Q2 2024 Ascent Industries Co Earnings Call
Cody Cree: Ascent does not undertake the responsibility to update any forward-looking statements. Furthermore, the discussion today may include non-gap measures. In accordance with Regulation G, the companies reconcile 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 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 in 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.
<unk> does not undertake the responsibility to update any forward looking statements.
Further 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 and posted on the investors section of the company's website at <unk> Dot com.
Please note that this call is available for replay via 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 a sense executive chairman of the board Ben Rosenzweig, Ben over to you. Thank.
Ben Rosenzweig: Thank you, Cody, and good afternoon, everyone. I'm pleased that we reported improved financial results for the second quarter, as our stabilization efforts are beginning to bear fruit. Though the broader demand environment remains soft, we did see some volume pickup across both segments due to churning through some slow-moving inventory as we continue shifting towards more profitable product lines. We expect demand will slowly improve through the remainder of the year and see more substantial growth opportunities occur in 2025 and beyond.
Ben Rosenzweig: Thank you Tony and good afternoon, everyone. I am pleased that we reported improved financial results for the second quarter as our stabilization efforts are beginning to bear fruit.
Speaker Change: <unk> demand environment remains soft we did see some volume pickup across both segments due to churning through some slow moving inventory as we continue shifting towards more profitable product lines.
We expect demand will slowly improve through the remainder of the year and see more substantial growth opportunities to occur in 2025 and beyond and.
Ben Rosenzweig: In the meantime, we've continued to diligently focus on our near-term initiatives to cut costs, drive operational efficiencies, and optimize our product mix in both segments. There's still more to be done on all these fronts, but we're pleased to see our initial efforts working. We expect financial improvements in the back half of the year to come from the internal self-help initiative, rather than anticipate any meaningful uptick in demand on the sales side.
Ben Rosenzweig: In the meantime, we have continued to diligently focus on our near term initiatives to cut costs drive operational efficiencies and optimize our product mix in both segments.
Ben Rosenzweig: Ryan will provide all the specific details on each segment, but I'm pleased that we're on the right track towards executing our long-term vision for both of these businesses. We continue to take steps towards maximizing the value of our tubular assets as we execute basic business fixes, while keeping our main focus on driving long-term profitable growth in the industry.
Ben Rosenzweig: and that our actions were positioning us nicely for recovery in the back half. And we were able to improve our gross profit for this segment by 311% as compared to the prior quarter and the prior year. Since our last Series call, our team has been busy sharpening our marketing tactics and evaluating product development opportunities that are centered around solving our customers' problems. While we do hope to see more green shoots in the second half of the year, we are taking full advantage of this time to stabilize, optimize, and establish a strong foundation for growth as we actively work towards shifting more of our capacity to branded product sales. We are just getting started, but I am pleased with the progress that our team is making.
Speaker Change: Driven by fulfilling low priced order backlog and depressed nickel pricing <unk>.
Speaker Change: Despite this we've been hard at work on optimizing all aspects of our cost structure and we were able to improve our gross profit for this segment by 311% as compared to the prior quarter prior year.
Speaker Change: And delivered the highest quarterly adjusted EBITDA results for this segment since the fourth quarter of 2022.
Speaker Change: As I mentioned in our last call our focus has not been isolated to continuing operations.
Speaker Change: But the entire segment inclusive of long haul I am pleased to share that subsequent to the end of the quarter. We have entered into a definitive agreement to monetize certain assets associated with long haul generating $2 $8 million of cash proceeds.
Speaker Change: Which equate to $1 million and $5 or 55% gain on book value, we are leaving no stone unturned.
Speaker Change: It all matters.
Speaker Change: Our overarching goal for this segment is to maximize the value of our current asset base by standardizing simplifying and optimizing although we do.
Speaker Change: While we are not yet achieving our fullest potential within this segment we are on the right path.
Speaker Change: Now, let's shift to our specialty chemicals segment.
As we've anticipated for this year market demand remained generally soft in the second quarter Mitch.
Mitch: Material year over year volume gains of 20% in Q2 were largely attributed to our efforts to monetize slow moving inventory.
Mitch: While new business wins gained traction and move towards full run rate impact.
Ryan Kavalauskas: The improvement was primarily a result of the aforementioned cost optimization and profitability improvement initiatives we implemented.
Mitch: Yeah.
