Exhibit 99.1 Ascent Industries Reports Fourth Quarter and Full Year 2023 Results Eliminated All Outstanding Debt with Cash Proceeds from the Sale of Specialty Pipe & Tube New Leadership Focused on Accelerating Profitable Growth and Maximizing Value Oak Brook, Illinois, March 28, 2024 – Ascent Industries Co. (Nasdaq: ACNT) (“Ascent” or the “Company”), an industrials company focused on the production of specialty chemicals and industrial tubular products, is reporting its results for the fourth quarter and fu ...

WIN-Initiative/Neleman/Stone via Getty Images Investment thesis In June 2021, I wrote an article about Ascent Industries (NASDAQ:ACNT), which was then named Synalloy, as operations were improving significantly after all the disruptions suffered during 2020 when the coronavirus pandemic broke the strong growth trend experienced in 2017, 2018, and 2019, and the share price still traded at 57% below mid-term highs (reached in August 2018). Despite reporting a 17.72% revenue decline year over year in Q1 202 ...

Ascent Industries Co. (NASDAQ:ACNT) Q3 2023 Earnings Conference Call November 9, 2023 4:30 PM ET Company Participants Cody Cree - Investor Relations Ben Rosenzweig - Executive Chairman of the Board Chris Hutter - President & Chief Executive Officer Bill Steckel - Chief Financial Officer Conference Call Participants Vincent Anderson - Stifel Operator Good afternoon, everyone and thank you for participating in today's Conference Call to discuss Ascent's Financial Results for the Third Quarter ended September ...

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, 2023 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 Ascent Industries Co. (Exact name of registrant as specified in its charter) Delaware 57-0426694 (State or other jurisd ...

Ascent Industries Co. (NASDAQ:ACNT) Q2 2023 Results Conference Call August 8, 2023 5:00 PM ET Company Participants Cody Cree - Investor Relations Ben Rosenzweig - Executive Chairman of the Board Chris Hutter - President and Chief Executive Officer Bill Steckel - Chief Financial Officer Conference Call Participants Vincent Anderson - Stifel 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 ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Ascent Industries Co. [Disclosure Regarding Forward Looking Statements](index=3&type=section&id=Disclosure%20Regarding%20Forward%20Looking%20Statements) This section outlines the nature of forward-looking statements, cautioning readers about inherent risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are identified by words like 'estimate,' 'project,' 'intend,' 'expect,' 'believe,' and similar expressions, and are subject to risks and uncertainties[7](index=7&type=chunk) - Key risk factors include adverse economic conditions (including COVID-19 impact), competitive pressures, product demand, raw material costs and availability, customer financial stability, and regulatory compliance[7](index=7&type=chunk) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Ascent Industries Co.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flow statements, and statements of shareholders' equity, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total Assets | $232,422 | $269,043 | $(36,621) | | Total Liabilities | $118,096 | $134,784 | $(16,688) | | Total Shareholders' Equity | $114,326 | $134,259 | $(19,933) | | Cash and Cash Equivalents | $717 | $1,440 | $(723) | | Inventories | $74,300 | $85,572 | $(11,272) | | Assets held for sale | $17,398 | $380 | $17,018 | | Current assets of discontinued operations | $3,441 | $38,120 | $(34,679) | [Condensed Consolidated Statements of Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) This section presents the company's financial performance over specific periods, detailing net sales, gross profit, operating income, and net income (loss) Condensed Consolidated Statements of Income (Loss) Highlights (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Sales | $60,665 | $84,600 | $128,084 | $168,309 | | Gross Profit | $3,225 | $20,184 | $10,367 | $41,643 | | Operating Income (Loss) from Continuing Operations | $(3,752) | $11,905 | $(5,175) | $24,778 | | Net Income (Loss) | $(14,636) | $11,057 | $(19,835) | $21,317 | | Basic EPS (Continuing Operations) | $(0.37) | $1.06 | $(0.56) | $2.04 | | Basic EPS (Discontinued Operations) | $(1.07) | $0.02 | $(1.39) | $0.05 | | Basic EPS (Total) | $(1.44) | $1.08 | $(1.95) | $2.08 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities, showing changes in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $18,072 | $2,889 | | Net Cash Used in Investing Activities | $(1,625) | $(2,325) | | Net Cash Used in Financing Activities | $(17,171) | $(2,340) | | Decrease in Cash and Cash Equivalents | $(724) | $(1,776) | | Cash and Cash Equivalents at End of Period | $717 | $245 | - Cash paid for interest increased significantly from **$699 thousand in H1 2022 to $1,999 thousand in H1 2023**[13](index=13&type=chunk) - Cash paid for income taxes decreased from **$3,874 thousand in H1 2022 to $817 thousand in H1 2023**[13](index=13&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in the company's shareholders' equity, including net income (loss), stock-based compensation, and share repurchases Shareholders' Equity Changes (in thousands) | Metric | Balance at Dec 31, 2022 | Net Loss (6M 2023) | Stock-based Compensation (6M 2023) | Repurchase of Common Stock (6M 2023) | Balance at June 30, 2023 | | :-------------------------- | :---------------------- | :------------------- | :----------------------------------- | :----------------------------------- | :----------------------- | | Total Shareholders' Equity | $134,259 | $(19,835) | $406 | $(504) | $114,326 | - The company repurchased **51,156 shares of common stock for $504 thousand** during the six months ended June 30, 2023[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies and specific line items [Note 1: Basis of Presentation](index=10&type=section&id=Note%201:%20Basis%20of%20Presentation) This note clarifies that the unaudited interim financial statements adhere to SEC rules and GAAP, emphasizing the use of estimates and reclassifications - Interim financial statements are unaudited and may not be indicative of full-year results, relying on management estimates for various financial items[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The