Q1 2024 Ascent Industries Co Earnings Call
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Operator: And thank you for participating in today's conference call to discuss Ascent's financial results for the first quarter ended March 31st, 2024. Joining us today are Ascent's Executive Chairman of the Board, Ben Rosenzweig, and CEO, Bryan Kitchen. CFO, Ryan Kavalauskas, and the Company's Outside Investor Relations Advisor, Cody Cree. Following their remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to Cody Cree as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. Cody, please proceed.
Good afternoon.
And thank you for participating in today's conference call to discuss financial results for the first quarter ended March 31, 'twenty 'twenty four.
Operator: Joining us today are a sales executive chairman of the board.
Operator: Or was it flat.
Operator: Let's see alpine kitchen.
Cody Cree: All right.
Operator: Brian couple of baskets, and the company's outside Investor Relations advisor Cody Cree.
Cody Cree: Following their remarks, we'll open the call for your questions.
Operator: If I can go further I would like to turn the call over to Cody Cree excuse me as the company's Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995.
Cody Cree: One cautious regarding forward looking statements Cody. Please proceed.
Cody Cree: Thanks, Livia. Before we continue, I'd like to remind all participants that the discussion today may contain certain forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. Ascent advises all of those listening to this call to review the latest 10Q and 10K posted on its website for a summary of these risks and uncertainties. Ascent does not undertake the responsibility to update any forward-looking statements.
Cody Cree: Thanks, Sylvia before we continue I'd like to remind all participants that the discussion today may contain certain forward looking statements pursuant to the safe Harbor provisions of the Federal Securities laws. These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially.
Cody Cree: We really thank.
Cody Cree: Thanks Advisors all of those listening to this call to review the latest 10-Q and 10-K.
Cody Cree: On its website for a summary of these risks and uncertainties.
Cody Cree: <unk> does not undertake the responsibility to update any forward looking statements.
Cody Cree: Further, the discussion today may include non-GAAP measures. In accordance with Regulation G, the company has reconciled these amounts back to the closest GAP-based measurement. Reconciliations can be found in the earnings press release issued earlier today and posted on the investor's section of the company's website, at ascentco.com. Please note that this call is available for replay via a webcast link that is also posted on the Investors section of the company's website. With that, I'd like to turn the call over to Ascent's Executive Chairman of the Board, Ben Rosenzweig. Ben, it's over to you.
Cody Cree: The discussion today may include non-GAAP measures in accordance with regulation G. The company has reconciled these amounts back to the closest GAAP based measurement reconciliations can be found in the earnings press release issued earlier today in person or the investors section of the company's website.
Speaker Change: Dot com.
Benjamin L. Rosenzweig: Please note that this call is available for replay via webcast thing Thats also a question on the investors section of the company's website with that I'd like to turn the call over to <unk> executive Chairman of the board been Horizons back.
Benjamin L. Rosenzweig: Thank you, Cody, and good afternoon, everyone. Demand challenges across both of our segments continued to persist during the first quarter, which drove overall weak consolidated financial performance. While it's not yet evident in our financial results, we're making progress on all of our near-term initiatives, which include cost savings, operational efficiencies, and product mix optimization. Brian and Ryan have been working extremely hard to right the ship, and we remain on track to see improvements across our financial results in the back half of this year.
Benjamin L. Rosenzweig: Over to you.
Speaker Change: Thank you Cody and good afternoon, everyone.
Benjamin L. Rosenzweig: Demand challenges across both of our segments continued to persist during the first quarter, which drove overall, we consolidated financial performance.
Benjamin L. Rosenzweig: Not yet evident in our financial results, we're making progress in all of our near term initiatives, which include cost savings operational efficiencies and product mix optimization.
Benjamin L. Rosenzweig: Ian and Ryan have been working extremely hard to right. The ship and we remain on track to see improvements across our financial results in the back half of this year.
Benjamin L. Rosenzweig: We expect that we're only a few months away from results that are more representative of run-rate performance for our existing assets. Though we're hopeful of some near-term market recovery, we neither assume nor rely on that taking place for us to meet our internal plan. I'll let Brian dive into the details on segment-specific initiatives, but I wanted to provide a brief recap of our plans for both segments. Within Tubular Products, we're working tirelessly to replicate and implement strategies that we believe can positively impact results in the near term. I'm pleased to report our operations at Bristol were fully restored after the unexpected downtime that significantly impacted our production capacity starting in Q3.
Benjamin L. Rosenzweig: We expect that we're only a few months away from results that are more representative of run rate performance for our existing asset base.
