What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-04 compared with 2024-04-01 · 232 added, 386 removed, 789 unchanged (44% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm ( Moss Adams, LLP ;

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.;

Consolidated Balance Sheets as of December 31, 2024 and 2023

8 unchanged sentences

Property, Plant and Equipment

Accrued Expenses

Accrued Expenses & Other Current Liabilities

Shareholders' Equity

4 unchanged sentences

Commitments and Contingencies

Supplemental Financial Information

Subsequent Events

3 unchanged sentences

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Ascent Industries Co.

(and subsidiaries) (the “Company”) as of December 31, 2023, the related consolidated statements of income (loss), shareholders’ equity and cash flows for the year ended December 31, 2023, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Ascent Industries Co.

(and subsidiaries) (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income (loss), shareholders’ equity, and cash flows for the years then ended, and the related notes and schedule (collectively referred to as the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We also have audited the adjustments to the 2022 financial statements for the retrospective presentation of discontinued operations, as described in Note 2.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2022 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 financial statements taken as a whole.

Basis for Opinions

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Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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• Information Technology - Management did not design and maintain effective information technology (IT) general controls in the areas of user access, change management, segregation of duties, and cyber-security for systems supporting many of the Company’s key financial reporting processes.

As a result, IT application controls and business process controls that are dependent on the ineffective IT general controls, or that rely on data produced from systems impacted by the ineffective IT general controls, are also deemed ineffective, which affects substantially all financial statement account balances and disclosures within the Company.

As a result, IT application controls and business process controls that are dependent on the ineffective IT general controls, or that rely on data produced

from systems impacted by the ineffective IT general controls, are also deemed ineffective, which affects substantially all financial statement account balances and disclosures within the Company.

• Inventory - Management did not design and maintain effective controls over inventory.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment

As described in Note 1 to the consolidated financial statements, the Company tests goodwill for impairment annually as of October 1 or between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.

In the third quarter of the year, the Company concluded an interim assessment should be performed and this resulted in a goodwill impairment expense of $11,389,000.

Testing goodwill for impairment involves significant management judgment, requiring an assessment of whether the carrying value of the reporting unit can be supported by its fair value, which is estimated by using valuation techniques, such as the market approach (earnings multiples or transaction multiples for the industry in which the reporting unit operates) or the income approach (discounted cash flow method).

The principal considerations for our determination that the goodwill impairment test is a critical audit matter were that our evaluation of management’s valuation methods and assumptions utilized in estimating the fair value of the reporting unit involved significant audit effort, including the use of specialists, as well as especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

• Testing management’s process for determining the fair value estimate of the reporting unit by performing the following procedures:

• Evaluating the methodologies used by management, including the relative weight assigned to the valuations indicated by the market and income approaches, and assessing management’s specialist’s knowledge, skill, and ability as well as the specialist’s relationship to the Company.

• Testing the completeness, accuracy, and reliability of underlying data used in the valuation model, including the mathematical accuracy of the analysis.

• Evaluating the reasonableness of the guidelines companies and market multiples used by management.

• Evaluating the reasonableness of significant assumptions used by management, including projected revenue, projected operating margin, discount rate, including performing arithmetic analysis to replicate management’s model, and sensitivity analysis.

• Utilizing valuation specialists to assist in evaluating the appropriateness of methods used and reasonableness of significant assumptions applied in the valuation model.

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Moss Adams LLP

Irvine, California

April 1, 2024

We have served as the Company's auditor since 2023.

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Ascent Industries Co.

Oak Brook, Illinois

Opinion on the Consolidated Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 2, the accompanying consolidated balance sheet of Ascent Industries Co.

(the “Company”) as of December 31, 2022, and the related consolidated statements of income (loss), shareholders’ equity, cash flows, and financial statement schedule for the year then ended (the 2022 consolidated financial statements before the effects of the adjustments discussed in Note 2 are not presented herein).

In our opinion, the 2022 consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting in Note 2, present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Note 2 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by Moss Adams, LLP.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We served as the Company's auditor from 2021 to 2023.

Chicago, Illinois

March 4, 2025

We have served as the Company's auditor since 2023.

Ascent Industries Co.

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Right-of-use assets, operating leases, net 28,225 27,784

Goodwill — 11,389

Intangible assets, net 7,009 8,496

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Other non-current assets 3,174 1,935

Long-term assets of discontinued operations — 9,184

Total assets $ 147,250 $ 163,295

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Accrued expenses and other current liabilities 5,042 5,046

Deferred revenue 1,360 62

Current portion of note payable 369 360

Current portion of long-term debt — 2,464

Current portion of operating lease liabilities 1,513 1,140

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Total current liabilities 22,280 24,789

Long-term debt — 69,085

Long-term portion of operating lease liabilities 30,039 29,729

Long-term portion of finance lease liabilities 1,015 1,307

Deferred income taxes 320 —

Other long-term liabilities 51 60

Long-term liabilities of discontinued operations — 42

Total liabilities $ 53,705 $ 55,885

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Goodwill impairment — 11,389

Operating (loss) income from continuing operations ( 37,430 ) 14,543

Gain on lease modification ( 67 ) —

Operating loss from continuing operations ( 5,096 ) ( 37,430 )

Other (income) and expense

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Other, net ( 448 ) ( 593 )

(Loss) income from continuing operations before income taxes ( 41,075 ) 12,010

Income tax benefit ( 6,924 ) ( 5,568 )

(Loss) income from continuing operations $ ( 34,151 ) $ 17,578

Income from discontinued operations, net of tax 7,522 4,488

Net (loss) income $ ( 26,629 ) $ 22,066

Net (loss) income per common share from continuing operations

Loss from continuing operations before income taxes ( 5,066 ) ( 41,075 )

Income tax provision (benefit) 6,159 ( 6,924 )

Loss from continuing operations $ ( 11,225 ) $ ( 34,151 )

(Loss) income from discontinued operations, net of tax ( 2,373 ) 7,522

Net loss $ ( 13,598 ) $ ( 26,629 )

Net loss per common share from continuing operations

Basic $ ( 1.11 ) $ ( 3.37 )

Diluted $ ( 1.11 ) $ ( 3.37 )

Net income per common share from discontinued operations

Net (loss) income per common share from discontinued operations

Basic $ ( 0.23 ) $ 0.74

Diluted $ ( 0.23 ) $ 0.74

Net (loss) income per common share

Net loss per common share

Basic $ ( 1.34 ) $ ( 2.63 )

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Cash flows from operating activities:

Net (loss) income $ ( 26,629 ) $ 22,066

Income from discontinued operations, net of tax 7,522 4,488

Net (loss) income from continuing operations ( 34,151 ) 17,578

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 13,598 ) $ ( 26,629 )

(Loss) income from discontinued operations, net of tax ( 2,373 ) 7,522

Net loss from continuing operations ( 11,225 ) ( 34,151 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation expense 5,936 6,161

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Deferred income taxes 6,159 ( 6,924 )

Payments of earn-out liabilities in excess of acquisition date fair value

(Reduction of) provision for losses on accounts receivable ( 180 ) 478

Provision for losses on inventories 3,318 2,615

Loss (gain) on disposal of property, plant and equipment 246 ( 18 )

Reduction of losses on accounts receivable ( 118 ) ( 180 )

Loss on disposal of property, plant and equipment 517 246

Non-cash lease expense 198 242

Issuance of treasury stock for director fees — 364

Share-based compensation expense 767 1,023

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Accounts payable ( 3,612 ) 1,650

Accounts payable - related parties — ( 2 )

Accrued expenses ( 66 ) ( 401 )

Accrued income taxes 1,485 3,129

Net cash provided by (used in) operating activities - continuing operations 6,644 ( 5,262 )

Net cash provided by operating activities - discontinued operations 16,434 10,839