Company adopted ASU 2020-04 "Reference Rate Reform" on March 31, 2023, which did not have a material effect on the financial statements[26](index=26&type=chunk) - Certain prior period amounts were reclassified to conform to current presentation, including the reclassification of Palmer business and Munhall operations within the Tubular Products segment to discontinued operations[25](index=25&type=chunk) [Note 2: Discontinued Operations](index=10&type=section&id=Note%202:%20Discontinued%20Operations) This note details the decision to cease Munhall operations, including asset impairment charges and the reclassification of its financial results - Ascent Industries Co. decided to permanently cease operations at its Munhall galvanized pipe and tube facility by August 31, 2023, to consolidate manufacturing and improve profitability[27](index=27&type=chunk)[28](index=28&type=chunk) - In Q2 2023, the company incurred **$6.4 million in asset impairment charges** (inventory and long-lived assets) and **$1.4 million in increased accounts receivable reserves** related to Munhall[29](index=29&type=chunk) Financial Results of Discontinued Operations (Munhall) (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Sales | $7,629 | $31,602 | $22,663 | $64,112 | | Gross Profit | $(4,716) | $689 | $(7,565) | $1,727 | | Operating Income (Loss) | $(13,840) | $286 | $(18,009) | $630 | | Net Income (Loss) from Discontinued Operations | $(10,888) | $235 | $(14,138) | $488 | [Note 3: Revenue Recognition](index=12&type=section&id=Note%203:%20Revenue%20Recognition) This note explains the company's revenue recognition policies, primarily upon shipment, and disaggregates net sales by product group and timing - Revenue is recognized when control of goods or services transfers to customers, primarily upon shipment, for steel and specialty chemical products[31](index=31&type=chunk) Net Sales by Product Group (Continuing Operations, in thousands) | Product Group | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Heavy wall seamless carbon steel pipe and tube | $10,299 | $12,094 | $22,686 | $24,498 | | Stainless steel pipe and tube | $29,003 | $43,486 | $60,236 | $86,957 | | Specialty chemicals | $21,363 | $29,020 | $45,112 | $56,741 | | Total Net Sales | $60,665 | $84,600 | $128,084 | $168,309 | Revenue Recognition by Timing (Continuing Operations, in thousands) | Timing | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Point-in-time | $57,387 | $77,127 | $120,302 | $153,620 | | Over-time | $3,278 | $7,473 | $7,782 | $14,689 | [Note 4: Fair Value of Financial Instruments](index=12&type=section&id=Note%204:%20Fair%20Value%20of%20Financial%20Instruments) This note defines the fair value hierarchy and discusses non-recurring measurements of long-lived assets, particularly those classified as held for sale - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[33](index=33&type=chunk)[34](index=34&type=chunk) - During Q2 2023, Munhall inventory was written down to **$16.0 million** and certain long-lived assets (including intangibles) to **$2.6 million**, resulting in **$6.4 million in asset impairment charges** due to the decision to cease operations[38](index=38&type=chunk) Munhall Assets Classified as Held for Sale (in thousands) | Asset Type | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Inventory, net | $13,494 | $0 | | Property, plant and equipment, net | $869 | $0 | | Other assets, net | $3,035 | $0 | | Total Assets held for sale | $17,398 | $0 | - All remaining assets classified as held for sale at the Palmer facility were disposed of by June 30, 2023[41](index=41&type=chunk) [Note 5: Inventories](index=14&type=section&id=Note%205:%20Inventories) This note details the valuation of inventories at the lower of cost or net realizable value, providing a breakdown of components and changes - Inventories are stated at the lower of cost or net realizable value, using specific identification or weighted average methods[44](index=44&type=chunk) Inventory Components (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :------------------ | :------------ | :---------------- | | Raw materials | $47,133 | $49,655 | | Work-in-process | $10,005 | $10,931 | | Finished goods | $21,524 | $28,157 | | Less: inventory reserves | $(4,362) | $(3,171) | | Total Inventories | $74,300 | $85,572 | [Note 6: Property, Plant and Equipment](index=15&type=section&id=Note%206:%20Property,%20Plant%20and%20Equipment) This note outlines the composition of property, plant, and equipment from continuing operations and details the depreciation expense incurred Property, Plant and Equipment, Net (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Land | $723 | $723 | | Leasehold improvements | $3,651 | $4,114 | | Buildings | $1,534 | $1,534 | | Machinery, fixtures and equipment | $100,670 | $99,786 | | Construction-in-progress | $2,190 | $1,881 | | Less: accumulated depreciation and amortization | $(74,404) | $(70,993) | | Property, plant and equipment, net | $34,364 | $37,045 | Total Depreciation Expense (in thousands) | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $1,632 | $1,621 | | Six Months Ended June 30 | $3,243 | $3,201 | [Note 7: Goodwill, Intangible Assets and Deferred Charges](index=15&type=section&id=Note%207:%20Goodwill,%20Intangible%20Assets%20and%20Deferred%20Charges) This note details the company's goodwill, definite-lived intangible assets, and deferred charges, including their carrying amounts and amortization schedules - Goodwill balance remained at **$11.4 million** as of June 30, 2023, attributable to the Specialty Chemicals segment[47](index=47&type=chunk) Definite-Lived Intangible Assets, Net (in thousands) | Asset Type | Gross Carrying Amount (June 30, 2023) | Accumulated Amortization (June 30, 2023) | Net (June 30, 2023) | | :-------------------------- | :------------------------------------ | :--------------------------------------- | :------------------ | | Customer related | $26,061 | $(17,390) | $8,671 | | Trademarks and trade names | $150 | $(17) | $133 | | Other | $500 | $(56) | $444 | | Total definite-lived intangible assets | $26,711 | $(17,463) | $9,248 | Estimated Amortization Expense for Intangible Assets (in thousands) | Year | Amount | | :--- | :----- | | Remainder of 2023 | $752 | | 2024 | $1,487 | | 2025 | $1,324 | | 2026 | $1,102 | | 2027 | $930 | | Thereafter | $2,867 | Deferred Charges, Net (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Deferred charges, gross | $398 | $398 | | Accumulated amortization | $(245) | $(195) | | Deferred charges, net | $153 | $203 | [Note 8: Debt](index=16&type=section&id=Note%208:%20Debt) This note describes the company's debt obligations, including a note payable and a revolving credit facility, and confirms compliance with covenants - A **$0.9 million note payable** with a 3.70% interest rate matures on April 1, 2024[51](index=51&type=chunk) - The Company has a four-year revolving credit facility with BMO Harris Bank, N.A., with up to **$150.0 million borrowing capacity**, maturing January 15, 2025[52](index=52&type=chunk) Long-Term Debt (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Revolving line of credit | $50,770 | $67,442 | | Term loan | $3,750 | $4,107 | | Total long-term debt | $54,520 | $71,549 | | Less: Current portion | $(2,464) | $(2,464) | | Long-term debt, less current portion | $52,056 | $69,085 | - As of June 30, 2023, the weighted average interest rate was **6.90%**, and the Company had **$45.4 million of remaining available capacity** under its credit facility, being in compliance with all financial debt covenants[55](index=55&type=chunk) [Note 9: Leases](index=17&type=section&id=Note%209:%20Leases) This note details the company's operating and finance lease liabilities, primarily for real estate and equipment, including future payments and discount rates - Operating lease liabilities related to the master lease agreement with Store Capital totaled **$31.1 million** as of June 30, 2023, representing **94% of total lease liabilities**[56](index=56&type=chunk) Total Lease Cost (in thousands) | Lease Cost Component | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $997 | $1,043 | $1,996 | $2,091 | | Finance lease cost (Amortization) | $86 | $69 | $164 | $136 | | Finance lease cost (Interest) | $24 | $9 | $38 | $18 | | Sublease income | $(91) | $(32) | $(182) | $(65) | | Total lease cost | $1,016 | $1,089 | $2,016 | $2,180 | Present Value of Lease Liabilities (in thousands) | Lease Type | Present Value (June 30, 2023) | | :-------------------------- | :---------------------------- | | Operating leases | $31,431 | | Finance leases | $1,596 | Weighted-Average Lease Terms and Discount Rates | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Operating leases (term) | 13.14 years | 13.61 years | | Finance leases (term) | 5.50 years | 6.06 years | | Operating leases (discount rate) | 8.32 % | 8.31 % | | Finance leases (discount rate) | 5.87 % | 2.32 % | [Note 10: Shareholders' Equity](index=19&type=section&id=Note%2010:%20Shareholders'%20Equity) This note outlines the company's share repurchase program, detailing shares repurchased and remaining authorization as of the reporting date - The Company's share repurchase program, re-authorized in December 2022, allows for the repurchase of up to **790,383 shares** until February 17, 2025[64](index=64&type=chunk) Share Repurchase Activity (6 Months Ended June 30, 2023) | Metric | 6 Months Ended June 30, 2023 | | :-------------------------- | :--------------------------- | | Number of shares repurchased | 51,156 | | Average price per share | $9.83 | | Total cost of shares repurchased | $504,151 | - As of June 30, 2023, **628,823 shares remained** under the share repurchase authorization[64](index=64&type=chunk) [Note 11: Earnings Per Share](index=19&type=section&id=Note%2011:%20Earnings%20Per%20Share) This note provides the computation of basic and diluted earnings per share for both continuing and discontinued operations Earnings (Loss) Per Share (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS (Continuing Operations) | $(0.37) | $1.06 | $(0.56) | $2.04 | | Diluted EPS (Continuing Operations) | $(0.37) | $1.04 | $(0.56) | $2.01 | | Basic EPS (Discontinued Operations) | $(1.07) | $0.02 | $(1.39) | $0.05 | | Diluted EPS (Discontinued Operations) | $(1.07) | $0.02 | $(1.39) | $0.05 | | Basic EPS (Total) | $(1.44) | $1.08 | $(1.95) | $2.08 | | Diluted EPS (Total) | $(1.44) | $1.06 | $(1.95) | $2.05 | - Potentially dilutive shares were excluded from diluted EPS calculations when their inclusion would have an anti-dilutive effect, totaling **0.1 million shares** for the three and six months ended June 30, 2023[67](index=67&type=chunk) [Note 12: Income Taxes](index=20&type=section&id=Note%2012:%20Income%20Taxes) This note details the company's effective income tax rate for continuing operations, explaining variances from the U.S. statutory rate Income Tax Provision (Benefit) and Effective Tax Rate (Continuing Operations, in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision (benefit) | $(897) | $699 | $(1,385) | $3,197 | | Effective income tax rate | 19.8 % | 6.4 % | 19.6 % | 13.5 % | - The effective tax rate for H1 2023 (**19.6%**) was lower than the U.S. statutory rate (**21.0%**) due to discrete tax charges from stock-based compensation[68](index=68&type=chunk) - The effective tax rate for H1 2022 (**13.5%**) was lower than the U.S. statutory rate (**21.0%**) due to the release of federal valuation allowances[69](index=69&type=chunk) [Note 13: Commitments and Contingencies](index=20&type=section&id=Note%2013:%20Commitments%20and%20Contingencies) This note discusses the company's involvement in a lawsuit with Henkel US Operations Corporation and other legal proceedings - DanChem (acquired by Ascent in 2021) is facing a lawsuit from Henkel US Operations Corporation, a former customer, alleging defective products and seeking approximately **$3 million in damages**[70](index=70&type=chunk) - The Company estimates a reasonably possible range of loss for the Henkel lawsuit between **$0 and $0.6 million**[70](index=70&type=chunk) - The Company is involved in various other legal proceedings in the normal course of business but does not believe their outcome would have a material adverse effect on its financial condition[71](index=71&type=chunk) [Note 14: Industry Segments](index=21&type=section&id=Note%2014:%20Industry%20Segments) This note provides financial information for the company's two reportable segments: Tubular Products and Specialty Chemicals, detailing net sales and operating income - Ascent Industries Co. has two reportable segments: Tubular Products (stainless steel and seamless carbon pipe and tube) and