Benjamin L. Rosenzweig: So we're hopeful of some near term market recovery.
Benjamin L. Rosenzweig: We need their assumed or rely on that taking place for us to meet our internal plan.
Benjamin L. Rosenzweig: Of that Brian dive into the details on segment specific initiatives, but I wanted to provide a brief recap of our plans for both segments.
Benjamin L. Rosenzweig: Within tubular products, we're working tirelessly to replicate and implement strategies that we believe can positively impact results in the near term.
Benjamin L. Rosenzweig: I am pleased to report our operations at Bristol for fully restored after the unexpected downtime that significantly impacted our production capacity starting in Q3.
Benjamin L. Rosenzweig: While we saw a bit of improvement in Q1, I believe we're on the right path towards maximizing the value of this segment, and Specialty Chemicals, our top priority remains capitalizing on attractive long-term growth opportunities. We've made positive strides as we've begun to reconfigure our product mix toward branded product sales without the need for significant capital investment in the near term.
Benjamin L. Rosenzweig: While we saw a bit of improvement in Q1 to restore production capacity will begin flowing through more meaningfully in Q2 and going forward.
Benjamin L. Rosenzweig: Overall I believe are on the right path towards maximizing the value of the segment.
Benjamin L. Rosenzweig: In specialty chemicals, our top priority remains capitalizing on attractive long term growth opportunities we've.
Benjamin L. Rosenzweig: We've made positive strides as we began to reconfigure our product mix towards branded product sales without the need for significant capital investment in the near term.
Benjamin L. Rosenzweig: Brian is executing towards a very specific vision for Ascent Chemicals, and it starts with breaking and breathing life back into some of the branded product offerings that we've had on the shelf the past few years, along with better utilizing the production resources we currently have in our toolbox.
Benjamin L. Rosenzweig: Ryan is executing towards a very specific vision for sand chemicals and it starts.
Benjamin L. Rosenzweig: With braking.
Benjamin L. Rosenzweig: Breathing life back into some of the branded product offerings that we've had on the shelf the past few years, along with better utilizing the production resources. We currently have in our toolbox.
Benjamin L. Rosenzweig: We remain confident in our belief that this segment can deliver more profitable and predictable revenues, resulting in better value for our shareholders over the long term. Our capital priorities also remain unchanged. We've been repurchasing shares in the open market as much as possible, and we'll continue to do so as long as our stock trades below our expectation of the company's intrinsic value. M&A continues to stay warm on the back burner while we maintain our internal operational focus for the near term.
Benjamin L. Rosenzweig: We remain confident in our belief that this segment can deliver more profitable and predictable revenue streams, resulting in better value for our shareholders over the long term.
Benjamin L. Rosenzweig: Our capital priorities also remain unchanged.
Benjamin L. Rosenzweig: Repurchasing shares in the open market as much as possible and we'll continue to do so as long as our stock trades below our expectation of the company's intrinsic value.
Benjamin L. Rosenzweig: M&A continues to stay warm on the backburner, while we maintain our internal operational focus for the near term.
Benjamin L. Rosenzweig: As always, our Board continues to evaluate other actionable options to accelerate creative capital deployment. We're moving in the right direction towards durable shareholder value creation. I know we've had setbacks throughout the last year, and we're working hard every day to restore credibility amongst our shareholders, but the optimism for our future throughout the organization is real. We remain debt-free, and I'm proud that we're able to show a significant year-over-year improvement in our liquidity as we continue to progress our working capital initiative.
Benjamin L. Rosenzweig: As always our board continues to evaluate other actionable options to accelerate accretive capital deployment.
Benjamin L. Rosenzweig: We're moving in the right direction towards durable shareholder value creation I know, we've had setbacks throughout the last year and we're working hard everyday to restore credibility amongst our shareholders, but the optimism for our future throughout the organization is real we remain debt free and I'm proud that we're able to show a significant year over year improvement in our liquidity as we continue to progress.
Benjamin L. Rosenzweig: That focus has created ample availability within our revolving credit facility that gives us optionality when the right opportunities to deploy capital arise. Overall, the entire organization is working tirelessly and cohesively to return a positive and growing EBITDA, and we're looking forward to delivering improved financial results in the very near future. Now, I'd like to pass the call over to Brian to provide details on our operations across both segments. I'll be available later on to answer any questions. Brian, it's over to you. Thanks.
Benjamin L. Rosenzweig: Our working capital initiatives.
Benjamin L. Rosenzweig: That focus has created ample availability within our revolving credit facility that gives us optionality when the right opportunities to deploy capital present themselves.
