Q4 2024 Ascent Industries Co Earnings Call
Okay.
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Ascent's financial results for the fourth quarter and full year ended December 31st, 2024.
Good afternoon, everyone and thank you for participating in today's conference call to discuss our sense financial results for the fourth quarter and full year ended December 31st 2020 for joining US today are a sense executive chairman of the board Ben Rosenzweig.
Operator: Joining us today are Ascent's Executive Chairman of the Board, Ben Rosenzweig, CEO Brian Kitchen, CFO Ryan Kavalauskas, and the company's Outside Investor Relations Advisor, Cody Cree. Following the remarks, we'll open the call for your questions.
Brian Kitchen: CEO, Brian Kitchen, CFO, Ryan Carver long skirts and the company's outside Investor Relations advisor Cody Cree.
Speaker Change: 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 that provides important cautions regarding forward looking statements.
Cody Cree: 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 that provides important cautions regarding forward-looking statements.
Operator: Cody, please go ahead. Thanks, Gigi.
Speaker Change: Cody. Please go ahead.
Cody Cree: 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 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. Ascent does not undertake the responsibility to update any forward-looking statements.
Speaker Change: Thanks, Gigi 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.
Speaker Change: <unk> advises all of 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.
Speaker Change: <unk> does not undertake the responsibility to update any forward looking statements.
Cody Cree: Further, the discussion today may include non-GAP measures. In accordance with Regulation G, the company has reconciled these amounts back to the closest GAP-based measurement. The 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.
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: Conciliations can be found in the earnings press release issued earlier today and posted on the investors section on the company's website at our St. Joe Dot Com.
Operator: 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.
Speaker Change: 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.
Ben Rosenzweig: With that, I'd like to turn the call over to Ascent's Executive Chairman of the Board, Ben Rosenzweig. Ben, over to you. Thank you, Cody, and good afternoon, everyone. As we've wrapped up 2024 and are moving into 2025, I'm very pleased with the current direction of the. Brian and Ryan have exceeded the expectations our board had set for 2024, and we believe the team that they have assembled is capable of executing on the growth plan we're collectively targeting. This quarter was another positive step in the right direction as we reported our fourth straight quarter of successive improvements in our financial and operational results.
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.
Speaker Change: Thank you Cody and good afternoon, everyone.
Speaker Change: We wrapped up 2024 and are moving into 2025, I'm very pleased with the current direction of the company.
Speaker Change: Brian and Ryan have exceeded the expectations. Our board has set for 2024 and we believe the team but they have assembled is capable of executing on the growth plan, we're collectively targeting.
Speaker Change: This quarter was another positive step in the right direction as we reported our fourth straight quarter of successive improvements and our financial and operational results.
Ben Rosenzweig: The stabilization and optimization efforts we implemented throughout the year continue to take hold and drive expansion to our margins and the bottom line. I'll let Brian dive into each segment's details shortly, but we plan to continue maximizing the value of our assets across the tubular product segment while investing in and delivering profitable growth in the specialty chemicals. We feel confident that we have a strong foundation in place, so we're laser-focused on driving growth while maintaining operational. Looking at our capital allocation priorities, they continue to remain the same from what we discussed throughout much of last year.
Speaker Change: Stabilization and optimization efforts, we implemented throughout the year continued to take hold and drive expansion to our margins and the bottom line.
Brian Kitchen: I'll, let Brian dive into each segment detail shortly but we plan to continue maximizing the value of our assets across the tubular products segment.
Brian Kitchen: We're investing in and delivering profitable growth in our specialty chemicals segment.
Brian Kitchen: We feel confident that we have a strong foundation in place. So we're laser focused on driving growth, while maintaining operational excellence.
Brian Kitchen: Looking at our capital allocation priorities.
Brian Kitchen: We continue to remain the same from what we discuss throughout much of last year.
Ben Rosenzweig: We have a strong liquidity position with over $16 million in cash on the balance sheet and more than $47 million available on our revolving credit. We also continue to repurchase shares in the open market and will continue to scrutinize our buyback efforts to evaluate moving forward in larger quantities as the share price remains below our estimates of intrinsic value. As part of our commitment to this capital allocation priority, we recently announced an expanded and extended authorization for our stock repurchase program, allowing us to acquire up to an additional 1 million shares, or approximately 10% of the common stock outstanding over the next 24 months.
Brian Kitchen: A strong liquidity position with over $60 million in cash on the balance sheet and more than $47 million available on our revolving credit facility.
Brian Kitchen: We also continue to repurchase shares in the open market and will continue to scrutinize our buyback efforts to evaluate moving forward in larger quantities as the share price remains below our estimates of intrinsic value.
Brian Kitchen: As part of our commitment to this capital allocation priority, we recently announced an expanded and extended the authorization for our stock repurchase program, allowing us to acquire up to an additional 1 million shares or approximately 10% of the common stock outstanding over the next 24 months.
