Ascent Industries (ACNT) - 2024 Q4 - Annual Report

Revenue and Sales Performance - Specialty Chemicals segment generated approximately 12% of its revenues from one customer in 2024, down from 24% in 2023[20] - Tubular Products segment had one customer accounting for approximately 18% of revenues in 2024 and 17% in 2023[21] - Net sales from continuing operations for the full-year 2024 decreased by $15.3 million, or 7.9%, to$ 177.9 million compared to 2023, primarily due to an 8.8% decrease in average selling prices and a 0.9% decrease in pounds shipped[98] - Net sales for the Specialty Chemicals segment decreased by 3.4%, or $2.9 million, to$ 80.8 million in 2024, driven by a 3.4% decrease in pounds shipped and a 2.6% decrease in average selling prices[101] - Net sales for the Tubular Products segment decreased by 11.3% to $97.1 million in 2024, primarily due to a 16.8% decrease in average selling prices, despite a 5.5% increase in pounds shipped[106] - Ascent Industries Co. reported net sales of$ 177.872 million for the year ended December 31, 2024, a decrease of 7.1% from $193.179 million in 2023[166] Financial Position and Liquidity - The company ended fiscal 2024 with no outstanding debt,$ 16.1 million in cash and cash equivalents, and $47.4 million of remaining available capacity on its revolving line of credit, providing flexibility for future growth opportunities[95] - Cash provided by operating activities increased to$ 17.0 million in 2024 from $6.6 million in 2023, driven by changes in working capital[120] - Cash and cash equivalents increased significantly to$ 16.108 million in 2024, up from $1.851 million in 2023, indicating better liquidity[165] - Total current assets decreased to$ 83.071 million in 2024, down from $89.413 million in 2023, primarily due to a reduction in inventories[165] - Total liabilities decreased to$ 53.705 million in 2024, compared to $55.885 million in 2023, reflecting improved financial management[165] - The Company had a current ratio of 3.8 for the year ended December 31, 2024, compared to 3.7 in 2023[132] Profitability and Operating Results - Full-year 2024 gross profit from continuing operations increased by 1349.1% to$ 22.1 million, or 12.4% of sales, compared to $1.5 million, or 0.8% of sales, in 2023, driven by improved strategic sourcing initiatives and lower raw material costs[99] - Operating loss from continuing operations improved to$ 5.1 million in 2024 compared to a loss of $37.4 million in 2023, primarily due to increased gross profit and absence of prior year goodwill impairment[100] - The company reported a net loss of$ 13.598 million for 2024, an improvement from a net loss of $26.629 million in 2023[166] - The return on average equity (ROAE) improved to (11.3)% in 2024 from (38.6)% in 2023[132] Operational Challenges and Risks - The Specialty Chemicals segment is vulnerable to supply chain disruptions, which could adversely affect sales and earnings due to reliance on key suppliers[47] - Operating results are sensitive to energy and freight costs, with potential increases in operating costs that may not be recoverable through price increases[48] - Production facilities are subject to hazards that could lead to material shutdowns or reduced production, impacting the ability to fulfill customer orders[49] - The company faces significant risks of injury and liabilities associated with industrial activities, despite compliance with safety regulations[50] - The company faces significant competition in all areas of its business, which may adversely affect profitability and market share due to larger competitors with greater financial resources[73] Employee and Labor Relations - The company had 452 employees as of December 31, 2024, with a voluntary turnover rate of approximately 22%[28][29] - The company has 181 employees represented by unions, approximately 40% of total employees, with collective bargaining agreements expiring in 2027[62] Corporate Governance and Compliance - Material weaknesses in internal controls over financial reporting have been identified, potentially affecting investor confidence and the market price of securities[75] - The company identified material weaknesses in internal controls, particularly in information technology and revenue recognition processes, which could affect financial reporting[158] - Cybersecurity risks and incidents could disrupt operations and adversely affect financial data, despite the implementation of internal control and security measures[77] - The company has a cybersecurity risk management program in place, overseen by the Board of Directors and the Audit Committee, to protect critical systems and infrastructure[81] Capital Expenditures and Investments - The Company expects capital spending in fiscal 2025 to be as much as$ 7.6 million[133] - Capital expenditures not yet paid amounted to $267,000 in 2024, down from$ 653,000 in 2023, reflecting a decrease in investment commitments[168] Shareholder Activities - The Company repurchased 101,263 shares of common stock in 2024 at an average price of $10.21 per share, totaling$ 1,037,346[131] - The previous share repurchase program allowed for the repurchase of up to 790,383 shares, which expired on February 17, 2025; a new program allows for up to 1.0 million shares over 24 months[130] - The company has not declared or paid dividends in 2024 or 2023, with a credit agreement restricting dividend payments[89] Asset Management - The Company recorded an obsolete inventory reserve of $5.5 million as of December 31, 2024, a decrease of approximately$ 0.1 million during the year[140] - The company experienced a reduction in accounts receivable from $26,604,000 in 2023 to$ 23,880,000 in 2024, a decrease of approximately 10%[179] - The allowance for credit losses decreased from $463,000 in 2023 to$ 345,000 in 2024, representing a 25% reduction[181] Acquisitions and Divestitures - On December 22, 2023, the Company sold substantially all assets of Specialty Pipe & Tube, Inc. for approximately $55 million[24] - The Company engages in acquisitions and divestitures, which may present integration challenges and affect anticipated financial benefits[69]