Brian: Overall, the entire organization is working tirelessly and cohesively to return to positive and growing EBITDA and we're looking forward to delivering improved financial results in the very near future.
Benjamin L. Rosenzweig: Now I'd like to pass the call over to Brian to provide details on our operations across both segments I'll be available later on to answer any questions Brian over to you.
Brian Kitchen: Thanks, Ben, and thank you all for joining us this afternoon. We have been disciplined in our approach to stabilize the enterprise since our last discussion in March. Accountability and ownership are at the core of everything that we do. We've been laser focused on reducing cost, optimizing mix, and managing cash, all while navigating ongoing demand headwinds across. While we are far from seeing the full run rate impact of the improvements to date, we've delivered both sequential and year-on-year improvements in our bottom-line results from continuing operations.
Brian: Thanks, Pam and thank you all for joining us. This afternoon, we have been disciplined in our approach to stabilize the enterprise since our last discussion in March.
Brian Kitchen: Accountability and ownership are at the core of everything that we do we've been laser focused on reducing costs optimizing mix and managing cash all while navigating ongoing demand headwinds across both segments.
Brian Kitchen: While we are far from seeing the full run rate impact of the improvements to date, we have delivered both sequential and year on year improvements in our bottom line results from continuing operations.
Brian Kitchen: Momentum is built. Now, let's first dive into the progress that we've made in the tubular segment. Facing ongoing market headwinds, the team delivered both sequential and year-over-year bottom line growth. Although we are nowhere near an acceptable level of performance, we are moving in the right direction. I'm also pleased to report that we've safely moved past the unplanned downtime issue that we had.
Brian Kitchen: Momentum is building.
Brian Kitchen: Now, let's first dive into the progress that we've made in the tubular segment. Despite ongoing market headwinds the team delivered both sequential and year over year bottom line improvements. Although we are nowhere near an acceptable level of performance we are moving in the right direction.
Brian Kitchen: I'm also pleased to report that we've safely moved past the unplanned downtime issue that we had at Bristol.
Brian Kitchen: As we strive to transition towards a more profitable and predictable business model, we have completed a critical assessment of our product. As a result, we have refined our organizational design and have optimized our labor cost approach. We expect our initial efforts related to product mix optimization to have a meaningful impact on our segment level adjusted EBITDA in the near future and will be at full run rate in the second half of 2020.
Brian Kitchen: As we strive to transition towards a more profitable and predictable business model. We've completed a critical assessment of our product mix. As a result, we have refined our organizational design and have optimized our labor cost appropriately.
Brian Kitchen: We expect our initial efforts related to product mix optimization to have a meaningful impact on our segment level adjusted EBITDA in the near future and will be at full run rate in the second half of 2024.
Brian Kitchen: Just as we've taken a data-driven approach to our product mix assessment, the same is true regarding the pipeline of cost reduction initiatives we're working on. First, we've made strong progress in reducing overhead across the segment as we've worked through a collaborative and aggressive reset on spending targets across our facility. Weekly control plans have been established to drive accountability, improve visibility, and surface new opportunities for collaboration across the universe. To be clear, our focus has not been isolated to just continuing operations but the entire segment, inclusive of Munhall. As a result, we've identified a number of addressable stranded costs, costs that we immediately eliminated.
Brian Kitchen: Just as we've taken a data driven approach to our product mix assessment. The same is true regarding the pipeline of cost reduction initiatives were working on first we've made strong progress in reducing overhead across the segment as we've worked through a collaborative and aggressive reset on spending targets across our facilities weakly control plans have been.
Brian Kitchen: Establishing a drive accountability improve visibility and surface new opportunities for collaboration across the enterprise to.
Brian Kitchen: To be clear our focus has not been isolated to just continuing operations, but the entire segment inclusive of munhall. As a result, we've identified a number of addressable skips stranded costs costs that we immediately eliminated.
Brian Kitchen: We are leaving no stone unturned; it all matters. We've also accelerated strategic sourcing initiatives to drive meaningful improvements to our cost of goods. Based on the spend profile, raw materials are certainly at the top of the list, but I assure you, every category of spend is being. Furthermore, we are not simply focused on how much we're paying for the goods and services, but we are also critically evaluating the underlying need to purchase anything at all, along with the time.
Brian Kitchen: We are leaving no stone unturned and all matters.
Brian Kitchen: We've also accelerated strategic sourcing initiatives to drive meaningful improvements to our cost of goods sold.