Ben Rosenzweig: As Brian and Ryan have fully gotten their arms around our businesses, while restoring credibility internally and externally, it's no longer necessary for me to deliver prepared remarks on our quarterly conference calls going forward. I'll still make myself available to stakeholders as needed and don't plan on going anywhere anytime soon. Overall, I'm proud of what we accomplished in 2024 as we turned around our businesses and laid the foundation for future growth. There still is a tremendous amount of work to be done in order to reach our value creation goals and we're on a mission to consistently deliver predictable and profitable growth.
Speaker Change: As Brian and Ryan have fully gotten their arms around our businesses, while restoring credibility internally and externally it's no longer necessary for me to deliver our prepared remarks on our quarterly conference calls going forward I'll still make myself available to stakeholders as needed and don't plan on going anywhere anytime soon.
Speaker Change: Overall I'm proud of what we accomplished in 2024 as we turned around our businesses and lay the foundation for future growth.
Speaker Change: There still is a tremendous amount of work to be done in order to reach our value creation goals and we're on a mission to consistently deliver predictable and profitable growth.
Ben Rosenzweig: We appreciate the continued support from all of our stakeholders and look forward to executing our strategic initiatives in 2025.
Speaker Change: We appreciate the continued support from all of our stakeholders and look forward to executing our strategic initiatives in 2025.
Ben Rosenzweig: With that, 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.
Speaker Change: With that 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: Brian, over to you. Thanks, Ben, and thank you all for joining us this afternoon. During our first earnings call a year ago, I shared that our primary objective for 2024 was to stabilize the economy. proud to report that despite persistent market headwinds and the discovery of deep foundational challenges with the existing book of business and core capabilities, not only did we stabilize the business, but we also drove transformational improvement.
Speaker Change: Thanks, Ben and thank you all for joining us. This afternoon during our first earnings call a year ago I shared that our primary objective for 2024 was to stabilize the enterprise.
Speaker Change: Router report that despite persistent market headwinds and the discovery of deep foundational challenges with the existing book of business and core capabilities not only did we stabilize the business, but we also drove transformational improvements along the way.
Brian Kitchen: Without question, the refresh of talent and purposeful recapitalization of SG&A has been, and will continue to be, pivotal to our accelerated improvements and transformation.
Speaker Change: Without question, the refresh of talent and purposeful recapitalization of the SG&A has been and will continue to be pivotal to our accelerated improvements and transformation.
Brian Kitchen: So let's talk about where we. Ascent closed the year with four consecutive quarters of EBITDA improvement, achieving a 19.9 million or 125% year-over-year increase in adjusted EBITDA, while liberating a significant amount of traffic. Our efforts to standardize, simplify, and optimize everything we do across segments and functions resulted in a 20.5 million or 1349% increase in year-over-year gross profit. a strong result considering our top line compression of 15.3 million or 7.9 million. Throughout this process, we strengthened our balance sheet by generating nearly $15 million in free cash flow throughout the year and remain debt-free.
Speaker Change: So let's talk about where we ended the year.
Speaker Change: I think over the year with four consecutive quarters of EBITDA improvement, achieving a $19 9 million or 125% year over year increase in adjusted EBITDA, while liberate a significant amount of trapped cash our efforts to standardize simplify and optimize everything we do across segments and <unk>.
Speaker Change: Actions resulted in a $25 million or <unk> hundred 49% increase in year over year gross profit.
Speaker Change: A strong result, considering our topline compression of $15 3 million or seven 9%.
Speaker Change: Throughout this process, we strengthened our balance sheet by generating nearly $15 million in free cash flow throughout the year and remained debt free.
Brian Kitchen: positioning as well to invest both organic and inorganic high growth potential. Momentum is building as we have good things happening across both segments. So let's jump in starting with tubular products As discussed in prior calls, we remain fully dedicated to maximizing the value of our existing assets in this segment while driving improved Despite a year-over-year sales decline of $12.4 million, we boosted our segment-level gross profit by approximately $15 million. This achievement was primarily driven by the sustained benefits of aggressive cost management and product line optimization initiatives previously highlighted in our earnings Pragmatic optimism is a good descriptor of how we are viewing 2025 in the tubular.
Speaker Change: <unk> us well to invest both organic and inorganic high growth potential initiatives.
Speaker Change: Momentum is building as we have good things happening across both segments, so, let's jump and starting with tubular products.
Speaker Change: As discussed in prior calls we remain fully dedicated to maximizing the value of our existing assets in this segment, while driving improved results. Despite a year over year sales decline of $12 4 million, we boosted our segment level gross profit by approximately $15 million.
Speaker Change: This achievement was primarily driven by the sustained benefits of aggressive cost management and product line optimization initiatives previously highlighted in our earnings calls.
Speaker Change: Pragmatic optimism is a good descriptor of how we are viewing 2025 in the tubular segment.
