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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____ to _____

COMMISSION FILE NUMBER 0-19687
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Ascent Industries Co.
(Exact name of registrant as specified in its charter)
Delaware57-0426694
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
20 N. Martingale Rd,Suite 430
Schaumburg,Illinois60173
(Address of principal executive offices)(Zip Code)
(630)884-9181
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, par value $1.00 per shareACNTNASDAQ Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
x
Non-accelerated filer
Smaller reporting company
x
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes   No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes     No x
The number of shares outstanding of the registrant's common stock as of November 8, 2024 was 10,092,966



Table of Contents
Ascent Industries Co.
Table of Contents
 
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
 
 
 
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
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1

Table of Contents
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable federal securities laws. All statements that are not historical facts are forward-looking statements. Forward looking statements can be identified through the use of words such as "estimate," "project," "intend," "expect," "believe," "should," "anticipate," "hope," "optimistic," "plan," "outlook," "should," "could," "may" and similar expressions. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, including risks relating to the impact and spread of and the government’s response to COVID-19; inability to weather an economic downturn; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw material availability; financial stability of the Company’s customers; customer delays or difficulties in the production of products; loss of consumer or investor confidence; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; risks associated with acquisitions; environmental issues; negative or unexpected results from tax law changes; inability to comply with covenants and ratios required by the Company’s debt financing arrangements; and other risks detailed from time-to-time in Ascent Industries Co.'s Securities and Exchange Commission filings, including our Annual Report on Form 10-K, which filings are available from the SEC. Ascent Industries Co. assumes no obligation to update any forward-looking information included in this release.
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2

Table of Contents

Part I - Financial Information
Item 1. Financial Statements

Ascent Industries Co.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share data)
(Unaudited)
 September 30, 2024December 31, 2023
Assets 
Current assets: 
Cash and cash equivalents$8,547 $1,851 
Accounts receivable, net of allowance for credit losses of $583 and $463, respectively
27,768 26,604 
Inventories42,968 52,306 
Prepaid expenses and other current assets3,483 4,879 
Assets held for sale 2,912 
Current assets of discontinued operations56 861 
Total current assets82,822 89,413 
Property, plant and equipment, net26,654 29,755 
Right-of-use assets, operating leases, net28,623 27,784 
Intangible assets, net7,380 8,496 
Deferred income taxes 5,808 
Deferred charges, net29 104 
Other non-current assets, net3,108 1,935 
Total assets$148,616 $163,295 
Liabilities and Shareholders' Equity 
Current liabilities: 
Accounts payable$12,286 $16,416 
Accrued expenses and other current liabilities7,081 5,108 
Current portion of note payable641 360 
Current portion of operating lease liabilities1,448 1,140 
Current portion of finance lease liabilities288 292 
Current liabilities of discontinued operations222 1,473 
Total current liabilities21,966 24,789 
Long-term portion of operating lease liabilities30,433 29,729 
Long-term portion of finance lease liabilities1,089 1,307 
Deferred income taxes369  
Other long-term liabilities54 60 
Total non-current liabilities31,945 31,096 
Total liabilities$53,911 $55,885 
Commitments and contingencies – See Note 13
Shareholders' equity: 
Common stock, par value $1 per share; 24,000,000 shares authorized; 11,085,103 and 10,092,966 shares issued and outstanding, respectively
$11,085 $11,085 
Capital in excess of par value47,238 47,333 
Retained earnings45,946 58,517 
 104,269 116,935 
Less: cost of common stock in treasury - 992,137 and 990,282 shares, respectively
(9,564)(9,525)
Total shareholders' equity94,705 107,410 
Total liabilities and shareholders' equity$148,616 $163,295 
Note: The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date. See accompanying notes to condensed consolidated financial statements.
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Ascent Industries Co.
Condensed Consolidated Statements of Income (Loss) (Unaudited)
(in thousands, except per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net sales$42,901 $46,747 $137,201 $151,963 
Cost of sales36,442 43,763 122,354 148,289 
Gross profit6,459 2,984 14,847 3,674 
Selling, general and administrative6,025 6,687 19,850 20,430 
Acquisition costs and other5  83 277 
Goodwill impairment 11,389  11,389 
Gain on lease modification(67) (67) 
Operating income (loss) from continuing operations496 (15,092)(5,019)(28,422)
Other expense (income)
Interest expense, net124 1,063 323 3,217 
Other, net(91)(97)(303)(344)
Income (loss) from continuing operations before income taxes463 (16,058)(5,039)(31,295)
Income tax expense (benefit)7,479 (1,380)6,270 (4,680)
Loss from continuing operations(7,016)(14,678)(11,309)(26,615)
Income (loss) from discontinued operations, net of tax864 (3,254)(1,262)(11,152)
Net loss$(6,152)$(17,932)$(12,571)$(37,767)
Net loss per common share from continuing operations:
Basic$(0.69)$(1.45)$(1.12)$(2.62)
Diluted$(0.69)$(1.45)$(1.12)$(2.62)
Net income (loss) per common share from discontinued operations:
Basic$0.08 $(0.32)$(0.12)$(1.10)
Diluted$0.08 $(0.32)$(0.12)$(1.10)
Net loss per common share:
Basic$(0.61)$(1.77)$(1.24)$(3.72)
Diluted$(0.61)$(1.77)$(1.24)$(3.72)
Weighted average shares outstanding:
Basic10,11410,13510,111 10,151 
Diluted10,11410,13510,111 10,151 
See accompanying notes to condensed consolidated financial statements.
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Ascent Industries Co.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended September 30,
 20242023
Operating activities  
Net loss$(12,571)$(37,767)
Loss from discontinued operations, net of tax(1,262)(11,152)
Net loss from continuing operations(11,309)(26,615)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense4,489 4,634 
Amortization expense1,116 1,128 
Amortization of debt issuance costs75 75 
Goodwill impairment 11,389 
Deferred income taxes6,639 (7,864)
Provision for losses on accounts receivable121 327 
Provision for losses on inventories1,300 1,980 
Loss on disposal of property, plant and equipment 182 
Non-cash lease expense171 190 
Stock-based compensation expense601 701 
Changes in operating assets and liabilities:  
Accounts receivable(1,283)3,754 
Inventories8,038 5,880 
Other assets and liabilities(918)358 
Accounts payable(4,237)8,872 
Accrued expenses1,973 (217)
Accrued income taxes669 (772)
Net cash provided by operating activities - continuing operations7,445 4,002 
Net cash (used in) provided by operating activities - discontinued operations(1,587)17,525 
Net cash provided by operating activities5,858 21,527 
Investing activities  
Purchases of property, plant and equipment(1,281)(2,411)
Net cash used in investing activities - continuing operations(1,281)(2,411)
Net cash provided by (used in) investing activities - discontinued operations2,797 (394)
Net cash provided by (used in) investing activities1,516 (2,805)
Financing activities  
Borrowings from long-term debt156,923 201,588 
Proceeds from note payable914 900 
Payments on long-term debt(156,923)(220,130)
Payments on note payable(633)(657)
Principal payments on finance lease obligations(221)(231)
Repurchase of common stock(738)(903)
Net cash used in financing activities(678)(19,433)
Increase (decrease) in cash and cash equivalents6,696 (711)
Less: Cash and cash equivalents of discontinued operations 1 
Cash and cash equivalents at beginning of period1,851 1,440 
Cash and cash equivalents at end of period$8,547 $730 

