Item 1. Business
Item 1. Business
Ascent Industries Co. 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. 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, 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.
General
Specialty Chemicals – Specialty Chemicals consists of the Company's three production facilities located in Cleveland, Tennessee, Fountain Inn, South Carolina and Danville, Virginia.
The segment produces specialty formulations and intermediates for use in a wide variety of applications and industries with primary product lines focusing on the production of surfactants, defoamers, lubricating agents, flame retardants and chemical intermediates. End users include companies that use our products as raw materials or process aids in the manufacturing of products such as cleaners, coatings, water treatment chemicals, metal working fluids, textiles, oilfield production chemicals, agrochemical formulations and other applications. The segment offers products that are petroleum derived, as well as bio-based alternatives.
Beyond its multi-functional product portfolio, the segment also provides an array of custom manufacturing services ranging from product development to commercial scale production. The segment operates both customer-specific, dedicated plants as well as multi-purpose plants with broad capabilities ranging from blending to complex, multi-step chemical reactions. The segment has long-term relationships with a number of leading chemical companies that outsource their requirements to our production facilities allowing those customers to accelerate new product commercialization efforts while avoiding the CAPEX requirement to modify and/or build manufacturing plants to support their growth.
The majority of raw materials used by the segment are available from numerous independent suppliers and approximately 34% of total raw material purchases are from its top 5 suppliers. While some raw material needs are met by an individual supplier or only a few suppliers, the Company anticipates no difficulties in fulfilling its raw material requirements.
Tubular Products – Tubular Products is comprised of BRISMET, located in Bristol, Tennessee and ASTI, located in Troutman and Statesville, North Carolina.
BRISMET manufactures welded pipe and tube, primarily from stainless steel, duplex, and nickel alloys. Pipe is produced in sizes from 1/2 inch nominal outside diameter to 144 inches outside diameter and wall thickness from 1/16 inch up to 1 and 3/8 inches. Pipe smaller than 18 inches in outside diameter is made on equipment that forms and welds the pipe in a continuous process. Pipe larger than 18 inches in outside diameter is formed on presses or rolls and welded using a batch welding technique. Pipe is normally produced in standard 20-foot lengths, although BRISMET also has capabilities in the production of pipe without circumferential welds in lengths up to 60 feet. BRISMET is one of the few domestic producers capable of making pipe in 48-foot lengths up to 36 inches in diameter.
ASTI is a leading manufacturer of high-end ornamental stainless steel tube, supplying the automotive, commercial transportation, marine, food services, construction, furniture, healthcare, and other industries. ASTI's facilities are located in Troutman and Statesville, North Carolina. ASTI incorporates proprietary finishing capabilities and the highest levels of customer service and technical support to provide the customer with the highest quality ornamental products available in the market. ASTI's product range includes a variety of shapes, including rounds, squares, rectangles and ellipticals up to 5 inches in outside diameter.
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The majority of raw materials used by the segment are available from numerous independent suppliers and approximately 92% of total raw material purchases are from its top 5 suppliers. The Company does not anticipate that the loss of a supplier would have a materially adverse effect on the Company as raw materials are readily available from a number of different sources, and the Company anticipates no difficulties in fulfilling its requirements.
See Note 13 to the consolidated financial statements, which are included in Item 8 of this Form 10-K, for financial information about the Company's segments.
Sales
Specialty Chemicals – Specialty chemicals are sold directly into various market by inside sales, outside sales and distribution partners. 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.
Tubular Products – The Tubular Products segment utilizes a sales force comprised of inside sales employees, outside sales employees and independent manufacturers' representatives. The segment's products are sold to various distributors, OEM and end use customers. The Tubular Products segment has one customer that accounted for approximately 18% and 17% of the segment's revenues for 2024 and 2023.
Mergers, Acquisitions and Dispositions
The Company is committed to a long-term strategy of reinvesting capital in our current business segments to foster organic growth and completing acquisitions that expand our manufacturing capabilities, product offerings and geographic footprint. The Company may, from time-to-time, divest or close businesses in an effort to better align capital investment within its core operations, increase operational efficiencies and improve profitability.