Specialty Chemicals (specialty chemical production)[73](index=73&type=chunk)[75](index=75&type=chunk) Net Sales by Segment (Continuing Operations, in thousands) | Segment | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Tubular Products | $39,302 | $55,580 | $82,922 | $111,454 | | Specialty Chemicals | $21,363 | $29,020 | $45,112 | $56,741 | | All Other | $0 | $0 | $50 | $114 | | Total Net Sales | $60,665 | $84,600 | $128,084 | $168,309 | Operating Income (Loss) by Segment (Continuing Operations, in thousands) | Segment | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Tubular Products | $(105) | $12,992 | $1,560 | $27,120 | | Specialty Chemicals | $(806) | $2,627 | $546 | $5,014 | | All Other | $(74) | $(235) | $(552) | $(317) | | Corporate (Unallocated) | $(2,767) | $(3,479) | $(6,729) | $(7,039) | | Total Operating Income (Loss) | $(3,752) | $11,905 | $(5,175) | $24,778 | - Identifiable assets for Tubular Products decreased from **$112.9 million** at Dec 31, 2022, to **$99.4 million** at June 30, 2023, and for Specialty Chemicals from **$73.0 million to $67.3 million**[77](index=77&type=chunk) [Note 15: Subsequent Events](index=22&type=section&id=Note%2015:%20Subsequent%20Events) This note confirms that no subsequent events requiring adjustment or disclosure were identified up to the financial statement issuance date - No subsequent events requiring adjustment or disclosure were identified by the Company up to the financial statement issuance date[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources, including strategic decisions and macroeconomic challenges [Executive Overview](index=24&type=section&id=Executive%20Overview) This section summarizes the strategic decision to cease Munhall operations, highlights market challenges, and details effective working capital management and debt reduction - The Board decided to permanently cease operations at Munhall by August 31, 2023, to consolidate manufacturing and improve profitability[81](index=81&type=chunk) - The Company faced difficult end market conditions, including inflationary pressures, increased raw material costs, and reduced customer demand due to inventory management[82](index=82&type=chunk) - Despite challenges, the Company managed working capital effectively, generated cash, and reduced debt by **$17.0 million** in H1 2023, also repurchasing **18,843 shares for $0.2 million**[82](index=82&type=chunk) - Macroeconomic uncertainties, such as global supply chain constraints, labor shortages, and inflation, continue to impact raw material costs, with the Company implementing price increases and efficiency measures[83](index=83&type=chunk) [Results of Operations and Non-GAAP Financial Measures](index=24&type=section&id=Results%20of%20Operations%20and%20Non-GAAP%20Financial%20Measures) This section analyzes consolidated and segment-specific financial performance, including net sales, gross profit, operating income, and non-GAAP measures like EBITDA Consolidated Performance Summary (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net Sales | $60,665 | $84,600 | (28.3)% | $128,084 | $168,309 | (23.9)% | | Gross Profit | $3,225 | $20,184 | (84.0)% | $10,367 | $41,643 | (75.1)% | | Operating Income (Loss) from Continuing Operations | $(3,752) | $11,905 | (131.5)% | $(5,175) | $24,778 | (120.9)% | - The decrease in net sales was driven by a **22.9% decrease in pounds shipped** and a **5.0% decrease in average selling prices** for Q2 2023, and a **20.7% decrease in pounds shipped** and a **2.5% decrease in average selling prices** for H1 2023[84](index=84&type=chunk) - Gross profit decline was primarily attributable to continued increasing raw material costs in 2023[85](index=85&type=chunk) Tubular Products Segment Performance (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net Sales | $39,302 | $55,580 | (29.3)% | $82,922 | $111,454 | (25.6)% | | Operating Income (Loss) | $(105) | $12,992 | (100.8)% | $1,560 | $27,120 | (94.2)% | | Adjusted EBITDA | $816 | $14,240 | (94.3)% | $3,450 | $29,653 | (88.4)% | - Tubular Products net sales decrease was driven by a **26.1% decrease in pounds shipped** and a **3.4% decrease in average selling prices** for Q2 2023[88](index=88&type=chunk) Specialty Chemicals Segment Performance (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (%) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net Sales | $21,400 | $29,020 | (26.3)% | $45,100 | $56,741 | (20.5)% | | Operating Income (Loss) | $(806) | $2,627 | (130.7)% | $546 | $5,014 | (89.1)% | | Adjusted EBITDA | $313 | $3,648 | (91.4)% | $2,811 | $7,023 | (60.0)% | - Specialty Chemicals net sales decrease was driven by a **20.2% decrease in pounds shipped** and a **3.2% decrease in average selling prices** for Q2 2023[90](index=90&type=chunk) - Interest expense increased to **$1.0 million in Q2 2023** (from $0.4 million in Q2 2022) and to **$2.1 million in H1 2023** (from $0.8 million in H1 2022) due to higher interest rates[94](index=94&type=chunk) - EBITDA and Adjusted EBITDA are non-GAAP measures used by management to evaluate operating performance, excluding non-cash and other items not indicative of ongoing performance[95](index=95&type=chunk)[96](index=96&type=chunk) Consolidated Adjusted EBITDA (Continuing Operations, in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | EBITDA | $(1,590) | $14,221 | $(932) | $29,380 | | Adjusted EBITDA | $(1,471) | $14,751 | $(166) | $30,680 | | Adjusted EBITDA % of sales | (2.4)% | 17.4% | (0.1)% | 18.2% | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity management through operating activities, cash, and credit facilities, detailing cash flow changes and debt levels - As of June 30, 2023, the Company had **$0.7 million in cash and cash equivalents** and **$45.4 million of remaining available capacity** on its revolving line of credit[99](index=99&type=chunk) Cash Flows from Continuing Operations (in thousands) | Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $7,515 | $689 | | Investing activities | $(1,483) | $(1,976) | | Financing activities | $(17,171) | $(1,657) | | Net decrease in cash and cash equivalents | $(11,139) | $(2,944) | - The increase in cash from operating activities was primarily driven by changes in working capital, including a **$10.3 million increase from inventories** and a **$2.0 million increase from accounts receivable** in H1 