Brian Kitchen: Based on the spend profile raw materials or certainly at the top of the list, but I assure you every category of spend is being touched.
Brian Kitchen: Furthermore, we are not simply focused in on how much we're paying for the goods and services, but we're also critically evaluating the underlying need to purchase anything at all along with the timing.
Brian Kitchen: As we continue to build out our strategic planning functions, we expect to drive even further efficiency. Our critical evaluation of spend is not only related to expense but capital as well. In fact, we've taken a decision to terminate nearly 22% of capital projects from the approved 2024 budget that, when scrutinized, did not meet our return threshold.
Brian Kitchen: As we continue to build out our strategic planning functions, we expect to drive even further efficiencies efficiencies that will yield accretive margin expansion.
Brian Kitchen: Our critical evaluation of the spend is not only related to expense our capital as well and in fact, we've taken a decision to terminate nearly 22% of capital projects from the approved 2044 budget that when scrutinized did not meet our return thresholds. These.
Brian Kitchen: These dollars will be reallocated to growth projects and or other needs based on clear return on investment. With daily improvements in our cost structure and signs of growing optimism across our end markets, we are confident that we are steering towards improved operating margins within the tubular business. Positive momentum is building within two years. Now, let's turn it over to the specialty.
Brian Kitchen: These dollars will be reallocated to growth projects and our other needs based on clear return on investment hurdles.
Brian Kitchen: With daily improvements in our cost structure and signs of growing optimism across our end markets. We are confident that we are steering towards improved operating margins within the tubular segment.
Brian Kitchen: Positive momentum is building within tubular.
Specialty: Now, let's turn it over to specialty chemicals.
Brian Kitchen: As expected, we continue to experience challenges associated with inventory destocking and soft market demand in the first. Green shoots are beginning to appear in some markets, but we are not relying on the markets to hand-deliver sustainable earnings. We remain laser focused on fixing our foundation with aggressive self-help. As outlined in our last call, we are actively working to shift our product mix towards branded product sales to mitigate demand variability and margin dilution associated with traditional custom manufacturing.
Brian Kitchen: As expected, we continued to experience challenges associated with inventory destocking and soft market demand in the first quarter range.
Brian Kitchen: Green shoots are beginning to appear in some markets, but we are not relying on the markets to hand deliver sustainable earnings growth. We remain laser focused in on fixing our foundation with aggressive self help.
Brian Kitchen: As outlined in our last call. We are actively working to shift our product mix towards branded product sales to mitigate demand variability and margin dilution associated with traditional custom manufacturing.
Brian Kitchen: Response has been strong, very strong; respective customers are latching on to our team in our domestic multi-site value process. Our demonstrated ability to innovate at the speed of our customers is one of our competitive advantages. To give you some color on that, one of our prospective customers expressed a need late in March. Within one week, our team had developed several different product formulations with complex, multi-step reactions. Samples were immediately shipped.
Brian Kitchen: Response has been strong.
Brian Kitchen: Very strong prospective customers are latching onto our team and our domestic multi site value proposition our demonstrated ability to innovate at the speed of our customers is one of our competitive advantages.
Brian Kitchen: To give you some color on that one of our perspective customers expressed a need late March within one week, our team and developed several different product formulations with complex multi step reactions samples were immediately shipped once received a prospective customer tested those samples and later advised that one of our products have been qualified our technical competency.
Brian Kitchen: Once received, our prospective customer tested those samples and later advised that one of our products had been qualified. Our technical competencies and our agility were on display, garnering the attention of all levels within their organization. We demonstrated the ability to innovate at the speed of our, solving a Problem of Enterprise Empowerment. As a result of that, we have received a customer commitment for over three million pounds, translating to over six million dollars of revenue on an annualized basis.
Brian Kitchen: And our agility were on display garnering the attention of all levels within their organization.
Brian Kitchen: We demonstrated the ability to innovate at the speed of our customers solving a problem of enterprise importance.
Brian Kitchen: As a result of that we have received a customer commitment for over 3 million pounds translating to over $6 million of revenue on an annualized basis.
Brian Kitchen: This was a tremendous win, but this is not the full breadth of the progress that we've made to date. We are only just getting started. In fact, we received our first orders from yet another customer, translating to roughly two million pounds or four billion dollars of revenue on an annualized basis. Momentum
Brian Kitchen: This was a tremendous win but this is not the full breadth of the progress that we've made to date. We are only we are only just getting started.
Brian Kitchen: In fact, we received our first orders from yet another customer translating to roughly 2 million pounds or $4 billion of revenue on an annualized basis.