Brian Kitchen: Market dynamics are beginning to improve. Domestic investments in energy, energy storage, and core infrastructure sectors are beginning to translate into increased demand. In fact, our order backlog is now stronger than it has been in four years. That said, we have yet to see a material increase in mill lead times, which is generally a strong indicator of overall demand. Again, pragmatic. We will continue to execute aggressive self-help within this segment and across the entire industry.
Speaker Change: Market dynamics are beginning to improve domestic investments in energy energy storage and core infrastructure sectors are beginning to translate into increased demand in fact, our order backlog is now stronger than it has been in for years.
Speaker Change: That said, we have yet to see a material increase in mill lead times, which is generally a strong indicator of overall demand again pragmatic optimism, we will continue to execute aggressive self help within this segment and across the entire enterprise.
Brian Kitchen: Now let's shift our focus to Specialty Care. Even with the challenging demand environment, our team continues to make significant steps forward in this segment. We produced our highest quarterly adjusted EBITDA figure for this segment since the second quarter of 2022, despite moderate top line compression. This was primarily driven by the 14% increase in gross margin, which reflects our commitment to upgrading the quality of our business, extracting the appropriate value for our goods and services, and aggressively managing costs.
Speaker Change: Now, let's shift our focus to specialty chemicals.
Speaker Change: Even with a challenging demand environment. Our team continues to make significant steps forward. In this segment, we produced our highest quarterly adjusted EBITDA figure for this segment since the second quarter of 2022, despite moderate top line compression.
Speaker Change: This was primarily driven by a 14% increase in gross margin, which reflects our commitment to upgrading the quality of our business extracting the appropriate value for our goods and services and aggressively managing costs.
Brian Kitchen: With this segment now fully operationally stabilized, we are focused on aggressively pursuing organic growth within our existing product portfolio and underutilized capabilities. when looking at the market only through the lens of the products that we actively produce and sell today, such as surfactants, defoamers, flame retardants, and other intermediates. Our total addressable market is over $9 billion. To be clear, that $9 billion is just related to branded products that we produce today, a small portion of the broader specialty chemicals. The breadth of our capabilities underpins our agility and approach to chemistry by design. We will be laser focused on the areas where our capabilities, our competencies and our competitive edge position us to succeed in the near term.
Speaker Change: With this segment now fully operationally stabilized.
Speaker Change: We are focused on aggressively pursuing organic growth within our existing product portfolio and underutilized capabilities.
Speaker Change: When looking at the market only through the lens of the products that we actively produce and sell today such as surfactants.
Summers flame retardants and other intermediates.
Speaker Change: Our total addressable market is over $9 billion.
Speaker Change: To be clear that $9 billion is just related to branded products that we produce today.
Speaker Change: Small portion of the broader specialty chemicals market.
Speaker Change: The breadth of our capabilities underpins, our agility and approach to chemistry by design.
Speaker Change: We will be laser focused on the areas, where our capabilities, our competencies and our competitive edge position us to succeed in the near term mainly China.
Brian Kitchen: Mainly HINI, personal care and energy. Our branded product sales will continue to be a cornerstone of our organic growth strategy as they offer a faster cycle time than custom manufacturing, along with more predictable and rateable demand and improved market. In 2024, we recorded double-digit year-over-year increase in branded product sales, driven primarily by our efforts in oil and gas, a testament to our focused strategy and targeted resource allocation.
Speaker Change: Personal care and energy.
Speaker Change: Our branded product sales will continue to be a cornerstone of our organic growth strategy as they offer a faster cycle times and custom manufacturing along with more predictable and ratable demand and improved margins.
Speaker Change: In 2024, we recorded double digit year over year increase in branded product sales driven primarily by our efforts in oil and gas a testament to our focused strategy and targeted resource allocation.
Brian Kitchen: Building on our success in the oil and gas market, we recently launched our branded product portfolio for the H-I-N-I market, which are household, industrial, and cleaning ingredients geared towards a total addressable market worth of $2.5 billion. The new portfolio includes biobased surfactants and specialty additives that address the industry's growing demand for effective and environmentally friendly cleaning technologies. This is a major milestone in our efforts to develop high-performing, sustainable We have the necessary portfolio, the core competencies, and the capacity to profitably participate in this expanding market, and we are very optimistic about the growth potential and this evolution.
Speaker Change: Building on our success in oil and gas market. We recently launched our branded product portfolio for the Shanghai market, which are household industrial and cleaning ingredients geared towards that total addressable market north of $2 5 billion.
Speaker Change: The new portfolio includes bio based surfactants in specialty additives that address the industry's growing demand for effective and environmentally friendly cleaning technologies. This is a major milestone in our efforts to develop high performing sustainable solutions we.
Speaker Change: Have the necessary portfolio, the core competencies and the capacity to profitably participate in this expanding market and we are very optimistic about the growth potential in this evolving space.