2023[100](index=100&type=chunk)[101](index=101&type=chunk) - Cash used in financing activities increased due to decreased borrowings and increased repayments under the Company's credit facility[103](index=103&type=chunk) - Total borrowings outstanding under the credit facility decreased by **$17.0 million** from December 31, 2022, to **$54.5 million** at June 30, 2023[105](index=105&type=chunk) [Material Cash Requirements from Contractual and Other Obligations](index=30&type=section&id=Material%20Cash%20Requirements%20from%20Contractual%20and%20Other%20Obligations) This section outlines the company's debt and lease obligations, projected capital spending, and confirms the absence of off-balance sheet arrangements - Debt obligations total **$54.5 million**, with **$2.5 million payable within 12 months**, including a **$0.9 million note payable** maturing April 2024[109](index=109&type=chunk) - Operating and finance lease obligations total **$33.0 million**, with **$1.4 million payable within 12 months**[110](index=110&type=chunk) - Capital spending is expected to be up to **$3.8 million** for the remainder of fiscal 2023[110](index=110&type=chunk) - The Company has no off-balance sheet arrangements likely to have a material effect on its financial position[110](index=110&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section reviews critical accounting policies and estimates, specifically detailing the policy for assets classified as held for sale - No significant changes to critical accounting policies or estimates since fiscal 2022, except for the detailed policy on 'Assets Held for Sale'[111](index=111&type=chunk) - Assets are classified as held for sale when a plan to sell is approved, the asset is available for immediate sale, an active buyer search is initiated, sale is probable within one year, and the asset is actively marketed at a reasonable price[111](index=111&type=chunk) - Assets held for sale are measured at the lower of carrying value or fair value less costs to sell, and depreciation/amortization ceases upon designation[112](index=112&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ascent Industries Co. is exempt from providing detailed quantitative and qualitative disclosures about market risk - As a smaller reporting company, Ascent Industries Co. is exempt from providing quantitative and qualitative disclosures about market risk[113](index=113&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with ongoing remediation efforts - The Company's disclosure controls and procedures were not effective as of June 30, 2023, due to previously reported material weaknesses in internal control over financial reporting[115](index=115&type=chunk) - Material weaknesses exist in the control environment and control activities areas, indicating a reasonable possibility of material misstatement not being prevented or detected timely[116](index=116&type=chunk) - Remediation efforts include hiring accounting, finance, and IT resources, expanding internal control training, realigning management roles, developing enhanced documentation policies, and improving controls over inventory, revenue, accounts receivable, period-end reporting, and general IT[117](index=117&type=chunk)[118](index=118&type=chunk) - Material weaknesses will not be considered fully remediated until all remedial processes are implemented, controls operate effectively for a sufficient period, and management concludes effectiveness through testing[119](index=119&type=chunk) - No changes in internal control over financial reporting occurred during the three and six months ended June 30, 2023, other than ongoing remediation efforts[120](index=120&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions and claims in the ordinary course of business, with specific details incorporated by reference from Note 13 - The Company is involved in various unresolved legal actions, administrative proceedings, and claims in the ordinary course of business, including product liability, commercial, employment, workers' compensation, and environmental matters[121](index=121&type=chunk) - Reserves are recorded when a liability is probable and the amount of loss can be reasonably estimated[121](index=121&type=chunk) - Information pertaining to legal proceedings is incorporated by reference from Note 13 to the condensed consolidated financial statements[121](index=121&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors were identified compared to those discussed in the company's Annual Report on Form 10-K for the prior year - No material changes in risk factors were identified compared to the Annual Report on Form 10-K for December 31, 2022[122](index=122&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases under its re-authorized program, including shares purchased and remaining authorization Issuer Purchases of Equity Securities (3 Months Ended June 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Number of Shares that May Yet Be Purchased under the Program | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------ | :----------------------------------------------------------- | | April 1, 2023 - April 30, 2023 | — | $— | — | 647,666 | | May 1, 2023 - May 31, 2023 | 6,490 | $9.46 | 6,490 | 641,176 | | June 1, 2023 - June 30, 2023 | 12,353 | $9.28 | 12,353 | 628,823 | | As of June 30, 2023 | 18,843 | $9.34 | 18,843 | 628,823 | - The share repurchase program, re-authorized in December 2022, allows for the repurchase of up to **790,383 shares** and expires in February 2025[123](index=123&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[124](index=124&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures for the period - No mine safety disclosures were reported[124](index=124&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - No other information was reported[125](index=125&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Rule 13a-14(a)/15d-14(a) Certifications of the CEO and CFO, Certifications Pursuant to 18 U.S.C. Section 1350, and various XBRL-related documents - Exhibits include CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) and XBRL instance, schema, calculation, label, presentation, and definition linkbase documents[124](index=124&type=chunk) - XBRL-related information is furnished, not filed, in accordance with Regulation S-T[124](index=124&type=chunk) [Signatures](index=35&type=section&id=Signatures) This