During the second quarter of 2023, the Company's Board of Directors made the decision to cease operations at BRISMET's Munhall facility. The Company ceased operations at this facility effective August 31, 2023. The Munhall facility has been classified as a discontinued operation for all periods presented and was formerly a component within the Tubular Products segment.
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 consideration for the transaction was approximately $55 million of cash proceeds subject to certain closing adjustments. The transaction closed on December 22, 2023. SPT has been classified as a discontinued operation for all periods presented and was formerly a reporting unit within the Tubular Products segment.
Environmental
Environmental expenditures that relate to an existing condition caused by past operations and do not contribute to future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or cleanups are probable and the costs of these assessments and/or cleanups can be reasonably estimated. Changes to laws and environmental issues, including climate change, are made or proposed with some frequency and some of the proposals, if adopted, might directly or indirectly result in a material reduction in the operating results of one or more of our operating units. We are presently unable to quantify this risk.
Seasonality
The Company's businesses and products are generally not subject to seasonal impacts that result in significant variations in revenues from one quarter to another.
Backlogs
The backlog of open orders for the Specialty Chemicals segment were $4.6 million and $5.0 million at the end of 2024 and 2023, respectively. The backlog of open orders for the Tubular Products segment were $26.7 million and $22.5 million at the end of 2024 and 2023, respectively. Our backlog may not be indicative of actual sales and, therefore, should not be used as a direct measure of future revenue.
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Human Capital
Our workforce is critical to our success. As of December 31, 2024, the Company had 452 employees, 451 of which were full-time employees. The Company considers relations with employees to be strong. The number of employees of the Company represented by unions is 181, or 40% of the Company's employees. They are represented by locals affiliated with the United Steelworkers (the "USW") and the United Food and Commercial Workers (the "UFCW"). Collective bargaining agreements with the USW was ratified in October and with the UFCW in December. Collective bargaining agreements for the USW and UFCW locals expire at various dates in 2027.
Our voluntary turnover rate in 2024 was approximately 22%. We monitor employee turnover rates by plant and the Company as a whole. The average employee tenure is approximately 11 years.
People and Culture
We have a shared commitment within our organization to foster an inclusive and respectful culture that encourages innovation, teamwork, and collaboration to eliminate barriers to progress, and continuously drive improvements across the enterprise. Our business results depend on our ability to identify, attract, recruit, develop and retain talent. Factors that may affect our ability to attract and retain employees include competition from other employers, availability of qualified individuals and opportunities for employee growth.
Safety and Compliance
Our safety, compliance, and operational reliability mandates are not at odds with our objectives to maintain the lowest cost and most efficient operations. We demand functional excellence across the entire organization, and our goal is to eliminate all injuries and incidents by providing comprehensive initial and ongoing safety training, and clear communication of safety policies and procedures.
Employees make a daily commitment to and take an active role in owning health and safety, ensuring safe working conditions for everyone. To support this, we provide employees with the necessary personal protective equipment to perform their job responsibilities safely and confidently.
Total Rewards
We invest in our workforce by offering a total rewards package including competitive compensation and health, wellness, retirement, and educational benefits.
The Employee Assistance Program (EAP) is a valuable resource for employees, providing access to confidential mental health support, as well as legal and financial assistance from qualified professionals. These services are designed to help address personal and work-related challenges that could impact their well-being or job performance.
Diversity, Equity and Inclusion
From the boardroom to the frontline, we are dedicated to building incredible teams with diverse backgrounds, perspectives, and experiences to drive innovation, outperform the competition, and strengthen our ability to attract and retain top talent.
Available information
The Company electronically files with the Securities and Exchange Commission ("SEC") its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its periodic reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the "1934 Act"), and proxy materials pursuant to Section 14 of the 1934 Act. The SEC maintains a site on the internet at www.sec.gov which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company also makes its filings available, free of charge, through its website at www.ascentco.com as soon as reasonably practical after the electronic filing of such material with the SEC. The information on the Company's website is not incorporated into this Annual Report on Form 10-K or any other filing the Company makes with the SEC.
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