Adjusted EBITDA of Negative $7.4 million Attributable
to its Munhall Facility1
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 fourth quarter and full
year ended December 31, 2022.
Fourth Quarter 2022
Summary
(in millions, expect per share and
margin)
Q4 2022
Q4 2021
Change
Net Sales
$81.6
$95.7
-14.7%
Gross Profit
$1.6
$19.9
-92.0%
Gross Profit Margin
2.0%
20.8%
-1880bps
Net Income
$0.1
$8.1
-98.4%
Diluted Earnings per Share
$0.01
$0.84
-98.5%
Adjusted EBITDA
$(2.0)
$14.9
-113.2%
Adjusted EBITDA Margin
(2.4)%
15.5%
-1790bps
Full Year 2022 Summary
(in millions, except per share and
margin)
2022
2021
Change
Net Sales
$414.1
$334.7
23.7%
Gross Profit
$56.5
$60.8
-7.0%
Gross Profit Margin
13.7%
18.2%
-450bps
Net Income
$22.1
$20.2
9.0%
Diluted Earnings per share
$2.12
$2.14
-1.0%
Adjusted EBITDA
$36.0
$44.3
-18.7%
Adjusted EBITDA Margin
8.7%
13.2%
-450bps
________________________________ 1 Company management has
previously articulated its intent to reduce operations at the
Company's facility in Munhall, PA, specifically its galvanized pipe
and tube operations. The majority of the galvanized reduction has
been completed as of March 31, 2023, and the Company is currently
evaluating strategic alternatives for the operations at this
facility.
Management Commentary
“Although we certainly faced some challenges during the last two
quarters of the year, I don’t want that to take away from the
progress we made throughout 2022 towards operational excellence,”
said Chris Hutter, president and CEO of Ascent. “This year proved
to be another step in the right direction as we made tangible
progress in growing Ascent Chemicals, rebranded our entire
organization for a more seamless go-to-market strategy and made
significant investments to improve internal processes that we
believe will further streamline our operations. While these efforts
are ongoing, we believe our top-down approach to eliminating
inherited inefficiencies and more purposefully rebuilding the
operational mindset of the organization is positioning Ascent for
long-term success.
“As expected, specific items within our tubular products segment
negatively impacted our consolidated financial results to close out
the year. That said, the bulk of the financial issues were
contained to our Munhall, PA facility where we have previously
expressed our frustration with the galvanized business we inherited
and our belief that this product line is not a meaningful part of
our long-term business plan. As we began the process of evaluating
strategic alternatives for the Munhall facility, we significantly
reduced our galvanized business there, which led to the facility
becoming meaningfully unprofitable in the fourth quarter. As of
today, we are no longer producing galvanized products at Munhall
and, excluding this facility, our consolidated results were in-line
with expectations.
“Ascent Chemicals remained a stalwart during the fourth quarter
with year-over-year growth across the top line and a minimal
decline in the bottom line as the pricing environment continued to
stabilize. We are pleased with the overall profile of this segment
given its stable customer base and high margin, recurring revenue
that we believe can provide a solid base for us to meaningfully
grow over the long-term. Our sales pipeline for Ascent Chemicals in
2023 remains strong, and we believe the foundation we have built
more easily allows us to incorporate adjacent products and new
offerings as the broader M&A landscape begins to open up. We
believe that our specialty chemicals segment has significant
long-term growth potential, and we are confident in the ability of
our team to seize these opportunities.
“Overall, we believe we are on a path toward sustained
profitable growth over the long-term. To achieve this, we will
focus on providing best-in-class products and services, investing
in technology and automation to improve efficiencies, and pursuing
strategic acquisitions within the specialty chemicals segment that
meet our return thresholds. Our dedicated team remains steadfast in
their commitment to delivering long-term value to our shareholders
through a culture of hard work and performance-based results.”
Fourth Quarter 2022 Financial
Results
Net sales were $81.6 million compared to $95.7 million in the
prior year period, primarily attributable to a reduction in
low-margin sales within the tubular products segment, partially
offset by year-over-year growth in the specialty chemicals
segment.
Gross profit was $1.6 million, or 2.0% of net sales, compared to
$19.9 million, or 20.8% of net sales, in the fourth quarter of
2021. The decrease is primarily attributable to the aforementioned
decline in net sales within the tubular products segment, along
with increased input and labor costs and a slightly unfavorable
product mix over the prior year.
Net income was $0.1 million, or $0.01 diluted earnings per
share, compared to $8.1 million, or $0.84 diluted earnings per
share, in the fourth quarter of 2021. The decline is primarily
attributable to the aforementioned lower gross profit, accelerated
depreciation and amortization charges related to the strategic
reassessment of certain operations within the tubular products
segment, and an increase in corporate expenses to optimize internal
processes, partially offset by an income tax benefit associated
with the ceased Palmer operations.