Brian Kitchen: Overall, we remain very confident in our segment's potential for long-term organic growth, and will continue investing in high-potential strategic initiatives to capture market share. From an inorganic growth standpoint, we remain active, but selective and disciplined in our approach. We look for good businesses that we can make It's not only about size, it's about the outcomes, both strategically and operationally. Our growth with M&A is simple, to align every move with our mission and ensure it has maximum impact for our shareholders.
Speaker Change: Overall, we remain very confident in our segments potential for long term organic growth and we will continue investing in high potential strategic initiatives to capture market share.
Speaker Change: From an inorganic growth standpoint, we remain active.
Speaker Change: But selective and disciplined in our approach we look for good businesses that we can make great.
Speaker Change: Not only about size, it's about the outcomes, both strategically and operationally.
Speaker Change: Our growth with M&A as simple to align every move with our mission and ensure it has maximum impact for our shareholders.
Brian Kitchen: Throughout 2024, Ryan and I spent much of our time putting the right team in place while driving foundational improvements needed for long-term success. Moving forward, more of our time will be purposely allocated to investor relations, with a laser focus on expanding our investor base, driving increased liquidity, and shareholder value. Expect to hear more and see more from Ascent in 2025, starting with a new IR deck within the next quarter, a deck that we believe will invite new conversations and spark increased interest in our company, our story, and our plans to unleash the fullest value potential for our shareholders.
Speaker Change: Throughout 2020 for Ryan and I spent much of our time, putting the right team in place by driving all driving foundational improvements needed for long term success moving forward more of our time will be purposely allocated to investor relations with a laser focus on expanding our investor base driving increased liquidity and shareholder value.
Speaker Change: Expect to hear more and see more from us in 2025, starting with the new IR deck within the next quarter.
We believe or like new conversations and spark increased interest in our company.
Speaker Change: Our story and our plans to unleash the fullest value potential for our shareholders.
Brian Kitchen: Finally, I would like to mention that our investors will be able to engage Ryan and I at the Planet Microcap Conference next month and the Oppenheimer Industrial Growth Conference. and we are actively exploring additional opportunities further to further engage and energize the market.
Speaker Change: Finally, I would like to mention that our investors will be able to engage right NII at the planet Microcap Conference next month and the Oppenheimer Industrial growth conference in May and we are actively exploring additional opportunities further.
Speaker Change: To further engage and energize the market.
Brian Kitchen: Before I pass it off to Ryan, I want to thank our shareholders for their patience, their competence, and trust that they have placed in us over the past year. I would also like to thank the entire team at Ascent who have demonstrated incredible grit, hustle, and the drive. We have returned to consistently generating positive adjusted EBITDA. We remain debt free and we continue to grow our cash.
Speaker Change: Before I pass it off to Ryan I want to thank our shareholders for their patience their confidence and trust that they have placed in us over the past year I would also like to thank the entire team at a cent who have demonstrated incredible Brett.
Speaker Change: Hustle and the drive to win.
Speaker Change: We have returned to consistently generating positive adjusted EBITDA, we remain debt free and we continue to grow our cash balance with this strong foundation and the right people in place we are optimistic about the future of <unk> and its ability to create durable shareholder value.
Brian Kitchen: With this strong foundation and the right people in place, we are optimistic about the future of Ascent and its ability to create durable shareholder value.
Ryan Kavalauskas: I'll now turn it over to our CFO, Ryan Kavalauskas, to walk us through our fourth quarter and full year financial results and more. Ryan, the floor is yours. Thank you, Brian, and good afternoon. Jumping right into our financial results, let's start with the fourth quarter. Net sales from continuing operations were $40.7 million compared to $41.2 million in the fourth quarter of 2020. Looking at the dynamics driving this slight decline, we had lower volume but higher pricing within specialty chemicals as we continue the mixed shift to our higher margin branded products. On the tubular side, we saw higher volume as we continue to work through older, stagnant inventory, which resulted in lower pricing, but has positively contributed to cash flow generation as we unlock trapped For more information visit www.FEMA.gov Gross profit from continuing operations increased 448% to $7.3 million, or 17.9% compared to a $2.1 million loss, or negative 5.2% of net sales in the fourth quarter of 2020.
Speaker Change: I'll now turn it over to our CFO, Ryan Campbell ask us to walk us through our fourth quarter and full year financial results in more detail.
Ryan Campbell: <unk> the floor is yours.
Speaker Change: Thank you, Brian and good afternoon, everyone jumping.
Speaker Change: Jumping right into our financial results, let's start with the fourth quarter.
Speaker Change: Net sales from continuing operations were $40 7 million compared to $41 2 million in the fourth quarter of 2023.
Speaker Change: Looking at the dynamics driving the slight decline, we had lower volume, but higher pricing within specialty chemicals as we continue the mix shift to our higher margin branded products.
Speaker Change: On the tubular side, we saw higher volume as we continue to work through older stagnant inventory, which resulted in some of our pricing, but has positively contributed to cash flow generation as we unlock trapped cash within the segment.
Speaker Change: Gross profit from continuing operations increased 448% to $7 3 million or 17, 9% of net sales compared to a $2 $1 million loss or negative five 2% of net sales in the fourth quarter of 2023.
