Earnings call transcript Q2 2023

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Operator

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Ascent's Financial Results for the Second Quarter Ended June 30, 2023.

Joining us today are Ascent's Executive Chairman of the Board, Ben Rosenzweig; President and CEO, Chris Hutter; CFO, Bill Steckel and the Company's outside Investor Relations Advisor, Cody Cree.

Following their remarks, we'll open the call to questions.

Before we go further, I'd 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.

ahead. go please Cody,

Cody Cree

Michelle. Thanks,

laws. continue, materially. to the I'd pursuant all we could results us federal to the information actual based currently cause available risks like today may and that to securities the discussion of statements are harbor participants statements contain are safe on subject Before and provisions remind differ These various certain to that to forward-looking uncertainties

XX-K review Ascent on advises risks to listening for latest summary its posted all and a this call website the and XX-Q to uncertainties. those of these

Ascent The on website forward-looking these Regulation reconciled does include can the Company's the in at reconciliations posted G, discussion release not non-GAAP undertake Further, may the measurement. has Company amounts the be earlier Investors responsibility found back to update today today press with of ascentco.com. and the earnings statements. to any measures. the section issued accordance In GAAP-based the closest

this is Company's a note website. Please the replay posted that of is via link webcast call the section also that on Investors available for

have presentation Investors website, of the you to we uploaded updated encourage We section which to the view. an also

you. Board, the Rosenzweig. that, of like Chairman to Ben, the With Ascent's I'd over Executive over call turn to to Ben

Ben Rosenzweig

Thank you, good everyone. Cody, and afternoon,

as earnings segment our we organization we faced transition and transparent of During as few calls, products about out last Munhall an our within the been we've the facility. tubular issues expected the softness

consolidated our on markets results a our originally more issues been drag While than have of of has and business we segments than simultaneously in macro end this execution anticipated. originally transition our across more many both affected anticipated, headwinds

to a August. by Munhall fully made end our we expect of working Board the view and on as current closure finalize immediate permanent which said, we pleased efforts quarter, action. operations, not the Speaking be do That shut of in hard corrective acceptable strong down that our am our and push I to second we of senior leadership performance our team, are the take during to behalf

Munhall, have discontinued little core very enable proper now forward As of will we showing at comparison. there in it periods is into left as it as to well prior is going which a why be business today, as operations and the are moved

The Munhall moving including transitioning has a our lot involved evaluating process remaining of the finishing Bristol. parts, movement facility mills the certain volume at closure of of the and Munhall, in production to

of unnecessary order for came has business, All the has of of volatility to core the core area product our it this execute line differentiation. our to distraction but remove business from in our outside a done be unquestionably on a that been ability to from

with pleased We this this legacy expect Ascent defensible focus segment margin, be of our to of more are stabilizing have effect a on our and of Chemicals tubular long-term higher broadly, the as a growth for on lines. engines company. product will view More from still the element long-term moving business we one

macro been relationships cycles expanding our typical, at hard volatility made even than has work longer building has pipeline. our Although and sales team

parted to in and we'll seen very confident feel X-K over our segment. we have we was our we may who This with bringing As parting the lead of amicable filed month segment. you be in an ago, that on ways a Head next

unlock leadership we're years. So over the further confident chemicals the potential focused growth there to scale empowering is on stay profitability the We're and and tuned. embedded very segment coming

possible. We managing as cash, aggressively down faced challenges continue to the and all debt, working meaningfully on focus pay generate shares accounts capital. able we were receivable clean up our Despite to QX, as we in our closely repurchase

today. top XX,XXX shares, our buy to back continuing where XXXX, repurchased capital So we allocation is stock given remains over far and price in our priority

effectively have quarter, in repurchasing single second the stock and day. been repurchase plan the a During we market authorized every open XXbX

operations, stock, we're Although in attractive to open and our shares or right this very of shareholders, to is to continues we've if expect Board remain strategies now lower. these alternatives performance, at active our now. strongly capital we believe value all our more additional repurchasers future to our a to the continue repurchase trade deliver streamlined visibility to use of is even aggressively gain stock we to the we levels that further Based constantly evaluating on the

behind the Though now not anticipate long our a shareholders challenges the as shareholder consolidated our on right these our improvements ideal, the of the QX we impacts business of believe we moves right results and appreciate seeing for the are of to are in changes in impact we're we today beyond. with short-term that and largest hurdles beginning next making ultimately more in term. firmly through the us, business come positive the our significant patience set value. quarter the and work course believe than deliver We We having

of with shareholders, in execute to long-term we interest team leadership for aligned set to our highly believe ourselves. and ability remains we've Our continue the our the goals

call performance and like be back to I'll to both more Chris details any answer in pass Q&A the to during on segments over provide Now portion. questions to I'd our the operational