Supplemental Disclosure of Cash Flow Information
Cash paid for:
  Interest$207 $2,937 
  Income taxes 817 
Noncash Investing Activities:
Capital expenditures, not yet paid$107 $201 
See accompanying notes to condensed consolidated financial statements.
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Ascent Industries Co.
Condensed Consolidated Statements of Shareholders' Equity (Unaudited)
(in thousands)

Three Months Ended September 30, 2024
Common StockCapital in Excess of
Par Value
Retained EarningsTreasury StockTotal
 Shares AmountSharesAmount
Balance June 30, 202411,085 $11,085 $47,111 $52,098 960 $(9,252)$101,042 
Net income— — — (6,152)— (6,152)
Issuance of 10,852 shares of common stock from treasury
— — (105)— (11)105  
Stock-based compensation— — 232 — — 232 
Repurchase of 42,623 shares of common stock
— — — — 43 (417)(417)
Balance as of September 30, 202411,085 $11,085 $47,238 $45,946 992 $(9,564)$94,705 
Nine Months Ended September 30, 2024
Common StockCapital in Excess of
Par Value
Retained EarningsTreasury StockTotal
SharesAmountSharesAmount
Balance at December 31, 202311,085 $11,085 $47,333 $58,517 $990 $(9,525)$107,410 
Net loss— — — (12,571)— (12,571)
Issuance of 72,331 shares of common stock from treasury
— — (696)— (72)696  
Stock-based compensation— — 601 — — 601 
Repurchase of 74,186 shares of common stock
— — — — 74 (735)(735)
Balance as of September 30, 202411,085 $11,085 $47,238 $45,946 $992 $(9,564)$94,705 
See accompanying notes to condensed consolidated financial statements.
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Ascent Industries Co.
Condensed Consolidated Statement of Shareholders' Equity (Unaudited)
Continued

Three Months Ended September 30, 2023
Common StockCapital in Excess of
Par Value
Retained EarningsTreasury StockTotal
 Shares AmountSharesAmount
Balance June 30, 202311,085 $11,085 $46,951 $65,311 927 $(9,021)$114,326 
Net loss— — — (17,932)— (17,932)
Issuance of 6,860 shares of common stock from treasury
— — (67)— (7)67  
Stock-based compensation— — 305 — — 305 
Repurchase of 44,799 shares of common stock
— — — — 45 (397)(397)
Balance as of September 30, 202311,085 $11,085 $47,189 $47,379 965 $(9,351)$96,302 
Nine Months Ended September 30, 2023
Common StockCapital in Excess of
Par Value
Retained EarningsTreasury StockTotal
SharesAmountSharesAmount
Balance at December 31, 202211,085 $11,085 $47,021 $85,146 924 $(8,993)$134,259 
Net loss— — — (37,767)— (37,767)
Issuance of 55,636 shares of common stock from treasury
— — (542)— (55)542  
Stock-based compensation— — 710 — — 710 
Repurchase 95,955 of common stock
— — — — 96 (900)(900)
Balance as of September 30, 202311,085 $11,085 $47,189 $47,379 965 $(9,351)$96,302 
See accompanying notes to condensed consolidated financial statements.


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Table of Contents
Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Unless indicated otherwise, the terms "Company," "we," "us," and "our" refer to Ascent Industries Co. and its consolidated subsidiaries.

Note 1: Basis of Presentation
Basis of Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The unaudited condensed consolidated financial statements, in the opinion of management, contain all normal recurring adjustments necessary to present a fair statement of the condensed consolidated balance sheets as of September 30, 2024, the statements of income (loss) and shareholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the statements of cash flows for the nine months ended September 30, 2024 and 2023. The December 31, 2023 condensed consolidated balance sheet was derived from the audited financial statements.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"). The financial results for the interim periods may not be indicative of the financial results for the entire year as our future assessment of our current expectations could result in material impacts to our consolidated financial statements in future reporting periods.
Use of Estimates
The preparation of the Company's financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. Significant items subject to such estimates and assumptions include the carrying value of property, plant and equipment; intangible assets; the fair value of assets or liabilities acquired in a business combination; valuation allowances for receivables, inventories and deferred income tax assets and liabilities; liabilities for potential tax deficiencies; and, potential litigation claims and settlements. The Company bases these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying value of assets and liabilities that are readily available from other sources. Actual results may differ from these estimates.
Reclassifications
Certain prior period amounts have been reclassified to conform to current period presentation, including the Company's Specialty Pipe and Tube operations within the Tubular Products segment to discontinued operations.

Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures.
In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments also require that all entities disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and subsequent interim periods, with early
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures.
In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The ASU requires updated disclosures, in the notes to the financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity disclose the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion, and amortization recognized as part of oil and gas producing activities included in relevant expense captions. The amendments also require disclosure of qualitative descriptions of amounts remaining in relevant expense captions that are not separately disaggregated and to disclose the total amount of selling expenses as well as the entity's definition of selling expenses. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures
Recent accounting pronouncements pending adoption not discussed in this Form 10-Q are either not applicable to the Company or are not expected to have a material impact on the Company.
Note 2: Discontinued Operations
Munhall Closure
During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023. The strategic decision to cease manufacturing operations at Munhall is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies.
As a result of this decision, during the second quarter ended June 30, 2023, the Company incurred asset impairment charges of $6.4 million related to the write down of inventory and long-lived assets as well as $1.4 million in increased reserves on accounts receivable at the facility. During the third quarter of 2023, the Company incurred additional asset impairment charges of $2.4 million related to the write down of inventory to net realizable value. During the first quarter of 2024, the Company incurred additional asset impairment charges of $1.1 million related to the write down of the remaining long-lived assets at the facility. During the third quarter, the Company entered into a purchase agreement to sell the remaining assets at the Munhall facility for approximately $2.8 million. The Company recognized a $1.5 million gain on the sale in the third quarter of 2024. See Note 4 for further discussion of the assets held for sale and related fair value measurements. The results of operations for Munhall have been classified as discontinued operations for all periods presented.