Brian Kitchen: We are encouraged by initial customer responses and continue to execute our plans to recapitalize SG&A resources. Most recently, we hired a director of strategic marketing that will help sharpen our go-to-market strategy for branded product sales in partnership with our new world-class tech. I look forward to sharing additional success stories with you in the near future. Similar to the positive momentum we're building with new business development, we are also making strong progress in cost reduction.
Brian Kitchen: Momentum is building.
Brian Kitchen: We are encouraged by initial customer responses and continued to execute our plans to recapitalize SG&A Resourcing. Most recently, we have hired a director of strategic marketing that will help sharpen our go to market strategy for branded product sales in partnership with our new World Class Technical sales I look forward to sharing it.
Brian Kitchen: Additional success stories with you in the near future.
Brian Kitchen: Similar to the positive momentum we are building with new business development. We're also making strong progress in cost reduction.
Brian Kitchen: In spite of great work being done to optimize our costs, the full impact of these efforts has been muted by software. In fact, our strategic sourcing team delivered double-digit unit material cost reductions, and we have yet to see the full run rate of their impact of that ongoing efforts hit the P&N. Similar to tubular, the chemical segment has also been aggressively managing overhead spend by utilizing the same standardized approach to weekly spend management.
Brian Kitchen: In spite of great work being done to optimize our cost the full impact of these efforts were muted by soft demand in fact, our strategic sourcing team delivered double digit unit material cost reduction and we have yet to see the full run rate of 30 <unk> of that impact other ongoing efforts hit the P&L.
Brian Kitchen: Similar to tubular the chemical segment has also been aggressively managing overhead spend by utilizing the same standardized approach to weekly spend management.
Brian Kitchen: To put aggressive into context, a few weeks ago, I received a picture in my inbox from our site director in Virginia. In the picture, there must have been 100 valves organized and spread out on the floor. I admit, my first reaction was one of concern, but as I read the note, I realized that our maintenance team had gathered up all of our unused fittings from across the entire site, cleaned them up, and got them ready for redeployment into the future.
Brian Kitchen: Put aggressive into context, a few weeks ago I received a picture in my inbox from or site director in Virginia, and the picture there must have been 100 valves are organized and spread out on the floor.
Brian Kitchen: Admit my first reaction was one of concern, but as I read the note I realize that our maintenance team gathered up all of our unused settings from across the entire site.
Brian Kitchen: Clean them up and got them for ready for redeployment into the field.
Brian Kitchen: The financial impact is the most tangible, but what is more encouraging to me is the ownership mindset and strong bias to eliminate it. The momentum is, Our employees have demonstrated incredible resilience and are beginning to lean into the required We are certainly not where we want to be, but our actions are positioned nicely for a recovery in the back half. I remain highly optimistic about the future of Ascent and our ability to deliver predictable reliability and durable value for our shareholders, our customers, and our employees. I'd like to now turn it over to our CFO, Ryan Kavalauskas, to walk us through our first quarter financial results and more. Ryan, the floor is yours.
Brian Kitchen: Financial impact is the most tangible but what is more encouraging to me is the ownership mindset and strong bias to eliminate waste.
Ryan Kavalauskas: Momentum is building.
Ryan Kavalauskas: Our employees have demonstrated incredible resilience and are beginning to lean into the required changes. We are certainly not where we want to be but our actions are positioning us nicely for a recovery in the back half of the year.
Ryan Kavalauskas: I remain highly optimistic about the future of ascent and our ability to deliver predictable reliability and durable value for our shareholders our customers and our employees.
Ryan Kavalauskas: I'd like to now turn it over to our CFO, Ryan <unk> will ask us to walk us through our first quarter financial results in more detail Ryan the floor is yours.
Ryan Kavalauskas: Thank you, Brian, and good afternoon, everyone. Jumping right into the first quarter financial results, net sales from continuing operations were $44.1 million compared to $54.9 million in the prior year period. This decline was primarily due to decreased end market demand and what we believe are the final effects of long-standing destocking trends across both sectors.
Ryan Kavalauskas: Thank you, Brian and good afternoon, everyone jumping right into the first quarter financial results.
Ryan Kavalauskas: Net sales from continuing operations were $44 1 million compared to $54 9 million in the prior year period.
Ryan Kavalauskas: This decline was primarily due to decreased end market demand and what we believe are the final effects of longstanding destocking trends across both segments.
Ryan Kavalauskas: Gross profit from continuing operations increased to $2.5 million compared to $1.5 million in the first quarter of 2023, and gross margin increased 300 basis points to 5.7% compared to 2.7% in the prior year period. The increase was primarily a result of cost savings initiatives and improved strategic sourcing actions that resulted in raw material cost improvements.