Ryan Kavalauskas: The increase was primarily driven by continued cost management, improved strategic sourcing, and product line up. Net income from continuing operations improved to $0.1 million, or $0.01 diluted earnings per share, compared to a net loss from continuing operations of $7.5 million, or $0.73 diluted loss per share, in the fourth quarter of 2020. The year-over-year 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 outcomes. Adjusted EBITDA increased notably to $2.6 million compared to negative $5.9 million in the fourth quarter of 2023, with adjusted EBITDA margin increasing significantly to 6.3% compared to negative 14.4% in the prior year The improvement was primarily a result of the aforementioned cost and product mix optimization.
Speaker Change: The increase was primarily driven by continued cost management improved strategic sourcing and product line optimization.
Speaker Change: Net income from continuing operations improved to $1 1 million or one diluted earnings per share compared to a net loss from continuing operations of $7 5 million or <unk> 73 diluted loss per share in the fourth quarter of 2023.
Speaker Change: The year over year improvement was primarily attributable to the aforementioned increase in gross profit and a year over year decrease in interest expense due to have a much lower outstanding debt.
Speaker Change: Adjusted EBITDA increased notably to $2 6 million compared to negative $5 $9 million in the fourth quarter of 2023 with adjusted EBITDA margin, increasing significantly to six 3% compared to negative 14, 4% in the prior year period.
Speaker Change: The improvement was primarily a result of the aforementioned cost and product mix optimization initiatives.
Ryan Kavalauskas: Now turning to our full year 2024. Net sales from continuing operations were $177.9 million compared to $193.2 million in 2020. The decrease was primarily attributable to soft demand dynamics and purposeful product line modernization. leading to a decline in volume across partially offset by increased pricing within the specialty chemical segment throughout Gross profit from continuing operations increased significantly to $22.1 million, or 12.4% of net sales, compared to $1.5 million, or 0.8% of net sales in 2019. The increase in gross profit was primarily driven by cost reduction measures for labor and materials combined with product line optimization, which we implemented throughout.
Speaker Change: Now turning to our full year 2024 results.
Speaker Change: Net sales from continuing operations were $177 9 million compared to $193 2 million in 2023.
Speaker Change: The decrease was primarily attributable to soft dynamics.
Speaker Change: Demand dynamics and purposeful product line modification.
Speaker Change: Leading to a decline in volume across both segments, partially offset by increased pricing within the specialty chemicals segment throughout the year.
Speaker Change: Gross profit from continuing operations increased significantly to $22 1 million or 12, 4% of net sales compared to $1 5 million or 8% of net sales in 2023.
Speaker Change: The increase in gross profit was primarily driven by cost reduction measures for labor and materials combined with product line optimization, which we implemented throughout 2024.
Ryan Kavalauskas: Net loss from continuing operations was $11.2 million, or $1.11 diluted loss per share, compared to a net loss from continuing operations of $34.2 million, or $3.37 diluted loss per share in 2020. As a reminder, we did have a $6.2 million tax charge related to evaluation allowance against our deferred tax assets in the third quarter of 2020. This was a one-time, non-cash charge, and did not affect our overall operating profit that quarter, but it did negatively impact our reported bottom line. Adjusted EBITDA was $4 million compared to negative $15.9 million in 2020. adjusted EBITDA as a percentage of net sales was 2.3% compared to negative 8.2% in the prior The increase is primarily attributable to continued gains in operational efficiencies and the aforementioned cost and product mix optimization.
Speaker Change: Net loss from continuing operations was $11 2 million or $1 11 diluted loss per share compared to a net loss from continuing operations of $34 2 million or $3.37 diluted loss per share in 2023.
Speaker Change: As a reminder, we did have a $6 $2 million tax charge related to evaluation allowance against our deferred tax assets in the third quarter of 2024. This was a onetime noncash charge and did not affect our overall operating profit that quarter, but it did negatively impact our reported bottom line for the year.
Speaker Change: Adjusted EBITDA was $4 million compared to negative $15 9 million in 2023.
Speaker Change: Just the EBITDA as a percentage of net sales was two 3% compared to negative eight 2% in the prior year.
Speaker Change: The increase is primarily attributable to continued gains in operational efficiencies and the affirmation cost and product mix mix optimization initiatives.
Ryan Kavalauskas: Lastly, looking at our liquidity position as of December 31st, 2024, we remain debt-free with $16.1 million of cash on the balance sheet and access to $47.4 million in borrowing availability under our current revolving credit system. We remain confident in our liquidity position to deploy capital and drive both organic and inorganic growth in the near During the year, we repurchased a total of 101,263 shares for approximately $1 million through our share repurchase.
Speaker Change: Lastly, looking at our liquidity position as of December 31, 2024, we remain debt free was $16.
Speaker Change: Cash on the balance sheet and access to $47 4 million in borrowing availability under our current revolving credit facility.