In May of 2023, the Company was named as a defendant in a lawsuit filed in the U.S. District Court for the Western District of Pennsylvania, asserting various claims for breach of contracts resulting in losses to the plaintiff and seeking damages in the amount of $0.8 million plus prejudgment interest and attorney's fees. The Company had an estimated liability of $1.0 million related to the lawsuit as of December 31, 2023. In August of 2024, the Company resolved the case through a settlement agreement and no longer has funds reserved for the matter.

Divestiture of Specialty Pipe & Tube, Inc.
On December 22, 2023, the Company and its wholly-owned subsidiary Specialty Pipe & Tube, Inc. (“SPT”) entered into an Asset Purchase Agreement pursuant to which Ascent and SPT sold substantially all of the assets primarily related to SPT to Specialty Pipe & Tube Operations, LLC, a Delaware limited liability company. The consideration for the transaction was approximately $55 million of cash proceeds subject to certain closing adjustments. The transaction closed on December 22, 2023. Ascent and Purchaser also entered into a Transition Services Agreement (the “TSA”) and an Employee Leasing Agreement (the “ELA”) each dated December 22, 2023, pursuant to which Ascent agreed to provide certain transition services and to lease certain employees to Purchaser immediately after the closing for certain agreed upon transition periods. The TSA and the ELA were both completed as of June 30, 2024. As result of the sale, SPT results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, SPT was reported under the Company's Tubular Products segment.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of the Company's discontinued operations:
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
(in thousands)September 30, 2024December 31, 2023
Carrying amounts of assets included as part of discontinued operations:
Accounts receivable, net $ $778 
Prepaid expenses and other current assets56 83 
Current assets classified as discontinued operations56 861 
Carrying amounts of current liabilities included as part of discontinued operations:
Accounts payable9 107 
Accrued expenses and other current liabilities213 1,366 
Total current liabilities classified as discontinued operations$222 $1,473 

The financial results are presented as loss from discontinued operations, net of tax on the unaudited condensed consolidated statements of income (loss). The following table summarizes the results of the Company's discontinued operations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Net sales$29 $12,016 $290 $57,547 
Cost of sales466 12,974 2,064 56,393 
Gross profit(437)(958)(1,774)1,154 
Selling, general and administrative expense(1,899)742 (1,758)6,326 
Acquisition costs and other5 135 124 213 
Asset impairments 2,416 1,115 8,803 
Income (loss) from discontinued operations before income taxes1,457 (4,251)(1,255)(14,188)
Income tax expense (benefit)593 (997)7 (3,036)
Net income (loss) from discontinued operations$864 $(3,254)$(1,262)$(11,152)
Note 3: Revenue Recognition
Revenue is generated primarily from contracts to produce, ship and deliver stainless steel and specialty chemical products. Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time or over-time. For certain contracts under which the Company produces product with no alternative use and for which the Company has an enforceable right to payment during the production cycle, product in which the material is customer owned or in which the customer simultaneously consumes the benefits throughout the production cycle, progress toward satisfying the performance obligation is measured using an output method of units produced. Certain customer arrangements consist of bill-and-hold characteristics under which transfer of control has been met (including the passing of title and significant risk and reward of ownership to the customers). Therefore, the customers can direct the use of the bill-and-hold inventory while we retain physical possession of the product until it is shipped to a customer at a point in time in the future.
Sales tax and other taxes we collect with revenue-producing activities are excluded from revenue. Shipping costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and are expensed when incurred. Because customers are invoiced at the time title transfers and the Company’s right to consideration is unconditional at that time, the Company does not maintain contract asset balances. Additionally, the Company does not maintain material contract liability balances, as performance obligations for substantially all contracts are satisfied prior to customer payment for product. The Company offers industry standard payment terms.
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
The following table presents the Company's revenues, disaggregated by product group from continuing operations:
Three Months Ended
September 30,
Nine Months Ended
 September 30,
(in thousands)2024202320242023
Fiberglass and steel liquid storage tanks and separation equipment$ $ $ $50 
Stainless steel pipe and tube22,023 26,695 74,559 86,748 
Specialty chemicals20,878 20,052 62,642 65,165 
Net sales$42,901 $46,747 $137,201 $151,963 
Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. The following table represents the Company's revenue recognized at a point-in-time and over-time:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Point-in-time$38,532 $42,037 $121,159 $137,803 
Over-time$4,369 $4,710 $16,042 $14,160 
Note 4: Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs:
Level 1 - Unadjusted quoted prices that are available in active markets for identical assets or liabilities at the measurement date.
Level 2 - Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by other observable market data.
Level 3 - Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using model-based techniques, including option pricing models, discounted cash flow models, probability weighted models, and Monte Carlo simulations.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
During the three and nine months ended September 30, 2024, the Company's only significant measurements of assets or liabilities at fair value on a non-recurring basis subsequent to their initial recognition were certain long-lived assets.
Long-lived assets
The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company assesses performance quarterly against historical patterns, projections of future profitability, and whether it is more likely than not that the assets will be disposed of significantly prior to the end of their estimated useful life for evidence of possible impairment. An impairment loss is recognized when the carrying amount of the asset (disposal) group is not recoverable and exceeds fair value. The Company estimates the fair values of assets subject to long-lived asset impairment based on the Company's own judgments about the assumptions market participants would use in pricing the assets and observable market data, when available.

