ASCENT INDUSTRIES CO. Q1 FY2025 earnings call

• Headline: Despite soft market conditions, Ascent delivered operating improvement with net sales from continuing operations at $24.7 million (down from $28 million in Q1 2024) but adjusted EBITDA from continuing operations swung from a loss of $2.7 million in the prior year to a positive $843,000 this quarter, a $3.5 million turnaround.
• Tubular segment: Closed the sale of Bristol Metals to Titan International for $45 million. ASCI, the remaining tubular asset, had revenue down slightly Y/Y but saw gross margin jump and adjusted EBITDA rise due to disciplined execution, tight cost control, sharper pricing, and operational efficiency.
• Specialty Chemicals segment: Approximately 95% of revenue is supported by domestically sourced raw materials. While revenue declined Y/Y, gross profit increased, gross margin expanded, and adjusted EBITDA improved. Shifted mix to higher-margin opportunities, secured $7.5 million of net new business with EBITDA margins >20%, with 25% from net new customer relationships and 75% from existing customer expansion. Aligned commercial, technical, and operational teams to enhance customer experience.
• Financials: Net sales at $24.7M, SG&A declined to $5.6M, down $1.1M Y/Y, with SG&A representing 22.5% of sales vs. 23.9% in Q1 2024. Consolidated adjusted EBITDA turned positive at $843,000, up $3.5 million from the prior year's loss.

Tubular segment: In Q1, revenue was $6.9 million, down slightly year-over-year. Gross margin jumped from 12.3% to 24.8% and adjusted EBITDA rose to $1.3 million, nearly 5 times the prior year's amount. Specialty Chemicals segment: Revenue was $17.8 million, down year-over-year. Gross profit increased from $1.6 million in Q1 2024 to $3.7 million in Q1 2025, a 131% improvement, with gross margin expanding from 7.6% to 21%. Adjusted EBITDA improved from a loss of $0.3 million in the prior year to positive $2 million this quarter. Revenue contribution: Tubular segment accounted for approximately 28% of total net sales ($6.9M/$24.7M), while Specialty Chemicals segment accounted for approximately 72% ($17.8M/$24.7M).

• Strategic repositioning: Actively exiting low-margin business and repositioning for higher value. Target to shift Specialty Chemicals mix to a 65-35 split by the end of 2025.
• Growth expectations: Expect growth in the second-half of 2025 and a ramp in 2026 towards achieving $80 million to $120 million in chemicals revenue by 2030 from the existing asset base.
• Buyback: Executed approximately 17,000 share repurchases in Q1 within the existing buyback program, with optionality increased post-Bristol sale and ability to buy more shares within the program.

• Soft market conditions impacting overall performance.
• Tariffs as a risk factor for the Specialty Chemicals segment, though 95% of revenue is from domestically sourced raw materials.
• Risks associated with forward-looking statements as per the safe harbor provisions.

Q: Comment on the STI business and potential sale in 2025.

A: Market is still incredibly soft, but Ascent is always evaluating options to monetize the value out of all of its assets, including the STI business.

Q: Guidance on chemicals growth.

A: Withhold forward-looking guidance until the business is more stable, but expect growth in the second-half of 2025 and a ramp in 2026 towards the stated revenue goals for chemicals by 2030.

Q: Mix shift in Specialty Chemicals.

A: In 2024, it was a 75-25 split between certain segments, and target to shift to a 65-35 split by the end of 2025.

Q: CapEx for growth.

A: Run rate CapEx is between $1 million to $3 million a year, and asset utilization is incredibly low, providing tons of runway for organic growth with minimal CapEx.

Q: Stock buyback and undervaluation.

A: Executed 17,000 share repurchases in Q1 within the existing program, CEO thinks the stock is undervalued, and the board has the ability to buy more shares within the program.