Speaker Change: We remain confident in our liquidity position to deploy capital and drive both organic and inorganic growth in the near future during the year, we repurchased a total of 101000.
Speaker Change: 263 shares for approximately $1 million through our share repurchase program.
Operator: With that, I'll turn it back over to the operator. Thank you, sir.
Speaker Change: With that I'll now turn it back over to the operator for Q&A.
Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: Thank you Sir.
Speaker Change: Minder to ask a question. Please press star one one on your telephone and wait for your name to be announced towards the draw. Your question. Please press star one one again.
Speaker Change: Please stand by while we compile the Q&A roster.
David Siegfried: Our first question comes from the line of David Siegfried. Hey guys, congratulations on a nice quarter. So just a couple of questions, I know obviously we all see the strengthening balance sheet, new product development, better margins, gross profit, but where do you see, with the top line growth, do you see that starting maybe as early as Q1 of 2025?
David Siegfried: Our first question comes from the line of David Siegfried.
David Siegfried: Hey, guys congratulations on a nice quarter.
David Siegfried: Thank you.
David Siegfried: Yes, so just a couple of questions.
David Siegfried: We all see the strengthening balance sheet.
David Siegfried: New product development better margins gross profit, but where do you see.
David Siegfried: With the top line growth do you really do you see that starting maybe as early as Q1 2025.
Brian Kitchen: Hey, David, it's Brian. Appreciate the question. In terms of top line growth, I would say that's really more of a second half opportunity. The markets have not come back yet. We really reset the base in both tubular and chemicals inside of the second half of last year. I don't think that we're expecting anything material to change in the first half. Any uptick that we see isn't going to be because the markets are helping us out. It's because we're grabbing the market. Got it. But even with that. lower revenue base, we still could be putting out similar gross profit or similar margin profile.
Speaker Change: Hey, David It's Brian I. Appreciate the question in terms of top line growth I would say thats really more of a second half.
Speaker Change: Opportunity the markets have not come back yet, we really reset the base and vault <unk>.
Speaker Change: And chemicals inside of the second half of last year I don't think that we're expecting anything material to change in the first half of 2025 any any uptick that we see is it going to be because the markets are helping us out it's because we're grabbing share.
Speaker Change: Got it.
Speaker Change: But even with that.
Speaker Change: Lower revenue base, we still could be putting out similar gross profit or a similar margin profile.
Brian Kitchen: Yeah, I mean, we've been incredibly successful in driving aggressive cost reduction and we've demonstrated our ability to sustain those gains. So that along with the pricing actions and the portfolio actions from a product mix optimization perspective. We're heading in the right direction. Yeah, for sure. Good.
Speaker Change: Yes, I mean, we've been incredibly successful in driving aggressive cost reduction that we've demonstrated our ability to sustain those gains so that along with the with the pricing actions and the portfolio actions.
Speaker Change: From a product mix optimization perspective.
Speaker Change: We're heading in the right direction.
Brian Kitchen: So, you know, the cash grew considerably. from Q3 to Q4, up $7.5 million. So could you talk a little bit about what contributed to that growth in cash? You're right, one second. Yeah, we continue to, you know, optimize our idle and stagnant inventory. That was the largest driver of cash and we continue to do that. That was far and away the largest increased efforts on collections, inventory management, and payables management also helped kind of shore up our cash conversion cycle, which pulled almost two weeks of cash back into the year, so those two items combined just continue to continue.
Speaker Change: Yes for sure.
Speaker Change: So the cash grew considerably.
Speaker Change: From Q3 to Q4 up $7 5 million.
Speaker Change: Could you talk a little bit about what contributed to that growth and cash.
Speaker Change: Sure right one sector.
Speaker Change: Yes, we continue to optimize our idle and stagnant inventory that was the largest driver of cash and we continue to do that in Q4, so that was far and away. The largest increased efforts on collections inventory management payables management also helps kind of shore up our cash.
Speaker Change: Cash conversion cycle, which pulled almost two weeks of cash back into the year. So those two items combined has continued to kind of.
Brian Kitchen: Turn that cycle a little faster and generate a little bit more cash. Okay, good.
Speaker Change: Turn that cycle, a little faster and generate a little bit more cash every quarter.
Brian Kitchen: A question on the underutilized assets. You know, I noticed in the 10Q from third quarter that the 20,000 feet in Cleveland, Tennessee plant had been leased to a third party. And I know that Palmer has had a sublease in the past. And I think we were looking for a sublease there. So is there any updates you can give on any of those? properties. Yes. Yeah, so our third party, so in Tennessee, specific to our chemicals facility. We had a smaller little warehouse that I believe in the second quarter, perhaps it was early the third quarter, we managed to broker the sale of that warehouse through our leasing provider.
Speaker Change: Okay. Good.
Speaker Change: A question on the underutilized assets I noticed in the Q10-Q from third quarter.
Speaker Change: 20000 feet in Cleveland, Tennessee plant had been leased to a third party.