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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at the Munhall facility effective on or around August 31, 2023. As a result of this decision, it was determined to be more likely than not that the assets of Munhall would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and therefore, experienced a triggering event and were evaluated for recoverability. Based on this evaluation, inventory at Munhall was written down to its net realizable value of $16.0 million and certain long-lived assets, including intangible assets, were written down to their estimated fair value of $2.6 million, resulting in asset impairment charges of $6.4 million in the second quarter of 2023.
During the third quarter of 2023, the remaining inventory at Munhall was written down to its net realizable value of $4.0 million resulting in asset impairment charges of $2.4 million in the third quarter of 2023. During the first quarter of 2024, the Company incurred additional asset impairment charges of $1.1 million related to the write down of the remaining long-lived assets at the facility. See Note 2 for further information on the Company's discontinued operations.
Assets Held for Sale
During the third quarter of 2024, the Company entered into a purchase agreement to sell the remaining assets at the Munhall facility for approximately $2.8 million. The Company recognized a $1.5 million gain on the sale in the third quarter of 2024. As a result of this sale, the Company had no assets held for sale as of September 30, 2024. The Company remains obligated under the terms of the leases for the rent and other costs that may be associated with the lease of the Munhall facility through 2036.
Munhall assets classified as held for sale as are as follows:
(in thousands)September 30, 2024December 31, 2023
Property, plant and equipment, net$ $2,374 
Other assets, net 538 
Assets held for sale$ $2,912 

Fair Value of Financial Instruments
The fair values of cash and cash equivalents, accounts receivable, accounts payable and the Company's note payable approximated their carrying value because of the short-term nature of these instruments. The Company's revolving line of credit and long-term debt, which is based on a variable interest rate, are also reflected in the financial statements at carrying value which approximate fair values as of September 30, 2024. The carrying amount of cash and cash equivalents are considered Level 1 measurements. The carrying amounts of accounts receivable, accounts payable, note payable, revolving line of credit and long-term debt are considered Level 2 measurements. See Note 8 for further information on the Company's debt.
Note 5: Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by either specific identification or weighted average methods. The components of inventories are as follows:
(in thousands)September 30, 2024December 31, 2023
Raw materials$15,647 $22,321 
Work-in-process13,276 14,740 
Finished goods21,365 21,364 
50,288 58,425 
Less: inventory reserves(7,320)(6,119)
Inventories$42,968 $52,306 

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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Note 6: Property, Plant and Equipment
Property, plant and equipment from continuing operations consist of the following:
(in thousands)September 30, 2024December 31, 2023
Land$668 $723 
Leasehold improvements3,087 3,079 
Buildings1,534 1,534 
Machinery, fixtures and equipment94,766 93,758 
Construction-in-progress1,357 1,330 
101,412 100,424 
Less: accumulated depreciation and amortization(74,758)(70,669)
Property, plant and equipment, net$26,654 $29,755 

The following table sets forth depreciation expense related to property, plant and equipment:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Cost of sales$1,374 $1,462 $4,290 $4,454 
Selling, general and administrative64 60 199 180 
Total depreciation$1,438 $1,522 $4,489 $4,634 

Note 7: Intangible Assets and Deferred Charges
Intangible Assets
Intangible assets represent the fair value of intellectual, non-physical assets resulting from business acquisitions and are amortized over their estimated useful life using either an accelerated or straight-line method over a period of 15 years.
The balance of intangible assets from continuing operations subject to amortization are as follows:
September 30, 2024December 31, 2023
(in thousands)Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Definite-lived intangible assets:
Customer related$14,604 $(7,779)$14,604 $(6,685)
Trademarks and trade names150 (22)150 (17)
Other500 (73)500 (56)
Total definite-lived intangible assets$15,254 $(7,874)$15,254 $(6,758)
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Estimated amortization expense related to intangible assets for the next five years are as follows:
(in thousands)
Remainder of 2024$372 
20251,324 
20261,102 
2027930 
2028786 
2029673 
Thereafter2,193 

Deferred Charges
Deferred charges represent debt issuance costs and are amortized over their estimated useful lives using the straight-line method over a period of four years.
The balance of deferred charges subject to amortization are as follows:
(in thousands)September 30, 2024December 31, 2023
Deferred charges, gross$398 $398 
Accumulated amortization of deferred charges(369)(294)
Deferred charges, net$29 $104 

Note 8: Debt
Short-term debt
On June 21, 2024, the Company entered into a note payable in the amount of $0.9 million with an interest rate of 3.70% maturing April 1, 2025. The agreement is associated with the financing of a portion of the Company's insurance premiums in the current year. As of September 30, 2024, the outstanding balance was $0.6 million.
Credit Facilities
During the first quarter of 2023, the Company entered into an Amended and Restated Credit Agreement with BMO Harris Bank, N.A. ("BMO") to replace LIBOR with the Secured Overnight Funding Rate ("SOFR").
During the fourth quarter of 2023, the Company entered into a Limited Consent, Second Amendment to Credit Agreement and Omnibus Amendment to Loan Documents with BMO Bank N.A. and the other lenders under the Company’s credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment contains a consent for the SPT divestiture, released the lien on the assets of SPT and removed SPT as a loan party. The Credit Facility Amendment also reduced the maximum revolving loan commitment under the credit facility from $105 million to $80 million, and increased the interest rate for the credit facility from SOFR plus an interest rate margin of between 1.60% and 1.70% to SOFR plus an interest rate margin of between 1.85% and 2.10%, depending on average availability under the credit facility and the Company’s consolidated fixed charge coverage ratio. As required by the Credit Facility Amendment, the Company used the proceeds from the SPT divestiture to prepay in full the term loan in the original principal amount of $5 million under the credit facility and used the remaining proceeds to prepay in part the revolving loans under the credit facility.

The borrowing capacity under the credit facility totals $80.0 million consisting of a $80.0 million revolving line of credit which includes a $17.5 million machinery and equipment sub-limit. The Company had no debt outstanding under its credit facilities as of September 30, 2024 and December 31, 2023.
We have pledged all of our accounts receivable, inventory, and certain machinery and equipment as collateral for the Credit Agreement. Availability under the Credit Agreement is subject to the amount of eligible collateral as determined by the lenders' borrowing base calculations. Amounts outstanding under the revolving line of credit currently bear interest at (a) the Base Rate (as defined in the Credit Agreement) plus 0.75%, or (b) SOFR plus 1.85%. The Credit Agreement also provides an unused commitment fee based on the daily used portion of the credit facility.
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Pursuant to the Credit Agreement, the Company was required to pledge all of its tangible and intangible properties, including the stock and membership interests of its subsidiaries. The Credit Agreement contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) $7.5 million and (ii) 10% of the revolving credit facility (currently $8.0 million). As of September 30, 2024, the Company was in compliance with all financial debt covenants.
As of September 30, 2024, the Company had $57.5 million of remaining availability under it credit facility.

