1、UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-K?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31,2024OR?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE
2、 TRANSITION PERIOD FROM TOCOMMISSION FILE NUMBER 0-19687Ascent Industries Co.(Exact name of registrant as specified in its charter)Delaware57-0426694(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)20 N.Martingale Rd,Suite 430Schaumburg,Illinois60173(A
3、ddress of principal executive offices)(Zip Code)(630)884-9181(Registrants telephone number,includingarea code)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of exchange on which registeredCommon Stock,par value$1.00 per shareACNTNASDAQ Global MarketSe
4、curities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of
5、 the Act.Yes No xIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorterperiod that the registrant was required to file such reports),and(2)has been subj
6、ect to such filing requirements for the past 90 days.Yes x No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or forsuch shorter period that the regis
7、trant was required to submit such files).Yes x No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See definitions of largeaccelerated filer,accelerated filer,smaller repo
8、rting company,and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer?Accelerated filer?Non-accelerated filer?Smaller reporting company?Emerging growth company?If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended tra
9、nsition period for complying with any new or revised financial accounting standards providedpursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over
10、 financial reporting under Section 404(b)of theSarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.xIf securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registr
11、ant included in the filing reflect the correction of an error to previouslyissued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officer
12、s duringthe relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes?No xBased on the closing price as of June 30,2024,which was the last business day of the registrants most recently completed second
13、fiscal quarter,the aggregate market value of the common stock held by non-affiliates of the registrant was$71.7 million.The number of shares outstanding of the registrants common stock as of February 28,2025 was 10,078,533.Documents Incorporated By ReferencePortions of the Proxy Statement for the 20
14、25 annual shareholders meeting are incorporated by reference into Part III of this Form 10-K.Ascent Industries Co.Form 10-KFor Period Ended December 31,2024Table of Contents PageDisclosure Regarding Forward Looking Statements2Part I Item 1Business3 Item 1ARisk Factors6 Item 1BUnresolved Staff Commen
15、ts11Item 1CCybersecurity11 Item 2Properties12 Item 3Legal Proceedings13 Item 4Mine Safety Disclosures13Part II Item 5Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities13 Item 6Reserved13Item 7Managements Discussion and Analysis of Financial Con
16、dition and Results of Operations13 Item 7AQuantitative and Qualitative Disclosures about Market Risk23 Item 8Financial Statements and Supplementary Data24 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure53 Item 9AControls and Procedures53 Item 9BOther Inform
17、ation55Item 9CDisclosure Regarding Foreign Jurisdictions that Prevent Inspections55Part III Item 10Directors,Executive Officers and Corporate Governance55 Item 11Executive Compensation55 Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters56Item 13Cer
18、tain Relationships and Related Transactions,and Director Independence56Item 14Principal Accounting Fees and Services56Part IVItem 15Exhibits and Financial Statement Schedules57Item 16Form 10-K Summary59Signatures601Table of ContentsDisclosure Regarding Forward-Looking StatementsThis Annual Report on
19、 Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicablefederal securities laws.All statements that are not historical facts are forward-looking statements.Forward looking statements can be identified through the u
20、se of words such asestimate,project,intend,expect,believe,should,anticipate,hope,optimistic,plan,outlook,should,could,may and similar expressions.Theforward-looking statements are subject to certain risks and uncertainties,including without limitation those identified below,which could cause actual
21、results to differ materiallyfrom historical results or those anticipated.Readers are cautioned not to place undue reliance on these forward-looking statements.The following factors could cause actualresults to differ materially from historical results or those anticipated:adverse economic conditions
22、,including risks relating to the impact and spread of and the governmentsresponse to pandemics;inability to weather an economic downturn;the impact of competitive products and pricing;product demand and acceptance risks;raw material andother increased costs;raw material availability;financial stabil
23、ity of the Companys customers;customer delays or difficulties in the production of products;loss of consumeror investor confidence;employee relations;ability to maintain workforce by hiring trained employees;labor efficiencies;risks associated with acquisitions;environmentalissues;negative or unexpe
24、cted results from tax law changes;inability to comply with covenants and ratios required by the Companys debt financing arrangements;and otherrisks detailed in Item 1A,Risk Factors,in this Annual Report on Form 10-K and from time-to-time in Ascent Industries Co.s Securities and Exchange Commission f
25、ilings.Ascent Industries Co.assumes no obligation to update any forward-looking information included in this Annual Report on Form 10-K.2Table of ContentsPART IItem 1.BusinessAscent Industries Co.is a diverse industrials company focused on the production of specialty chemicals and stainless steel pi
26、pe and tube.Ascent Industries Co.was incorporatedin 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries Inc.The Companys executive office is located at 20 N.Martingale Rd,Suite 430,Schaumburg,Illinois 60173.Unless indicated otherwise,the term
27、s Ascent,Company,we us,and our refer to Ascent Industries Co.and itsconsolidated subsidiaries.The Companys business is divided into two reportable operating segments,Specialty Chemicals and Tubular Products.The Specialty Chemicals segment produces criticalingredients and process aids for the oil&gas
28、,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 t
29、he 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.GeneralSpecialty Chemic
30、als Specialty Chemicals consists of the Companys 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 li
31、nes focusing on the production ofsurfactants,defoamers,lubricating agents,flame retardants and chemical intermediates.End users include companies that use our products as raw materials or process aids inthe manufacturing of products such as cleaners,coatings,water treatment chemicals,metal working f
32、luids,textiles,oilfield production chemicals,agrochemical formulationsand 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 rang
33、ing from product development to commercial scaleproduction.The segment operates both customer-specific,dedicated plants as well as multi-purpose plants with broad capabilities ranging from blending to complex,multi-stepchemical reactions.The segment has long-term relationships with a number of leadi
34、ng chemical companies that outsource their requirements to our production facilitiesallowing those customers to accelerate new product commercialization efforts while avoiding the CAPEX requirement to modify and/or build manufacturing plants to supporttheir growth.The majority of raw materials used
35、by the segment are available from numerous independent suppliers and approximately 34%of total raw material purchases are from its top 5suppliers.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 mate
36、rialrequirements.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 inc
37、h nominal outside diameter to144 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 andwelds the pipe in a continuous process.Pipe larger than 18 inches in outside diameter is formed on pres
38、ses or rolls and welded using a batch welding technique.Pipe is normallyproduced 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 isone of the few domestic producers capable of making pipe in 4
39、8-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.ASTIs facilities are located in Troutman and Statesvill
40、e,North Carolina.ASTI incorporates proprietary finishing capabilities and the highestlevels of customer service and technical support to provide the customer with the highest quality ornamental products available in the market.ASTIs product range includes avariety of shapes,including rounds,squares,
41、rectangles and ellipticals up to 5 inches in outside diameter.3Table of ContentsThe 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 5suppliers.The Company does not anticipate that th
42、e loss of a supplier would have a materially adverse effect on the Company as raw materials are readily available from anumber 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 It
43、em 8 of this Form 10-K,for financial information about the Companys segments.SalesSpecialty Chemicals Specialty chemicals are sold directly into various market by inside sales,outside sales and distribution partners.The Specialty Chemicals segment hasone customer that accounted for approximately 12%
44、of the segments revenues for 2024 and 24%of the segments revenues for 2023.Tubular Products The Tubular Products segment utilizes a sales force comprised of inside sales employees,outside sales employees and independent manufacturersrepresentatives.The segments products are sold to various distribut
45、ors,OEM and end use customers.The Tubular Products segment has one customer that accounted forapproximately 18%and 17%of the segments revenues for 2024 and 2023.Mergers,Acquisitions and DispositionsThe Company is committed to a long-term strategy of reinvesting capital in our current business segmen
46、ts to foster organic growth and completing acquisitions that expand ourmanufacturing capabilities,product offerings and geographic footprint.The Company may,from time-to-time,divest or close businesses in an effort to better align capitalinvestment within its core operations,increase operational eff
47、iciencies and improve profitability.During the second quarter of 2023,the Companys Board of Directors made the decision to cease operations at BRISMETs Munhall facility.The Company ceased operations atthis facility effective August 31,2023.The Munhall facility has been classified as a discontinued o