Net cash provided by operating activities - continuing operations 17,007 6,644

Net cash (used in) provided by operating activities - discontinued operations ( 2,326 ) 16,434

Net cash provided by operating activities 14,681 23,078

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Purchases of property, plant and equipment ( 1,892 ) ( 2,885 )

Proceeds from disposal of property, plant and equipment — 99

Net cash used in investing activities - continuing operations ( 1,892 ) ( 2,885 )

Net cash provided by (used in) investing activities - discontinued operations 53,386 ( 1,680 )

Net cash provided by (used in) investing activities 50,501 ( 4,975 )

Net cash provided by investing activities - discontinued operations 2,797 53,386

Net cash provided by investing activities 905 50,501

Cash flows from financing activities:

Borrowings from long-term debt 256,606 443,363

Borrowings from credit facilities 197,898 256,606

Proceeds from note payable 914 900

Proceeds from exercise of stock options — 175

Payments on long-term debt ( 328,155 ) ( 442,206 )

Payments on credit facilities ( 197,898 ) ( 328,155 )

Payments on note payable ( 906 ) ( 928 )

Principal payments on finance lease obligations ( 300 ) ( 305 )

Payments on earn-out liabilities — ( 484 )

Repurchase of common stock ( 1,037 ) ( 1,287 )

Net cash used in financing activities - continuing operations ( 73,169 ) ( 374 )

Net cash used in financing activities - discontinued operations — ( 808 )

Net cash used in financing activities ( 1,329 ) ( 73,169 )

Increase (decrease) in cash and cash equivalents 14,257 410

Cash and cash equivalents of discontinued operations — 4

Cash and cash equivalents, beginning of period 1,851 1,441

Cash and cash equivalents, end of period $ 16,108 $ 1,851

See accompanying notes to consolidated financial statements.

Ascent Industries Co.

Consolidated Statements of Cash Flows

For the years ended December 31, 2023 and 2022

(in thousands)

Year Ended December 31,

Supplemental Disclosure of Cash Flow Information

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Balance December 31, 2022 11,085 $ 11,085 $ 47,021 $ 85,146 924 $ ( 8,993 ) $ 134,259

Net income — — — 22,066 — — 22,066

Net loss — — — ( 26,629 ) — — ( 26,629 )

Issuance of 77,330 shares of common stock from treasury

— — ( 751 ) — ( 77 ) 751 —

Exercise of stock options for 18,098 shares, net

— — 5 — ( 18 ) 170 175

Share-based compensation — — 1,063 — — — 1,063

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Ascent Industries Co.

is an industrials company focused on the production of stainless steel pipe and tube and specialty chemicals.

is a diverse industrials company focused on the production of specialty chemicals and stainless steel pipe and tube.

Ascent Industries Co.

was incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries Inc.

On August 5, 2022, we filed with the Secretary of State of the State of Delaware a Certificate of Amendment to our Certificate of Incorporation to change our corporate name from Synalloy Corporation to Ascent Industries Co., effective August 10, 2022.

The Company's executive office is located at 1400 16th Street, Suite 270, Oak Brook, Illinois 60523.

The Company's executive office is located at 20 N.

Martingale Rd, Suite 430, Schaumburg, Illinois 60173.

Unless indicated otherwise, the terms "Ascent", "Company," "we" "us," and "our" refer to Ascent Industries Co.

and its consolidated subsidiaries.

The Company's business is divided into two reportable operating segments, Tubular Products and Specialty Chemicals.

The Tubular Products segment serves markets through pipe and tube and customers in the appliance, architectural, automotive and commercial transportation, brewery, chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and waste-water treatment, liquid natural gas ("LNG"), food processing, pharmaceutical, oil and gas and other industries.

The Specialty Chemicals segment produces specialty products for the pulp and paper, coatings, adhesives, sealants and elastomers (CASE), textile, automotive, household, industrial and institutional ("HII"), agricultural, water and waste-water treatment, construction, oil and gas and other industries.

The Company's business is divided into two reportable operating segments, Specialty Chemicals and Tubular Products.

The Specialty Chemicals segment produces critical ingredients and process aids for the oil & gas, household, industrial and institutional ("HII"), personal care, coatings, adhesives, sealants and elastomers (CASE), pulp and paper, textile, automotive, agricultural, water treatment, construction and other industries.

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

Below are those accounting policies considered by the Company to be significant.

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Actual results may differ from these estimates.

Reclassifications - Certain prior period amounts have been reclassified to conform to current period presentation, including deferred revenue and accrued expenses on the consolidated balance sheets and provision for inventory losses on the statement of cash flows.

Cash and Cash Equivalents - The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

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Balance at end of period $ 345 $ 463

Inventories - Inventory is stated at the lower of cost or net realizable value ("LCNRV").

Inventories - Inventories are stated at the lower of cost or net realizable value ("LCNRV").

Cost is determined by either specific identification or weighted average methods.

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An LCNRV adjustment is recorded when the Company's inventory cost, based upon a historical price, is greater than the current selling price of that product.

During the year ended December 31, 2023, LCNRV adjustments of $ 0.6 million required by our Specialty Chemicals segment.

During the year ended December 31 2022, no significant LCNRV adjustments were required by our Specialty Chemicals segment.

LCNRV adjustments of $ 0.5 million and $ 0.6 million were required by our Specialty Chemicals segment during the years ended December 31, 2024 and 2023, respectively.

Stainless steel, both in its raw material (coil or plate) or finished goods (pipe and tube) state is purchased/sold using a base price plus an additional surcharge which is dependent on current nickel prices.

As raw materials are purchased, it is priced to the Company based upon the surcharge at that date.

When the selling price of the finished pipe is set for the customer, approximately three months later, the then-current nickel surcharge is used to determine the proper selling prices.

Approximately three months later, the current nickel surcharge is used to determine the proper selling price of the finished pipe for the customer.

An LCNRV adjustment is recorded when the Company's inventory cost, based upon a historical nickel price, is greater than the current selling price of that product due to a reduction in the nickel surcharge.

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The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired, if any, and liabilities assumed.

Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less fair value of liabilities assumed, in a business combination.

The Company reviews goodwill for impairment at the reporting unit level,

Ascent Industries Co.

Notes to Consolidated Financial Statements

Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less fair value of liabilities assumed, in a business combination.

The Company reviews goodwill for impairment at the reporting unit level, which is the operating segment level or one level below the operating segment level.

which is the operating segment level or one level below the operating segment level.

Goodwill is not amortized but is evaluated for impairment at least annually on October 1 or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.

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A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management.

During 2023 and 2022, goodwill was allocated to the Specialty Chemicals reporting unit.

The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 were as follows:

The company had no goodwill as of December 31, 2024 and 2023, respectively.

The changes in the carrying amount of goodwill for the years ended December 31, 2023 were as follows:

(in thousands) Specialty Chemicals

Balance December 31, 2022 $ 11,389

Purchase Price Allocation Revision ( 1,248 )

Balance December 31, 2022 11,389

Goodwill Impairment ( 11,389 )

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Amortization expense is recorded in selling, general and administrative expense on the consolidated statements of income (loss).

Ascent Industries Co.

Notes to Consolidated Financial Statements

The gross carrying amount and accumulated amortization of intangible assets from continuing operations consist of the following:

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Total definite-lived intangible assets $ 15,254 $ ( 8,245 ) $ 15,254 $ ( 6,758 )

The Company recorded amortization expense related to intangible assets from continuing operations of $ 1.5 million and $ 1.9 million for 2023 and 2022, respectively.

Ascent Industries Co.

Notes to Consolidated Financial Statements

The Company recorded amortization expense related to intangible assets from continuing operations of $ 1.5 million for 2024 and 2023, respectively.