Note 9: Leases
The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020.
During the third quarter of 2024, the Company and Store closed on a transaction pursuant to which Store sold to a third party approximately 20,200 square feet of warehouse space located at Ascent’s facility in Cleveland, Tennessee. As a result of the sale, the Company and Store entered into a Fourth Amended and Restated Master Lease Agreement (the “Fourth Master Lease”) to reduce the Company's rent at the Cleveland facility pursuant to the terms and conditions of the Third Amended and Restated Master Lease Agreement between the parties dated September 10, 2020.
The Fourth Master Lease was determined to be a lease modification that qualified for a remeasurement of the existing lease and not a separate contract. Upon modification of the Fourth Master Lease, the right-of-use asset and operating lease liability were remeasured using an incremental borrowing rate determined on the date of modification. As such, the Company recognized an increase in the right-of-use asset and operating lease liability related to the Fourth Master Lease of $1.3 million and recognized a gain on the modification of $0.1 million, which is reported within operating expenses on the unaudited consolidated statements of income (loss).
As of September 30, 2024, operating lease liabilities related to the master lease agreement with Store Capital totaled $31.2 million, or 94% of the total lease liabilities on the consolidated balance sheet.
On July 16, 2024, the Company entered into a sixty-five month operating lease agreement with respect to certain office property commencing November 1, 2024 with one option to extend an additional sixty months at the end of the lease term. Pursuant to the terms of the lease agreement, the Company will pay a base rent in the first year of the agreement of $9,606 monthly with an annual increase in November each year of 3.0% through the term of the agreement. The total amount of rent and rent adjustments shall be abated for a period of five months from the period commencing November 1, 2024 and expiring March 31, 2025. In addition, the Company remitted a security deposit of $52,353 to the landlord at execution and is also responsible for taxes and other operating expenses related to the space. The Company has treated tenancy for the period prior to rent commencement as a free rental period for accounting purposes.
During the three months and nine months ended September 30, 2024, the Company did not enter into any new finance lease agreements.
Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
ClassificationFinancial Statement Line ItemSeptember 30, 2024December 31, 2023
Long-term AssetsRight-of-use assets, operating leases$28,623 $27,784 
Long-term AssetsProperty, plant and equipment1,303 1,543 
Current liabilitiesCurrent portion of lease liabilities, operating leases1,448 1,140 
Current liabilitiesCurrent portion of lease liabilities, finance leases288 292 
Non-current liabilitiesNon-current portion of lease liabilities, operating leases30,433 29,729 
Non-current liabilitiesNon-current portion of lease liabilities, finance leases1,089 1,307 
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Operating lease cost1
$1,007 $985 $2,978 $2,956 
Finance lease cost:
Amortization of right-of-use assets79 87 237 263 
Interest on finance lease liabilities22 24 65 61 
Sublease income(92)(91)(276)(273)
Total lease cost$1,016 $1,005 $3,004 $3,007 
1Includes short term leases, which are immaterial
Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the unaudited condensed consolidated statements of income (loss).
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases in continuing operations as of September 30, 2024 are as follows:
(in thousands)OperatingFinance
Remainder of 2024$898 $90 
20253,698 361 
20263,750 361 
20273,825 361 
20283,903 303 
Thereafter31,937 85 
Total undiscounted minimum future lease payments48,011 1,561 
Imputed interest(16,130)(184)
Present value of lease liabilities$31,881 $1,377 
Lease Term and Discount Rate
Weighted-average remaining lease termSeptember 30, 2024December 31, 2023
Operating leases11.85 years12.67 years
Finance leases4.37 years5.07 years
Weighted-average discount rate
Operating leases7.17 %8.33 %
Finance leases5.93 %5.92 %
Subleases
During the second quarter of 2024, the Company entered into a sublease agreement with a third party to sublease the former Specialty Pipe and Tube, Inc. facilities in Mineral Ridge, Ohio and Houston, Texas. The sublease agreement continues through the remaining term of the Master Lease Agreement and will expire on September 30, 2036, unless terminated in accordance with the sublease agreement. The sublease provides for an annual base rent of approximately $0.1 million in the first year, which increases on an annual basis by 2.0%. The sublessee is responsible for taxes and all operating expenses related to the subleased space.
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
The Company also currently subleases the former Palmer facility and records cash receipts related to the subleases in other expense (income) on the unaudited condensed consolidated statements of income (loss).
Future expected cash receipts from the Company's subleases as of September 30, 2024 are as follows:
(in thousands)Sublease Receipts
Remainder of 2024$145 
2025582 
2026594 
2027606 
2028618 
Thereafter5,229 
Total sublease receipts$7,774 
Note 10: Shareholders' Equity
On December 20, 2022, the Board of Directors re-authorized the Company's share repurchase program. The previous share repurchase program had a term of 24 months and was set to expire on February 17, 2023. The share repurchase program allows for repurchase of up to 790,383 shares of the Company's outstanding common stock and extends to February 17, 2025. The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Under the program, the purchases will be funded from available working capital, and the repurchased shares will be returned to the status of authorized, but unissued shares of common stock or held in treasury. There is no guarantee as to the exact number of shares that will be repurchased by the Company and the Company may discontinue purchases at any time that management determines additional purchases are not warranted. As of September 30, 2024, the Company has 462,685 shares of its share repurchase authorization remaining.
Shares repurchased for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Number of shares repurchased 42,623 44,799 74,186 95,955 
Average price per share$9.79 $8.87 $9.92 $9.38 
Total cost of shares repurchased1
$418,563 $398,861 $738,361 $903,012 
1Includes broker commissions paid as part of repurchase transactions
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
Note 11: Earnings Per Share
The following table sets forth the computation of basic and diluted income (loss) per share:
Three Months Ended September 30,Nine Months Ended
September 30,
(in thousands, except per share data)2024202320242023
Numerator:  
Net loss from continuing operations$(7,016)$(14,678)$(11,309)$(26,615)
Net income (loss) from discontinued operations864 (3,254)(1,262)(11,152)
Net loss$(6,152)$(17,932)$(12,571)$(37,767)
Denominator:  
Weighted-average common shares outstanding10,114 10,135 10,111 10,151 
Effect of dilutive securities: 
Employee stock options and stock grants    
Weighted-average common shares, as adjusted10,114 10,135 10,111 10,151 
Net loss per share from continuing operations:  
Basic$(0.69)$(1.45)$(1.12)$(2.62)
Diluted$(0.69)$(1.45)$(1.12)$(2.62)
Net income (loss) per share from discontinued operations:
Basic$0.08 $(0.32)$(0.12)$(1.10)
Diluted$0.08 $(0.32)$(0.12)$(1.10)
Net loss per share:
Basic$(0.61)$(1.77)$(1.24)$(3.72)
Diluted$(0.61)$(1.77)$(1.24)$(3.72)
The diluted loss per share calculations exclude the effect of potentially dilutive shares when the inclusion of those shares in the calculation would have an anti-dilutive effect. The Company had $0.1 million shares that were anti-dilutive for the three and nine months ended September 30, 2024 and 2023, respectively.
Note 12: Income Taxes
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal examinations for years before 2020 or state examinations for years before 2019. During the three and nine months ended September 30, 2024 and 2023, the Company did not identify nor reserve for any unrecognized tax benefits.
Our income tax expense (benefit) and overall effective tax rates for continuing operations for the periods presented are as follows:
Three Months Ended
 September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Income tax benefit$7,479 $(1,380)$6,270 $(4,680)
Effective income tax rate1,612.2 %8.6 %124.4 %15.0 %