Adjusted EBITDA was $(2.0) million compared to $14.9 million in
the fourth quarter of 2021. Adjusted EBITDA margin was (2.4)%
compared to 15.5% in the prior year period. The decrease is
primarily attributable to the aforementioned lower net sales, the
bulk of which were contained in one operating site that the Company
is in the process of meaningfully contracting, and an increase in
corporate expenses.
Full Year 2022 Financial
Results
Net sales increased 24% to $414.1 million compared to $334.7
million in 2021. The increase was primarily attributable to a more
favorable pricing environment in the first half of the year,
partially offset by a lower volume of products shipped due to
product mix shifts to meet long-term profitability objectives.
Gross profit was $56.5 million, or 13.7% of net sales, compared
to $60.8 million or 18.2% of net sales in 2021. The modest decrease
was primary attributable to an increase in raw materials and
freight costs.
Net income increased 9% to $22.1 million, or $2.12 diluted
earnings per share, compared to $20.2 million, or $2.14 diluted
earnings per share in 2021. The increase was primarily attributable
to the aforementioned increase in net sales and an income tax
benefit that wasn’t recognized in the prior year period.
Adjusted EBITDA was $36.0 million compared to $44.3 million in
2021. Adjusted EBITDA as a percentage of net sales was 8.7%
compared to 13.2% in the prior year. The slight decline is
primarily attributable to lower operating margins in the tubular
products segment compared to the prior year.
Segment Results
Ascent Tubular – net sales in the fourth quarter of 2022
were $58.1 million compared to $73.8 million in the fourth quarter
of 2021. Operating loss in the fourth quarter was $4.3 million
compared to operating income of $11.8 million in the prior year
period. Adjusted EBITDA in the fourth quarter was $(1.6) million
compared to $13.8 million in the prior year period. As a percentage
of segment net sales, adjusted EBITDA was (2.8)% compared to 18.7%
in the fourth quarter of 2021.
Net sales in 2022 increased 15% to $306.6 million compared to
$267.2 million in 2021. Operating income in 2022 was $27.6 million
compared to $33.6 million in the prior year. Adjusted EBITDA in
2022 was $35.8 million compared to $43.0 million in the prior year.
As a percentage of segment net sales, adjusted EBITDA was 11.7%
compared to 16.1% in 2021.
Ascent Chemicals – net sales in the fourth quarter of
2022 increased 7% to $23.5 million compared to $21.9 million in the
fourth quarter of 2021. Operating income in the fourth quarter was
$0.9 million compared to $1.7 million in the prior year period.
Adjusted EBITDA in the fourth quarter was $2.0 million compared to
$2.5 million in the prior year period. As a percentage of segment
net sales, adjusted EBITDA was 8.6% compared to 11.7% in the fourth
quarter of 2021.
Net sales in 2022 increased 59% to $107.5 million compared to
$67.5 million in 2021. Operating income in 2022 increased
significantly to $7.0 million compared to $3.7 million in the prior
year. Adjusted EBITDA in 2022 increased 80% to $11.8 million
compared to $6.5 million in the prior year. As a percentage of
segment net sales, adjusted EBITDA increased 120 basis points to
10.9% compared to 9.7% in 2021.
Liquidity
As of December 31, 2022, total debt was $71.5 million under the
Company’s revolving credit facility, compared to $70.4 million at
December 31, 2021. As of the end of 2022, the Company had $37.6
million of remaining available borrowing capacity under its
revolving credit facility, compared to $39.4 million at December
31, 2021.
For the year ended December 31, 2022, the Company repurchased
110,404 shares at an average cost of $12.16 per share for
approximately $1.3 million.
Conference Call
Ascent will conduct a conference call today at 8:30 a.m. Eastern
time to discuss its results for the fourth quarter and full year
ended December 31, 2022.
Ascent management will host the conference call, followed by a
question and answer period.