Mitch: Just a question so with the labor and material costs that had been taken out of both businesses.
Speaker Change: Is it.
Speaker Change: Safe to assume that there'll be margin improvement.
Speaker Change: Sequentially going forward.
Speaker Change: Yeah.
Yes, David Hey, it's Brian So, yes, absolutely we're going to see that margin improvement carry through we're not done yet right. We're continuing to evaluate our product portfolio, our product mix and we continue to look for ways to further optimize costs.
David: Got it.
Speaker Change: How is the cadence of the branded product sales in chemicals, how has that been going lately.
Speaker Change: Good I mean, I think we reported in our last earnings call that we started to build some pretty meaningful traction.
Speaker Change: We're getting closer towards a run rate.
Speaker Change: Volumes on those initial two sponsoring opportunities that we that we had.
Speaker Change: I would say again based on the activity that we had in the second quarter from an R&D perspective.
Speaker Change: We're heading in the right direction David.
Speaker Change: In terms of the rest of the portfolio that we Havent, Tennessee, there is more work to be done, but we've got the right people and we're hyper focused.
David: So those wins that you had in the first quarter, the $10 million and new wins.
David: You have some activity in the second quarter.
Speaker Change: That just increased demand or is that just.
David: A more effective sales team.
Speaker Change: No those were net new selling opportunities that we did not have on the.
Speaker Change: We didn't have in the selling pipeline.
David: Prior to Q2, so those were net new and they continue to build month on month getting to that full rate run rate volume revenue and EBITDA inside of Q3. So we're pleased with the progress pleased with the traction there is a lot more to do and it's largely driven by our hyper focus and just an incredible team that we're building.
Speaker Change: Good good to hear.
Speaker Change: So subsequent to the quarter end, there was the 2 million $2 $8 million.
David: Asset sale for Munhall.
Speaker Change: So if you add that to the $3 six in cash as of June 30.
Speaker Change: Don't know what the cash balance would be but let's just say it's north of five is that just something just going let the cash build.
David: Until it is determined how to use it.
David: Yeah.
Speaker Change: Yes, that's right.
David: I'll, let Ben talk little more broadly about some of the decisions for.
Ben Rosenzweig: For capital allocation at the business level.
Ben Rosenzweig: We're strategically looking at Reinvestments or if there is there is accretive.
Speaker Change: Margin building capital investments, we can make we'll look at those none have come to our attention right away inorganic growth is again in the near future than we had probably thought so looking at things like that so at this point there is no specific allocation for the capital we are going to let it build our focus on costs and it's good to see the cash building away.
Speaker Change: Yes.
Ben Rosenzweig: Exactly what Ryan said, David. I mean, I think we feel very good about our liquidity position right now. And just because there's a little bit of excess cash on the balance sheet doesn't mean we're going to, you know, change the mentality in terms of...
Ryan: Yes, exactly what Ryan said, David I mean, I think we feel very good about our liquidity position right now and just because there is a little bit of excess cash on the balance sheet doesn't mean, we're going to change the mentality in terms of.
Ryan: Making sure that everything meets our thresholds, but it is it is good to have the ability to be building cash at this moment, knowing that we're creating some enterprise value.
Speaker Change: Absolutely I don't think.
Speaker Change: The five years that I've owned the stock I don't think we've ever had cash on the balance sheet. So.
Speaker Change: More than a million dollars. So that's good.
Speaker Change: So then Brian and Ryan you've been with the management team for six months or so would you say that the potential here.
Speaker Change: Is more.
Speaker Change: And then perhaps what you maybe even perceived six months ago.
Ryan: Yes.
Brian: This is Brian Ron I'll, let you jump in as well I mean I'm incredibly bullish.
Brian Ron: The prospects of our company right I think we've got some incredible foundational capabilities that we're just really beginning to unlock.
Speaker Change: What they are capable of if there is a lot more to do that we can do inside of our existing asset base.
Speaker Change: Couldn't agree more I think there's a ton of efficiency, we can pull out of this business. We can we can continue to drive margin through self help so.
Brian Ron: Yes, I think there's a tremendous amount of focus commercially we've got to get a lot of things fix there, but even within the business. How we operate how we can extract margin more efficiently.
Ryan Kavalauskas: There's more there than we had anticipated, so it will still take some time to pull it all out and kind of determine what are the bigger levers, and still remain extremely optimistic about what's to come.