The effective tax rate for continuing operations was 1,612.2% and 124.4% for the three and nine months ended September 30, 2024. The three and nine months ended September 30, 2024 effective tax rate was higher than the U.S. statutory rate of 21.0% primarily due to discrete tax charges associated with the recording of a valuation allowance on cumulative U.S. federal and
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
state deferred tax assets. During the period, the Company determined it was more likely than not that the existing cumulative deferred tax assets would be unrealizable and recorded a discrete tax charge of $6.2 million.
The effective tax rate for continuing operation was 8.6% and 15.0% for the three and nine months ended September 30, 2023. The three and nine months ended September 30, 2023 effective tax rate was lower than the U.S. statutory rate 21.0% primarily due to the effects of permanent goodwill impairment reducing the tax benefit in the period.
Note 13: Commitments and Contingencies
From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees. We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.
Note 14: Industry Segments
Ascent Industries Co. has two reportable segments: Specialty Chemicals and Tubular Products. The Specialty Chemicals segment includes the operating results of the Company’s plants involved in the production of specialty chemicals. The Specialty Chemicals segment produces products for the pulp and paper, coatings, adhesives, sealants and elastomers (CASE), textile, automotive, household, industrial and institutional ("HII"), agricultural, water and waste-water treatment, construction, oil and gas and other industries.

The Tubular Products segment includes the operating results of the Company’s plants involved in the production of stainless steel pipe and tube. The Tubular Products segment serves markets through pipe and tube and customers in the appliance, architectural, automotive and commercial transportation, brewery, chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and waste-water treatment, liquid natural gas ("LNG"), food processing, pharmaceutical, oil and gas and other industries.

On December 22, 2023, the Company announced the sale of substantially all of the assets of Specialty Pipe & Tube (“SPT”). As a result, certain prior period Tubular Products segment results have been reclassified to remove SPT’s results from continuing operations to discontinued operations.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measures being operating income and adjusted earnings (loss) before interest, income taxes, depreciation and amortization. Adjusted earnings (loss) before interest, income taxes, depreciation and amortization excludes certain items that management believes are not indicative of future results.

The accounting principles applied at the operating segment level are the same as those applied at the consolidated financial statement level. Intersegment sales and transfers are eliminated at the corporate consolidation level.
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Ascent Industries Co.
Notes to Consolidated Financial Statements (Unaudited)
The following table summarizes certain information regarding segments of the Company's continuing operations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Net sales
Tubular Products$22,023 $26,695 $74,559 $86,748 
Specialty Chemicals20,878 20,052 62,642 65,165 
All Other   50 
$42,901 $46,747 $137,201 $151,963 
Operating income (loss)
Tubular Products$1,653 $(620)$1,040 $(7,215)
Specialty Chemicals385 (11,481)(625)(10,935)
All Other(117)(132)(378)(684)
Corporate
Unallocated corporate expenses(1,490)(2,859)(5,070)(9,314)
Acquisition costs and other(2) (53)(274)
Gain on lease modification67  67  
Total Corporate (1,425)(2,859)(5,056)(9,588)
Operating income (loss)496 (15,092)(5,019)(28,422)
Interest expense, net124 1,063 323 3,217 
Other, net(91)(97)(303)(344)
Income (loss) from continuing operations before income taxes$463 $(16,058)$(5,039)$(31,295)
As of
(in thousands)September 30, 2024December 31, 2023
Identifiable assets
Tubular Products$64,571 $70,548 
Specialty Chemicals43,905 49,547 
Corporate and other40,084 42,339 
$148,560 $162,434 
Note 15: Subsequent Events
On November 6, 2024, Ascent entered into a Limited Consent, Third Amendment to Credit Agreement to Loan Documents with BMO Bank N.A. under Ascent’s credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment reduced the maximum revolving loan commitment under the credit facility from $80 million to $60 million and extended the term of the credit facility through December 31, 2027. The Credit Facility Amendment also increased the interest rate for the credit facility from SOFR plus an interest rate margin of between 1.85% and 2.10% to SOFR plus an interest rate margin of between 1.85% and 2.35%, depending on average availability under the credit facility and Ascent’s consolidated fixed charge coverage ratio.