Estimated amortization expense for the next five fiscal years based on existing intangible assets is as follows:

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Deferred Charges - Deferred charges represent debt issuance costs and are amortized over their estimated useful lives using the straight-line method over a period of four years and is recorded in interest expense on the consolidated statements of income (loss).

Deferred charges totaled $ 0.4 million as of December 31, 2023 and 2022, respectively.

Accumulated amortization of deferred charges as of December 31, 2023 and 2022 totaled $ 0.3 million and $ 0.2 million, respectively.

In the fourth quarter of 2024, the Company capitalized $ 0.3 million of debt issuance costs related to is Credit Facility Amendment with BMO Bank N.A.

Debt issuance costs remaining related to the Company's previous credit agreement were expensed in the fourth quarter of 2024.

See Note 6 for additional information on the Company's credit facilities.

Deferred charges totaled $ 0.3 million and $ 0.4 million as of December 31, 2024 and 2023, respectively.

Accumulated amortization of deferred charges as of December 31, 2024 and 2023 totaled less than $ 0.1 million and $ 0.3 million, respectively.

The Company recorded amortization expense related to deferred charges of $ 0.1 million for 2024 and 2023.

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If the Company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, its depreciable life is re-evaluated.

Gains and losses on the disposal of assets are recorded as the difference between the net proceeds received, if any, and net carrying values of the assets disposed and are included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive (loss) income.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Fair value measurements associated with long-lived asset impairments are included in Note 4 of the notes to the consolidated financial statements.

Discontinued Operations - The Company accounts for and classifies a business as a discontinued operation when the following criteria are met:

the disposal group is a component of an entity, the component of the entity meets the held for sale criteria in accordance with our policy described above and the component of the entity represents a strategic shift in the entity's operating and financial results.

See N o te 2 for discussion on the Company's discontinued operations.

Assets Held for Sale - The Company classifies long-lived assets or disposal groups as held for sale in the period when all of the following conditions have been met:

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• an active program to locate a buyer and other actions required to complete the sale have been initiated;

Ascent Industries Co.

Notes to Consolidated Financial Statements

• the sale of the asset or disposal group is probable and expected to be completed within one year;

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See Note 4 for discussion on the Company's assets held for sale.

Discontinued Operations - The Company accounts for and classifies a business as a discontinued operation when the following criteria are met:

See Note 2 for discussion on the Company's discontinued operations.

Leases - The Company determines whether an arrangement is a lease at contract inception.

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The Company determines the appropriate incremental borrowing rate by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances.

Such adjustments include assuming the Store Capital lease would require two lenders with the secondary lender being secured on a second lien requiring mezzanine rates.

Lease costs are recognized on a straight-line basis over the lease term.

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The Company subleases portions of certain properties that are not used in its operations.

Sublease income was $ 0.4 million for 2023.

Sublease income was $ 0.2 million for 2022.

Revenue Recognition - Revenues are recognized when control of the promised goods or services is transferred to our customers upon shipment, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

The Company's revenues are derived from contracts with customers where performance obligations are satisfied

Sublease income was $ 0.4 million for 2024 and 2023, respectively.

Deferred Revenue – Deferred revenue includes advance payments and deposits from customers prior to the completion of a performance obligation.

Deferred revenue is classified as current based on our production cycle and reported on a sales order-by-sales order basis, net of revenue recognized, at the end of each reporting period.

As of December 31, 2024 , the Company's deferred revenue balance was $ 1.4 million.

Deferred revenue activity from continuing operations were as follows:

(in thousands) 2024 2023

Balance at beginning of period $ 62 $ 98

Current period advances from customers 2,303 1,395

Revenue recognized due to fulfillment of performance obligations ( 1,005 ) ( 1,431 )

Balance at end of period $ 1,360 $ 62

Ascent Industries Co.

Notes to Consolidated Financial Statements

at a point-in-time or over-time.

The Company's revenues are derived from contracts with customers where performance obligations are satisfied at a point-in-time or over-time.

For certain contracts under which the Company produces product with no alternative use and for which the Company has an enforceable right to payment during the production cycle, product in which the material is customer owned or in which the customer simultaneously consumes the benefits throughout the production cycle, progress toward satisfying the performance obligation is measured using an output method of units produced.

22 unchanged sentences

The Company monitors the financial institutions where it invests its cash and cash equivalents as well as performs credit reviews of potential customers when extending credit to purchase and periodic reviews of existing customers to mitigate exposure and risk.

The Tubular Products segment has one customer that accounted for approximately 17 % of the segment's revenues for 2023.

There were no customers representing more than 10% of the Tubular Products segment's revenues for 2022.

The Specialty Chemicals segment has one customer that accounted for approximately 12 % of the segment's revenues for 2024 and 24 % of the segment's revenues for 2023.

Accounting Pronouncements Recently Adopted - On March 31, 2023, the Company adopted ASU 2020-04 Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial Reporting.

The ASU, and subsequent clarifications, provide practical expedients for contract modification accounting related to the transition away from the London Interbank Offered Rate (LIBOR) and other interbank offering rates to alternative reference rates.

The expedients are applicable to contract modifications made and hedging relationships entered into on or before December 31, 2024.

The Company intends to use the expedients where needed for reference rate transition.

The adoption of this standard by the Company did not have a material effect on the consolidated financial statements or footnote disclosures..

Ascent Industries Co.

Notes to Consolidated Financial Statements

Accounting Pronouncements Not Yet Adopted - In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

The Tubular Products segment has one customer that accounted for approximately 18 % and 17 % of the segment's revenues for 2024 and 2023.

Accounting Pronouncements Recently Adopted - In December 2024, the Company adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

1 unchanged sentence

All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment.

The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

The adoption of this standard by the Company did not have a material effect on the consolidated financial statements or footnote disclosures.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Accounting Pronouncements Not Yet Adopted - In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

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The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures .

The ASU requires updated disclosures, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments require that at each interim and annual reporting period an entity disclose the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion, and amortization recognized as part of oil and gas producing activities included in relevant expense captions.

The amendments also require disclosure of qualitative descriptions of amounts remaining in relevant expense captions that are not separately disaggregated and to disclose the total amount of selling expenses as well as the entity's definition of selling expenses.

The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and footnote disclosures

Recent accounting pronouncements pending adoption not discussed in this Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.

1 unchanged sentence

Munhall Closure

During the fourth quarter of 2022, the Company began a strategic reassessment of certain operations to drive an increased focus on its core operations and to continue to improve overall performance and operating profitability.

As a result of this reassessment, management and the Board of Directors decided to pursue an exit of the Company's galvanized pipe and tube operations at its Munhall facility ("Munhall").

During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall.

The Company ceased operations effective August 31, 2023.

It is anticipated that the complete exit and disposal of all assets at Munhall will be completed within one year from the date the decision was made to permanently cease operations.

The strategic decision to cease operations at Munhall is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies.

During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at Munhall effective on or around August 31, 2023.

The strategic decision to cease manufacturing operations at Munhall is part of the Company’s ongoing efforts to consolidate manufacturing to drive an increased focus on its core operations and to improve profitability while driving operational efficiencies.

As a result of this decision, during the second quarter of 2023, the Company incurred asset impairment charges of $ 6.4 million related to the write down of inventory and long-lived assets as well as $ 1.4 million in increased reserves on accounts receivable at the facility.

During the third quarter of 2023, the Company incurred additional asset impairment charges of $ 2.4 million related to the write down of inventory to net realizable value.

Certain assets of Munhall were also classified as held for sale and the results of operations previously reported under the Tubular Products segment have been classified as discontinued operations for all periods presented.

During the first quarter of 2024, the Company incurred additional asset impairment charges of $ 1.1 million related to the write down of the remaining long-lived assets at the facility.

During the third quarter of 2024, the Company entered into a purchase agreement to sell the remaining assets at the Munhall facility for approximately $ 2.8 million.