Ryan Kavalauskas: Gross profit from continuing operations increased to $2 5 million compared to $1 5 million in the first quarter of 2023.
Ryan Kavalauskas: While gross margin increased 300 basis points to five 7% compared to two 7% in the prior year period.
Ryan Kavalauskas: The increase was primarily a result of cost savings initiatives and improved strategic sourcing actions that resulted in raw material cost improvements.
Ryan Kavalauskas: Net loss from continuing operations in the first quarter decreased to $4.1 million, or $0.41 diluted loss per share, compared to a net loss from continuing operations of $5.8 million, or $0.58 diluted loss per share, for the first quarter of 2020. The decrease in net loss was primarily attributable to the aforementioned increase in gross profit, along with the decrease in year-over-year interest expense due to lower debt outcomes, adjusted EBITDA in the first quarter improved to negative 3.1 million compared to negative 3.7 million in the same period last year, which was primarily driven by our broader cost optimization, adjusted EBITDA margin was negative 7.1%, compared to negative 6.8% in the same period last year, primarily driven by the aforementioned lower net sales base.
Ryan Kavalauskas: Okay.
Ryan Kavalauskas: Net loss from continuing operations in the first quarter decreased to $4 1 million.
Ryan Kavalauskas: Or <unk> 41 diluted loss per share compared to a net loss from continuing operation of <unk>.
Ryan Kavalauskas: $5 8 million or <unk> 58 cents diluted loss per share for.
Ryan Kavalauskas: For the first quarter of 2023.
Ryan Kavalauskas: The decrease in net loss was primarily attributable to the aforementioned increase in gross profit along with a decrease in year over year interest expense due to lower debt outstanding.
Ryan Kavalauskas: Adjusted EBITDA in the first quarter improved to negative $3 1 million compared to negative $3 7 million in the same period last year, which was primarily driven by our broader cost optimization efforts.
Ryan Kavalauskas: Adjusted EBITDA margin was negative seven 1% compared to a negative six 8% in the same period last year, primarily driven by the aforementioned lower net sales base.
Ryan Kavalauskas: Lastly, looking at our liquidity position as of March 31st, 2024, we are pleased to have ended a second consecutive quarter with no outstanding debt under a revolving credit facility and access to $63.6 million in availability. The Minimal Debt You Do See. The balance sheet is related to a financing portion of our insurance expense, which matured last, during the first quarter of 2024. We repurchased a total of 16,330 shares for approximately $165,000 through our Share Repurchase Program. With that, I'll now turn it back over to the operator for Q&A. Thanks, sir.
Ryan Kavalauskas: Lastly, looking at our liquidity position as of March 31, 2024. We are pleased to have ended a second consecutive quarter with no outstanding debt under our revolving credit facility and access to $63 6 million in availability.
Ryan Kavalauskas: The minimal that you do see.
Ryan Kavalauskas: On our balance sheet is related to finance a portion of our insurance expense, which matured last month during the first quarter of 2024.
Ryan Kavalauskas: We repurchased a total of 16330 shares for approximately $165000 through our share repurchase program.
Ryan Kavalauskas: With that I'll now turn it back over to the operator for Q&A.
Operator: Thank you, sir. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again. Please stand by while we compile the county roster. Now, first question coming from the lineup, Vincent Anderson with Stiefel, your line is open. Yeah, thanks.
Operator: Thank you, Sir ladies and gentlemen to ask a question you will need to press star one on your telephone and Lakeland name to be announced to withdraw your question simply press Star One again, please standby, while we compile the Q&A roster.
Operator: Okay.
Vincent Alwardt Anderson: First question coming from the lineup.
Vincent Alwardt Anderson: Anderson with Stifel. Your line is open.
Vincent Alwardt Anderson: Yeah, thanks. Good evening, guys. Unknown Attendee, Cody Cree, William Steckel, David Siegfried, Ryan Kavalauskas, Ascent Industries
Vincent Alwardt Anderson: Yes, thanks, good evening guys.
Vincent Alwardt Anderson: I know we've beaten this one to death I think but.
Vincent Alwardt Anderson: Couldn't help but notice that the operating expense line and chemicals through all of the volatility of the last two years has been surprisingly stable.
Vincent Alwardt Anderson: And I Wonder if it's fair to interpret that is throughout all of this the team has done a really good job of hitting the mark on variable margins on a product by product basis, and so everything we think about from here on with earnings improvement is really just down to fixed cost absorption and mix or do you feel like theres still more work to do on the variable margin side as well.