Date: Friday, March 31, 2023 Time: 8:30 a.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 stainless steel and galvanized pipe and tube, 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)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
1,441
$
2,021
Accounts receivable, net of allowance for
credit losses of $1,250 and $216, respectively
45,120
50,126
Inventories, net
114,452
103,249
Prepaid expenses and other current
assets
8,982
3,728
Assets held for sale
380
855
Total current assets
170,375
159,979
Property, plant and equipment, net
42,346
43,720
Right-of-use assets, operating leases,
net
29,224
30,811
Goodwill
11,389
12,637
Intangible assets, net
10,387
14,382
Deferred income taxes
1,353
—
Deferred charges, net
203
302
Other non-current assets, net
3,766
4,171
Total assets
$
269,043
$
266,002
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
22,731
$
32,318
Accounts payable - related parties
—
2
Accrued expenses and other current
liabilities
6,560
12,407
Current portion of note payable
387
—
Current portion of long-term debt
2,464
2,464
Current portion of earn-out
liabilities
—
1,961
Current portion of operating lease
liabilities
1,056
1,104
Current portion of finance lease
liabilities
280
233
Total current liabilities
33,478
50,489
Long-term debt
69,085
67,928
Long-term portion of operating lease
liabilities
30,911
32,059
Long-term portion of finance lease
liabilities
1,242
1,414
Deferred income taxes
—
2,433
Other long-term liabilities
68
89
Total non-current liabilities
101,306
103,923
Commitments and contingencies
Shareholders' equity:
Common stock, par value $1 per share;
authorized 24,000,000 shares; issued 11,085,103 shares
11,085
11,085
Capital in excess of par value
47,021
46,058
Retained earnings
85,146
63,080
143,252
120,223
Less: cost of common stock in treasury -
924,504 and 918,471 shares, respectively
(8,993
)
(8,633
)
Total shareholders' equity
134,259
111,590
Total liabilities and shareholders'
equity
$
269,043
$
266,002
Note: The condensed consolidated balance
sheets at December 31, 2022 and 2021 have been derived from the
audited consolidated financial statements at that date.
Ascent Industries Co.
Condensed Consolidated Statements of
Income - Comparative Analysis (Unaudited)
($ in thousands, except per share
data)
Three Months Ended
December 31,
Year Ended
December 31,
2022
2021
2022
2021
Net sales
Tubular Products
$
58,087
$
73,799
$
306,605
$
267,238
Specialty Chemicals
23,473
21,868
107,542
67,477
$
81,560
$
95,667
$
414,147
$
334,715
Operating income (loss)
Tubular Products
$
(4,323
)
$
11,767
$
27,607
$
33,561
Specialty Chemicals
860
1,658
6,971
3,656
Corporate
Unallocated corporate expenses
(2,761
)
(1,690
)
(12,997
)
(6,828
)
Acquisition costs and other
(363
)
(800
)
(1,200
)
(1,001
)
Proxy contest costs and recoveries
—
—
—
(168
)
Earn-out adjustments
—
(442
)
7
(1,872
)
Total Corporate
(3,124
)
(2,932
)
(14,190
)
(9,869
)
Operating income (loss)
(6,587
)
10,493
20,388
27,348
Interest expense
1,104
418
2,742
1,486
Loss on extinguishment of debt
—
—
—
223
Change in fair value of interest rate
swap
—
—
—
(2
)
Other, net
(34
)
(10
)
(209
)
143
Income (loss) before income
taxes
(7,657
)
10,085
17,855
25,498
Income tax provision (benefit)
(7,784
)
2,018
(4,211
)
5,253
Net income
$
127
$
8,067
$
22,066
$
20,245
Net income per common share
Basic
$
0.01
$
0.85
$
2.16
$
2.17
Diluted
$
0.01
$
0.84
$
2.12
$
2.14
Average shares outstanding
Basic
10,213
9,518
10,230
9,340
Diluted
10,416
9,617
10,410
9,456
Other data:
Adjusted EBITDA1
$
(1,964
)
$
14,861
$
36,021
$
44,308
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)
Year Ended December
31,
2022
2021
Operating activities
Net income
$
22,066
$
20,245
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
8,722
7,547
Amortization expense
3,995
2,794
Amortization of debt issuance costs
99
95
Asset impairments
—
233
Loss on extinguishment of debt
—
223
Deferred income taxes
(4,211
)
(2,071
)
Earn-out adjustments
(7
)
1,872
Payments of earn-out liabilities in excess
of acquisition date fair value
(662
)
(138
)
Provision for (reduction of) losses on
accounts receivable
1,034
(398
)
Provision for losses on inventories
3,052
1,649
Loss (gain) on disposal of property, plant
and equipment
27
(848
)
Non-cash lease expense
414
481
Non-cash lease termination loss
—
5
Change in fair value of interest rate
swap
—
(2
)
Payments for termination of interest rate
swap
—
(46
)
Issuance of treasury stock for director
fees
364
132
Stock-based compensation expense
1,407
799
Changes in operating assets and
liabilities:
Accounts receivable
3,972
(16,185
)
Inventories
(13,779
)
(18,873
)
Other assets and liabilities
(12
)
(55
)
Accounts payable
(10,277
)
10,835
Accounts payable - related parties
(2
)
2
Accrued expenses
(2,702
)
1,506
Accrued income taxes
(7,923
)
9,253
Net cash provided by operating
activities
5,577
19,055
Investing activities
Purchases of property, plant and
equipment
(5,074
)
(1,497
)
Proceeds from disposal of property, plant
and equipment
99
1,400
Acquisitions, net of cash acquired
—
(32,564
)
Net cash (used in) provided by
investing activities
(4,975
)
(32,661
)
Financing activities
Borrowings from long-term debt
443,363
215,528
Proceeds from note payable
967
—
Proceeds from the issuance of common stock
related to Rights Offering
—
10,010
Proceeds from the exercise of stock
options
175
109
Payments on long-term debt
(442,206
)
(206,505
)
Payments on note payable
(580
)
—
Principal payments on finance lease
obligations
(266
)
(92
)
Payments on earn-out liabilities
(1,292
)
(3,494
)
Repurchase of common stock
(1,343
)
—
Payments for deferred financing costs
—
(165
)
Net cash used in financing
activities
(1,182
)
15,391
(Decrease) increase in cash and cash
equivalents
(580
)
1,785
Cash and cash equivalents, beginning of
period
2,021
236
Cash and cash equivalents, end of
period
$
1,441
$
2,021
Ascent Industries Co.