The Company recognized a $ 1.5 million gain on the sale in the third quarter of 2024.

See Note 4 for further discussion of the assets held for sale and related fair value measurements.

The results of operations for Munhall have been classified as discontinued operations for all periods presented.

In May of 2023, the Company was named as a defendant in a lawsuit filed in the U.S.

District Court for the Western District of Pennsylvania, asserting various claims for breach of contracts resulting in losses to the plaintiff and seeking damages in the amount of $ 0.8 million plus prejudgment interest and attorney's fees.

The Company had an estimated liability of $ 1.0 million related to the lawsuit as of December 31, 2023.

In August of 2024, the Company resolved the case through a settlement agreement and no longer has funds reserved for the matter.

In August of 2023, the Company was named as a defendant in a lawsuit filed with the Court of Common Pleas for Delaware County, Ohio, asserting various claims for breach of contracts resulting in losses to the plaintiff and seeking damages in the amount of $ 0.7 million plus prejudgment interest and attorney's fees.

In December 2024, the Company entered into mediation with the plaintiff subject to negotiation of a mutually agreeable settlement.

As such, the Company recorded an estimated liability of $ 0.4 million related to the lawsuit as of December 31, 2024.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Divestiture of Specialty Pipe & Tube, Inc.

3 unchanged sentences

The transaction closed on December 22, 2023.

Ascent and Purchaser also entered into a Transition Services Agreement (the “TSA”) and an Employee Leasing Agreement (the “ELA”) each dated December 22, 2023, pursuant to which Ascent has agreed to provide certain transition services and to lease certain employees to Purchaser immediately after the closing for certain agreed upon transition periods.

As result of the sale, SPT results of operations are classified under discontinued operations for all periods presented.

Ascent and Purchaser also entered into a Transition Services Agreement (the “TSA”) and an Employee Leasing Agreement (the “ELA”) each dated December 22, 2023, pursuant to which Ascent agreed to provide certain transition services and to lease certain employees to Purchaser immediately after the closing for certain agreed upon transition periods.

The TSA and the ELA were both completed as of June 30, 2024.

As a result of the sale, SPT results of operations are classified under discontinued operations for all periods presented.

Prior to the divestiture, SPT was reported under the Company's Tubular Products segment.

Ascent Industries Co.

Notes to Consolidated Financial Statements

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of the Company's discontinued operations:

1 unchanged sentence

Carrying amounts of assets included as part of discontinued operations:

Cash and cash equivalents $ — $ 1

Accounts receivable, net — 778

Inventories — 46,781

Prepaid expenses and other current assets 46 83

Current assets classified as discontinued operations 46 861

Property, plant and equipment, net — 6,812

Right-of-use assets, operating leases, net — 82

Intangible assets, net — 386

Other non-current assets, net — 1,904

Long-term assets classified as discontinued operations — 9,184

Total assets classified as discontinued operations $ 46 $ 861

2 unchanged sentences

Accrued expenses and other current liabilities 575 1,366

Current portion of operating lease liabilities — 41

Total current liabilities classified as discontinued operations $ 591 $ 1,473

Carrying amounts of long-term liabilities included as part of discontinued operations:

Long-term portion of operating lease liabilities $ — $ 42

Total liabilities classified as discontinued operations $ 591 $ 1,473

In May of 2023, the Company was named as a defendant in a lawsuit filed in the U.S.

Although we continue to defend ourselves against the claims, we believe we may incur a material loss in this matter and that our financial statements could be materially affected by an adverse decision regarding the assessment of damages incurred by the plaintiff.

Accordingly, the Company has an estimated liability of $ 1.0 million for expected losses related to this lawsuit as of December 31, 2023.

Ascent Industries Co.

Notes to Consolidated Financial Statements

The financial results of the Company's discontinued operations are presented as income from discontinued operations, net of tax on the consolidated statements of income (loss).

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Asset impairments — — 1,115 8,720

Earnout adjustments — — — ( 7 )

Operating income (loss) of discontinued operations 23,831 ( 5,477 ) 9,726 5,845

Operating (loss) income of discontinued operations ( 1,116 ) 23,831 ( 2,372 ) 9,726

Loss on classification as held for sale — — — 83

Income (loss) from discontinued operations before income taxes 23,831 ( 5,477 ) 9,643 5,845

Income tax provision (benefit) 5,157 ( 1,102 ) 2,121 1,357

Net income (loss) from discontinued operations $ 18,674 $ ( 4,375 ) $ 7,522 $ 4,488

(Loss) income from discontinued operations before income taxes ( 1,116 ) 23,831 ( 2,372 ) 9,643

Income tax (benefit) provision ( 5 ) 5,157 1 2,121

Net (loss) income from discontinued operations $ ( 1,111 ) $ 18,674 $ ( 2,373 ) $ 7,522

Ascent Industries Co.

Notes to Consolidated Financial Statements

Revenue Recognition

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Because customers are invoiced at the time title transfers and the Company’s right to consideration is unconditional at that time, the Company does not maintain contract asset balances .

Additionally, the Company does not maintain material contract liability balances, as performance obligations for substantially all contracts are satisfied prior to customer payment for product.

Deferred revenues are recorded when cash payments are received in advance of satisfying the performance obligation, including amounts which are refundable.

As of December 31, 2024 , the Company's deferred revenue balance was $ 1.4 million.

See Note 1 for additional information of the Company's deferred revenue.

The Company offers industry standard payment terms.

12 unchanged sentences

Over-time $ 22,323 $ 17,899

Ascent Industries Co.

Notes to Consolidated Financial Statements

Fair Value of Financial Instruments

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The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable, notes payable, earn-out liabilities, revolving line of credit, and long-term debt.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

5 unchanged sentences

The Company estimates the fair values of assets subject to long-lived asset impairment based on the Company's own judgments about the assumptions market participants would use in pricing the assets and observable market data, when available.

As a result of this reassessment, management and the Board of Directors decided to pursue an exit of the Company's galvanized pipe and tube operations at its Munhall facility ("Munhall").

During the first quarter of 2023, it was determined that a continued change in the use of the assets of the Munhall facility had occurred before the end of their previous useful lives, and therefore, had experienced a triggering event and were evaluated for recoverability.

Based on this evaluation of the Munhall assets, it was determined the assets were recoverable and no impairment was recorded during the first quarter.

During the second quarter of 2023, the Board of Directors of the Company made the decision to permanently cease operations at the Munhall facility.

2 unchanged sentences

Based on this evaluation, inventory at Munhall was written down to its net realizable value of $ 16.0 million and certain long-lived assets, including intangible assets, were written down to their estimated fair value of $ 2.6 million, resulting in asset impairment charges of $ 6.4 million in the second quarter of 2023.

Ascent Industries Co.

Notes to Consolidated Financial Statements

During the third quarter of 2023, the remaining inventory at Munhall was written down to its net realizable value of $ 4.0 million resulting in asset impairment charges of $ 2.4 million in the third quarter of 2023.

During the first quarter of 2024, the Company incurred additional asset impairment charges of $ 1.1 million related to the write down of the remaining long-lived assets at the facility.

See Note 2 for further information on the Company's discontinued operations.

Assets Held-for-Sale

As a result of the Company's decision to cease operations and exit Munhall, during the year end December 31, 2023, certain assets of Munhall were classified as held for sale and classified as Level 2 fair value measurements.

The Company remains obligated under the terms of the leases for the rent and other costs that may be associated with the lease of the Munhall facility through 2036.

The Company is actively pursuing a sublease for the facility.

Munhall assets classified as held for sale as are as follows:

During the third quarter of 2024, the Company entered into a purchase agreement to sell the remaining assets at the Munhall facility for approximately $ 2.8 million.

The Company recognized a $ 1.5 million gain on the sale in the third quarter of 2024.