section provides the official signatures of the company's President and CEO and Chief Financial Officer, confirming the report's submission - The report was signed by Christopher G. Hutter, President and Chief Executive Officer, and William S. Steckel, Chief Financial Officer, on August 8, 2023[126](index=126&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q1 2023 were $82.5 million, down from $116.2 million in the prior year period, primarily due to a reduction in low-margin sales and distributor destocking [19] - Gross profit decreased to $4.3 million from $22.5 million, with gross margin dropping to 5.2% from 19.4% [19] - Net loss for Q1 2023 was $5.2 million, or $0.51 loss per share, compared to net income of $10.3 million, or $0.99 diluted earnings per share in Q1 2022 [20] - Adjusted EBITDA was negative $1.6 million, down from $17 million in the year-ago quarter, with adjusted EBITDA margin at negative 1.9% compared to 14.6% [20] - Total debt decreased to $58.7 million from $71.5 million at the end of 2022, with $50 million of borrowing capacity under the revolving credit facility [21] Business Line Data and Key Metrics Changes - The Tubular Products segment faced challenges due to the exit of the galvanized business and distributor destocking, impacting overall performance [5][10] - The Specialty Chemicals segment experienced sales declines due to industry-wide destocking trends but is expected to improve in the latter half of the year [13][14] Market Data and Key Metrics Changes - Service center inventories are near historic lows, with signs of restocking beginning, which is expected to benefit the Tubular segment [12] - The markets for the Tubular segment remain resilient despite some order delays, with no significant cancellations reported [13] Company Strategy and Development Direction - The company is focusing on its Specialty Chemicals business as a long-term growth engine, prioritizing stability and long-term contracts [8][16] - There is a commitment to managing working capital efficiently and generating free cash flow, with a focus on share buybacks as part of the capital allocation strategy [9][21] - M&A is viewed as a potential tool for long-term objectives, but the company is exercising patience in pursuing opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q1 but expressed optimism about stabilization and potential growth in the second quarter [7][28] - The company is committed to addressing internal control weaknesses and has a plan in place for remediation [41][43] Other Important Information - The new CFO, Bill Steckel, is expected to drive efficiencies in finance and accounting functions [7][18] - The company repurchased 32,313 shares for $0.3 million during the first quarter [21] Q&A Session Summary Question: Connection of debt paydown to working capital release from Munhall - Management indicated that the debt paydown was a broad-based effort across the business, not solely linked to Munhall [23][24] Question: Potential for substantial debt paydown in the next quarters - Management confirmed that further debt paydown is expected as free cash flow generation continues [26] Question: Sales growth potential in the near future - Management noted that while sales are stabilizing, growth will depend on specific divisions and measurement periods [28][30] Question: Share buybacks and potential for increased pace - Management stated that they are open to increasing the pace of buybacks now that regulatory restrictions have eased [31][32] Question: Market makers and trading patterns - Management did not have specific information on market makers or trading patterns but offered to follow up [35][37] Question: Addressing internal control deficiencies - The new CFO outlined a plan for addressing internal control weaknesses, emphasizing a measured approach [41][43]

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 March 31, 2023 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 Ascent Industries Co. (Exact name of registrant as specified in its charter) Delaware 57-0426694 (State or other jurisdicti ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) The company operates in Tubular Products and Specialty Chemicals, exiting its galvanized pipe business while managing a significant order backlog decrease - The company operates through two main segments: **Tubular Products** (stainless steel, galvanized, and carbon pipe/tube) and **Specialty Chemicals** (defoamers, surfactants, lubricating agents)[7](index=7&type=chunk) - In Q4 2022, the company decided to **exit the galvanized steel pipe and tube business** at its Munhall facility, with operations expected to cease in the first half of 2023[9](index=9&type=chunk) - The Specialty Chemicals segment has significant customer concentration, with one customer accounting for **21% of the segment's revenue in 2022**, up from 15% in 2021[16](index=16&type=chunk) Order Backlog (Year-End) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Tubular Products | $49.8 million | $91.5 million | | Specialty Chemicals | $10.4 million | $12.9 million | - As of December 31, 2022, the company had **698 full-time employees**, with **48% represented by unions** under collective bargaining agreements expiring between 2023 and 2024[24](index=24&type=chunk) [Risk Factors](index=6&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from industry cyclicality, customer concentration, supply chain volatility, and material weaknesses in internal controls - The business is susceptible to cyclical demand, intense competition, and overproduction by foreign producers, which can negatively impact pricing and profitability[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - A significant portion of Specialty Chemicals sales depends on a few customers; in 2022, the top 15 customers accounted for **67% of revenue**[33](index=33&type=chunk) - The company is exposed to supply chain risks, including **volatility in raw material prices** and availability, and potential loss of key suppliers[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - As of December 31, 2022, **48% of the company's employees (334) were unionized** under agreements expiring between 2023 and 2024, posing a risk of labor disruptions[51](index=51&type=chunk) - The company has identified **material weaknesses in its internal controls** over financial reporting, which could affect investor confidence and report accuracy[63](index=63&type=chunk) [Unresolved Staff Comments](index=12&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[67](index=67&type=chunk) [Properties](index=12&type=section&id=Item%202.