Brian: There's more there than we had anticipated so still take some time to pull it all out and kind of determine what are the bigger levers, but yes still.
Brian: Still remain extremely optimistic about where we're at.
Brian: More so than when we started.
Speaker Change: Alright, well, thank you and thank you for the input and keep up the good work.
David: Thanks, David.
David: Yes, David.
David: 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 for closing remarks, great.
Sheree: Great. Thank you, Sheree. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you again when we report our third quarter 2024 results.
Sheree: Great
Mr. Kitchen: Great. Thank you Sherry, we'd like to thank everyone for listening to today's call and we look forward to speaking with you again.
Brian: When we report our third quarter 2024 results.
Brian: Thanks, and have a great afternoon.
Speaker Change: This concludes today's program. Thank you all for participating you may now disconnect.
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Speaker Change: Good afternoon, everyone and thank you for participating in today's conference call to discuss our sense financial results for the second quarter ended June 30th 2020 for joining US today are <unk> executive Chairman of the board, Dan Rosensweig, CEO, Brian Kitchen, CFO, Brian <unk>.
Brian: And the company's outside Investor Relations advisor Cody Cree.
Brian: 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 statements with the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements Cody. Please go ahead.
Cody Cree: Thanks, Sheree before we continue I would 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.
Cody Cree: 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.
Speaker Change: <unk> advises all those listening to this call to review the latest 10-Q and 10-K posted on its website for a summary of these risks and uncertainties.
Cody Cree: Ascent does not undertake the responsibility to update any forward-looking statements.
Speaker Change: <unk> does not undertake the responsibility to update any forward looking statements.
Speaker Change: Further 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.
Speaker Change: Reconciliations can be found in the earnings press release issued earlier today and posted on the investors section of the company's website at <unk> Dot com.
Speaker Change: Please note that this call is available for replay via webcast link that is also posted on the investors section of the company's web site.
Speaker Change: With that I'd like to turn the call over to a sense executive chairman of the board Ben Rosenzweig, Ben over to you.
Ben Rosenzweig: Thank you Cody and good afternoon, everyone I'm pleased that we reported improved financial results for the second quarter as our stabilization efforts are beginning to bear fruit.
Speaker Change: <unk> demand environment remains soft we did see some volume pick up across both segments due to churning through some slow moving inventory as we continue shifting towards more profitable product lines.
Speaker Change: We expect demand will slowly improve through the remainder of the year and see more substantial growth opportunities to occur in 2025 and beyond and.
Ben Rosenzweig: In the meantime, we've continued to diligently focus on our near-term initiatives to cut costs, drive operational efficiencies, and optimize our product mix in both segments. There's still more to be done on all these fronts, but we're pleased to see our initial efforts working. We expect financial improvements in the back half of the year to come from these internal self-help initiatives. We continue to take steps toward maximizing the value of our tubular structure.
Speaker Change: In the meantime, we've continued to diligently focus on our near term initiatives to cut costs drive operational efficiencies and optimize our product mix in both segments.
Speaker Change: Theres still more to be done on all these fronts, but we're pleased to see our initial efforts working we expect financial improvements in the back half of the year to come from the internal self help initiatives rather than anticipating any meaningful uptick in demand on the sales side.
Speaker Change: Brian will provide all the specific details on each segment, but I am pleased that we're on the right track towards executing our long term vision for both of these businesses.
Speaker Change: We continue to take steps towards maximizing the value of our tubular segment as we execute basic business fixes, while keeping our main focus on driving long term profitable growth initiatives for the specialty chemicals segment.
Ben Rosenzweig: We remain confident in our belief that this segment, run by the team that Brian and Ryan are building, can deliver more profitable and predictable revenues. We have ample availability within our revolving credit facility that allows us to be flexible should an opportunity arise to deploy capital to high-conviction and accretive areas, but we're still focused at this moment on optimizing the current operations across the company, and it's incumbent on us to bring that message to a wider audience.
Speaker Change: We remain confident in our belief that this segment run by the team that Brian and Brian are building can deliver more profitable and predictable revenue streams, resulting in better value for shareholders over the long term.
Speaker Change: Turning to our capital allocation priorities, we remain comfortable with where our current liquidity position is today.