Chris, to you. over

Chris Hutter

call. Thanks, segment. products for our right Ben, you into Jumping and today's thank all joining tubular

forward. a galvanized to footprint are and distracting with Ben moving and much As efficient process entire be pleased we operating on business be has our going This more from been we'll have time given believe necessary multiple through this as thresholds. consuming exit not we return strategic our But occasions, meet for was our on internal business we did the organization. talked mentioned, entire

each the these and the and are to growth streamlined, believe we macro deliver We explain tubing of parts of each products have and represent the at in volatility their To products, best and competitive groups. continuing within with peer environment, Bristol pipe stainless acknowledge American can deal generate more effects we the businesses of economy. profitable prolonged tube. work to attractive the do. much specialty current people returns now are and of each Looking We we on focusing tubular the within segment, remaining

In adjusted year-over-year, unacceptable EBITDA industry-wide impact pressures as and second trends quarter, the meaningful in line sales to resulting margin. bottom continued destocking import our declined

in meaningful and a we products that Although come our prices. cutting coming into are And import have believe we customers. been customers us better. inventoried slowly we Overall, and and are had can our issues, businesses said, in over of That our customers will perform imports first under these the still the cash pipeline. back number, told many sales year, seeing of seeing quality we have generated half these have flow

under first year half been distribution has capital of At light in been as Bristol, focusing and of in many caused customers on orders. of a new slow inventoried we've the the this Munhall. bit falling market purchase surcharge to closure We've volatile working the also

surcharges capital us the good few And a in position a the I On enable have stabilized to months. ramp the a bit feel to beginning confident also normalized closer past much positive over to are working that side, sales we August. see in

historical on shows still the the delays products more been overall caused we project remains has industry projects On cancellations uncertainty our we focus tubular markets service derisking. experienced and data believe customers has of will below forward, a intact, that our averages. long-term more delay and we for viability side, inventories but of were to Overall, center macro ultimately and there as end are move assured

progress position pendulum accelerating hard are back ensure momentum the best we anticipate That the of the eventually XXXX segment in again. on when fourth quarter. to favor we swing half possible the are in with does improvements from in being continue capitalize to this working said, to We our earnings in the

broad-based part our short-term only And of a specialty facing continued persisting chemicals impacted turning remain as the in business the pullback. destocking by peers ones of this our confident affecting pressure despite customer We're really not and headwinds this to significantly been results. industry have and our also segment. customers QX in program with We loss this

to we're bounce not for demand just However, back. waiting

team Our We of pursuing coming with opportunities in months. trial profitable more made to good turn is generate will revenue both aggressively projects. strong recurring inroads and existing XXXX and recent that streams very in see revenue hopeful more and QX QX on into long-term into have remain customers new activity this sales

customer been in as area all improving projections, capacity around our below first volume of of our half and other been this some their relationships have goal meeting loss was to sites the the the with Admittedly, line. things not operating in the utilization. impact move on we resulting working performance bottom Post targets, not have large utilization a good a disproportionate our

that certain expenses, have operating have corrective believe to I closer QX and track action we the We we'll by growth been be to on. some reduce taken

continues long-term our progress Overall, to organization our towards goals. make

ago. years achieving very a for on set vision and to out are We to a we specific we accomplish few have believe what we track Ascent,

way organization entirely come back mindsets to core, ever. an have processes stronger new essentially it down We its build stripped We've a XXXX. we as long the than and implemented work to since

have nearly We position and mistakes in of every be we the first capable search optimizing world-class to leaders acknowledge turned their made for business many and as units. over them. we'll growing organization We've business leadership the

point, exasperated issues, we dramatically the look will can position on intentional ourselves. a over begin do we expect earnings reducing our upon of dynamics result volatility. of we the and to is our but over don't support We have out we decisions is this micro run. challenging forward While of pain that delivering better recognize to set dime, our substantially results this to put year continued a business a believe believe to and in and execution from investors our our the patience have expectations appreciate grow for We please long some that succeed worst now, turn

quarter our of then is who the any financial And yours. like I'd to detailed have. call turn our the second floor Steckel answer to return questions to Bill, will you Bill provide may a CFO, results. I'll over overview Now