48、peration for all periods presented and was formerly a component within theTubular 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 whichAscent and SPT sold substantially all of the ass
49、ets primarily related to SPT to Specialty Pipe&Tube Operations,LLC,a Delaware limited liability company.The considerationfor the transaction was approximately$55 million of cash proceeds subject to certain closing adjustments.The transaction closed on December 22,2023.SPT has beenclassified as a dis
50、continued operation for all periods presented and was formerly a reporting unit within the Tubular Products segment.EnvironmentalEnvironmental expenditures that relate to an existing condition caused by past operations and do not contribute to future revenue generation are expensed.Liabilities arere
51、corded when environmental assessments and/or cleanups are probable and the costs of these assessments and/or cleanups can be reasonably estimated.Changes to laws andenvironmental issues,including climate change,are made or proposed with some frequency and some of the proposals,if adopted,might direc
52、tly or indirectly result in amaterial reduction in the operating results of one or more of our operating units.We are presently unable to quantify this risk.SeasonalityThe Companys businesses and products are generally not subject to seasonal impacts that result in significant variations in revenues
53、 from one quarter to another.BacklogsThe 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 forthe Tubular Products segment were$26.7 million and$22.5 million at the end of 2024 and 2023,resp
54、ectively.Our backlog may not be indicative of actual sales and,therefore,should not be used as a direct measure of future revenue.4Table of ContentsHuman CapitalOur workforce is critical to our success.As of December 31,2024,the Company had 452 employees,451 of which were full-time employees.The Com
55、pany considers relationswith employees to be strong.The number of employees of the Company represented by unions is 181,or 40%of the Companys employees.They are represented by localsaffiliated with the United Steelworkers(the USW)and the United Food and Commercial Workers(the UFCW).Collective bargai
56、ning agreements with the USW wasratified 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 wh
57、ole.The average employee tenure isapproximately 11 years.People and CultureWe have a shared commitment within our organization to foster an inclusive and respectful culture that encourages innovation,teamwork,and collaboration to eliminatebarriers to progress,and continuously drive improvements acro
58、ss 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 employeegrowth.S
59、afety and ComplianceOur safety,compliance,and operational reliability mandates are not at odds with our objectives to maintain the lowest cost and most efficient operations.We demand functionalexcellence across the entire organization,and our goal is to eliminate all injuries and incidents by provid
60、ing comprehensive initial and ongoing safety training,and clearcommunication 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 provideemployees with the necessary
61、 personal protective equipment to perform their job responsibilities safely and confidently.Total RewardsWe 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
62、valuable resource for employees,providing access to confidential mental health support,as well as legal and financial assistancefrom qualified professionals.These services are designed to help address personal and work-related challenges that could impact their well-being or job performance.Diversit
63、y,Equity and InclusionFrom the boardroom to the frontline,we are dedicated to building incredible teams with diverse backgrounds,perspectives,and experiences to drive innovation,outperform thecompetition,and strengthen our ability to attract and retain top talent.Available informationThe Company ele
64、ctronically files with the Securities and Exchange Commission(SEC)its annual reports on Form 10-K,its quarterly reports on Form 10-Q,its periodicreports 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
65、materialspursuant 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 otherinformation regarding issuers that file electronically with the SEC.The Company also makes its filings available,free of charge,thr
66、ough its website at assoon as reasonably practical after the electronic filing of such material with the SEC.The information on the Companys website is not incorporated into this Annual Report onForm 10-K or any other filing the Company makes with the SEC.5Table of ContentsItem 1A.Risk FactorsThere
67、are inherent risks and uncertainties associated with our business that could adversely affect our operating performance and financial condition.Set forth below aredescriptions of those risks and uncertainties that we believe to be material,but the risks and uncertainties described are not the only r
68、isks and uncertainties that could affect ourbusiness.Reference should be made to Forward-Looking Statements above,Managements Discussion and Analysis of Financial Condition and Results of Operations inItem 7 and our consolidated financial statements and related notes in Item 8 below.Industry and Seg
69、ment RisksThe demand for our products may be cyclical,creating uncertainty regarding future profitability.Various changes in general economic conditions affect(or disproportionately affect)the industries in which our customers operate.These changes include decreases in the rateof consumption or use
70、of our customers products due to economic downturns.Other factors causing fluctuation in our customers positions are changes in market demand,capital spending,tariff induced price changes,lower overall pricing due to domestic and international overcapacity,lower priced imports,currency fluctuations,
71、and increases inuse or decreases in prices of substitute materials.As a result of these factors,our profitability has been and may in the future be subject to significant fluctuation.Domestic competition and excess manufacturing capacity could force lower product pricing and may have an adverse effe
72、ct on our revenues and profitability.From time-to-time,intense competition and excess manufacturing capacity in the commodity stainless steel industry have resulted in reduced selling prices,excluding rawmaterial surcharges,for many of our stainless steel products sold by the Tubular Products segmen
73、t.In such situations,in order to maintain market share,we would have to lowerour prices to match the competition.These factors have had and may in the future have a material adverse impact on our revenues,operating results and financial condition.Overcapacity and overproduction by foreign producers
74、in our industry could result in lower domestic prices,which would adversely affect our sales,margins andprofitability.Our business is susceptible to the import of products from other countries,particularly in our Tubular Products segment.Import levels of various products are affected by,among other
75、things,overall world-wide demand,lower cost of production in other countries,the trade practices of foreign governments,government subsidies to foreignproducers,the strengthening of the U.S.dollar,and government-imposed trade restrictions in the United States,such as imposed in 2018 under Section 23
76、2 of the TradeExpansion Act of 1962(section 232 tariffs).Although imports from certain countries have been curtailed by anti-dumping duties,imported products from other countries couldsignificantly reduce prices.Increased imports of certain products,whether illegal dumping or legal imports,could red
77、uce demand for our products or cause us to lower ourprices to maintain demand for our products,which could adversely affect our business,financial position,or results of operations.A substantial portion of our sales in the Specialty Chemicals segment is dependent upon a limited number of customers.T
78、he top 15 customers in the Specialty Chemicalssegment accounted for approximately 53%of revenues for the year ended December 31,2024 and 72%for the year ended December 31,2023 with the top customer accountingfor approximately 12%of revenues for 2024 and 24%of revenues for 2023.An adverse change in,o
79、r termination of,the relationship with one or more of our top customerscould materially and adversely affect our results of operations.Operations and Supply Chain RisksAny interruption in our ability to procure raw materials,or significant volatility in the price of raw materials,could adversely aff
80、ect our business and results of operations.While the Company believes that raw materials for both segments are(in general)readily available from numerous sources,some of our raw material needs are met by a solesupplier or only a few suppliers and many such relationships are terminable by either part
81、y.If any key supplier that we rely on for raw materials ceases or limits production,wemay incur significant additional costs,including capital costs,in order to find alternate,reliable raw material suppliers.We may also experience significant production delayswhile locating new supply sources,which
82、could result in our failure to timely deliver products to our customers.In addition,purchase prices and availability of these critical raw materials are subject to volatility which may negatively impact financial performance due to decreased salesvolume and/or decreased profitability.At any given ti
83、me,we may be unable to obtain an adequate supply of these critical raw materials on a timely basis,at acceptable pricesand other terms,or at all.If suppliers increase the price of critical raw materials,we may not have alternative sources of supply.As well,though we attempt to pass changes inthe pri
84、ces of raw materials along to our customers,we cannot always do so due to market6Table of Contentscompetition,among other reasons,or price increases to customers may occur on a delayed basis.In addition,although raw materials may remain available,volatility in rawmaterial pricing may negatively impa
85、ct customer ordering patterns.The loss of or reduced supply from one or more key suppliers in either segment,or any other material change in our current supply channels,could materially affect theCompanys ability to meet the demand for its products and adversely affect the Companys business and resu
86、lts of operations.In addition,any limitations(or delay)on ourability to pass through any price increases in raw materials could have an adverse effect on our profitability.Loss of a key supplier or lack of product availability from suppliers could adversely affect our sales and earnings.Our Specialt