Speaker Change: We have ample availability within our revolving credit facility that allows us to be flexible should an opportunity arise to deploy capital to high conviction and accretive areas, but we're still focused in this moment on optimizing the current operations across the company.
Speaker Change: We continue to repurchase shares in the open market and remain committed to exploring all avenues to do so as long as our stock trades below our expectation of the company's intrinsic value.
Speaker Change: It's been our near term mission is to restore credibility with the market and overall, we're making progress executing against David goals and I remain highly confident in our strategic direction.
Speaker Change: In the near term, we expect to step up our Investor Relations efforts as we have a story that I believe resonates well with the small cap investment community and it's incumbent on us to bring that message to a wider audience.
Speaker Change: Pleased that we've returned to positive adjusted EBITDA strengthened our balance sheet and positioned the company to better capitalize on future growth opportunities I look forward to continued momentum in the quarters and years to come.
Speaker Change: 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 Ron: Thanks, Ben and thank you all for joining us this afternoon.
Speaker Change: During our Q1 2020 for earnings call I shared that momentum was building across the enterprise.
Brian Ron: Our actions are positioning us nicely for a recovery in the back half of the year.
Ben Rosenzweig: Momentum continued to build in Q2, and I'm pleased to report that, despite both market-driven and cleanup-related headwinds, we delivered the best quarter of consolidated adjusted EBITDA since the fourth quarter of 2022, and we did so without tapping into our revolving credit. Material volume gains in Q2 were largely due to our efforts to monetize slow-moving inventory, which more than offset our purposeful deselection of unprofitable, unfavorable mix and the critical reinvestments made in both talent and capability. We have a lot of work to do, but our strategy is working, and our employees are highly aligned with our long-term vision. With that, let's dive into our segment-specific commentary, starting with the tubular prop.
Brian Ron: Momentum continued to build in Q2 and I'm pleased to report that despite both market driven and cleanup related headwinds we delivered the best quarter of consolidated adjusted EBITDA since the fourth quarter of 2022 and.
Brian Ron: And we did so without tapping into our revolving credit facility.
Brian Ron: The markets have not done us any favors as domain across the segments remained soft.
Brian Ron: Material volume gains in Q2 were largely attributed to our efforts to monetize slow moving inventory, which more than offset our purposeful deselection of unprofitable business.
Brian Ron: Our ROE to improve profitability in Q2 was underpinned by aggressive self help and was accelerated by the recapitalization of talent across the enterprise.
Brian Ron: More specific our team delivered a 28% or nearly $4 million reduction in material costs, and a 30% or nearly $3 million reduction in labor and overhead as compared to the same quarter prior year.
Speaker Change: Our aggressive actions position us to overcome the impact of ongoing market headwinds.
Brian Ron: Unfavorable mix and the critical Reinvestments made in both talent and.
Brian Ron: We have a lot of work to do but.
Speaker Change: But our strategy is working and our employees are highly aligned with our long term vision. We are on the right track to creating durable value for our shareholders with that let's dive into our segment specific commentary starting with tubular products.
Ben Rosenzweig: Demand across array markets remains soft. We attribute much of this to the higher cost of financing across credit markets that has caused many capital projects to be put on hold. Despite this, we've been hard at work on optimizing all aspects of our costs to deliver the highest quarterly adjusted EBITDA result for this segment since the fourth quarter of 2022. I'm pleased to share that, subsequent to the end of the quarter, we have entered into a definitive agreement to monetize certain assets associated with Munhall, generating $2.8 million of cash proceeds, which equate to a million and a half dollars, or a 55% gain on book value.
Speaker Change: Demand across your end markets remained soft we attribute much of this to higher cost of financing across credit markets that has caused many capital projects to be put on hold we believe that the underlying softness in demand was further compounded by tight management of working capital across the value chain.
Speaker Change: We did see strong quarter on quarter volume growth of 18%. However, this was offset by unfavorable pricing, primarily driven by fulfilling low priced order backlog and depressed nickel pricing.
Speaker Change: Despite this we've been hard at work on optimizing all aspects of our cost structure and we were able to improve our gross profit for this segment by 311% as compared to the prior quarter prior year.
Speaker Change: And delivered the highest quarterly adjusted EBITDA results for this segment since the fourth quarter of 2022.