The Company remains obligated under the terms of the Master Lease for the rent and other costs that may be associated with the lease of the Munhall facility through 2036.

The Company's assets classified as held for sale as are as follows:

(in thousands) December 31, 2024 December 31, 2023

2 unchanged sentences

Assets held for sale $ — $ 2,912

On February 17, 2021 the Board of Directors authorized the permanent cessation of operations at Palmer and the subleasing of the Palmer facility.

As of December 31, 2021, the Company permanently ceased operations at the Palmer facility and determined that the remaining asset group met the criteria to be classified as held for sale, and therefore classified the related assets as held for sale on the consolidated balance sheets.

The Company determined that the exit from this business did not represent a strategic shift that had a major effect on its consolidated results of operations, and therefore this business was not classified as discontinued operations.

As of December 31, 2023, the remaining Palmer assets continue to be classified as held for sale with the remaining assets to be disposed of in the first quarter of 2023.

The results of operations for this business are included within the Tubular Products segment for all periods presented in this annual report.

The Company uses observable inputs, such as prices of comparable assets in active markets to determine the fair value of the remaining assets.

The Company classifies these fair value measurements as Level 2.

Palmer assets classified as held for sale as of December 31, 2023 and 2022 are as follows:

(in thousands) 2023 2022

Inventory, net $ — $ 198

Property, plant and equipment, net — 182

Assets held for sale $ — $ 380

The Company remains obligated under the terms of the leases for the rent and other costs that may be associated with the lease of the facility through 2036.

During the fourth quarter of 2022, the Company entered into an amended sublease agreement with a third party to sublease the entirety of the Palmer facility.

The sublease agreement amends the previous sublease agreement entered into in the fourth quarter of 2021 and continues through the remaining term of the Master Lease Agreement.

The sublease will expire on September 30, 2036, unless terminated in accordance with the amended sublease agreement.

The sublease provides for an annual base rent of approximately $ 0.4 million in the first year, which increases on an annual basis by 2.0 %.

The sublessee is responsible for its pro rata share of certain costs, taxes and operating expenses related to the subleased space.

The sublease includes an initial security deposit of $ 0.1 million.

Fair Value of Financial Instruments

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Credit Facilities

(in thousands) 2023 2022

Revolving line of credit, due January 15, 2025 $ — $ 67,442

Term loan, due January 15, 2025 — 4,107

Total long-term debt — 71,549

Current portion of long-term debt — ( 2,464 )

Long-term debt, less current portion $ — $ 69,085

During the first quarter of 2023, the Company entered into an Amended and Restated Credit Agreement with BMO Harris Bank, N.A.

("BMO") to replace LIBOR with the Secured Overnight Funding Rate ("SOFR").

During the fourth quarter of 2023, the Company entered into a Limited Consent, Second Amendment to Credit Agreement and Omnibus Amendment to Loan Documents with BMO Bank N.A.

and the other lenders under the Company’s credit facility (the “Credit Facility Amendment”).

The Credit Facility Amendment contains a consent for the SPT divestiture, released the lien on the assets of SPT and removed SPT as a loan party.

The Credit Facility Amendment also reduced the maximum revolving loan commitment under the credit facility from $ 105 million to $ 80 million, and increased the interest rate for the credit facility from SOFR plus an interest rate margin of between 1.60 % and 1.70 % to SOFR plus an interest rate margin of between 1.85 % and 2.10 %, depending on average availability under the credit facility and the Company’s consolidated fixed charge coverage ratio.

As required by the Credit Facility Amendment, the Company used the proceeds from the SPT divestiture to prepay in full the term loan in the original principal amount of $ 5 million under the credit facility and used the remaining proceeds to prepay in part the revolving loans under the credit facility.

Ascent Industries Co.

Notes to Consolidated Financial Statements

The borrowing capacity under the credit facility totals $ 80.0 million consisting of a $ 80.0 million revolving line of credit which includes a $ 17.5 million machinery and equipment sub-limit.

On November 6, 2024, Ascent entered into a Limited Consent, Third Amendment to Credit Agreement to Loan Documents with BMO Bank N.A.

under Ascent’s credit facility (the “Credit Facility Amendment”).

The Credit Facility Amendment reduced the maximum revolving loan commitment under the credit facility from $ 80 million to $ 60 million and extended the term of the credit facility through December 31, 2027.

The Credit Facility Amendment also increased the interest rate for the credit facility from SOFR plus an interest rate margin of between 1.85 % and 2.10 % to SOFR plus an interest rate margin of between 1.85 % and 2.35 %, depending on average availability under the credit facility and Ascent’s consolidated fixed charge coverage ratio.

We have pledged all of our accounts receivable, inventory, and certain machinery and equipment as collateral for the Credit Agreement.

2 unchanged sentences

The Credit Agreement also provides an unused commitment fee based on the daily used portion of the credit facility.

Pursuant to the Credit Facility Amendment, the Company was required to pledge all of its tangible and intangible properties, including the stock and membership interests of its subsidiaries.

The Credit Facility Amendment contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) $ 6.0 million and (ii) 15 % of the revolving credit facility.

The borrowing capacity under the amended credit facility totals $ 60.0 million consisting of a $ 60.0 million revolving line of credit which includes a $ 7.6 million machinery and equipment sub-limit.

The revolving line of credit interest rate was 0.35 % and 6.20 % as of December 31, 2024 and 2023, respectively.

Average borrowings under the revolving line of credit during 2023 and 2022 were $ 55.6 million and $ 71.0 million with a weighted average interest rate of 7.22 % and 3.67 %, respectively.

The term loan interest rate was 6.38 % as of December 31, 2022.

The interest rate in 2024 consisted solely of the Company's unused commitment fee under the Credit Facility Amendment.

Ascent Industries Co.

Notes to Consolidated Financial Statements

had no average borrowings under the revolving line of credit during 2024.

The Company had $ 55.6 million of average borrowings under the revolving line of credit with a weighted average interest rate of 7.22 % in 2023.

The Company made interest payments on all credit facilities of $ 0.3 million and 4.0 million in 2024 and 2023, respectively.

As of December 31, 2024, the Company has no principal payments outstanding on long-term debt.

Pursuant to the Credit Agreement, the Company was required to pledge all of its tangible and intangible properties, including the stock and membership interests of its subsidiaries.

The Credit Agreement contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) $ 7.5 million and (ii) 10 % of the revolving credit facility (currently $ 8.0 million).

As of December 31, 2023, the Company was in compliance with all financial debt covenants.

As of December 31, 2024, the Company had $ 47.4 million of remaining availability under it credit facility.

The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment.

Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020.

Substantially all of the value of the Company's leased plants and facilities relate to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital"), that was entered into in 2016 and since amended, with the latest amendment occurring in 2024.

During the third quarter of 2024, the Company and Store closed on a transaction pursuant to which Store sold to a third party approximately 20,200 square feet of warehouse space located at Ascent’s facility in Cleveland, Tennessee.

As a result of the sale, the Company and Store entered into a Fourth Amended and Restated Master Lease Agreement (the “Fourth Master Lease”) to reduce the Company's rent at the Cleveland facility pursuant to the terms and conditions of the Third Amended and Restated Master Lease Agreement between the parties dated September 10, 2020.

The Fourth Master Lease was determined to be a lease modification that qualified for a remeasurement of the existing lease and not a separate contract.

Upon modification of the Fourth Master Lease, the right-of-use asset and operating lease liability were remeasured using an incremental borrowing rate determined on the date of modification.

As such, the Company recognized an increase in the right-of-use asset and operating lease liability related to the Fourth Master Lease of $ 1.3 million and recognized a gain on the modification of $ 0.1 million, which is reported within operating expenses on the consolidated statements of income (loss).