87、y Chemicals segment depends on maintaining an immediately available supply of various products to meet customer demand.Many of our relationships with keyproduct suppliers are longstanding but are terminable by either party.The loss of key supplier authorizations,or a substantial decrease in the avai
88、lability of their products,couldput us at a competitive disadvantage and have a material adverse effect on our business or results of operations.Supply interruptions could arise from raw material shortages,inadequate manufacturing capacity or utilization to meet demand,financial difficulties,tariffs
89、 and other regulations affecting trade between the U.S.and other countries,labordisputes,weather conditions affecting suppliers production,transportation disruptions or other reasons beyond our control.Our operating results are sensitive to the availability and cost of energy and freight,which are i
90、mportant in the manufacture and transport of our products.Our operating costs increase when energy or freight costs rise.During periods of increasing energy and freight costs,we might not be able to fully recover our operating costincreases through price increases without reducing demand for our pro
91、ducts.In addition,we are dependent on third party freight carriers to transport many of our products,all ofwhich are dependent on fuel to transport our products.The prices for and availability of electricity,natural gas,oil,diesel fuel and other energy resources are subject to volatilemarket conditi
92、ons.These market conditions often are affected by political and economic factors beyond our control.Disruptions in the supply of energy resources couldtemporarily impair our ability to manufacture products for customers and may result in the decline of freight carrier capacity in our geographic mark
93、ets,or make freight carriersunavailable or more expensive.Further,increases in energy or freight costs that cannot be passed on to customers,or adverse changes in our costs relative to energy and freightcosts paid by competitors,has adversely affected,and may continue to adversely affect,our profita
94、bility.We are dependent upon the continued operation of our production facilities,which are subject to a number of hazards.Our manufacturing processes are dependent upon critical pieces of equipment.This equipment may,on occasion,be out of service as a result of unanticipated failures.We haveexperie
95、nced,and may in the future experience,material plant shutdowns or periods of reduced production as a result of such equipment failures.In addition,our productionfacilities are subject to hazards associated with the manufacture,handling,storage and transportation of materials and products,including l
96、eaks and ruptures,explosions,fires,inclement weather and natural disasters,unscheduled downtime and environmental hazards.As well,some of our production capabilities are highly specialized,which limits ourability to shift production to another facility.The occurrence of incidents in the future may r
97、esult in production delays,failure to timely fulfill customer orders or otherwise havea material adverse effect on our business,financial condition or results of operations.Our operations present significant risk of injury and other liabilities.The industrial activities conducted at our facilities p
98、resent significant risk of serious injury or even death to our employees or other visitors to our operations,notwithstandingour safety precautions,including our material compliance with federal,state and local employee health and safety regulations,and we may be unable to avoid material liabilitiesf
99、or any such incidents.We maintain various forms of insurance,including insurance covering claims related to our properties and risks associated with our operations,but therecan be no assurance that the insurance coverage will be applicable and adequate,or will continue to be available on terms accep
100、table to us,or at all,which could result inmaterial liability to us for any injuries or deaths.We may not be able to make the operational and product changes necessary to continue to be an effective competitor.We must continue to enhance our existing products,develop and manufacture new products wit
101、h improved capabilities,and accurately predict future customer needs andpreferences in order to continue to be an effective competitor in our business markets.In addition,we must anticipate and respond to changes in industry standards,includinggovernment regulations,that affect our products and the
102、needs of our customers.The success of any new or enhanced products will depend on a number of factors,such astechnological innovations,increased manufacturing and material costs,customer acceptance,and the performance and quality of the new or enhanced products.We cannotpredict the level of market a
103、cceptance or the amount of market share these new or enhanced products may achieve,and we may experience delays or problems in theintroduction of new or enhanced products.Any failure in our ability to effectively and efficiently launch new or enhanced products could materially and adversely affect o
104、urbusiness,financial condition or results of operation.7Table of ContentsGovernment Regulation RisksOur operations expose us to the risk of environmental,health and safety liabilities and obligations,which could have a material adverse effect on our financial condition orresults of operations.We are
105、 subject to numerous federal,state and local environmental protection and health and safety laws governing,among other things:the generation,use,storage,treatment,transportation,disposal and management of hazardous substances and wastes;emissions or discharges of pollutants or other substances into
106、the environment;investigation and remediation of,and damages resulting from,releases of hazardous substances;andthe health and safety of our employees.Under certain environmental laws,we can be held strictly liable for hazardous substance contamination of any real property we have ever owned,operate
107、d or used as a disposalsite.We are also required to maintain various environmental permits and licenses,many of which require periodic modification and renewal.Our operations entail the risk ofviolations of those laws and regulations,and we may not have been in the past or will be at all times in th
108、e future,in compliance with all of these requirements.In addition,theserequirements and their enforcement may become more stringent in the future.We have incurred,and expect to continue to incur,additional capital expenditures(in addition to ordinary or other costs and capital expenditures)to comply
109、 with applicableenvironmental laws.Our failure to comply with applicable environmental laws and permit requirements could result in civil and/or criminal fines or penalties,enforcementactions,and regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures,such a
110、s the installation of pollution control equipment,which couldhave a material adverse effect on our financial condition,results of operations or cash flows.We are currently,and may in the future be,required to investigate,remediate or otherwise address contamination at our current or former facilitie
111、s.Many of our current andformer facilities have a history of industrial usage for which additional investigation,remediation or other obligations could arise in the future and that could materiallyadversely affect our business,financial condition,results of operations or cash flows.In addition,we ar
112、e currently,and could in the future be,responsible for costs to addresscontamination identified at any real property we used as a disposal site.Although we cannot predict the ultimate cost of compliance with any of the requirements described above,the costs could be material.Non-compliance could sub
113、ject us tomaterial liabilities,such as government fines,third-party lawsuits or the suspension of non-compliant operations.We also may be required to make significant site oroperational modifications at substantial cost.Future developments also could restrict or eliminate the use of or require us to
114、 make modifications to our products,which couldhave a significant negative impact on our results of operations.At any given time,we are(or may be)involved in claims,litigation,administrative proceedings andinvestigations of various types involving potential environmental liabilities,including cleanu
115、p costs associated with hazardous waste disposal sites at our facilities.We cannotassure you that the resolution of these environmental matters will not have a material adverse effect on our results of operations.The occurrence and ultimate costs and timing ofenvironmental liabilities are difficult
116、to predict.Liability under environmental laws relating to contaminated sites can be imposed retroactively and on a joint and several basis.We could incur significant costs,including cleanup costs,civil or criminal fines and sanctions and third-party claims,as a result of past or future violations of
117、,or liabilitiesunder,environmental laws.We could be subject to third party claims for property damage,personal injury,nuisance or otherwise as a result of violations of,or liabilities under,environmental,health orsafety laws in connection with releases of hazardous or other materials at any current
118、or former facility.We could also be subject to environmental indemnification claims inconnection with assets and businesses that we have acquired or divested.There can be no assurance that any future capital and operating expenditures to maintain compliance with environmental laws,as well as costs i
119、ncurred to addresscontamination or environmental claims,will not exceed any current estimates or adversely affect our financial condition and results of operations.In addition,any unanticipatedliabilities or obligations arising,for example,out of discovery of previously unknown conditions or changes
120、 in laws or regulations,could have an adverse effect on ourbusiness,financial condition or results of operations.8Table of ContentsFederal,state and local legislative and regulatory initiatives relating to hydraulic fracturing,as well as governmental reviews of such activities could result in delays
121、 oreliminate new wells from being started,thus reducing the demand for our pressure vessels and heavy walled pipe and tube.Hydraulic fracturing(“fracking”)is currently an essential and common practice to extract oil from dense subsurface rock formations,and this lower cost extraction method is asign