%20Properties) The company operates several manufacturing plants and facilities, primarily leased, which are considered adequate for current operational needs Principal Properties Overview | Location | Principal Operations | Segment | Leased or Owned | | :--- | :--- | :--- | :--- | | Munhall, PA | Manufacturing stainless steel pipe | Tubular Products | Leased | | Bristol, TN | Manufacturing stainless steel pipe | Tubular Products | Leased | | Cleveland, TN | Chemical manufacturing and warehousing | Specialty Chemicals | Leased | | Fountain Inn, SC | Chemical manufacturing and warehousing | Specialty Chemicals | Leased | | Danville, VA | Chemical manufacturing and warehousing | Specialty Chemicals | Owned | | Troutman, NC | Manufacturing ornamental stainless steel tube | Tubular Products | Leased | - Substantially all of the value of the Company's leased plants and facilities relate to the **Master Lease with Store Master Funding XII, LLC**[67](index=67&type=chunk) [Legal Proceedings](index=12&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 15 to the Consolidated Financial Statements - For a discussion of legal proceedings, see **Note 15** to the Consolidated Financial Statements[68](index=68&type=chunk) [Mine Safety Disclosures](index=12&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[68](index=68&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=13&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ (ACNT), no dividends were paid, and 80,204 shares were repurchased in Q4 2022 - The company's common stock trades on the NASDAQ Global Market under the symbol **ACNT**; no dividends were declared or paid in 2022 or 2021[72](index=72&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2022 | — | $ — | | Nov 2022 | 34,403 | $11.00 | | Dec 2022 | 45,801 | $10.30 | | **Total Q4** | **80,204** | **$10.60** | - The Board of Directors re-authorized the share repurchase program, extending it to **February 17, 2025**[74](index=74&type=chunk) [Reserved](index=13&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated net sales grew 23.7% to $414.1 million in 2022, though operating cash flow decreased and material weaknesses were identified [Executive Overview](index=15&type=section&id=Executive%20Overview) In 2022, the company rebranded to Ascent Industries Co, grew sales 23.7% to $414.1 million, and decided to exit its galvanized pipe business - Effective August 10, 2022, the company changed its corporate name from Synalloy Corporation to **Ascent Industries Co**[77](index=77&type=chunk) Fiscal 2022 Financial Highlights | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales | $414.1M (+23.7%) | $334.7M | | Net Income | $22.1M | $20.2M | | Diluted EPS | $2.12 | $2.14 | - The company made a strategic decision to exit its galvanized pipe and tube operations, resulting in a **$0.9 million charge in Q4 2022**[83](index=83&type=chunk) - The company repurchased **110,404 shares for $1.3 million** during 2022[84](index=84&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Consolidated 2022 sales rose 23.7% to $414.1 million on higher prices, but gross margin fell to 13.7% due to increased costs Consolidated Results of Operations (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales | $414,147 | $334,715 | | Gross Profit | $56,533 | $60,766 | | SG&A Expense | $34,952 | $30,144 | | Operating Income | $20,388 | $27,348 | Tubular Products Segment Results (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales | $306,605 | $267,238 | | Gross Profit | $43,084 | $51,397 | | Operating Income | $27,607 | $33,561 | Specialty Chemicals Segment Results (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales | $107,542 | $67,477 | | Gross Profit | $13,862 | $9,850 | | Operating Income | $6,971 | $3,656 | [Non-GAAP Financial Measures](index=19&type=section&id=Non-GAAP%20Financial%20Measures) Consolidated Adjusted EBITDA decreased to $36.0 million in 2022 from $44.3 million in 2021, driven by a decline in the Tubular Products segment - The company uses EBITDA and Adjusted EBITDA as key non-GAAP measures to evaluate performance, excluding items like acquisition and restructuring costs[96](index=96&type=chunk)[97](index=97&type=chunk) Consolidated Adjusted EBITDA Reconciliation (in thousands) | Line Item | 2022 | 2021 | | :--- | :--- | :--- | | Net income | $22,066 | $20,245 | | EBITDA | $33,314 | $37,323 | | **Adjusted EBITDA** | **$36,021** | **$44,308** | | % of sales | 8.7% | 13.2% | Segment Adjusted EBITDA (in thousands) | Segment | 2022 Adjusted EBITDA | 2021 Adjusted EBITDA | | :--- | :--- | :--- | | Tubular Products | $35,760 | $42,963 | | Specialty Chemicals | $11,771 | $6,548 | [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased to $5.6 million in 2022 due to working capital changes, while total debt stood at $71.5 million Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash from Operating Activities | $5,577 | $19,055 | | Cash used in Investing Activities | ($4,975) | ($32,661) | | Cash (used in) provided by Financing Activities | ($1,182) | $15,391 | - The decrease in operating cash flow was primarily driven by a **$13.8 million use of cash for inventory** and a **$10.3 million use of cash for accounts payable**[103](index=103&type=chunk) - As of December 31, 2022, the company had **$71.5 million in total outstanding debt** and **$37.6 million of remaining availability** under its credit facility[108](index=108&type=chunk) Key Financial Ratios | Ratio | 2022 | 2021 | | :--- | :--- | :--- | | Current ratio | 5.1 | 3.3 | | Debt to capital | 34% | 39% | | Return on average equity | 18.0% | 21.1% | [Material Cash Requirements from Contractual and Other Obligations](index=24&type=section&id=Material%20Cash%20Requirements%20from%20Contractual%20and%20Other%20Obligations) Material cash requirements include $71.5 million in debt and $33.5 million in lease obligations, with $6.0 million budgeted for 2023 capital spending - Material cash requirements include debt obligations on a revolving credit facility (**$67.4 million**) and a term loan (**$4.1 