As of December 31, 2024, operating lease liabilities related to the master lease agreement with Store Capital totaled $ 30.9 million, or 94 % of the total lease liabilities on the consolidated balance sheet.

46 unchanged sentences

Finance leases 4.03 years 5.07 years

During the second quarter of 2024, the Company entered into a sublease agreement with a third party to sublease the former Specialty Pipe and Tube, Inc.

facilities in Mineral Ridge, Ohio and Houston, Texas.

The sublease agreement continues through the remaining term of the Master Lease Agreement and will expire on September 30, 2036, unless terminated in accordance with the sublease agreement.

The sublease provides for an annual base rent of approximately $ 0.1 million in the first year, which increases on an annual basis by 2.0 %.

The sublessee is responsible for taxes and all operating expenses related to the subleased space

Ascent Industries Co.

Notes to Consolidated Financial Statements

Accrued Expenses

The Company also currently subleases the former Palmer facility and records cash receipts related to the subleases in other expense (income) on the consolidated statements of income (loss).

Sublease payments fully offset the amounts the Company incurs in the Master Lease related to sublet facilities.

Future expected cash receipts from the Company's subleases as of December 31, 2024 are as follows:

(in thousands) Sublease Receipts

Thereafter 4,598

Total sublease receipts $ 7,629

Accrued Expenses & Other Current Liabilities

Accrued expenses for continuing operations consist of the following:

2 unchanged sentences

Taxes, other than income taxes 540 359

Advances from customers 62 98

Insurance 964 1,129

8 unchanged sentences

Share Repurchase Program

The share repurchase program allows for repurchase of up to 790,383 shares of the Company's outstanding common stock and expires on February 17, 2025.

The Company's previous share repurchase program allowed for repurchase of up to 790,383 shares of the Company's outstanding common stock and expired on February 17, 2025.

On February 17, 2025, the Board of Directors authorized a new share repurchase program allowing for repurchase of up to 1.0 million shares of the Company's outstanding common stock over 24 months.

See Note 16 for additional information.

The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions.

1 unchanged sentence

There is no guarantee as to the exact number of shares that will be repurchased by the Company, and the Company may discontinue purchases at any time that management determines additional purchases are not warranted.

As of December 31, 2023, the Company has 536,871 shares of its share repurchase authorization remaining.

As of December 31, 2024, the Company had 435,608 shares of its previous share repurchase authorization remaining.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Shares repurchased for the year ended December 31, 2024 and 2023 were as follows:

7 unchanged sentences

In 2024 and 2023, no dividends were declared or paid by the Company.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Accounting for Share-Based Payments

4 unchanged sentences

The Company recognized share-based compensation expense within SG&A expense on the consolidated statements of income (loss) of $ 0.8 million and $ 1.1 million in 2024 and 2023, respectively.

Total unrecognized share-based payment expense for all share-based payment plans was $ 0.8 million at December 31, 2023, of which $ 0.6 million is expected to be recognized in 2024, $ 0.1 million in 2025, and $ 0.1 million thereafter.

Total unrecognized share-based payment expense for all share-based payment plans was $ 0.3 million at December 31, 2024, of which $ 0.2 million is expected to be recognized in 2025 and $ 0.1 million in 2026.

This results in these amounts being recognized over a weighted-average period of 1.52 years.

2 unchanged sentences

Options are expensed on a straight-line basis over the grant vesting period, which is considered to be the requisite service period.

There was no compensation expense charged against income for options in 2023.

Compensation expense charged against income for options was insignificant for 2022.

There was no compensation expense charged against income for options in 2024 or 2023.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

13 unchanged sentences

Exercisable options $ 13.56 98,088 4.2 $ —

1 Includes outstanding vested and nonvested options

Ascent Industries Co.

Notes to Consolidated Financial Statements

Restricted Stock Awards

5 unchanged sentences

An employee is not entitled to any voting rights with respect to any shares not yet vested, and the shares are not transferable.

Ascent Industries Co.

Notes to Consolidated Financial Statements

All awards are expensed on a straight-line basis over the grant vesting period, which is considered to be the requisite service period.

23 unchanged sentences

Tranche VII 30,000 $ 35.00

Tranche VIII 100,000 25.00

Tranche IX 40,000 27.50

Tranche X 30,000 30.00

Tranche XI 30,000 $ 35.00

The fair value of the performance stock units granted with a market performance condition are determined using a Monte Carlo simulation considering historical performance of the Company's stock as well as the probability of attaining the market performance condition determined on the date of grant.

2 unchanged sentences

The weighted average period over which the performance stock units compensation expense is expected to be recognized is 1.98 years.

The weighted-average grant-date fair value per unit of performance stock units granted was $ 0.64 and $ 3.92 in 2023 and 2022, respectively.

There were no performance stock units vesting in 2023 and 2022.

Ascent Industries Co.

Notes to Consolidated Financial Statements

The weighted-average grant-date fair value per unit of performance stock units granted was $ 2.61 and $ 0.64 in 2024 and 2023, respectively.

There were no performance stock units vesting in 2024 and 2023.

Transactions related to performance stock units for the year ended December 31, 2024 were as follows:

14 unchanged sentences

Outstanding December 31, 2023 4,902 $ 10.21

Vested ( 4,902 ) 2.61

Forfeited/Canceled — $ —

Outstanding December 31, 2024 — $ —

There were no inducement awards that vested in 2023.

The total fair value of inducement awards vesting was approximately $ 0.2 million in 2022 The weighted average period over which inducement award compensation cost is expected to be recognized is 0.51 years.

The Company has no outstanding inducement awards as of December 31, 2024.

Non-Employee Director Compensation Plan

27 unchanged sentences

State valuation allowance ( 2,026 ) ( 1,641 )

Federal valuation allowance ( 7,040 ) —

Total net deferred income tax assets 10,699 18,430

8 unchanged sentences

Federal $ ( 42 ) $ ( 561 )

State 191 137

Total current 27 ( 370 )

12 unchanged sentences

112 ( 2.2 ) % ( 585 ) 1.4 %

Federal and State valuation allowance 270 ( 0.7 ) % ( 2,366 ) ( 19.7 ) %

State valuation allowance 400 ( 7.9 ) % 270 ( 0.7 ) %

Federal valuation allowance 6,539 ( 129.2 ) % — — %

Stock option compensation 37 ( 0.7 ) % 87 ( 0.2 ) %

Tax Benefits Associated with Palmer Closure — — % ( 5,707 ) ( 47.5 ) %

Other nondeductible expenses ( 5 ) 0.1 % 33 ( 0.1 ) %

3 unchanged sentences

The Company's effective tax rate for 2024 was less than the U.S.

statutory rate of 21% primarily driven by tax benefits associated with non-deductible goodwill impairment.

statutory rate of 21% primarily due to discrete tax charges associated with recording a valuation allowance on cumulative US Federal and state deferred tax assets.

The Company's effective tax rate for 2023 was less than the U.S.

statutory rate of 21% primarily driven by tax benefits associated with the closure of Palmer and the release of valuation allowances on certain deferred tax assets, partially offset by state taxes.

The Company made income tax payments of $ 0.9 million and $ 7.8 million in 2023 and 2022, respectively.

statutory rate of 21% primarily driven by tax benefits associated with non-deductible goodwill impairment.

The Company made no income tax payments in 2024 and $ 0.9 million in 2023, respectively.

The Company has $ 19.4 million of U.S.

1 unchanged sentence

Federal net operating loss carryforwards and $ 6.6 million interest limitation carryforwards at the end of 2023.

The Company believes that these carryforwards are more likely than not to be utilized in future periods.

During the period, the Company determined that these carryforwards are unrealizable and not more likely than not to be utilized in future periods.

The majority of these carryforwards are not subject to expiration.