122、ificant driving force behind the surge of oil exploration and drilling in several locations in the United States.However,the Environmental Protection Agency,U.S.Congressand state legislatures have considered adopting legislation to provide additional regulations and disclosures surrounding this proc
123、ess.In the event that new legal restrictionssurrounding the fracking process are adopted in the areas in which our customers operate,we may experience a decrease in revenue,which could have an adverse impact on ourresults of operations,including profitability.Regulations related to“conflict minerals
124、”may force us to incur additional expenses,may make our supply chain more complex and may result in damage to ourreputation with customers.On August 22,2012,under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010(the“Dodd-Frank Act”),the SEC adopted new requirements forcompanies
125、that use certain minerals and metals,known as conflict minerals,in their products,whether or not these products are manufactured by third parties.These regulationsrequire companies to conduct annual due diligence and disclose whether or not such minerals originate from the Democratic Republic of Con
126、go and adjoining countries.Tungsten and tantalum are designated as conflict minerals under the Dodd-Frank Act.These metals are used to varying degrees in our welding materials and are also present inspecialty alloy products.These new requirements could adversely affect the sourcing,availability and
127、pricing of minerals used in our products.In addition,we could incuradditional costs to comply with the disclosure requirements,including costs related to determining the source of any of the relevant minerals and metals used in our products.Since our supply chain is complex,we may not be able to suf
128、ficiently verify the origins for these minerals and metals used in our products through the due diligence proceduresthat we implement,which may harm our reputation.In such event,we may also face difficulties in satisfying customers who could require that all of the components of ourproducts are conf
129、lict mineral-free.Human Capital RisksCertain of our employees are covered by collective bargaining agreements,and the failure to renew these agreements could result in labor disruptions and increased laborcosts.As of December 31,2024,we had 181 employees represented by unions which is approximately
130、40%of the aggregate number of Company employees.These employees arerepresented by local unions affiliated with the USW and the UFCW.Collective bargaining contracts for the USW and UFCW locals expire at various dates in 2027.Althoughwe believe that our present labor relations are strong,our failure t
131、o renew these agreements on reasonable terms as the current agreements expire could result in labordisruptions and increased labor costs,which could adversely affect our financial performance.Failure to attract and retain key personnel may adversely impact our strategy and execution and financial re
132、sults.Our ability to successfully operate,grow our business and implement our business strategies is largely dependent on the efforts,abilities and services of our employees.The lossof employees or our inability to attract,train and retain additional personnel could reduce the competitiveness of our
133、 business or otherwise impair our operations.Our futuresuccess will also depend,in part,on our ability to attract and retain qualified personnel who have experience in the application of our products and are knowledgeable about ourbusiness,markets and products.We also face risks associated with the
134、actions taken in response to COVID-19,including those associated with workforce reductions,and may experience difficulties withhiring additional employees or replacing employees following the pandemic,which may be exacerbated by the tight labor market.In addition,COVID-19 has,and may againresult in
135、quarantines of our personnel or an inability to access facilities,which could adversely affect our operations.Financial and Strategic RisksThere are risks associated with our outstanding and future indebtedness.As of December 31,2024,we had no outstanding indebtedness,however,we may incur additional
136、 indebtedness in the future.We have customary restrictive covenants in ourcurrent debt agreements,which may limit our flexibility to operate our business.Failure to comply with this covenant could result in an event of default that,if not cured orwaived,could have a material adverse effect on our bu
137、siness,results of operations and financial condition.Additionally,our ability to pay interest and repay the principal forour indebtedness is dependent upon our ability to manage our business operations,generate sufficient cash flows to service such debt and the other factors discussed in thissection
138、.There can be no assurance that we will be able to manage any of these risks successfully.9Table of ContentsWe may need new or additional financing in the future to expand our business,and our inability to obtain capital on satisfactory terms or at all may have an adverse impacton our operations and
139、 our financial results.If we are unable to access capital on satisfactory terms and conditions,we may not be able to expand our business or meet our payment requirements under the CreditAgreement.Our ability to obtain new or additional financing will depend on a variety of factors,many of which are
140、beyond our control.We may not be able to obtain new oradditional financing because we may have substantial debt,our current receivable and inventory balances do not support additional debt availability or because we may nothave sufficient cash flows to service or repay our existing or future debt.In
141、 addition,depending on market conditions and our financial performance,equity financing may notbe available on satisfactory terms or at all.If we are unable to access capital on satisfactory terms and conditions,this could have an adverse impact on our operations and ourfinancial results.Impairment
142、in the carrying value of our fixed assets or intangible assets could adversely affect our financial condition and consolidated results of operations.We evaluate the useful lives of our fixed assets and intangible assets to determine if they are definite or indefinite-lived.Reaching a determination o
143、n useful life requiressignificant judgments and assumptions regarding the lease term,future effects of obsolescence,demand,competition,other economic factors(such as the stability of theindustry,legislative action that results in an uncertain or changing regulatory environment,and expected changes i
144、n distribution channels),the level of required maintenanceexpenditures and the expected lives of other related groups of assets.We cannot accurately predict the amount and timing of any impairment of assets.Should the value ofgoodwill,fixed assets or intangible assets become impaired,there could be
145、an adverse effect on our financial condition and consolidated results of operations.From time to time,we engage in acquisitions and divestitures and may encounter difficulties in integrating and separating these businesses and therefore we may notrealize the anticipated benefits.We may seek growth o
146、pportunities through strategic acquisitions as well as evaluate our portfolio for potential divestitures to optimize our business footprint and portfolio.Thesuccess of these transactions will depend on our ability to integrate or separate,as applicable,assets and personnel in these transactions and
147、to cooperate with our strategicpartners.We may encounter difficulties in integrating acquisitions with our operations as well as separating divested businesses,and in managing strategic investments.Additionally,we may seek opportunities to monetize non-core and excess assets.These opportunities may
148、not materialize or generate the financial benefits expected.Furthermore,we may not realize the degree,or timing,of benefits we anticipate when we first enter into a transaction.Intellectual Property RisksOur inability to sufficiently or completely protect our intellectual property rights could adver
149、sely affect our business,prospects,financial condition and results ofoperations.Our ability to compete effectively in both of our business segments will depend on our ability to maintain the proprietary nature of the intellectual property used in ourbusinesses.These intellectual property rights cons
150、ist largely of trade-secrets and know-how.We rely on a combination of trade secrets and non-disclosure and other contractualagreements and technical measures to protect our rights in our intellectual property.We also depend upon confidentiality agreements with our officers,employees,consultantsand s
151、ubcontractors,as well as collaborative partners,to maintain the proprietary nature of our intellectual property.These measures may not afford us sufficient or completeprotection,and others may independently develop intellectual property similar to ours,otherwise avoid our confidentiality agreements
152、or produce technology that wouldadversely affect our business,financial condition or results of operations.General Risk FactorsWe encounter significant competition in all areas of our businesses and may be unable to compete effectively,which could result in reduced profitability and loss of marketsh
153、are.We actively compete with companies producing the same or similar products and,in some instances,with companies producing different products designed for the same uses.We encounter competition from both domestic and foreign sources in price,delivery,service,performance,product innovation,and prod
154、uct recognition and quality,dependingon the product involved.For some of our products,our competitors are larger and have greater financial resources than we do.As a result,these competitors may be better ableto withstand a change in conditions within the industries in which we operate,a change in t
155、he prices of raw materials or a change in the economy as a whole.Our competitorscan be expected to continue to develop and introduce new and enhanced products and more efficient production capabilities,which could cause a decline in market acceptanceof our products.Current and future consolidation a
156、mong our competitors and customers also may cause a loss of market share as well as put downward pressure on pricing.Ourcompetitors could cause a reduction in the prices for some of10Table of Contentsour products as a result of intensified price competition.Competitive pressures can also result in t