Bill Steckel

afternoon, everyone. Chris, good you, Thank and

released QX wanted may noticed the I the financial the this accounting change out results, into Before have we to you jump on statements call afternoon. I

operations, As facility results reflect have today a periods relevant I'll into results enable are discontinued from the operations. as of financial result continuing the to well performance the more primarily our accurate we comparisons. and to give of have the the operations Munhall, from cease ex Munhall, we more to prior-year our representation at be results ex adjusted a discussing To Munhall categorized decision

have million is $X.X carrying other to the million shutdown charges transfer cash contract Currently, of Munhall we restructuring $X.X in closure termination, costs with come costs. expected $X.X on production and reiterate we expect in the incur to our in $X.X million severance to that facility wanted I of pretax million include million to financials. the processes, which Additionally, approximately XXXX and year full expect to to $X.X impact costs

XXXX. for million charges in incur the $X we expect noncash noncash charges charges non-cash of approximately to million of approximately second impairments, other quarter, We inventory $X.X pretax of incurred million also and asset expected. approximately and we million cash $X.X Through have to write-downs the restructuring the $XX.X charges

operations million overall or about $X.X $XX.X labor $XX.X quarter. XX.X% material was tubular quarter both decrease well sales of sales to in to period. net talk sales and sales attributable X.X% primarily products let's of the million to were or Net raw operations the as of continuing that, increased With from Gross the in second chemicals net is within costs. net previously-mentioned $XX.X compared decline The sales second million XXXX. the to The million profit as in and decrease due from is continuing prior-year volumes compared lower segments. specialty

net million diluted in profit X.X% $XX.X million loss expense. to XXXX. $X.X Net XX.X% in to $X.XX second to to period. operations higher loss from gross $X.XX of in interest diluted the is negative attributable share EBITDA and per the was $XX.X per Adjusted the the continuing share or or from compared earnings of primarily XXXX. was negative EBITDA Adjusted aforementioned The compared operations of quarter million prior-year decrease in million second decline margin income $X.X quarter compared continuing was

total XX, Lastly, looking to December XX, of was XXXX. liquidity million debt as position at $XX.X June $XX.X at our compared XXXX, million

[Audio Gap] had our credit we compared borrowing of to capacity $XX.X As of XXXX. $XX.X XXXX, million facility under XX, June million revolving

XXXX, of repurchased at XXX,XXX repurchase $X.XX $XXX,XXX XXXX share per we to the our or currently year-to-date under XX,XXX total have quarter second XX,XXX remaining over for shares During share cost shares. bringing authorization. repurchases an approximately average of We shares

With to I'll over for turn it Q&A. operator that, back the now

Operator

from first Our comes Instructions] Vincent [Operator with Anderson Stifel. question

Vincent Anderson

ag business, mean, So in industry, from a just chemicals specifically I through on the of the seen care everywhere thinking purely we've lot personal else pressure, and destocking.

this in something you're you into cycle if times earlier mindful is was wondering products? Or saw this trying to for your of And that specific be that next quarter? similar those inflated positioning if could it to it Just heading lead not, customers' that something you? the order your be

Chris Hutter

more is more was chemicals this Chris significantly impacts. to that's having the side primary so personal the on issue a on volume side. Vince, care that is related here. product a The making customer site-specific yes, It's

working So volume, above performing but really are that sites through on we're that our it's -- refilling expectations. of two

One now. of right anchor the sites is being the

Vincent Anderson

helpful a actually, customer, your really have already some suddenly an That's that the from demand next you're large, lose tied makes and and to that and by when sense. perspective. early to year a large degree. you you this just us walk But is my addressing how you in And specific particularly asset that maybe adjust through planning planning when question