Speaker Change: As I mentioned in our last call. Our focus has not been isolated to continuing operations, but the entire segment inclusive of non hall.
Speaker Change: I am pleased to share that subsequent to the end of the quarter. We have entered into a definitive agreement to monetize certain assets associated with munhall generating $2 $8 million of cash proceeds.
Speaker Change: Which equate to a $1 million and $5 or 55% gain on book value, We are leaving no stone unturned.
Brian Ron: It all matters.
Brian Ron: Our overarching goal for this segment is to maximize the value of our current asset base by standardizing simplifying and optimizing all that we do.
Brian Ron: While we are not yet achieving our fullest potential within this segment we are on the right path.
Ben Rosenzweig: Now let's shift to our specialty chemicals business. Material year-over-year volume gains of 20% in Q2 were largely attributed to our efforts to monetize slow moving inventory while new business wins gain traction and move towards full run rate. Since our last earnings call, our team has been busy sharpening our marketing tactics and evaluating product development opportunities that are centered around solving our customers' problems. We will remain disciplined in our approach, evaluating strategic fit before resources are allocated.
Brian Ron: Now, let's shift to our specialty chemicals segment.
Brian Ron: As we've anticipated for this year market demand remained generally soft in the second quarter.
Brian Ron: Material year over year volume gains of 20% in Q2 were largely attributed to our efforts to monetize slow moving inventory.
Brian Ron: New business wins gained traction and move towards full run rate impact.
Brian Ron: We remain hyper focused on accelerating the sales of our existing product line, while thoughtfully exploring new product development opportunities at the request of our customers.
Brian Ron: Since our last earnings call. Our team has been busy sharpening our marketing tactics and evaluating product development opportunities that are centered around solving our customers' problems we.
Brian Ron: We will remain disciplined in our approach evaluating strategic fit before resources are allocated demands on our R&D team increased significantly in Q2, resulting in a record number of new formulations being developed.
Brian Ron: Customer qualification.
Ben Rosenzweig: While we do hope to see more green shoots in the second half of the year, we are taking full advantage of this time to stabilize, optimize, and establish a strong foundation for growth as we actively work towards shifting more of our capacity to branded product sales. This transition is of critical importance, given the improved rateability, predictability, and profitability that solutions-based branded product sales provide. Our team delivered a 28% or $4 million reduction in material costs and a 28% or nearly $3 million reduction in labor and overhead.
Brian Ron: While we do hope to see more green shoots in the second half of the year. We are taking full advantage of this time to stabilize optimize and establish a strong foundation for growth as we actively work towards shifting more of our capacity to branded product sales.
Brian Ron: This transition is of critical importance, given the improved rate ability predictability and profitability that solutions base.
Brian Ron: <unk> product sales provide.
Brian Ron: Core to this shift is our ability to solve our customers' most difficult problems innovating at the speed of their needs momentum continues to build in this space and we are encouraged by the reception we are receiving from our growing number of blue chip customers.
Speaker Change: Like the tubular segment, our path to enhance profitability in Q2 for chemicals was driven by self improvement initiatives delivering sequential month over month improvements in material cost labor and overhead.
Brian Ron: Our team delivered a 28% of our $4 million reduction in material costs, and a 28% or nearly $3 million reduction in labor and overhead as compared to the same quarter prior year.
Brian Ron: These gains helped us overcome the impact of ongoing market headwinds and unfavorable mix.
Brian Ron: As a result, we improved our gross profit in this segment by 466% compared with the prior year quarter.
Brian Ron: All of these efforts combined culminated in the highest quarterly adjusted EBITDA figure for this segment since the first quarter of 2023.
Ben Rosenzweig: Momentum is building in our specialty chemical segment, and we are positioning the business for profitable organic and inorganic growth. Our team has accomplished a great deal in a short period of time, but more importantly, we're doing it the right way. We are laying a solid foundation for durable earnings growth by standardizing, simplifying, and optimizing all that we do, and remain incredibly optimistic about the future. And now I'd like to turn it over to our CFO, Ryan Kavalauskas, to walk us through our second quarter financial results in more detail. Ryan, the floor is yours.
Brian Ron: Momentum is building in our specialty chemicals segment, and we are positioning the business for profitable organic and inorganic growth.
Brian Ron: Our team has accomplished a great deal in a short period of time, but more importantly, we're doing it the right way.