15 unchanged sentences

(in thousands, except per share data) 2024 2023

Net (loss) income from continuing operations $ ( 34,151 ) $ 17,578

Net income from discontinued operations 7,522 4,488

Net (loss) income ( 26,629 ) 22,066

Net loss from continuing operations $ ( 11,225 ) $ ( 34,151 )

Net (loss) income from discontinued operations ( 2,373 ) 7,522

Net loss ( 13,598 ) ( 26,629 )

Weighted average common shares outstanding 10,106 10,140

Effect of dilutive securities:

Employee stock options and stock grants — 180

Denominator for diluted earnings per share - weighted average shares 10,106 10,140

Net (loss) income per share from continuing operations:

Net loss per share from continuing operations:

Basic $ ( 1.11 ) $ ( 3.37 )

Diluted $ ( 1.11 ) $ ( 3.37 )

Net income per share from discontinued operations:

Net (loss) income per share from discontinued operations:

Basic $ ( 0.23 ) $ 0.74

Diluted $ ( 0.23 ) $ 0.74

Net (loss) income per share:

Net loss per share:

Basic $ ( 1.34 ) $ ( 2.63 )

1 unchanged sentence

The diluted earnings per share calculations exclude the effect of potentially dilutive shares when the inclusion of those shares in the calculation would have an anti-dilutive effect.

The Company had an $ 0.1 million shares of common stock that were anti-dilutive in 2023.

The Company had 0.2 million shares of common stock that were anti-dilutive in 2022 .

Ascent Industries Co.

Notes to Consolidated Financial Statements

The Company's dilutive securities have been excluded from the computation of diluted net loss share.

Therefore, the weighted average number of common shares used to calculate the basic and diluted net loss per share is identical.

The Company had $ 0.1 million shares of common stock that were anti-dilutive in 2024 and 2023 .

Industry Segments

1 unchanged sentence

has two reportable segments:

Tubular Products and Specialty Chemicals.

Specialty Chemicals and Tubular Products.

The Specialty Chemicals segment includes the operating results of the Company’s plants involved in the production of specialty chemicals.

The Specialty Chemicals segment produces critical ingredients and process aids for the oil & gas, household, industrial and institutional ("HII"), personal care, coatings, adhesives, sealants and elastomers (CASE), pulp and paper, textile, automotive, , agricultural, water treatment, construction and other industries.

The Tubular Products segment includes the operating results of the Company’s plants involved in the production of stainless steel pipe and tube.

On January 1, 2023, the Company changed the grouping of certain immaterial revenue and expenses associated with the ceased Palmer operations.

As a result, certain prior period Tubular Products segment results have been reclassified to All Other to be comparable to the current period's presentation.

During the second quarter of 2023, the Board of Directors made the decision to permanently cease operations at the Company’s Munhall facility, which was effective August 31, 2023.

As a result, certain prior period Tubular Products segment results have been reclassified to remove Munhall's results from continuing operations to discontinued operations.

On December 22, 2023, the Company and its wholly-owned subsidiary Specialty Pipe & Tube, Inc.

(“SPT”) entered into an Asset Purchase Agreement pursuant to which Ascent and SPT sold substantially all of the assets primarily related to SPT to Specialty Pipe & Tube Operations, LLC, a Delaware limited liability company.

The transaction closed on December 22, 2023.

As a result, prior period Tubular Products segment results have been reclassified to remove SPT's results from continuing operations to discontinued operations.

The Specialty Chemicals segment includes the operating results of the Company’s plants involved in the production of specialty chemicals.

The Specialty Chemicals segment produces products for the pulp and paper, coatings, adhesives, sealants and elastomers (CASE), textile, automotive, household, industrial and institutional ("HII"), agricultural, water and waste-water treatment, construction, oil and gas and other industries.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measures being operating income and Adjusted earnings (loss) before interest, income taxes, depreciation and amortization.

Adjusted earnings (loss) before interest, income taxes, depreciation and amortization excludes certain items that management believes are not indicative of future results.

The chief executive officer, who is also the chief operating decision maker (CODM), evaluates performance and determines resource allocations based on a number of factors, the primary measures being gross margin and segment net income (loss).

The accounting principles applied at the operating segment level are the same as those applied at the consolidated financial statement level.

The significant expense categories and amounts below align with the segment-level information that is regularly provided to the CODM.

Intersegment sales and transfers are eliminated at the corporate consolidation level.

1 unchanged sentence

Notes to Consolidated Financial Statements

The following table summarizes certain information regarding segments of the Company's continuing operations:

(in thousands) 2023 2022

Tubular Products $ 109,513 $ 154,040

Specialty Chemicals 83,616 107,542

All Other 50 411

The following tables summarizes certain information regarding segments of the Company's continuing operations:

Year Ended December 31, 2024

(in thousands) Specialty Chemicals Tubular Products Corporate & Other 1

Total Continuing Operations

Net sales $ 80,764 $ 97,108 $ — $ 177,872

Cost of goods sold - material 40,903 53,284 — 94,187

Cost of goods sold - other 2

28,671 32,402 498 61,571

Operating (loss) income

Tubular Products $ ( 11,210 ) $ 22,182

Specialty Chemicals ( 12,558 ) 6,971

All Other ( 801 ) ( 509 )

Gross profit 11,190 11,422 ( 498 ) 22,114

Selling, general and administrative expense 3

9,546 8,743 8,297 26,586

Unallocated corporate expenses ( 12,018 ) ( 12,997 )

Acquisition costs and other ( 843 ) ( 1,104 )

Total Corporate ( 12,861 ) ( 14,101 )

Operating (loss) income ( 37,430 ) 14,543

Interest expense 4,238 2,742

Other income, net ( 593 ) ( 209 )

(Loss) income before income taxes $ ( 41,075 ) $ 12,010

Interest expense, net 75 1 342 418

Income taxes — — 6,159 6,159

Other expense (income) 476 29 ( 329 ) 176

Net income (loss) 1,093 2,649 ( 14,967 ) ( 11,225 )

Identifiable assets $ 38,928 $ 61,980 $ 46,296 $ 147,204

Tubular Products $ 70,548 $ 89,050

Specialty Chemicals 49,547 72,990

Corporate & Other 42,339 37,907

$ 162,434 $ 199,947

Depreciation and amortization

Tubular Products $ 3,145 $ 3,451

Specialty Chemicals 4,432 4,749

Corporate & Other 89 74

$ 7,666 $ 8,274

Capital expenditures 1,180 773 ( 61 ) 1,892

Tubular Products $ 1,104 $ 2,076

Specialty Chemicals 1,519 1,140

Corporate & Other 262 178

Geographic sales

United States 75,565 95,264 — 170,829

International $ 5,199 $ 1,844 — $ 7,043

Year Ended December 31, 2023

(in thousands) Specialty Chemicals Tubular Products Corporate & Other 1

Total Continuing Operations

Net sales $ 83,616 $ 109,513 $ 50 $ 193,179

Cost of goods sold - material 46,377 67,323 ( 63 ) 113,637

Cost of goods sold - other 2

31,429 45,864 723 78,016

Sales by product group

Fiberglass and steel liquid storage tanks and separation equipment $ 50 $ 411

Stainless steel pipe and tube 109,513 154,040

Specialty chemicals 83,616 107,542

Gross profit 5,810 ( 3,674 ) ( 610 ) 1,526

Selling, general and administrative expense 3

6,966 7,537 12,209 26,712

Goodwill impairment 11,389 — — 11,389

Interest expense, net 74 1 4,163 4,238

Income taxes — — ( 6,924 ) ( 6,924 )

Other expense (income) — ( 1 ) 263 262

Net loss ( 12,619 ) ( 11,211 ) ( 10,321 ) ( 34,151 )

Identifiable assets $ 49,547 $ 70,548 $ 42,339 $ 162,434

Capital expenditures 1,519 1,104 262 2,885

Geographic sales

United States 79,498 108,693 50 188,241

Elsewhere 4,938 8,300

$ 193,179 $ 261,993

International $ 4,118 $ 820 $ — $ 4,938

1 All Other includes corporate overhead expenses and ongoing expenses for properties under the Master Lease not assigned to a segment in which the Company is the responsible party.