Chris Hutter

related and state-of-the-art. specifically going It's in to -- of effort what use great turning Yes. all stones. a customers' volume our mean of this is this customers the dedicated other I well, one -- the more over working with customer It's process backfill more is you're equipment our a that abilities really to getting the of with plant, that on, okay, through of not products. to if are commercial

us So we coming be the volume like openly of we're little to make headway able to that end as feel other that, it's bit we'll negotiation, but and a for contract a of customers. tail discuss using

Vincent Anderson

more then John we little recruitment helpful. that effort, go. job of filled to take via for Okay. about And bit him, to you address Excellent. a opening your think potentially when longer-term replacement you this time from having and a a want get view, probably were But is are is That's sorry see that you approaching M&A? Or could that immediately? on and a you traditional a something

Chris Hutter

we actively mean, an Well, yes individual. I for no. are searching and

we that wait very We strong and to later. want and we the have great leading a things versus that's accretive to we're a We business. acquisition the think are we is chemicals he's going capable someone bring views segment uncovering doing immediately have specialty interim not where job our see to the person to. sooner an But charge in. of grow recharge to to And need for energy there,

Vincent Anderson

where current then comfortable there over? the turn inventory well to impact inventory headwinds. some Are of Okay. the margins you you've you pretty volume your as residual you mark-to-market now Or material is going given And managed through the balance on raw are that be basis? really to a with to year continue

Chris Hutter

talking which We're segment?

Vincent Anderson

Either.

Chris Hutter

don't I any see would -- I foresee -- the issues any on say chemicals side.

you're side, tubular the negatively margins. burned mostly On we through, and impact what seeing that's the

working was that we that as of about burning brought at that, All raw the likely calls, in brought And were well of loss little surcharge through that bit customer of burn highest There's forecast -- that's talked did. first also price. surcharges a not customer we all or for year. in but the of our I in -- prices would we're nickel say, last we And this as we've of as optimal majority didn't of through earnings large year. QX, the position in terms time as capital the last burned that as the it falling prior through to through fast product of material year the half hangover was, on material

Vincent Anderson

Sure.

can't. these you you the I your you loan, particularly efforts can support just and able in imports, you be discontent any demand at And environment, of imports to case trade could, talk potential about think address to might general burden about steel large or a this, plans a more of be you Okay. But a Ascent that for of quick on impact ones front. this would a the maybe the Maybe of if couple throw to in for? but are bit aware probably go industry when

Chris Hutter

into dumping Imports, mean in I producers. argue the collaboration we're our a and and Yes. Tube as point, tube for cases groups engaged they're countries are of we're surveying, But would to I is trade a case at a domestic alone pursue that go material Committee is actively trade & to team. and Pipe options. And North to pipe America want looking effectively your to expensive actually which various actively to weighing which

and all we've explore -- that done to past options. now continue So in the

But our some years. where it through I value than where proposition there creative more be we than so chance of on for prior a really need more look at in record little think produce alternatively, understanding importer stuff]. smaller and [OD also We're an we a and can imports may I think could be different price distribute And at we're lens. the we opportunity be a if today of lower to an we can import a it

Vincent Anderson

That's to it. thought. I'll interesting and to about probably think that an need come back

think assets the my whether to facility operations sale? end. one over fall of I you about might how last just kind that that that lead guidance some this through how relates now, to you future the question are of ranges cost defer for for and ranges at Munhall of the versus you residual and me CapEx, Just on and this point, gave your maybe you walk or one the kind to value thinking shifting But other outright charges end on year. of would be those where balance in

Chris Hutter

impact residual of we're exploring get our I the maximize out goal the of asset. is we minimize the of all would say and business options, to value the the can return and

we that exit liquidating potentially, the an -- maximizes have all joint of to need above lot to having equipment things queue. would sure something frankly, equipment there to So is moving and value. the is in that venturing say, But to we a subleasing equipment discontinued of there's facility conversations with, from I ops, make it to

Vincent Anderson

Sure.

the of amount end than longer the a least bit if to had around this like cost assume facility, work you you be of the through probably keeping of fair reclaim residual that. kind and to that things the would So value out of of just high it kind wanted

Chris Hutter

Yes. we acquired, anchor. an trying was so -- just the I it since mean obviously day anchor we're it's to cut the been

Vincent Anderson

Fair enough. of best quarter. right. rest for All Got you. on That's And the all the third me. luck of

Operator

Our [David [Operator from comes Sifford]. Instructions] question next

Unidentified Analyst

the did Company anything more than talk second back the question. quarter? there Is in Just you could shares What obstacles buying it about? a kept from

Ben Rosenzweig

Yes.