million**)[114](index=114&type=chunk) - Operating and finance lease obligations totaled **$33.5 million**, with $1.3 million payable within 12 months[115](index=115&type=chunk) - Capital spending in fiscal 2023 is expected to be as much as **$6.0 million**[115](index=115&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting estimates involve business combinations, goodwill impairment testing, inventory valuation, and deferred tax asset recoverability - Business combination accounting requires significant estimates to allocate purchase price to acquired assets and liabilities based on fair value[117](index=117&type=chunk)[118](index=118&type=chunk) - Goodwill is tested for impairment annually on October 1; the 2022 test for the Specialty Chemicals reporting unit indicated **no impairment was required**[120](index=120&type=chunk)[122](index=122&type=chunk) - Inventory reserves for obsolescence **increased by $2.4 million to $3.5 million** in 2022[123](index=123&type=chunk)[124](index=124&type=chunk) - A valuation allowance of **$1.7 million** was recorded against certain state and local deferred tax assets as of December 31, 2022[127](index=127&type=chunk)[131](index=131&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, this information is not required - The Company is a smaller reporting company and is not required to provide the information required by this Item[131](index=131&type=chunk) [Financial Statements and Supplementary Data](index=26&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The auditor issued an adverse opinion on internal controls due to material weaknesses but an unqualified opinion on the financial statements - The independent auditor, BDO USA, LLP, issued an **adverse opinion** on the Company's internal control over financial reporting as of December 31, 2022[136](index=136&type=chunk)[148](index=148&type=chunk) - Critical audit matters identified were the accounting for tax benefits and the valuation of goodwill for the **Specialty Chemicals reporting unit**[140](index=140&type=chunk)[143](index=143&type=chunk) - **Material weaknesses** were identified in entity-level controls and specific control activities including inventory, revenue, and IT general controls[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) Consolidated Financial Highlights (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | $269,043 | $266,002 | | Total Liabilities | $134,784 | $154,412 | | Total Shareholders' Equity | $134,259 | $111,590 | | **Income Statement** | | | | Net Sales | $414,147 | $334,715 | | Net Income | $22,066 | $20,245 | | Diluted EPS | $2.12 | $2.14 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=60&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants - None[282](index=282&type=chunk) [Controls and Procedures](index=60&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective as of year-end 2022 due to multiple material weaknesses in internal control - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2022, due to identified material weaknesses in internal control[283](index=283&type=chunk) - Material weaknesses were identified in **Entity Level Activities**, attributed to insufficient qualified resources and a lack of effective monitoring[286](index=286&type=chunk)[287](index=287&type=chunk) - Additional material weaknesses were found in Control Activities related to **inventory, revenue recognition, period-end financial reporting, complex accounting, and IT general controls**[288](index=288&type=chunk) - Management's remediation plan includes providing training, realigning roles, and enhancing or designing new controls across the affected areas[290](index=290&type=chunk) [Other Information](index=62&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[292](index=292&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=62&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[292](index=292&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=62&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the 2023 Proxy Statement, which identifies John P. Schauerman as an audit committee financial expert - Information for this item is incorporated by reference from the definitive **Proxy Statement for the 2023 Annual Meeting of Shareholders**[293](index=293&type=chunk) - The Board of Directors has determined that **John P. Schauerman** is an 'audit committee financial expert' serving on the Audit Committee[295](index=295&type=chunk) [Executive Compensation](index=62&type=section&id=Item%2011.%20Executive%20Compensation) Details concerning executive compensation are incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive **Proxy Statement for the 2023 Annual Meeting of Stockholders**[296](index=296&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=63&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive **Proxy Statement for the 2023 Annual Meeting of Shareholders**[298](index=298&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price | Securities remaining for future issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 118,142 | $13.66 | 668,523 | | Not approved by security holders | — | — | — | | **Total** | **118,142** | **$13.66** | **668,523** | [Certain Relationships and Related Transactions, and Director Independence](index=63&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive **Proxy Statement for the 2023 Annual Meeting of Shareholders**[300](index=300&type=chunk) [Principal Accounting Fees and Services](index=63&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on accounting fees and pre-approval policies is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive **Proxy Statement for the 2023 Annual Meeting of Shareholders**[301](index=301&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=64&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed with the report, including details on valuation and qualifying accounts - This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K[304](index=304&type=chunk) Schedule II - Valuation and Qualifying Accounts (in thousands) | Description | Beginning Balance (2022) | Charged to Cost and Expenses | Deductions | Ending Balance (2022) | | :--- | :--- | :--- | :--- | :--- | | Inventory reserves | $1,272 | $3,052 | $(627) | $3,697 | [Form 10-K Summary](index=66&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided for Form 10-K - None[307](index=307&type=chunk)