Brian Ron: We are laying a solid foundation for durable earnings growth by standardizing simplifying and optimizing although we do we are just getting started but I am pleased with the progress that our team is making I remain incredibly optimistic about the future of <unk>.
Brian Ron: And now I'd like to turn it over to us to our CFO, Ryan <unk> to walk us through our second quarter financial results in more detail.
Brian Ron: Brian the floor is yours.
Brian Ron: Okay.
Ryan Kavalauskas: Thank you, Brian, and good afternoon, everyone. I'm jumping right to our second quarter financial results. Net sales from continuing operations were $50.2 million, compared to $50.4 million in the prior year period. Gross profit from continuing operations increased to $5.9 million, compared to negative $0.8 million in the second quarter of 2023. The improvement was primarily attributable to the aforementioned increase in gross profit and a year-over-year decrease in interest expense due to having much lower outstanding debt. Adjusted EBITDA in the second quarter increased significantly to $2.1 million compared to negative $4.8 million in the same period last year.
Ryan: Thank you, Brian and good afternoon, everyone jumping right to our second quarter financial results.
Ryan: Net sales from continuing operations were $50 2 million compared to $50 4 million in the prior year period.
Speaker Change: The slight decline was primarily attributable to a decrease in pricing across both segments.
Speaker Change: This was offset by an uptick in year over year volume as we turn through lower priced slow moving inventory across both segments.
Speaker Change: Gross profit from continuing operations increased to $5 9 million compared to negative $8 million in the second quarter of 2023.
Ryan: While gross margin increased significantly to 11, 7% compared to negative one 5% in the prior year period.
Brian Ron: The increase was primarily attributable to continued strategic sourcing initiatives, leading to cost improvements across both segments.
Brian Ron: Net loss from continuing operations in the second quarter improved $2 2 million or <unk> Duluth.
Brian Ron: Diluted loss per share.
Brian Ron: Compared to a net loss from continuing operations of $6 1 million or 60 cents diluted loss per share for the second quarter of 2023.
Brian Ron: The improvement was primarily attributable to the aforementioned increase in gross profit and a year over year decrease in interest expense due to having much lower outstanding debt.
Brian Ron: Adjusted EBITDA in the second quarter increased significantly to $2 1 million compared to negative $4 8 million in the same period last year, while adjusted EBITDA margin improved to four 2% compared to negative nine 4% in the same period.
Brian Ron: Last year.
Brian Ron: The improvement was primarily a result of the <unk> message aforementioned cost optimization and profitability improvement initiatives we've implemented.
Brian Ron: Lastly, looking at our liquidity position as of June 32024, we continue to be diligent with our capital ending our third consecutive quarter with no outstanding debt under our revolving credit facility.
Ryan Kavalauskas: Ending our third consecutive quarter with no outstanding debt under our revolving credit facility, which provides us access to $62.7 million in availability to drive organic and inorganic growth in the near future. During the second quarter of 2024, we repurchased a total of 15,233 shares for approximately $156,000 through our share repurchase program. With that, I'll now turn it back over to the operator for Q&A. Thank you, sir.
Brian Ron: Which provides us access to $62 7 million in availability to drive organic and inorganic growth in the near future.
Brian Ron: During the second quarter of 2024, we repurchased a total of 15233 shares or approximately $156000 through our share repurchase program.
Speaker Change: With that I'll now turn it back over to the operator for Q&A.
Operator: Thank you, sir. To ask a question, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. One moment for our questions. And our first question will come from the line of David Siegfried, a private investor. Your line is open. Hey, congratulations.
Speaker Change: Thank you Sir to ask a question you will need to press star one one on your telephone you will then hear an automated message advising yohan. This race to withdraw your question Press Star one again.
Brian Ron: One moment for our question.
Speaker Change: And our first question will come from the line of David <unk>, a private Investor Your line is open Sir.
David Siegfried: Congratulations on the momentum you achieved in both businesses. That's remarkable. Thank you. Just a question. So with the labor and material costs that have been taken out of both businesses, it is safe to assume that there'll be margin improvement sequentially going forward.
David: Hey, congratulations on the momentum achieved in both businesses.
Speaker Change: That's remarkable.
Speaker Change: Thank you.
Speaker Change: Just a question so with the labor and material costs that have been taken out of both businesses.
Speaker Change: Is it.