Pursuant to the Credit Facility Amendment, the Company was required to pledge all of its tangible and intangible properties, including the stock and membership interests of its subsidiaries. The Credit Facility Amendment contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) $6.0 million and (ii) 15% of the revolving credit facility. The borrowing capacity under the amended credit facility totals $60.0 million consisting of a $60.0 million revolving line of credit which includes a $7.7 million machinery and equipment sub-limit. The Company had no debt outstanding under its credit facilities as of November 6, 2024.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity, and capital resources during the three and nine months ended September 30, 2024 and 2023, respectively. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the Annual Report), as well as the condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of 2023. This discussion and analysis is presented in five sections:
Executive Overview
Results of Operations and Non-GAAP Financial Measures
Liquidity and Capital Resources
Material Cash Requirements from Contractual and Other Obligations
Critical Accounting Policies and Estimates
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Executive Overview
Ascent Industries Co. is a diverse industrials company focused on the production of specialty chemicals and industrial tubular products. Ascent Industries Co. was incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries Inc.
The Company's business is divided into two reportable operating segments, Specialty Chemicals and Tubular Products. The Specialty Chemicals segment produces specialty products for the pulp and paper, coatings, adhesives, sealants and elastomers (CASE), textile, automotive, household, industrial and institutional ("HII"), agricultural, water and waste-water treatment, construction, oil and gas and other industries. The Tubular Products segment serves markets through pipe and tube production and customers in the appliance, architectural, automotive and commercial transportation, brewery, chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and waste-water treatment, liquid natural gas ("LNG"), food processing, pharmaceutical, oil and gas and other industries.
Munhall Closure
During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023. This strategic decision is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies. Munhall results are included within discontinued operations in all periods presented.
Divestiture of Specialty Pipe & Tube, Inc.
On December 22, 2023, the Company and its wholly-owned subsidiary Specialty Pipe & Tube, Inc. (“SPT”) entered into an Asset Purchase Agreement pursuant to which Ascent and SPT sold substantially all of the assets primarily related to SPT to Specialty Pipe & Tube Operations, LLC, a Delaware limited liability company. The consideration for the transaction was approximately $55 million of cash proceeds subject to certain closing adjustments. The transaction closed on December 22, 2023. As result of the sale, SPT results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, SPT was reported under the Company's Tubular Products segment. The discussion and analysis of our results of operations refers to continuing operations unless noted.
Macroeconomic Events
Macroeconomic and inflationary pressures have negatively impacted our revenue, operating margins and net income in 2023 and 2024 to date, including increased pricing pressures within both segments of our business. During the quarter, we continued to see demand fluctuations in our end user markets resulting in decreases in volume year over year and sequentially from the second quarter, however, we continue to focus on stabilization initiatives centered around pricing and product mix optimization, strategic sourcing, labor and overhead improvements and working capital which has allowed us to achieve three consecutive quarters of positive margin expansion and setting the foundation for future growth. The ongoing factors driving volatility in global markets that could impact our business' earnings and cash flows include, but are not limited to, the misalignment of supply and demand for labor, energy, raw materials and other inputs, the inflation of (or unavailability of) raw material inputs and transportation and logistics services, currency fluctuations, interest rates and extreme weather, the purchasing of commodities and relative commodity prices. The Company continues efforts to offset these inflationary pressures and continues to implement initiatives to improve working capital and evaluate other opportunities to maintain and improve financial performance in the short and long term, however, if these inflationary and demand pressures continue, our revenue, gross and operating margins and net income (loss) will continue to be impacted for the remainder of 2024.

