Ascent Industries Co. Q1 FY2026 earnings call

• First quarter saw projects convert to revenue, net sales up. Pipeline increased 34% vs end of 2025. • Gross margin down but due to non-structural factors like timing of sourcing and production optimization. • Announced acquisition of Midwest Graphic Sales and Sigma Coatings, which is high-value, formulation-driven, with embedded earnings and access to new customer base. • SG&A up but viewed as investment in supporting high-value business. • Focus on winning volume, maximizing value, and optimizing workflows to improve earnings.

Net sales were $19.4 million, nearly double-digit growth vs prior year and 3.5% sequential increase. 58% of pipeline wins from product sales, 42% from custom manufacturing. Gross profit was $2.8 million, or 14.5% of sales, down from prior year. Material costs were not the source of margin compression; pressure was in non-material costs like timing, absorption, etc. Cash ended the quarter at $47.8 million with no debt.

• Expect margin improvements to begin flowing through by fourth quarter of 2026 with $3 to $5 million of incremental run rate gross profit improvement. • Midwest acquisition expected to be immediately accretive to annual adjusted EBITDA with upside from execution. • Will continue to monitor share repurchases based on stock valuation relative to intrinsic value. • Won't provide early revenue and profitability targets in 2026 due to moving parts and lumpiness.

• Risks from forward-looking statements subject to various uncertainties. • Margin compression in short term due to non-optimized sourcing and production timing, which is operational but needs corrective actions. • Cash usage in quarter due to share repurchases, incentive compensation, and working capital, which may not be recurring but is a quarter-specific situation.

Q: Can you give details on the Midwest acquisition?

A: 2025 revenue was ~$10.8 million, adjusted EBITDA ~$2 million. Expected to be immediately accretive. Margins to normalize throughout 2026. Pipeline conversion continues.

Q: Spending on Midwest acquisition, cash, and release of escrow?

A: $13 million spent, cash at quarter end $47.8 million, larger portion of escrow released in July, separate tranche in October.

Q: Tariff refunds, digital first market strategy?

A: No material tariff refunds. Digital first strategy seeing increased traffic and quality leads.