Brian Kitchen: Hey Vincent, it's Brian. So yeah, the way that we look at it is absolutely the more volume we put through the plant that's fixed cost absorption, but I assure you we're still pulling on levers today to reduce our raw material inputs, we're pulling on levers to continue to reduce overhead expenses and the like. So that work doesn't stop, and we're not going to stop seeing the benefits anytime in the near future. In fact, you know, I think, based on what we talked about earlier, we're not even seeing the full benefit of all of the improvements that we've implemented.
Vincent Alwardt Anderson: Hey, Vincent it's Brian So, yes, the way to the way that we look at it is absolutely the more volume we put through the plant that's fixed fixed cost absorption, but I assure you we are pulling on still even today levers to reduce our raw material inputs were pulling on levers to continue to reduce overhead expenses.
Brian Kitchen: Right.
Brian Kitchen: So that work doesn't stop we're not going to start seeing the benefits.
Brian Kitchen: Anytime in the near future.
Brian Kitchen: In fact, I think based on what we talked about earlier, we're not even seen the full benefit of all of the improvements that we've implemented to date.
Brian Kitchen: Okay, that's good, and I know the queue just hit, so I haven't had a chance to look at it, but if you could just comment briefly on what you saw in terms of price versus volume in each of the segments and how price has been tracking versus raw materials.
Vincent: Okay. That's good.
Brian Kitchen: And I know the Q just hit I haven't had a chance to look at it but if you could just comment briefly on what you saw in terms of price versus volume in each of the segments and how has price been tracking versus raw materials.
Brian Kitchen: Yeah, so from a tubular standpoint, obviously price was depressed, you know, as we look out into Q2, we start to see that tick up a little bit. From a chemical standpoint, there's a lot of volatility in there from a product mix standpoint. So that's why I would caution you and others, as you're looking at the data. As we move forward, as we implement some of the product mix changes, we're going to start to see our average selling price begin to tick up and have it be more rateable, more predictable.
Speaker Change: Yes, so from a tubular standpoint, obviously price was price was depressed as we look out into Q2, we start to see that tick up.
Brian Kitchen: A little bit.
Brian Kitchen: From a chemical standpoint, theres a lot of volatility in there from a product mix standpoint, satisfy it with caution you and others.
Brian Kitchen: Youre looking at the data.
Brian Kitchen: As we move forward as we implement some of the product mix changes, we're going to start to see our average selling price begin to tick up over time.
Brian Kitchen: And they haven't been more.
Brian Kitchen: Okay, excellent. And then, you know, inventory and dollar terms stabilized here in one queue look like you're running at around 120 days, so just curious if that's kind of the target, if there are some timing considerations with that, or if you're still expecting to bring that down over the course of a year.
Brian Kitchen: More ratable and more predictable.
Speaker Change: Okay excellent and then.
Brian Kitchen: Inventory in dollar terms stabilized here at <unk> it looks like you're running at around 120 days. So just curious if that's kind of the target. If there is some timing.
Brian Kitchen: Considerations with that or if youre still expecting to bring that down over the course of the year.
Brian Kitchen: Yeah, look, I think from a chemical standpoint, we still see some opportunity to right-size the inventory levels. We also see some sizable opportunities in the tubular sector as well. So we're not done yet, right? From an inventory optimization standpoint, I would say that we're really just getting started.
Speaker Change: Yes look I think from a chemical standpoint, we still see some opportunity to to rightsize. The inventory levels. We also see some sizable opportunities in the tubular segment as well. So we're not done yet right from an inventory optimization standpoint, I would say that we're really just getting started.
Brian Kitchen: Okay, excellent. And then, you know, on the tubular side, maybe specifically, in just broad terms, you know, how do you feel customer relationships have been holding up with just the sheer amount of change the company has gone through from, you know, the staffing standpoint, product portfolio optimization sounds like you got another round of that coming? You know, has there been any burden on customer relationships, or is that something you've managed through?
Brian Kitchen: Okay excellent.
Brian Kitchen: And then on.
Brian Kitchen: The tubular side, maybe specifically.
Brian Kitchen: And just broad terms, how do you feel customer relationships have been holding up with just the sheer amount of change. The company has gone through from a staffing standpoint product portfolio optimization and it sounds like you've got another round of that coming.
Brian Kitchen: Has there been any burden on customer relationships or is that something you've managed through pretty well.