157、he loss of major customers.If we cannot compete successfully,our business,financial condition and results of operation could be adversely affected.We have identified and may continue to discover material weaknesses in our internal controls over financial reporting,which may adversely affect investor
158、 confidence inthe accuracy and completeness of our financial reports and consequently the market price of our securities.We have identified and may continue to discover material weaknesses in our internal controls over financial reporting,which may adversely affect investor confidence in theaccuracy
159、 and completeness of our financial reports and consequently the market price of our securities.As a public company,we are required to design and maintain proper andeffective internal controls over financial reporting and to report any material weaknesses in such internal controls.Section 404 of the
160、Sarbanes-Oxley Act of 2002 requires thatwe evaluate and determine the effectiveness of our internal controls over financial reporting and provide a management report on the internal controls over financial reporting,which must be attested to by our independent registered public accounting firm.We ha
161、ve identified material weaknesses in our internal controls over financial reporting,andmay not detect errors on a timely basis and our financial statements may be materially misstated.The process of compiling the system and processing documentation necessary to perform the evaluation needed to compl
162、y with Section 404 is challenging and costly.In thefuture,we may not be able to complete our evaluation,testing,and any required remediation in a timely fashion.If we continue to identify material weaknesses in our internalcontrols over financial reporting,if we are unable to comply with the require
163、ments of Section 404 in a timely manner,if we continue to be unable to assert that our internalcontrols over financial reporting are effective,or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of ourinternal controls over fina
164、ncial reporting,investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities could benegatively affected,and we could become subject to investigations by the Financial Industry Regulatory Authority,the SEC,or other regulatory authorit
165、ies,which could requireadditional financial and management resources.Cybersecurity risks and cyber incidents could adversely affect our business and disrupt operations.Cyber incidents can result from deliberate attacks or unintentional events.These incidents can include,but are not limited to,gainin
166、g unauthorized access to digital systems forpurposes of misappropriating assets or sensitive information,corrupting data,or causing operational disruption.The result of these incidents could include,but are not limitedto,disrupted operations,misstated financial data,liability for stolen assets or in
167、formation,increased cyber security protection costs,litigation and reputational damage adverselyaffecting customer or investor confidence.We have taken steps to address these concerns and have implemented internal control and security measures to protect our systemsand networks from security breache
168、s;however,there can be no assurance that a system or network failure,or security breach,will not impact our business,results of operationsand financial condition.Item 1B.Unresolved Staff CommentsNone.Item 1C.CybersecurityCybersecurity GovernanceThe Companys Board of Directors(the Board)recognizes th
169、e critical nature of managing risks associated with cybersecurity threats and is responsible for oversight of theCompanys information security programs,including risk of cybersecurity threats.The Audit Committee,which supports the Board of Directors in the oversight of theCompanys information securi
170、ty program,oversees managements design,implementation and enforcement of our cybersecurity risk management program.The AuditCommittee is composed of Board members with diverse expertise,including technology,financial and risk management experience.The Audit Committee and full Board receive periodic
171、briefings from management on our cyber risk management programs.The Company also has an internal disclosurecommittee made up of members of management to assist in fulfilling its obligations to maintain disclosure controls and procedures and to coordinate and oversee the process ofpreparing our perio
172、dic securities filings with the SEC.The disclosure committee meets on a quarterly basis to ensure they are appropriately informed of any matters that shouldbe considered in advance of applicable public filings,including cybersecurity and data privacy matters,and to address the proper handling and es
173、calation of information to theBoard and Audit Committee as needed.11Table of ContentsCybersecurity Risk Management and StrategyWe have developed and implemented a cybersecurity risk management program intended to protect the confidentiality,integrity and availability of our critical systems andinfra
174、structure.This program includes the implementation of a set of system,network and application level controls to protect our data and systems.These controls aremonitored for cybersecurity risks and incidents by internal staff and our third-party service provider and are updated as necessary to protec
175、t the Company.Our overall cybersecurity program includes:security tools,technologies and processes and control reviews;cybersecurity awareness training exercises for our employees,including phishing simulations to raise internal awareness of manipulated electronic communications;and an annual review
176、 of System and Organization reports for criticalthird-party service providers.We have not identified known risks,including as a result of prior cybersecurity incidents,that have materially affected us,including our operations,business strategy,results ofoperations or financial condition.We face cert
177、ain ongoing risks from cybersecurity threats that,if realized,are reasonably likely to materially affect us,including ouroperations,business strategy,results of operations or financial condition.See Item 1A Risk Factors-Cybersecurity risks and cyber incidents could adversely affect our businessand d
178、isrupt operations.Item 2.PropertiesThe Company operates the major plants and facilities listed below,all of which are in adequate condition for their current usage and are able to accommodate our capacity needsfor the immediate future.Substantially all of the value of the Companys leased plants and
179、facilities relate to the Master Lease with Store Master Funding XII,LLC(“Store”),anaffiliate of Store Capital Corporation(Store Capital),that was entered into in 2016 and since amended,with the latest amendment occurring in 2024;see Note 7 to theconsolidated financial statements included in Item 8 o
180、f this Form 10-K for additional information on the Companys leases.The following table sets forth certain information concerning our principal properties including which segments products are supported out of each location:SegmentLocationPrincipal Operations Square FeetLand AcresLeased or OwnedTubul
181、arProductsSpecialty ChemicalsBristol,TNManufacturing stainless steel pipe275,00073.1LeasedFountain Inn,SCChemical manufacturing and warehousing136,83416.9LeasedDanville,VAChemical manufacturing and warehousing135,81155.3OwnedCleveland,TNChemical manufacturing and warehousing122,80018.8LeasedTroutman
182、,NCManufacturing ornamental stainless steel tube106,65726.5LeasedStatesville,NCManufacturing ornamental stainless steel tube83,00026.8LeasedThe following table sets forth certain information concerning other properties under the Master Lease in which the Company is the responsible party:LocationPrin
183、cipal Operations Square FeetLand AcresLeased or OwnedMunhall,PAManufacturing stainless steel pipe284,00020.0LeasedAndrews,TXLiquid storage solutions and separation equipment122,66219.6LeasedHouston,TXCutting facility and storage yard for heavy walled pipe29,82110.0LeasedMineral Ridge,OHCutting facil
184、ity and storage yard for heavy walled pipe12,00012.0LeasedCompany ceased operations as of August 31,2023Company currently subleases facility to a third partyCompany sold substantially all assets of SPT as of December 22,2023 and currently subleases facility to a third partyIn addition to the facilit
185、ies listed above,the Company leases from a third party the Companys executive office located in Schaumburg,Illinois.123312312Table of ContentsItem 3.Legal Proceedings For a discussion of legal proceedings,see Note 15 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.Item
186、4.Mine Safety DisclosuresNot applicable.PART IIItem 5.Market for the Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe Company had 312 common shareholders of record at February 28,2025.The Companys common stock trades on the NASDAQ Global Market under
187、 the trading symbolACNT.The Companys credit agreement restricts the payment of dividends indirectly through a minimum fixed charge coverage covenant.No dividends were declared or paidin 2024 or 2023.Stock Performance GraphThe Company is a smaller reporting company as defined in Rule 12b-2 of the Exc
188、hange Act and is not required to provide this information.Issuer Purchases of Equity SecuritiesThe following table sets forth information with respect to purchase of the Companys common stock made during the fourth quarter of 2024:PeriodTotal Number of SharesPurchasedAverage Price Paidper ShareTotal
189、 Number of SharesPurchased as Part ofPublicly AnnouncedProgramsNumber of Shares thatMay Yet Be Purchasedunder the ProgramOctober 1,2024-October 31,2024$462,685 November 1,2024-November 30,20244,088 10.17 4,088 458,597 December 1,2024-December 31,202422,989 11.16 22,989 435,608 As of December 31,2024
190、27,077$11.01 27,077 435,608 Pursuant to the 790,383 share stock repurchase program re-authorized by the Board of Directors in December 2022.On February 17,2025,the Board of Directors authorized a new share repurchaseprogram allowing for repurchase of up to 1.0 million shares of the Companys outstand
191、ing common stock over 24 months.See Note 9 for additional information.Item 6.Reserved11113Table of ContentsItem 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsThis discussion and analysis summarizes the significant factors affecting our consolidated operating r
192、esults,financial condition,liquidity,and capital resources during the fiscalyears ended December 31,2024 and 2023.Unless otherwise noted,all references herein for the years 2024 and 2023 represent the fiscal years ended December 31,2024 and2023,respectively.We intend for this discussion to provide t