Speaker Change: And I know that Palmer has had a sublease in the past.
Speaker Change: And.
Speaker Change: I think we are looking.
Speaker Change: First.
Speaker Change: A sublease there. So is there any update you can give on any of those.
Speaker Change: Properties, yes.
Speaker Change: Yes.
Speaker Change: Our third party, so in Tennessee specific to our chemicals facility.
Speaker Change: We had a smaller little warehouse that I believe in the second quarter, perhaps that was it really the third quarter, we managed to to broker the sale about warehouse.
Brian Kitchen: So that's done and passed us. Yes, we have an active sublease with Palmer.
Speaker Change: Through our leasing providers. So that's done and passed US yes, we have an active sublease with Palmer.
Brian Kitchen: So pivoting to the real opportunity or challenge is the Munhall site. We're actively working to find a forever home for that. got it. Okay.
Speaker Change: Pivoting to the real.
Speaker Change: Real opportunity or challenges the Montreal side, we're actively working to.
Speaker Change: To find a forever home.
Speaker Change: For that asset.
David Siegfried: Um, now you, last month there was the launch of the ingredient cleaning portfolio, which was nice to see. But now you mentioned today that that market is two and a half billion. So, I mean, how is that being accepted by, in the marketplace and by potential customers?
Speaker Change: Got it okay.
Speaker Change: No.
Speaker Change: Last month, there was the launch of the ingredient cleaning portfolio.
Speaker Change: Which was nice to see but now you mentioned today that market is $2 5 billion. So I mean, how is that being accepted by the marketplace and by potential customers Nuomi.
Brian Kitchen: No, I mean, David, it's a good question. So last month, we launched the portfolio and we actually had a little party, if you will, at a cleaning conference down in Florida, where we launched the brand new portfolio. And, you know, to no surprise, not that many potential customers even knew who we were and that we even participated in the space. So I would say it's early. The reception was really, really good. The team walked away with a number of net new opportunities that they're actively pursuing, and hopefully we can convert those from opportunities to actual sales in the near term.
Speaker Change: So let me it's a good question. So last month, we launched the portfolio, we actually add.
Speaker Change: A little a little party if you will at a cleaning conference down in Florida, where we launched the brand new portfolio.
Speaker Change: So no surprise not that many potential.
Speaker Change: Potential customers, even knew who we were and that we even participated in this space. So I would say it's early.
Speaker Change: The reception was really really good the team walked away with a number of net new opportunities that they are actively pursuing and hopefully we can convert those from opportunities to actual sales in the near term.
David Siegfried: Okay.
Brian Kitchen: Now, you know, I know the team has spent some time trying to really make work on their sourcing, domestic sourcing of critical ingredients, and a supply chain that's secure, that's domestic. So you think what you've been accomplishing is positioning the company to have a competitive advantage in this area? Yeah, I think so. I think so. I think Yeah, so two things, David. Number one, from a raw material sourcing standpoint for Ascent, our exposure is very, very minimal. So I want to make sure that our shareholders understand that. Our team has done a really good job making sure that we're not reliant offshore sources of raw materials that may or may not be subject to future tariffs and or future supply chain disruptions.
Speaker Change: Okay.
Speaker Change: Now I know that the team has spent some time trying to really make work on their sourcing domestic sourcing of critical ingredients.
Speaker Change: And our supply chain that secure that's domestic so you think of what you've been accomplishing is positioning the company to have a competitive advantage in this area.
Speaker Change: Yes, so two things David number one from a raw material sourcing standpoint for our.
Speaker Change: Our exposure is very very minimal so I want to make sure that our shareholders understand that our team has done a really good job, making sure that we're not reliant on.
Speaker Change: Offshore sources of raw materials that may or may not be subject to future tariffs and our future supply chain disruptions.
Brian Kitchen: On the other side of the coin, what I would say is, yeah, there's a tremendous opportunity for us to capitalize on, you know, the domestic manufacturing renaissance. You know, a number of current and prospective customers are talking about their strategic initiatives to bring sourcing back onshore, along with, you know, optimizing their supply chains. Now, we all know that those types of changes don't happen overnight. It takes time to implement those, but we're starting to get some pretty interesting looks at new opportunities as a result. Yeah, good. Good to hear.
Speaker Change: On the other side of the coin what I would say is yes, there is a tremendous opportunity for us to to capitalize on the domestic manufacturing Renaissance and a number of current and prospective customers are talking about their strategic initiatives too to bring sourcing back onshore.
Speaker Change: Along with optimizing their supply chain is now we all know that those types of changes don't happen overnight. It takes time to implement those but we're starting to get some pretty interesting looks at new opportunities as a result of that.
Speaker Change: Yeah, good good to hear.
David Siegfried: Now, in chemicals, I mean, the margins were excellent. I mean, it's just outstanding. And obviously, because of your mix.
Speaker Change: <unk> and chemicals I mean, the margins were excellent.