Non-GAAP Financial Measures
Reconciliation
Reconciliation of Net Income to
Adjusted EBITDA (Unaudited)
($ in thousands)
Three Months Ended
December 31,
Year Ended
December 31,
($ in thousands)
2022
2021
2022
2021
Consolidated
Net income
$
127
$
8,067
$
22,066
$
20,245
Adjustments:
Interest expense
1,104
418
2,742
1,486
Change in fair value of interest rate
swap
—
—
—
(2
)
Income taxes
(7,784
)
2,018
(4,211
)
5,253
Depreciation
2,343
2,088
8,722
7,547
Amortization
1,407
754
3,995
2,794
EBITDA
(2,803
)
13,345
33,314
37,323
Acquisition costs and other
363
800
1,200
1,001
Proxy contest costs and recoveries1
—
—
—
168
Shelf registration costs
12
—
12
—
Loss on extinguishment of debt
—
—
—
223
Earn-out adjustments
—
442
(7
)
1,872
Loss on investment in equity securities
and other investments
—
—
—
363
Asset impairments
—
—
—
233
Gain on lease modification
—
—
(2
)
—
Stock-based compensation
308
103
1,016
799
Non-cash lease expense
92
108
414
481
Retention expense
—
6
—
500
Restructuring and severance costs
64
57
74
1,345
Adjusted EBITDA
$
(1,964
)
$
14,861
$
36,021
$
44,308
% sales
(2.4
)%
15.5
%
8.7
%
13.2
%
1Proxy contest costs and recoveries for
the year months ended December 31, 2021 are reimbursements of
documented, out-of-pocket costs to Privet and UPG partially offset
by insurance recoveries for costs related to the 2020 shareholder
activism.
Ascent Industries Co.
Non-GAAP Financial Measures
Reconciliation
Reconciliation of Net Income to
Adjusted EBITDA (Unaudited)
($ in thousands)
Three Months Ended
December 31,
Year Ended
December 31,
($ in thousands)
2022
2021
2022
2021
Tubular Products
Net income (loss)
$
(4,392
)
$
11,335
$
27,644
$
31,893
Adjustments:
Interest expense
—
—
1
—
Depreciation expense
1,375
1,293
4,814
5,485
Amortization expense
1,217
680
3,092
2,721
EBITDA
(1,800
)
13,308
35,551
40,099
Acquisition costs and other
96
—
96
—
Earn-out adjustments
—
442
(7
)
1,872
Stock-based compensation
36
54
100
129
Retention expense
—
6
—
500
Restructuring and severance costs
20
—
20
363
Tubular Products Adjusted EBITDA
$
(1,648
)
$
13,810
$
35,760
$
42,963
% segment sales
(2.8
)%
18.7
%
11.7
%
16.1
%
Specialty Chemicals
Net income
$
852
$
1,588
$
6,935
$
3,589
Adjustments:
Interest expense
9
9
36
11
Depreciation expense
949
768
3,846
1,932
Amortization expense
191
73
903
73
EBITDA
2,001
2,438
11,720
5,605
Acquisition costs and other
—
61
—
61
Asset impairments
—
—
—
233
Stock-based compensation
12
(8
)
41
165
Non-cash lease expense
—
—
2
—
Restructuring and severance costs
8
57
8
484
Specialty Chemicals Adjusted EBITDA
$
2,021
$
2,548
$
11,771
$
6,548
% segment sales
8.6
%
11.7
%
10.9
%
9.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230331005095/en/
Company Contact Aaron Tam
Chief Financial Officer 1-630-884-9181
Investor Relations Cody
Slach and Cody Cree Gateway Group, Inc. 1-949-574-3860
ACNT@gatewayir.com
Grafico Azioni Ascent Industries (NASDAQ:ACNT)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Ascent Industries (NASDAQ:ACNT)
Storico
Da Giu 2023 a Giu 2024