Speaker Change: Safe to assume that there'll be margin improvement.
Speaker Change: Sequentially going forward.
Brian: Yes, David. Hey, it's Brian.
Speaker Change: Yes, David it's Brian So, yes, absolutely we're going to see that margin improvement carry through we're not done yet right. We're continuing to evaluate our product portfolio, our product mix and we continue to look for ways to further optimize costs.
David: Got it.
Brian Ron: Yes.
Speaker Change: How is the cadence of the branded product sales in chemicals, how has that been going lately.
Brian: So, absolutely. We're going to see that margin improvement carry through. But we're not done yet, right? We're continuing to evaluate our product portfolio, our product mix, and we continue to look for ways to further optimize costs.
Speaker Change: Good I mean, I think we reported in our last earnings call that we started to build some pretty meaningful traction.
David Siegfried: How's the pace of branded product sales and chemicals? How's that been going lately?
Speaker Change: We're getting closer towards a run rate.
Speaker Change: <unk> on those initial choose sponsoring opportunities that we that we had.
Brian: Yeah, good. I mean, I think we reported in our last earnings call that we started to build some pretty meaningful traction. We're getting closer to run rate volumes on those initial two sponsoring opportunities that we had. And I would say, you know, again, based on the activity that we had in the second quarter from an R&D perspective, we're heading in the right direction. In terms of the rest of the portfolio that we have in Tennessee, there's more work to be done, but we've got the right people, and we're hyper-focused.
Speaker Change: And I would say again based on the activity that we had in the second quarter from an R&D perspective.
Speaker Change: We're heading in the right direction David.
Brian Ron: In terms of the rest of the volume that we Havent, Tennessee, there is more work to be done, but we've got the right people and we're hyper focused.
David Siegfried: So those wins that you had in the first quarter, the $10 million in new wins, and you had some activity in the second quarter, is that just increased demand, or is that just... a more effective sales team?
David: So those wins that you had in the first quarter, the $10 million and new wins and you have some activity in the second quarter is that just increased demand or is that just.
Speaker Change: A more effective sales team.
Brian: Those were net new selling opportunities that we didn't have in the selling pipeline prior to Q2. Those were net new, and they continue to build month on month getting to that full run rate volume revenue and EBITDA inside of Q2. So we're pleased with the progress, pleased with the traction. There's a lot more to do, and it's largely driven by a hyper-focus and just an incredible team that we're building. Good, it's good to hear from you.
Speaker Change: No those were net new selling opportunities that we did not have on the.
Brian Ron: We didn't have in the selling pipeline.
Brian Ron: Prior to Q2, so those were net new and they continue to build month on month getting to that full rate run rate volume revenue and EBITDA inside of Q3. So we're pleased with the progress pleased with the traction there is a lot more to do and it's largely driven by our hyper focus and just an incredible team that we're building.
David Siegfried: Good, good to hear. So, subsequent to the quarter end, there was the $2.8 million asset sale for Munhall. So if you add that to the $3.6 in cash as of June 30, I don't know what the cash balance would be, but let's just say it's north of five. Is that just something you're just gonna let the cash build until it's determined how to use it?
Speaker Change: Good good to hear.
Brian Ron: So subsequent to the quarter end, there was the 2 million $2 $8 million.
Brian Ron: Asset sale for Munhall.
Speaker Change: So if you add that to the three six in cash as of June 30.
Speaker Change: Don't know what the cash balance would be but let's just say, it's north of five.
Speaker Change: Is that just something just kind of let the cash build.
Brian Ron: Until it is determined how to use it.
Brian Ron: Okay.
Ryan Kavalauskas: Yeah, at this point, I mean, I'll let Ben talk a little more broadly about some of the decisions about capital allocation. But at the business level, you know, we're strategically looking at reinvestment. If there are accretive, you know, margin-building capital investments we can make, we'll look at those. None have come to our attention right away. Inorganic growth is again, in the near future that So we are looking at things like that. So at this point, there's no specific allocation for capital. We are going to let it build. We're focused on cost, and it's good to see the cash.
Speaker Change: Yes, that's right.
Brian Ron: I'll, let Ben talk little more broadly about some of the decisions.
Ben Rosenzweig: For capital allocation at the business level.
Ben Rosenzweig: We're strategically looking at reinvestment that if there is there is accretive.
