Financial Data and Key Metrics Changes - In Q2 2019, the company reported a GAAP-based net loss of $0.3 million or $0.03 per diluted share, compared to a profit of $3.7 million or $0.41 per share in Q2 2018 [5] - The non-GAAP adjusted net loss was $0.3 million or $0.04 per diluted share, down from adjusted net income of $6.3 million or $0.71 per diluted share in the same quarter last year [5] - Non-GAAP adjusted EBITDA totaled $3.4 million or 4.3% of sales, a decline from $10.3 million or 14.4% of sales in Q2 2018 [5][6] Business Line Data and Key Metrics Changes - The welded stainless steel pipe business faced temporary headwinds, leading to a downward revision in the annual forecast [8] - The addition of ASTI and its ornamental tubing products contributed positively, with sales and profit margins meeting or exceeding original forecasts [8] - The Storage Tank business in West Texas showed improved results in Q2, but new order activity slowed in July [9] Market Data and Key Metrics Changes - Oil production growth in the Permian Basin has slowed, with projections indicating a growth of only 34,000 barrels per day in August [9] - North American shipments of welded stainless steel pipe were down 24% year-over-year for the first six months of 2019 [14] - The company’s market share in the welded stainless steel pipe business increased by 200 basis points despite a 12% decline in pound shipments [16] Company Strategy and Development Direction - The company is focused on cash flow and reducing debt, targeting net debt to be less than $65 million by year-end [19] - There is an ongoing evaluation of potential acquisitions in the metals and chemical sectors, although no transactions are imminent [19] - The company implemented a new ERP system for the ASTI unit, which has transitioned smoothly [8] Management Comments on Operating Environment and Future Outlook - Management believes the challenges in the welded stainless steel pipe business are temporary and expects inventory profits to return in Q4 if nickel prices hold [16] - The company anticipates that new orders will be released later in Q3, with expectations of benefiting from recent mergers in the Permian Basin [10] - Management noted that many chemical customers are reporting flat to marginal year-over-year growth, impacting the intermediate products manufactured [12] Other Important Information - The company experienced a significant inventory price change loss of $1.8 million in Q2 2019, compared to a gain of $1.1 million in Q2 2018 [6] - The company has reached an agreement with Bristol Union for a new five-year contract [18] - The company opened a data room for Privet to provide additional information, with no further comments or offers received as of the call date [20] Q&A Session Summary Question: Tax rate in Q2 and first six months - The CFO explained that low income figures resulted in discrete items having a significant impact on the overall effective tax rate [22][23] Question: Impact of new tariffs on Chinese imports - Management clarified that the upcoming tariff increase would not affect any steel products [25][26] Question: EBITDA forecast for the second half - Management confirmed a forecast of approximately $14 million of EBITDA for the second half of the year [27][28]
Ascent Industries (ACNT) - 2019 Q2 - Earnings Call Transcript