193、he reader with information that will assist in understanding our financial statements,the changes in certain keyitems in those financial statements from year to year,and the primary factors that accounted for those changes,as well as how certain accounting principles affect our financialstatements.T
194、his discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in this AnnualReport that have been prepared in accordance with accounting principles generally accepted in the United States of America.This discussion
195、 and analysis is presented in fivesections:Executive OverviewResults of Operations and Non-GAAP Financial MeasuresLiquidity and Capital ResourcesMaterial Cash Requirements from Contractual and Other ObligationsCritical Accounting Policies and EstimatesExecutive OverviewAscent Industries Co.is a dive
196、rse industrials company focused on the production of specialty chemicals and stainless steel pipe and tube.Ascent Industries Co.was incorporatedin 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries Inc.The Specialty Chemicals segment produce
197、s 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 segmentserves marke
198、ts 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,oi
199、l and gas andother industries.Fiscal 2024 was a year of stabilization,recapitalization of talent and aggressive self-help to establish a foundation for organic and inorganic growth.The team rallied toovercome soft market conditions across both segments,delivering positive bottom line improvements wh
200、ile establishing a more predictable,reliable and profitable operatingmodel.We ended the year with no outstanding debt,$16.1 million of cash and cash equivalents as well as$47.4 million of remaining available capacity on our revolving line ofcredit,allowing flexibility to continue to execute our stra
201、tegy and future growth opportunities.Munhall ClosureDuring 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.This strategic decision is part of the Companys ongoing efforts to consolidat
202、e manufacturing to drive an increased focus on its core operations and to improveprofitability while driving operational efficiencies.Munhall results are included within discontinued operations in all periods presented.Divestiture of Specialty Pipe&Tube,Inc.On December 22,2023,the Company and its wh
203、olly-owned subsidiary Specialty Pipe&Tube,Inc.(“SPT”)entered into an Asset Purchase Agreement pursuant to whichAscent and SPT sold substantially all of the assets primarily related to SPT to Specialty Pipe&Tube Operations,LLC,a Delaware limited liability company.The considerationfor the transaction
204、was approximately$55 million of cash proceeds subject to certain closing adjustments.The transaction closed on December 22,2023.As 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 C
205、ompanys Tubular Productssegment.The discussion and analysis of our results of operations refers to continuing operations unless noted.14Table of ContentsResults of OperationsComparison of 2024 to 2023 Continuing OperationsNet sales from continuing operations for the full-year 2024 decreased$15.3 mil
206、lion,or 7.9%,over the full-year 2023 to$177.9 million.The decrease in net sales was primarilydriven by an 8.8%decrease in average selling prices coupled with a 0.9%decrease in pounds shipped.Full-year 2024 gross profit from continuing operations increased 1349.1%to$22.1 million,or 12.4%of sales,comp
207、ared to$1.5 million,or 0.8%of sales,in the full-year 2023.The increase in dollars and percentage of sales for the full-year 2024 were primarily driven by improved strategic sourcing initiatives and product line management resulting inlower raw material costs.Selling,general and administrative expens
208、e(SG&A)from continuing operations for the full-year 2024 decreased$0.1 million to$26.6 million compared to$26.7 million for thefull-year 2023.SG&A as a percentage of sales was 14.9%of sales for 2024 and 13.8%of sales for 2023.The changes in SG&A expense were primarily driven by:decreases in salaries
209、,wages and benefits driven by lower headcount in the current year;decreases in taxes and licenses;and,decreases in other expenses primarily driven by decreases in share-based compensation expenseThe full-year decreases were partially offset by:increases in incentive bonus driven by higher attainment
210、 of performance goals in the current year over the prior year;increases in professional fees driven by increased IT and legal expenses in the current yearOperating loss from continuing operations for the full-year 2024 improved to$5.1 million compared to an operating loss of$37.4 million for the ful
211、l-year 2023.The operatingloss decrease for the full-year 2024 was primarily driven by aforementioned increase in gross profit as well as the prior year goodwill impairment not present in the current year.Comparison of 2024 to 2023 Specialty ChemicalsNet sales for the Specialty Chemicals segment decr
212、eased 3.4%,or$2.9 million,to$80.8 million for 2024 compared to$83.6 million in 2023.The decrease in net sales wasprimarily driven by a 3.4%decrease in pounds shipped and a 2.6%decrease in average selling prices.SG&A expense increased by$2.6 million,or 37.0%,to$9.5 million in 2024 compared to$7.0 mil
213、lion in 2023.SG&A as a percentage of sales increased to 11.8%in 2024 from8.3%in 2023.The changes in SG&A expense were primarily driven by increases in corporate allocation,incentive bonus expense and professional fees,partially offset bydecreases in salaries,wages and benefits and taxes and license
214、fees.Operating income for the full-year 2024 totaled$1.2 million compared to an operating loss of$12.6 million for the full-year 2023.The increase in operating income wasprimarily driven by improved strategic sourcing initiatives and product line management resulting in lower raw material costs.The
215、following tables summarize operating results for the two years indicated.Reference should be made to Note 13 to the consolidated financial statements included in Item 8of this Form 10-K.20242023(in thousands)Amount%Amount%Net sales$80,764 100.0%$83,616 100.0%Cost of goods sold69,574 86.1%77,807 93.1
216、%Gross profit11,190 13.9%5,809 6.9%Selling,general and administrative expense9,546 11.8%6,966 8.3%Acquisition costs and other477 0.6%12%Goodwill impairment%11,389 13.6%Operating income(loss)$1,167 1.4%$(12,558)(15.0)%Table of ContentsComparison of 2024 to 2023-Tubular ProductsNet sales for the Tubul
217、ar Products segment totaled$97.1 million for the full year of 2024,a decrease of 11.3%compared to the full-year 2023.The decrease in net sales wasprimarily driven by a 16.8%decrease in average selling prices offset by a 5.5%increase in pounds shipped.SG&A expense increased$1.2 million,or 16.0%,for t
218、he full-year 2024 when compared to 2023.SG&A as a percentage of sales was 9.0%of sales for 2024 and 6.9%of salesfor 2023.The changes in SG&A expense were primarily driven by increases in corporate allocation partially offset by decreases in salaries,wages and benefits,taxes and licensefees and profe
219、ssional fees.Operating income for the full-year 2024 totaled$2.6 million compared to an operating loss of$11.2 million for the full-year 2023.The operating income increase for the full-year 2024 was primarily driven by increases in gross profit partially offset by the aforementioned increases in SG&
220、A expenses.The following table summarizes operating results for the two years indicated.Reference should be made to Note 13 to the consolidated financial statements included in Item 8of this Form 10-K.20242023(in thousands)Amount%Amount%Net sales$97,108 100.0%$109,513 100.0%Cost of goods sold85,686
221、88.2%113,187 103.4%Gross profit11,422 11.8%(3,674)(3.4)%Selling,general and administrative expense8,743 9.0%7,536 6.9%Acquisition costs and other30 0.1%Operating income(loss)from continuing operations$2,649 2.7%$(11,210)(10.2)%Comparison of 2024 to 2023-CorporateCorporate expenses decreased$4.1 mill
222、ion to$8.8 million in 2024 down from$12.9 million in 2023.The full-year decrease resulted primarily from allocating corporateexpense to locations and decreases in stock compensation expense partially offset by increases in incentive bonus,professional fees,taxes and license expense and insuranceexpe
223、nse.Interest expense was$0.3 million and$4.2 million for the full-years of 2024 and 2023,respectively.The decrease was driven by lower debt outstanding in the current yearcompared to the prior year.The Company had no debt outstanding as of December 31,2024.The Companys effective tax rate for 2024 wa
224、s less than the U.S.statutory rate of 21%primarily due to discrete tax charges associated with recording a valuation allowance oncumulative US Federal and state deferred tax assets.The Companys effective tax rate for 2023 was less than the U.S.statutory rate of 21%primarily driven by tax benefitsass
225、ociated with non-deductible goodwill impairment.Non-GAAP Financial MeasuresTo supplement our consolidated financial statements,which are prepared and presented in accordance with accounting principles generally accepted in the United States(GAAP),we use the following non-GAAP financial measures:EBIT
226、DA and Adjusted EBITDA.Management believes that these non-GAAP measures are useful becausethey are key measures used by our management team to evaluate our operating performance,generate future operating plans and make strategic decisions as well as allowreaders to compare the financial results betw
227、een periods.Non-GAAP measures should not be considered as an alternative to any measure of performance or financial conditionas promulgated under GAAP,and investors should consider the Companys performance and financial condition as reported under GAAP and all other relevant informationwhen assessin
228、g the performance or financial condition of the Company.Non-GAAP measures have limitations as analytical tools,and investors should not consider them inisolation or as a substitute for analysis of the Companys results or financial condition as reported under GAAP.16Table of ContentsEBITDA and Adjust
229、ed EBITDAWe define EBITDA as earnings before interest,income taxes,depreciation and amortization.We define Adjusted EBITDA as EBITDA further adjusted for the impact ofnon-cash and other items we do not consider in our evaluation of ongoing performance.These items include:goodwill impairment,asset im