[indiscernible] filing was done. So That from late quarter. if in late necessarily even filing quarter first have quarter. the the have second the event, XXbX into XX-K open a recall, we move our did you us place XX-K though the liked but were we the didn't later would first prevent window to that in it in getting of our

that's we able once buy window the that second and we of second post back in middle we so quarter, to XXbX But stock. buy And the which were day. opened the of utilize able every QX to place the the the why weren't entirety quarter put back shares was results, to

as continue get time long place market and continuing the the open be in every filings as mechanics purchases legal we don't So to our in prepared, on market get issue an see in the to in I from XXbXs a out standpoint. day

Unidentified Analyst

Okay. Got it.

XXXX see this quarter. down pay good you the that get in lower think much do So this you can debt year? to How

Ben Rosenzweig

on guidance have specific make still we do We can think some headway there. but to no we continue that,

Unidentified Analyst

Okay. How controls is internal the progressing?

Ben Rosenzweig

prior was better auditor. than our lot it now whole with A

the have in to through and the in needs never get the the be everything processes more smooth I perspectives. that processed and are lot our So us order with to we going way, and sure more done. feedback feel quarter communications to systematic and a like very place going to out from be ability a now our need make in that a time is we perfect, be productive this There's that but enable think filings to we're

Unidentified Analyst

being predictable where volatility begin being offer a stable, more With in more the would restructured the the and can say, chemicals tubular see the do to here with point I less Company there'll in future earnings you and little earnings? becoming with be guidance because tubular a

Ben Rosenzweig

Most be much to I of term the our of I think directional a the is is function the in. going of the possible. type industry, so of for than near more not It's with mean business it right, specific guidance we're number.

size function lot a it is a think well. I the of as of

give of the to difficult guidance. we're this very our what thinking we'll for better it's to investors future So help yearly But quarterly businesses and size or billion of on or views where very best sub understand are. kind do specific so our

Unidentified Analyst

should Right. It be in back did the like in second prepared comments. your there we an inflection hit point half in seem quarter, where improvement

Ben Rosenzweig

that's correct. think I

Unidentified Analyst

the business. hope would team And So been chemical the to about consolidate need over the I the has to vocal years fairly chemical know manufacturing. grow Ascent

you So does price and you buy need sellers know intent when the buy something to that to grow, artificially to asking advertise keep high? your that

Ben Rosenzweig

No, I don't think so.

supply-demand more it's willingness from issue, away to make don't a right? of We've I economic deals that clearly our walk think shown sense.

lives both think buyer the there's that's transacting. for I where with consider number just ultimately So deal a a seller, we where and and

Unidentified Analyst

Yes.

question. Okay. One last

say you to the guys who investors sidelines? the all stock who seen story has So say a It's maybe maybe sideline? Wall waiting don't those are would on watching with the are what lost know. would But Street, secret. been right? Ascent it's They've credibility to I tough the customer volatility. on no management What And some destocking, individuals, you the quarters, three turnover,

Ben Rosenzweig

it's clear current for I of shareholders right ones. the So which are right? that we we execute think the manage business now need we to largest our better,

and And patience. responsibility hopefully so to investment have their we and execution their a improve reward to our them

people with for [indiscernible] determine investments, can do their in our other so to on job are risk the capital. the sidelines, that reward things that's the And who to their they

very the what and prices it's think to manifest our will we're share the well at as these these a see our business, stock and prices. results, hopefully at willing obviously, the the put Company already view of potential that in itself into capital compelling in in as what's investment capital the at we the happening future, of Company's But motion the we

Unidentified Analyst

a good day. the for Have feedback. Yes. I appreciate the Good. thanks Well, time.

Operator

like Chris back for Hutter turn There to the I'd to no remarks. any questions. closing over are call further

Chris Hutter

everyone look our speaking when listening again thank Michelle. to you, results. to We'd Thank like XXXX you call to today's quarter and forward with third for we we report

Operator

for your you have This Thank disconnect. now great may and does a the you conclude program, participation. Everyone, day.

Ascent Industries (ACNT) 8 Aug 232023 Q2 Earnings call transcript