2 Cost of good sold - other includes manufacturing labor and overhead expenses, depreciation expense, repair and maintenance expense, shipping expense, scrap and shrinkage expense, and other operational manufacturing overhead expenses.

3 Selling, general and administrative expenses include sales and administrative salaries, wages and benefits and overhead expenses, professional fees, depreciation and amortization expense, corporate overhead allocation expense and other administrative overhead expenses.

Ascent Industries Co.

2 unchanged sentences

The Company has a 401(k) Employee Stock Ownership Plan (the "401(k)/ESOP Plan") covering all non-union employees.

Beginning January 1, 2023 the plan was extended to include all non-union and union employees at the Company's Virginia facility.

Employees can contribute to the 401(k)/ESOP Plan up to 100 % of their wages with a maximum of $ 23,000 for 2024.

6 unchanged sentences

The matching contribution is applied to the employee accounts after each payroll.

Matching contributions of approximately $ 1.0 million were made for 2023 and $ 0.7 million for 2022.

Matching contributions of approximately $ 1.0 million were made for 2024 and 2023.

The Company may also make a discretionary contribution, which if made, would be distributed to all eligible participants regardless of whether they contribute to the 401(k)/ESOP Plan.

7 unchanged sentences

No discretionary contributions were made to the Bristol Plan in 2024 or 2023.

During 2022, the Company also maintained a 401(k) Plan (the "Virginia Plan") covering substantially all employees at the Virginia facility.

The Company contributed on behalf of each eligible participant a matching contribution equal to a percentage determined each year by the Board of Directors.

For 2022 the maximum was 100 % of employee contributions up to the first 3 % of their eligible compensation and 50 % for employee contributions from 3 % to 6 %.

Matching contributions of $ 0.4 million were made under the Virginia Plan for 2022 .

The Company also maintains a Collective Bargaining Agreement (the "Virginia CBA") with the United Food and Commercial Workers, Local Union 400 (the "Virginia Union"), which represents employees at the Virginia facility and is required to make additional quarterly contributions for hourly employees who had a hire date prior to June 1, 2013.

Additional quarterly matching contributions of approximately $ 30,358 were made for 2024 and $ 34,734 for 2023 .

The Company maintains a Collective Bargaining Agreement (the "Mineral Ridge CBA") with the United Steel Workers of America, Local Union 4564-07, which represents employees at the Mineral Ridge facility.

In connection with the Mineral Ridge CBA, the Company contributes to union-sponsored defined contribution retirement plans.

Contributions relating to these plans were $ 37,818 and $ 40,835 for 2023 and 2022, respectively.

The employees at this facility are covered under the Employee Leasing Services Agreement entered into as part of the sale of Specialty Pipe & Tube, Inc which closed December 22, 2023.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Commitments and Contingencies

In October 2021, the Company acquired DanChem Technologies, Inc.

("DanChem"), a specialty chemical manufacturer based in Virginia.

In June of 2020, DanChem received a demand letter from Henkel US Operations Corporation (“Henkel”), a former customer, asserting various claims for breach of contract alleging that product supplied by DanChem under four (4) purchase orders in 2018 and 2019 were defective and/or non-conforming and seeking approximately $ 315,000 in damages.

DanChem responded in August 2020 disputing the claims and denying wrongdoing.

Henkel was silent almost two years and then, in August 2022, sent another demand letter to DanChem asserting similar, if not identical claims, but now seeking alleged damages of approximately $ 3 million (with the main difference between the two demands being Henkel’s new claims for lost profits and other consequential damages).

Henkel filed a lawsuit against DanChem in Connecticut state court in October 2022 seeking its newly alleged damages of approximately $ 3 million.

The Company settled the lawsuit with Henkel during the third quarter of 2023.

In addition, from time to time, we are involved in various other legal proceedings arising from the normal course of business activities.

We are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition.

From time to time, we may become involved in various legal proceedings which arise from the normal course of business activities.

Outside of the legal proceedings discussed in Note 2 related to the Munhall closure, we are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition.

Defending such proceedings is costly and can impose a significant burden on management and employees.

We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.

Ascent Industries Co.

Notes to Consolidated Financial Statements

Supplemental Financial Information (unaudited)

The following tables present certain unaudited consolidated quarterly financial information for each of the eight quarters ended December 31, 2023.

This quarterly information has been prepared on the same basis as the consolidated financial statements and includes all adjustments necessary to state fairly the information for the periods presented.

Unaudited, in thousands, except per share data

Quarter Ended

2023 March 31 June 30 September 30 December 31

Net sales $ 54,861 $ 50,355 $ 46,747 $ 41,216

Gross profit 1,466 ( 776 ) 2,984 ( 2,148 )

Loss from continuing operations ( 5,788 ) ( 6,150 ) ( 14,678 ) ( 7,535 )

Income (loss) from discontinued operations, net of tax 588 ( 8,486 ) ( 3,254 ) 18,674

Net (loss) income ( 5,200 ) ( 14,636 ) ( 17,932 ) 11,139

Net loss per share from continuing operations:

Basic ( 0.57 ) ( 0.60 ) ( 1.45 ) ( 0.75 )

Diluted ( 0.57 ) ( 0.60 ) ( 1.45 ) ( 0.73 )

Net income (loss) per share from discontinued operations:

Basic 0.06 ( 0.83 ) ( 0.32 ) 1.85

Diluted 0.06 ( 0.83 ) ( 0.32 ) 1.80

Net (loss) income per share:

Basic ( 0.51 ) ( 1.44 ) ( 1.77 ) 1.10

Diluted ( 0.51 ) ( 1.44 ) ( 1.77 ) 1.07

Weighted-average shares:

Basic 10,148 10,170 10,135 10,107

Diluted 10,148 10,170 10,135 10,374

Unaudited, in thousands, except per share data

Quarter Ended

2022 March 31 June 30 September 30 December 31

Net sales $ 71,238 $ 72,443 $ 64,132 $ 54,180

Gross profit 15,791 14,350 8,257 4,889

Income (loss) from continuing operations 6,488 7,189 ( 600 ) 4,501

Income (loss) from discontinued operations, net of tax 3,770 3,868 1,224 ( 4,374 )

Net income 10,258 11,057 624 127

Net income (loss) per share from continuing operations:

Basic 0.64 0.70 ( 0.06 ) 0.44

Diluted 0.63 0.69 ( 0.06 ) 0.43

Net income (loss) per share from discontinued operations:

Basic 0.37 0.38 0.12 ( 0.43 )

Diluted 0.37 0.37 0.12 ( 0.42 )

Net income per share:

Basic 1.00 1.08 0.06 0.01

Diluted 0.99 1.06 0.06 0.01

Weighted-average shares:

Basic 10,209 10,244 10,253 10,213

Diluted 10,320 10,431 10,465 10,416

Ascent Industries Co.

Notes to Consolidated Financial Statements

Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

On February 17, 2025, the Board of Directors authorized a new share repurchase program.

The previous share repurchase program had a term of 24 months and terminated on February 17, 2025.

The new share repurchase program allows for repurchase of up to 1.0 million shares of the Company's outstanding common stock over 24 months.

The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions.

Under the program, the purchases will be funded from available working capital, and the repurchased shares will be returned to the status of authorized, but unissued shares of common stock or held in treasury.

There is no guarantee as to the exact number of shares that will be repurchased by the Company, if any, and the Company may discontinue purchases at any time that management determines additional purchases are not warranted.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data