230、pairment,gain on lease modification,stock-based compensation,non-cash lease cost,acquisition costs and other fees,shelf registration costs,loss on extinguishment of debt,retention costs and restructuring andseverance costs from net(loss)income.We caution investors that amounts presented in accordanc
231、e with our definitions of EBITDA and Adjusted EBITDA may not becomparable to similar measures disclosed by other companies because not all companies calculate EBITDA and Adjusted EBITDA in the same manner.We present EBITDAand Adjusted EBITDA because we consider them to be important supplemental meas
232、ures of our performance and investors understanding of our performance is enhanced byincluding these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.Consolidated EBITDA and Adjusted EBITDA from continuing operations are as follows:Year Ended December
233、 31,($in thousands)20242023ConsolidatedNet loss from continuing operations$(11,225)$(34,151)Adjustments:Interest expense418 4,238 Income taxes6,159(6,924)Depreciation5,936 6,161 Amortization1,487 1,505 EBITDA2,775(29,171)Acquisition costs and other692 856 Goodwill impairment 11,389 Gain on lease mod
234、ification(67)Stock-based compensation204 594 Non-cash lease expense198 242 Retention expense3 26 Restructuring and severance costs208 130 Adjusted EBITDA$4,013$(15,934)%sales2.3%(8.2)%17Table of ContentsSpecialty Chemicals EBITDA and Adjusted EBITDA are as follows:Year Ended December 31,($in thousan
235、ds)20242023Specialty ChemicalsNet income(loss)$1,093$(12,619)Adjustments:Interest expense75 74 Depreciation3,809 3,798 Amortization695 634 EBITDA5,672(8,113)Acquisition costs and other477 12 Goodwill impairment 11,389 Stock-based compensation7 8 Non-cash lease expense66 88 Restructuring and severanc
236、e costs110 40 Specialty Chemicals Adjusted EBITDA$6,332$3,424%of segment sales7.8%4.1%Tubular Products EBITDA and Adjusted EBITDA from continuing operations are as follows:Year Ended December 31,($in thousands)20242023Tubular ProductsNet income(loss)from continuing operations$2,649$(11,210)Adjustmen
237、ts:Interest expense1 Depreciation2,052 2,274 Amortization792 871 EBITDA5,494(8,065)Acquisition costs and other30 Stock-based compensation10 58 Non-cash lease expense88 118 Retention expense 8 Restructuring and severance costs30 84 Tubular Products Adjusted EBITDA$5,652$(7,797)%of segment sales5.8%(7
238、.1)%18Table of ContentsLiquidity and Capital ResourcesWe closely manage our liquidity and capital resources.Our liquidity requirements depend on key variables,including level of investment required to support our businessstrategies,the performance of our business,capital expenditures,credit faciliti
239、es and working capital management.Capital expenditures and share repurchases are a componentof our cash flow and capital.Sources of LiquidityFunds generated by operating activities supplemented by our available cash and cash equivalents and our credit facilities are our most significant sources of l
240、iquidity.As ofDecember 31,2024,we held$16.1 million of cash and cash equivalents,as well as$47.4 million of remaining available capacity on our revolving line of credit.Our existingcash,cash equivalents,and credit facilities balances may fluctuate during 2025.Cash from operations could also be affec
241、ted by various risks and uncertainties detailed in Item1A-Risk Factors of this report.We believe our sources of liquidity will be sufficient to fund operations and anticipated capital expenditures as well as repay our debtobligations as they become due over the next 12 months and beyond.Cash FlowsCa
242、sh flows from continuing operations were as follows:Year ended December 31,(in thousands)20242023Total cash provided by(used in):Operating activities17,007 6,644 Investing activities(1,892)(2,885)Financing activities(1,329)(73,169)Net increase(decrease)in cash and cash equivalents$13,786$(69,410)Ope
243、rating ActivitiesThe increase in cash provided by operating activities for the year ended December 31,2024 compared to cash used in operating activities in the year ended December 31,2023was primarily driven by changes in working capital.Changes in working capital can vary significantly depending on
244、 factors such as the timing of inventory production andpurchases,customer payments of accounts receivable and payments to vendors in the regular course of business.Inventory increased operating cash flows for the year endedDecember 31,2024 by approximately$11.6 million compared to a decrease of appr
245、oximately$12.2 million for 2023,while accounts payable decreased operating cash flows byapproximately$3.6 million for the year ended December 31,2024 compared to an increase of approximately$1.6 million for the year ended December 31,2023.The increasein operating cash flows from inventory is primari
246、ly due to lower average inventory and higher inventory turns year over year while the decrease in accounts payable is primarilydriven by a decreases in days payables outstanding within our Specialty Chemicals segment.Accounts receivable increased operating cash flow by approximately$2.8 millioncompa
247、red to an increase of$6.8 million driven by lower sales in the current year partially offset by lower days sales outstanding.In addition to the working capital changes,changes in deferred income taxes increased cash flows by approximately$6.2 million compared to cash used in operations of approximat
248、ely$6.9 million in 2023.This wasprimarily due to discrete tax charges associated with the recording of a valuation allowance on cumulative U.S.federal and state tax assets in the third quarter of 2024.Investing ActivitiesNet cash used in investing activities primarily consists of transactions relate
249、d to capital expenditures,proceeds from the disposal of property,plant and equipment andacquisitions.The decrease in cash used in investing activities for the full-year 2024 compared to cash used in investing activities for the full-year 2023 was primarily driven by adecrease in capital expenditures
250、 in the current year over the prior year.Financing ActivitiesNet cash used in financing activities primarily consist of transactions related to our long-term debt.The decrease in net cash used in financing activities for the full-year 2024compared to the full-year 2023 was primarily due to the repay
251、ment of the19Table of ContentsCompanys asset backed line of credit and delayed draw term loan in the fourth quarter of 2023 driven by the sale of substantially all of the assets of SPT.Short-term DebtThe Company has a note payable in the amount of$0.9 million with an annual interest rate of 3.70%mat
252、uring April 1,2024,associated with the financing of the Companysinsurance premium in the current year.As of December 31,2024,the outstanding balance was$0.4 million.Long-term DebtOn November 6,2024,Ascent entered into a Limited Consent,Third Amendment to Credit Agreement to Loan Documents with BMO B
253、ank N.A.under Ascents 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 millionand extended the term of the credit facility through December 31,2027.The Credit Facility Amendment
254、 also increased the interest rate for the credit facility from SOFR plus aninterest 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 facilityand Ascents consolidated fixed charge coverage ratio.The
255、Facility 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(currently$9.0 million).As of December 31,2024,the Company was in compliance with all
256、 financial debt covenants.As of December 31,2024,the Company had no principal payments outstanding on long-term debt.As of December 31,2024,the Company had$47.4 million of remainingavailability under its credit facility.See Note 6 in the notes to the consolidated financial statements for additional
257、information on the Companys line of credit.Stock Repurchases and DividendsWe may repurchase common stock and pay dividends from time to time pursuant to programs approved by our Board of Directors.The payment of cash dividends is alsosubject to customary legal and contractual restrictions.Our capita
258、l allocation strategy is to first fund operations and investments in growth and then return excess cash over timeto shareholders through share repurchases and dividends.The Companys previous share repurchase program allowed for repurchase of up to 790,383 shares of the Companys outstanding common st
259、ock 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 Companysoutstanding common stock over 24 months.The shares will be purchased from time to time at prevailing market pric
260、es,through open market or privately negotiatedtransactions,depending on market conditions.Under the program,the purchases will be funded from available working capital,and the repurchased shares will be returned tothe status of authorized,but unissued shares of common stock or held in treasury.There
261、 is no guarantee as to the exact number of shares that will be repurchased by theCompany,and the Company may discontinue purchases at any time that management determines additional purchases are not warranted.As of December 31,2024,theCompany had 435,608 shares of its previous share repurchase autho
262、rization remaining.Shares repurchased for the year ended December 31,2024 and 2023 were as follows:Year ended December 31,20242023Number of shares repurchased101,263 143,108 Average price per share$10.21$8.97 Total cost of shares repurchased$1,037,346$1,287,416 At the end of each fiscal year,the Boa
263、rd reviews the financial performance and capital needed to support future growth to determine the amount of cash dividend,if any,whichis appropriate.In 2024 and 2023,no dividends were declared or paid by the Company.20Table of ContentsOther Financial MeasuresBelow are additional financial measures t
264、hat we believe are important in understanding the Companys liquidity position from year to year.The metrics are defined as:Liquidity Measure:Current ratio=current asset divided by current liabilities.The current ratio will be determined by the Company using generally accepted accounting principles,c
265、onsistently applied.Profitability Ratio:Return on average equity(ROAE)=net(loss)income divided by the trailing 12-month average of equity.The ROAE will be determined by the Company usinggenerally accepted accounting principles,consistently applied.Results of these additional financial measures are a
266、s follows:Year ended December 31,20242023Current ratio3.83.7Return on average equity(11.3)%(38.6)%Material Cash Requirements from Contractual and Other ObligationsAs of December 31,2024,our material cash requirements for our known contractual and other obligations were as follows:Operating and Finan