Speaker Change: Outstanding and obviously.
Speaker Change: Because of your mix.
Brian Kitchen: to branded sales, but so is there a chance that there could even be more margin improvement in chemicals or at the very least just sustaining these margins? Yeah, look, I think that there could be ongoing margin improvement as we continue to increase our sales of the branded product portfolio. We did go out last year with some very targeted price increases. We were successful in achieving those increases. I don't anticipate much more of that in 2025. We'll see what the raw material market does. Okay.
Speaker Change: To branded sales.
Speaker Change: So.
Speaker Change: Is there a chance that there could even be more margin improvement in chemicals.
Or at the very least just sustaining these margins.
Speaker Change: Yes look I think that there can be ongoing margin improvement as we continue to increase our sales of the branded product portfolio. We did go out last last year with some very targeted price increases we were successful in achieving those increases.
David Siegfried: A question about the share repurchase now, you know, as shows increased confidence in business, stock undervalued. I noticed in 2022, I think the buyback averaged maybe 18,000 shares a month, 2023, 12,000 shares a month, 2024, 8,000 shares a month was bought back, and that's when we had no debt.
Speaker Change: Okay.
Speaker Change: A question about the share repurchase now.
Speaker Change: As shows increased confidence in the business stock undervalued I noticed in 2022, I think the buyback average maybe 18000 shares a month 2023 12000 shares a month 2024 8000 shares a month, what's bought back and that's when we had no debt so without sound.
Brian Kitchen: So without sounding skeptical, but is this really doable? In order to buy back a million shares over two years, that's 40,000 shares a month, at least, that you'd have to buy back. So is that doable? based upon what I've seen in the last three and a half years. I wonder.
Speaker Change: Skeptical.
Speaker Change: Is this really doable in order to buy back 1 million shares over two years, that's 40000 shares a month at least that you'd have to buyback.
Speaker Change: Or is that is that doable even.
Speaker Change: Based upon what Ive seen last five years.
Speaker Change: I Wonder Panama.
Brian Kitchen: All I'll say is that, you know, it gives us some parameters of what we're going to try to do. So we have the ability to purchase shares up to that amount. It's not necessarily drawing a line in the sand saying we're going to do, you know, a certain portion over a certain time duration. So I think it's good corporate hygiene for us to have that in place to give us the optionality to be able to do it if we're able to, if we can capitalize on the share prices. And so it just depends on things like, you know, volume.
Speaker Change: I'll say it is.
Speaker Change: Is that it gives us some parameters of what we're going to try to do so we have the ability to purchase shares up to that amount, it's not necessarily drawing a line in the sand, saying, we're going to do.
Speaker Change: A certain a certain portion over a certain time duration. So I think it's good corporate hygiene for us to have that in place to give us the optionality to do it if we're able to if we can capitalize on the share prices.
Speaker Change: And so it just depends on things like volume. It also depends on when we're able to buy back shares right. So there are certain times of the year. When we're precluded from buying back shares so it's not necessarily directly comparable from year to year.
Brian Kitchen: It also depends on, you know, when we're able to buy back shares. Right. So there are certain times of the year when we're precluded from buying back shares. So it's not necessarily directly comparable from year to year. But, you know, as long as we believe that it's a good use of our capital to be buying back our own shares, we're going to find a way to do it. Yeah. Okay, good.
Speaker Change: But as long as we believe that it's a good use of our capital to be buying back our own shares we're going to find a way to do it.
Speaker Change: Yes.
Brian Kitchen: And then one last question. You know, guys, you've been leading the company for for over a year now. And based upon where the company was a year ago till today. I mean, obviously, good job. But where do you see a year from now? Where do we see it a year from now? David, we're pivoting to growth, both organically and inorganically. We have underutilized assets that need to be filled up with high-quality, high-value applications, and we're in the process of doing that.
Speaker Change: Okay. Good and then one last question.
Speaker Change: Guys, you've been leading the company for for over a year now and based upon where the company was a year ago today.
Speaker Change: I mean.
Speaker Change: So a good job, but where do you see a year from now.
Speaker Change: Where do we see it a year from now.
Speaker Change: David were pivot, we're pivoting to growth both organically and Inorganically, we have underutilized assets that need to be filled up with high quality high value add.
Speaker Change: Applications and we're in the process of doing that.
David Siegfried: Okay, good. Well, you know, thank you for the time. I appreciate it. Appreciate you, David.
Speaker Change: Okay, great well. Thank you for the time I appreciate it.
Operator: Thank you.
David Siegfried: I appreciate you David Thank you.
Operator: At this time, this concludes our question and answer session.
Speaker Change: 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 Kitchen: I would now like to turn the call back over to Mr. Kitchen for closing remarks. Thank you, Gigi. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you again when we report out our first quarter 2025 report.
Speaker Change: Thank you Gigi 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 first quarter 2025 results.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Okay.
Speaker Change: [music].
Operator: Thanks for watching!
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
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