Brian Kitchen: Yeah, I mean, look, there's certainly been some churn, but what I would say is, you know, the vast majority of our customers have been with us for..., and I believe that they will continue to be incredibly loyal. We're incredibly thankful for the customers that we do have, and we'll continue to grow that way.
Brian Kitchen: Yes, I mean look there has certainly been have been some churn.
Brian Kitchen: But what I would say is the vast majority of our customers have been with us for decades.
Brian Kitchen: And I believe that they will continue to be with us for decades. So incredibly loyal we're incredibly thankful for the customers that we do have and want to continue to grow that base.
Brian Kitchen: All right, excellent. And then just last one real quick, you know, not you specifically, but Ben, you know, used to comment on a representative run rate margin. Being somewhere in the double digit EBITDA area, if not. You know, the goal of getting into the teams when you talk about it. You know, kind of starting to see that representative margin in the back half of the year. Is that still it? The right level, or is that, you know, we're talking about maybe more of a transition period in the back half of the year, and that's still more of a long-term goal.
Brian Kitchen: All right excellent and then just last one real quick.
Brian Kitchen: Not you, specifically, but but Ben.
Brian Kitchen: Just to comment on a representative run rate margin being somewhere in the double digit EBITDA area if not.
Brian Kitchen: Full of getting into the teens when you talk about.
Brian Kitchen: Starting to see that representative margin in the back half of the year is that still the right level or is that yes.
Brian Kitchen: We're talking about maybe more of a transition period in the back half of the year and Thats still more of a long term goal.
Brian Kitchen: Yeah, I think it's more of a transitionary period in the near term, but, you know, the two new pieces of business that were referenced earlier are squarely in that range.
Speaker Change: Yes, I think it's more of a transition period in the near term but.
Brian Kitchen: The two new pieces of business that I referenced earlier.
Vincent Alwardt Anderson: Excellent. All right. Well, thank you so much. That was everything.
Speaker Change: We're squarely in that range.
Speaker Change: Excellent alright, well. Thank you so much that was everything for me.
Operator: Thank you. And as a reminder, ladies and gentlemen, if you'd like to ask a question, please press star 1 1. And our next question, coming from the line of Charles Galt with Truer Ceylon, is open.
Vincent Alwardt Anderson: Yeah.
Speaker Change: Thank you.
Charles Galt: As a reminder, ladies and gentlemen, I'd like to ask a question. Please press star one one.
Charles Galt: And our next question coming from the line of Charles <unk> with Thomas Your line is open.
Charles Galt: Congratulations on showing some improvement. It sounds like things are getting better.
Charles Galt: Congratulations on showing some improvement and it sounds like things are.
Charles Galt: I just have a comment about the share repurchase. Buying 275 shares a day on average indicates that you really don't want to buy back shares at a greater rate. I mean, I'm following lots of companies that do share repurchases, and I know Ascent is thinly traded. But if you wanted to buy two or three times that amount, it should be available in the marketplace. Thank you.
Charles Galt: Are you getting better I, just have a comment about the share repurchase.
Charles Galt: Buying 275 shares a day on average.
Charles Galt: Indicates.
Charles Galt: You really don't want to buyback shares.
Charles Galt: At a greater rate.
Charles Galt: Lots of companies.
Charles Galt: To share repurchases.
Charles Galt: Ascend has suddenly traded but if you wanted to buy two or three times that amount.
Charles Galt: It should be available in the marketplace.
Charles Galt: Yes.
Charles Galt: Yes.
Charles Galt: Okay.
Charles Galt: Excellent.
Operator: Thank you. And as a reminder, ladies and gentlemen, to ask a question, please press star 1 1.
Speaker Change: Thank you.
Operator: And as a reminder, ladies.
Operator: To ask a question please press star one.
Operator: Okay.
Brian Kitchen: Thank you. At this time, this concludes our question and answer session. I would now like to send a call back to Mr. Kitchen for any closing remarks.
Operator: Thank you at this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Kitchen.
Brian Kitchen: <unk> remarks.
Brian Kitchen: Okay.
Operator: Okay, great. Thank you. And, ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And we look forward to reporting our second quarter results.
Mr. Kitchen: Okay, great. Thank you.
Operator: Okay.
Kitchen: And ladies and gentlemen, this does conclude today's teleconference. You may just disconnect. Your lines at this time. Thank you for your participation and we look forward to reporting out our second quarter results.
Operator: Ladies and gentlemen, this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.
Speaker Change: Ladies and gentlemen. This concludes today's teleconference. You may now disconnect. Your lines at this time. Thank you for your participation.
Operator: Okay.
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