Ben Rosenzweig: Margin building capital investments, we can make we'll look at those none have come to our attention right away inorganic growth is again in the near future than we had probably thought so looking at things like that so at this point there is no specific allocation for the capital we are going to let it build our focus on costs and it's good to see the cash build and the way it.
Brian Ron: Yes.
Ben Rosenzweig: Exactly what Ryan said, David. I mean, I think we feel very good about our liquidity position right now. And just because there's a little bit of excess cash on the balance sheet doesn't mean we're going to, you know, change the mentality in terms of liquidity. Making sure that everything meets our thresholds, but it is it is good to have the ability to be building cash at this moment, knowing that we're creating some enterprise value.
Ryan: Yes, exactly what Ryan said, David I mean, I think we feel very good about our liquidity position right now and just because there is a little bit of excess cash on the balance sheet doesn't mean, we're going to change the mentality in terms of.
Speaker Change: Making sure that everything meets our thresholds, but it is it is good to have the ability to be building cash at this moment, knowing that we're creating some enterprise value.
David Siegfried: Absolutely, I don't think, in the five years that I've owned the stock. I don't think we've ever had cash on the balance sheet, you know, more than a million dollars.
Speaker Change: Absolutely I don't think so.
Speaker Change: Five years that I've owned the stock I don't think we've ever had cash on the balance sheet. So.
Speaker Change: More than $1 million, so thats good.
David Siegfried: So that's good. So then, Brian and Ryan, you know, you've been with the management team for six months or so. Would you say that the potential here is greater than perhaps what you maybe even perceived six months ago?
Ryan: So then Brian Ryan you've been with the management team for six months or so.
Brian Ryan: You say that the potential here.
Brian Ryan: Is more.
Speaker Change: Then, perhaps what you maybe even perceived six months ago.
Brian Ron: Yes.
Brian: Yeah, I mean, this is Brian and Ryan. I'll let you jump in as well. I mean, I'm incredibly bullish about the prospects of our company, right? I think we've got some incredible foundational capabilities; they're just really beginning to unlock what they're capable of. There's a lot more to do that we can do inside of our existing assets.
Brian Ron: Yes.
Brian Ron: This is Brian Ron I'll, let you jump in as well I mean I'm incredibly bullish.
Brian Ron: About the prospects of our company you're right I think we've got some <unk>.
Speaker Change: Incredible foundational capabilities that we're just really beginning to unlock what they're capable of if there is a lot more to do that we can do inside of our existing asset base.
Ryan Kavalauskas: Yep, couldn't agree more. I think there's a ton of efficiency we can pull out of this business; we can, we can continue to drive margin through self-help. So yeah, I think there's a tremendous amount of focus commercially; we've got to get a lot of things fixed there. But even within the business, how we operate, how we can extract margin more efficiently. There's more there than we had anticipated, so it will still take some time to pull it all out and kind of, you know, determine what are the bigger levers, and still remain extremely optimistic about where we're at.
Speaker Change: Couldn't agree more I think there's a ton of efficiency, we can pull out of this business. We can we can continue to drive margin through self help so.
Speaker Change: Yes, I think there is.
Brian Ron: Tremendous amount of focus commercially we've got to get a lot of things fix there, but even within the business. How we operate how we can extract margin more efficiently.
Brian Ron: There is more there than we had anticipated so still take some time to pull it all out and kind of determine what are the bigger levers, but yes still.
Brian Ron: We still remain extremely optimistic about where we're at.
Brian Ron: More so than when we started.
David Siegfried: Well, all right, good. Well, thank you. And thank you for the input and keep up the good work. Thanks, David.
Speaker Change: Alright, well, thank you and thank you for the input and keep up the good work.
David: Thanks, David.
David: Yes, David.
Sheree: 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 for closing remarks.
Brian Ron: 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 for closing remarks, great.
Sheree: Great. Thank you, Sheree. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you again when we report our third quarter 2024 results.
Mr. Kitchen: Great. Thank you Sherry, we'd like to thank everyone for listening to today's call and we look forward to speaking with you again.
Brian Ron: When we report our third quarter 2024 results.
David: Thanks, and have a great afternoon.
Operator: This concludes today's program. Thank you all for participating. You may now disconnect.
Speaker Change: This concludes today's program. Thank you all for participating you may now disconnect.