Results of Operations
Consolidated Performance Summary
Consolidated net sales for the third quarter of 2024 were $42.9 million, a decrease of $3.8 millions, or 8.2%, compared to net sales for the third quarter of 2023. The decrease in net sales was primarily driven by a 7.3% decrease in average selling prices and a 2.0% decrease in pounds shipped.
Consolidated net sales for the first nine months of 2024 were $137.2 million, a decrease of $14.8 million, or 9.7%, compared to net sales for the first nine month of 2023. The decrease in net sales was primarily driven by a 14.2% decrease in average selling prices partially offset by a 3.0% increase in pounds shipped.
For the third quarter of 2024, consolidated gross profit increased 116.5% to $6.5 million, or 15.1% of sales, compared to a gross profit of $3.0 million, or 6.4% of sales in the third quarter of 2023. For the first nine months of 2024, consolidated gross profit increased 304.2% to $14.8 million, or 10.8% of sales, compared to $3.7 million, or 2.4% of sales in the first nine months
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of 2023. The increases in gross profit for the third quarter and first nine months of 2024 were primarily attributable to improved strategic sourcing initiatives and product line management resulting in lower raw material costs as well as labor and overhead improvements.
Consolidated selling, general, and administrative expense (SG&A) for the third quarter of 2024 decreased $0.7 million to $6.0 million, or 14.0% of sales, compared to $6.7 million, or 14.3% of sales in the third quarter of 2023. The decrease in SG&A expense for the third quarter of 2024 was primarily driven by decreases in salaries, wages and benefits and credit losses partially offset by increases in incentive bonus expense.
Consolidated selling, general, and administrative expense (SG&A) for the first nine months of 2024 decreased $0.6 million to $19.9 million, or 14.5% of sales, compared to $20.4 million, or 13.4% of sales in the first nine months of 2023. The decrease in SG&A expense for the first nine months of 2024 was primarily driven by decreases in salaries, wages and benefits and credit losses partially offset by increases in incentive bonus expense and professional fees.
Consolidated operating income in the third quarter of 2024 totaled $0.5 million compared to operating loss of $15.1 million in the third quarter of 2023. Consolidated operating loss in the first nine months of 2024 totaled $5.0 million compared to operating loss of $28.4 million in the first nine months of 2023. The operating income in the third quarter and the operating loss decrease in first nine months of 2024 was primarily driven by the aforementioned increase in gross profit as well as goodwill impairment within the Specialty Chemicals segment in 2023.
Specialty Chemicals
Net sales in the third quarter of 2024 totaled $20.9 million, an increase of $0.8 million, or 4.1%, from the third quarter of 2023. The increase was driven by a 6.1% increase in average selling prices partially offset by a 2.5% decrease in pounds shipped.
Net sales in the first nine months of 2024 totaled $62.6 million, a decrease of $2.5 million, or 3.9%, from the first nine months of 2023. The decrease was driven by a 9.3% decrease in average selling price offset by a 2.7% increase in pounds shipped.
Gross profit for the third quarter of 2024 increased to $3.1 million, or 15.0% of sales, compared to $1.9 million, or 9.3% of sales in the third quarter of 2023. Gross profit for the first nine months of 2024 increased to $7.6 million, or 12.1% of sales, compared to $5.7 million, or 8.8% of sales in the first nine months of 2023. The increases were primarily attributable strategic sourcing initiatives and product line management resulting in lower raw material costs as well as labor and overhead improvements.
SG&A expense for the third quarter of 2024 increased to $2.7 million, or 13.2% of sales, compared to $2.0 million, or 9.8% of sales in the third quarter of 2023. The increase was primarily driven by increases in corporate expense allocation and incentive bonus expense partially offset by decreases in professional fees and credit losses.
SG&A expense for the first nine months of 2024 increased to $8.2 million, or 13.1% of sales, compared to $5.3 million, or 8.1% of sales in the first nine months of 2023. The increase was primarily driven by increases in corporate expense allocation, incentive bonus expense and professional fees partially offset by decreases in credit losses.
Operating income increased to $0.4 million for the third quarter of 2024 compared to operating loss of $11.5 million for the third quarter of 2023. The current year increase in operating income was primarily driven by the aforementioned increases in gross profit and reduction in prior year goodwill impairment partially offset by increases in SG&A expenses.
Operating loss decreased to $0.6 million for the first nine months of 2024 compared to operating loss of $10.9 million for the first nine months of 2023. The current year decrease in operating loss was primarily driven by the aforementioned increases in gross profit and reduction in prior year goodwill impairment partially offset by increases in SG&A expenses.
Tubular Products
Net sales in the third quarter of 2024 totaled $22.0 million, a decrease of $4.7 million, or 17.5%, from the third quarter of 2023. The decrease was primarily driven by a 17.2% decrease in average selling prices and a 1.0% decrease in pounds shipped.
Net sales in the first nine months of 2024 totaled $74.6 million, a decrease of $12.2 million, or 14.1%, from the first nine months of 2023. The decrease was primarily driven by a 18.5% decrease in average selling prices partially offset by a 4.2% increase in pounds shipped.
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For the third quarter of 2024, gross profit increased 177.6% to $3.5 million, or 15.7% of sales, compared to a gross profit of $1.2 million, or 4.7% of sales in the third quarter of 2023. For the first nine months of 2024, gross profit increased 592.1% to $7.6 million, or 10.2% of sales, compared to a gross loss of $1.6 million, or (1.8)% of sales in the first nine months of 2023. The increase for the third quarter and first nine months of 2024 was primarily attributable to strategic sourcing measures and product line management resulting in lower raw material costs as well as labor and overhead improvements.
SG&A expense for the third quarter of 2024 decreased to $1.8 million, or 8.2% of sales, compared to $1.9 million, or 7.0% of sales, in the third quarter of 2023. SG&A expense for the first nine months of 2024 increased to $6.6 million, or 8.8% of sales, compared to $5.7 million, or 6.5% of sales, in the first nine months of 2023. The change in the third quarter and year to date SG&A was primarily driven by increases in corporate expense allocation partially offset by decreases in salaries, wages and benefits, credit losses and professional fees.
Operating income increased to $1.7 million for the third quarter of 2024 compared to an operating loss of $0.6 million for the third quarter of 2023. The current year increase in operating income was primarily driven by the aforementioned increase in gross profit.
Operating income increased to $1.0 million for the first nine months of 2024 compared to an operating loss of $7.2 million for the first nine months of 2023. The current year decrease in operating loss was primarily driven by the aforementioned increase in gross profit partially offset by increases in SG&A expense.
Corporate & Other Items
Unallocated corporate and other expenses for the third quarter of 2024 decreased $1.4 million, or 46.2%, to $1.6 million, or 3.7% of sales, compared to $3.0 million, or 6.4% of sales, in the prior year. The third quarter of 2024 decrease was primarily driven by increases in corporate allocation expenses partially offset by increases in salaries, wages and benefits, professional fees, taxes and licenses and insurance expense.
Unallocated corporate and other expenses for the first nine months of 2024 decreased $4.6 million, or 45.8%, to $5.4 million, or 4.0% of sales, compared to $10.0 million, or 6.6% of sales, in the prior year. The first nine months of 2024 decrease was primarily driven by increases in corporate allocation expense as well as decreases in salaries, wages and benefits and stock compensation expense, partially offset by increases in incentive bonus expense, taxes and licenses and insurance expense.
Interest expense for the third quarter of 2024 decreased to $0.1 million, from $1.1 million for the third quarter of 2023. Interest expense for the first nine months of 2024 decreased to $0.3 million, from $3.2 million for the first nine months of 2023. The decrease is primarily related to lower outstanding debt in the current year compared to the prior year.
The effective tax rate for continuing operations was 1,612.2% and 124.4% for the three and nine months ended September 30, 2024. The three and nine months ended September 30, 2024 effective tax rate was higher than the U.S. statutory rate of 21.0% primarily due to discrete tax charges associated with the recording of a valuation allowance on cumulative U.S. federal and state deferred tax assets. During the period, the Company determined it was more likely than not that the existing cumulative deferred tax assets would be unrealizable and recorded a discrete tax charge of $6.2 million.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we use the following non-GAAP financial measures: EBITDA and Adjusted EBITDA. Management believes that these non-GAAP measures are useful because they are key measures used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions as well as allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
EBITDA and Adjusted EBITDA
We define "EBITDA" as earnings before interest, income taxes, depreciation and amortization. We define "Adjusted EBITDA" as EBITDA further adjusted for the impact of non-cash and other items we do not consider in our evaluation of ongoing performance. These items include: goodwill impairment, asset impairment, gain on lease modification, stock-based compensation, non-cash lease cost, acquisition costs and other fees, shelf registration costs, loss on extinguishment of debt,
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retention costs and restructuring and severance costs from net income. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by other companies because not all companies calculate EBITDA and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and investors' understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.
Consolidated EBITDA and Adjusted EBITDA from continuing operations are as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in thousands)2024202320242023
Consolidated
Net loss from continuing operations$(7,016)$(14,678)$(11,309)$(26,615)
Adjustments:
Interest expense124 1,063 323 3,217 
Income taxes7,479 (1,380)6,270 (4,680)
Depreciation1,438 1,522 4,489 4,634 
Amortization372 376 1,116 1,128 
EBITDA2,397 (13,097)889 (22,316)
Acquisition costs and other— 83 277 
Goodwill impairment— 11,389 — 11,389 
Gain on lease modification(67)— (67)— 
Stock-based compensation55 134 158 371 
Non-cash lease expense60 63 171 190 
Retention expense— 
Restructuring and severance cost— — 208 90 
Adjusted EBITDA$2,450 $(1,505)$1,446 $(9,993)
% of sales5.7 %(3.2)%1.1 %(6.6)%
Specialty Chemicals EBITDA and Adjusted EBITDA are as follows:
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
($ in thousands)2024202320242023
Specialty Chemicals
Net income (loss)$367 $(11,498)$(682)$(10,974)
Adjustments:
Interest expense19 21 57 52 
Depreciation945 942 2,863 2,850 
Amortization174 159 522 475 
EBITDA1,505 (10,376)2,760 (7,597)
Acquisition costs and other— — — 
Goodwill impairment— 11,389 — 11,389 
Stock-based compensation— (13)
Non-cash lease expense19 23 58 69 
Restructuring and severance costs— — 109 — 
Specialty Chemicals Adjusted EBITDA$1,524 $1,039 $2,934 $3,850 
% of segment sales7.3 %5.2 %4.7 %5.9 %
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Tubular Products EBITDA and Adjusted EBITDA from continuing operations are as follows:
Three Months Ended
September 30,
Nine Months Ended
 September 30,
($ in thousands)2024202320242023
Tubular Products
Net income (loss) from continuing operations$1,653 $(620)$1,040 $(7,215)
Adjustments: