Sixth Consecutive Quarter of Year-Over-Year Net Sales Growth

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 third quarter ended September 30, 2022.

Third Quarter 2022 Summary

Management Commentary

“Our third quarter results represent our sixth consecutive quarter of year-over-year revenue growth,” said Chris Hutter, president and CEO of Ascent. “While the overall pricing environment began to decline during the quarter, we were still able to capitalize on higher stainless prices in our tubular segment compared to the prior year. We continued to make improvements in our on-time delivery rates and employee safety record across both segments, driven by the enhanced safety measures we’ve implemented over the past two years. I’m also very pleased with the investments we have made in our customer development initiatives, which we expect to benefit us in the coming quarters. Notably, we’ve seen positive reception towards our corporate re-brand and have taken the opportunity to re-introduce our aligned suite of products to the market through well attended customer events at our facilities.

“Our tubular segment continues to make progress as we further invest in our ongoing sales, inventory and operations planning initiatives to better shift our sales efforts towards higher margin products. In addition to pricing pressure on our lower margin products, we saw some increased competition from the influx of imports during the quarter, leading to slower sales of these affected products. We are using this transient period to allocate additional resources toward improving internal processes and pursue opportunities that will better position us for growth and structurally increase the earnings power of the segment. We anticipate these investments will enable us to react to dynamic market conditions more quickly and optimize our profitability across all environments. Our chemicals segment delivered consistent growth while we continued to invest in our equipment and infrastructure to enhance our capabilities, drive efficiency and capture the full potential of this very promising business. I’m very pleased with the culture that we’ve created at Ascent Chemicals through an unparalleled level of collaboration leading to new and innovative commercial opportunities.

“For the rest of 2022, we are focused on expanding our market share in both segments through our revamped branding and go-to-market strategy. We are confident in the current position of our balance sheet and we anticipate accelerating cash flows and further debt reduction over the coming quarters. We are making notable progress both identifying and progressing accretive acquisition opportunities that we believe will lead to durable value creation.

“As we look towards next year, we are prioritizing our efforts towards keeping a lean inventory position through a disciplined working capital strategy, continuing our shift to a higher margin product mix, and executing on our refined commercial strategy to drive sales toward large scale projects. Additionally, we remain committed to our share repurchase program and expect to be highly opportunistic in the near-term. We are confident in our ability to continue executing on our strategy, further unlocking value across our platform and driving long-term results for our shareholders.”

Third Quarter 2022 Financial Results

Net sales increased 16% to $100.2 million compared to $86.2 million in the prior year period, attributable to favorable tubular pricing early in the quarter, as well as the ongoing shift to higher priced products.

Gross profit was $11.6 million, or 11.5% of net sales, compared to $18.0 million, or 20.9% of net sales, in the third quarter of 2021. The decrease is primarily attributable to increased input and labor costs and a slightly unfavorable product mix over the prior year, partially offset by the elevated pricing environment.

Net income was $0.6 million, or $0.06 diluted earnings per share, compared to $8.2 million, or $0.87 diluted earnings per share, in the third quarter of 2021. The decrease is primarily attributable to lower gross profit within the tubular products segment and higher corporate expenses aimed at internal process improvements.

Adjusted EBITDA was $5.6 million compared to $14.8 million in the third quarter of 2021. Adjusted EBITDA margin was 5.6% compared to 17.2% in the prior year period. The decline was primarily a result of the lower volume of tubular sales from some customer destocking trends, increased tubular operating expenses and modestly higher corporate expenses.

Segment Results

Ascent Tubular – Net sales in the third quarter of 2022 increased 4% to $72.8 million compared to $70.1 million in the third quarter of 2021. Operating income in the third quarter was $4.5 million compared to $11.7 million in the prior year period. Adjusted EBITDA in the third quarter was $6.3 million compared to $14.2 million in the prior year period given the aforementioned factors related to lower volumes and higher operating expenses. As a percentage of segment net sales, adjusted EBITDA was 8.6% compared to 20.2% in the third quarter of 2021.

Ascent Chemicals – Net sales in the third quarter of 2022 increased 70% to $27.3 million compared to $16.1 million in the third quarter of 2021. Operating income in the third quarter was $1.1 million compared to $1.4 million in the prior year period. Adjusted EBITDA in the third quarter increased 55% to $2.7 million compared to $1.8 million in the prior year period and corresponding adjusted EBITDA margin was 10.0% compared to 10.9% in the third quarter of 2021.

Liquidity

As of September 30, 2022, total debt was $72.6 million under the Company’s credit facility, compared to $70.4 million in debt at December 31, 2021. As of the end of the third quarter of 2022, the Company had $36.7 million of remaining available borrowing capacity under its credit facility, compared to $39.4 million at December 31, 2021.

During the third quarter of 2022, the Company repurchased 30,200 shares at an average cost of $16.29 per share for approximately $0.5 million.

Conference Call

Ascent will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2022.

Ascent management will host the conference call, followed by a question-and-answer period.

Date: Tuesday, November 08, 2022

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 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, 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.

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