267、ce Leases-The Company enters into various lease agreements for real estate and manufacturing equipment used in the normal course of business.Operating and finance lease obligations were$32.9 million,with$1.8 million payable within 12 months.See Note 7 for further detail of our lease obligations and
268、thetiming of expected future payments.The Company has no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on the Companys financial position,revenues,resultsof operations,liquidity,or capital expenditures.We expect capital spending in fiscal 2025
269、to be as much as$7.6 million.Critical Accounting Policies and EstimatesThe preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and thedisclosure of contingent assets and liabilities at the date of
270、the financial statements and the reported amounts of revenues and expenses during the reporting period.On an on-going basis,management evaluates its estimates and judgments based on historical experience and on various other factors that are believed to be reasonable under thecircumstances,the resul
271、ts of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.Actualresults may differ from these estimates under different assumptions or conditions.Our significant accounting policies are described in Note 1 to t
272、he consolidated financialstatements included herein.We believe the following accounting policies affect the most significant estimates and management judgments used in the preparation of theCompanys consolidated financial statements.Business CombinationsDescriptionBusiness combinations are accounted
273、 for using the acquisition method of accounting in accordance with GAAP.Under this method,the total consideration transferred toconsummate the business combination is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values a
274、s of theclosing date of the transaction.Judgments and uncertainties involved in the estimateThe acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assetsacquired,if any,and liabiliti
275、es assumed.Fair value determinations involve significant assumptions about highly subjective variables,including future cash flows,discount rates,and expected business performance.There are also different valuation models and inputs for each component,the selection of which requires considerable jud
276、gment.Ourestimates and assumptions may be based,in part,on the availability of listed21Table of Contentsmarket prices or other transparent market data.These determinations will affect the amount of amortization expense recognized in future periods as well the allocation ofgoodwill,if any,attributabl
277、e to the transaction.Effect if actual results differ from assumptionsWe base our fair value estimates on assumptions we believe are reasonable,but recognize the assumptions are inherently uncertain.Depending on the size of the purchase priceof a particular acquisition,the mix of intangible assets ac
278、quired and expected business performance,the purchase price allocation could be materially impacted by applying adifferent set of assumptions and estimates.Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions,estimates oractual results.Invent
279、oryDescriptionInventory is stated at the lower of cost or net realizable value.Cost is determined by either specific identification or weighted average methods.At the end of each quarter,allfacilities review recent sales reports to identify sales price trends that would indicate products or product
280、lines that are being sold below our cost.This would indicate that anadjustment would be required.We record an obsolete inventory reserve for identified aged inventory items with slow or no sales activity for finished goods or slow or no usage for raw materials for a certainperiod of time.For those i
281、nventory items,a reserve is established for a percentage of the inventory cost less any estimated scrap proceeds and is based on our current knowledgewith respect to inventory levels,sales trends and historical experience.During 2024,our reserve decreased approximately$0.1 million to$5.5 million as
282、of December 31,2024.We also record an inventory reserve for the estimated shrinkage(quantity losses)between physical inventories.This reserve is based upon the most recent physical inventoryresults.During 2024,the inventory shrink reserve had a$0.3 million decrease in response to estimated shrinkage
283、 rates based on results from previous physical inventories.Ourinventory reserve for estimated shrinkage was$0.3 million as of December 31,2024.Judgments and uncertainties involved in the estimateWe do not believe that our inventories are subject to significant risk of obsolescence in the near term a
284、nd we have the ability to adjust purchasing practices based on anticipatedsales trends and general economic conditions.However,changes in demand,product life cycle,cost trends,product pricing or a deterioration in product quality could result inthe need for additional reserves.Likewise,changes in th
285、e estimated shrink reserve may be necessary,based on the timing and results of physical inventories.We also applyjudgment in the determination of levels of obsolete inventory and assumptions about net realizable value.Effect if actual results differ from assumptionsWe have not made any material chan
286、ges in the methodology used to establish our reserves for obsolete inventory or inventory shrinkage during the past two fiscal years.However,it is possible that actual results could differ from recorded reserves.For instance,a 10%change in the amount of products considered obsolete would have decrea
287、sednet earnings by$0.6 million for 2024.A 10%change in the estimated shrinkage rate would not have had a material impact on net earnings for 2024.Income TaxesDescriptionIn determining income for financial statement purposes,we must make certain estimates and judgments in the calculation of tax expen
288、se,the resultant tax liabilities and therecoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.Deferred tax assets andliabilities are recognized for the estimated future tax consequences attributable to d
289、ifferences between the financial statement carrying amounts of existing assets and liabilitiesand their respective tax bases.In addition,deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards.Deferred tax assets andliabilities are measured us
290、ing enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.Valuation allowances areestablished when realization of the benefit of deferred tax assets is not deemed to be more likely than not.The effect on deferred tax assets and liabilit
291、ies of a change in tax ratesis recognized in income in the period that includes the enactment date.22Table of ContentsWe recognize net tax benefits under the recognition and measurement criteria of FASB ASC Topic 740,Income Taxes,which prescribes requirements and other guidance forfinancial statemen
292、t recognition and measurement of positions taken or expected to be taken on tax returns.We record interest and penalties,if any,related to uncertain taxpositions as a component of income tax expense.Judgments and uncertainties involved in the estimateWe assess on a tax jurisdictional basis the likel
293、ihood that our deferred tax assets can be recovered.If recovery is not expected to exceed a more likely than not(a likelihood ofless than 50 percent)threshold,the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that areest
294、imated not to ultimately be recoverable.In this process,certain relevant criteria are evaluated including:the amount of income or loss in prior years,the existence of deferredtax liabilities that can be used to absorb deferred tax assets,the taxable income in prior carryback years that can be used t
295、o absorb net operating losses and credit carry backs,future expected taxable income and prudent and feasible tax planning strategies.Changes in taxable income,market conditions,tax laws and other factors may change ourjudgment regarding whether we will be able to realize the deferred tax assets.Thes
296、e changes,if any,may require material adjustments to the net deferred tax assets and anaccompanying reduction or increase in income tax expense which will result in a corresponding increase or decrease in net income in the period when such determinations aremade.The utilization of certain deferred t
297、ax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors,suchas changes in tax laws.We also assess the likelihood that our tax reporting positions will ultimately be sustained.To the extent it is determined it is more likely t
298、han not(a likelihood of more than 50percent)that some portion,or all,of a tax reporting position will ultimately not be recognized and sustained,a provision for unrecognized tax benefit is provided by eitherreducing the applicable deferred tax asset or accruing an income tax liability.Our judgment r
299、egarding the sustainability of our tax reporting positions may change in the futuredue to changes in tax laws and other factors.These changes,if any,may require material adjustments to the related deferred tax assets or accrued income tax liabilities and anaccompanying reduction or increase in incom
300、e tax expense which will result in a corresponding increase or decrease in net income in the period when such determinations aremade.We have provided valuation allowances as of December 31,2024,aggregating to$9.1 million,net of federal benefit,against our federal deferred tax assets as well as certa
301、instate and local net operating loss carryforwards and other deferred tax assets.As of December 31,2024,the Company has no liability for unrecognized income tax benefits.Effect if actual results differ from assumptionsAlthough management believes that the estimates and judgments discussed herein are
302、 reasonable,actual results could differ,which could result in income tax expense orbenefits that could be material.Item 7A.Quantitative and Qualitative Disclosures about Market RiskThe Company is a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and is not required to provide
303、the information required by this Item.23Table of ContentsItem 8.Financial Statements and Supplementary DataIndex to Financial StatementsPageReport of Independent Registered Public Accounting Firm(Moss Adams,LLP;Irvine,CA;PCAOB ID:659)25Consolidated Balance Sheets as of December 31,2024 and 202327Con
304、solidated Statements of Income(Loss)for the years ended December 31,2024 and 202328Consolidated Statements of Cash Flows for the years ended December 31,2024 and 202329Consolidated Statements of Shareholders Equity for the years ended December 31,2024 and 202330Notes to Consolidated Financial Statem
305、ents31Note 1:Summary of Significant Accounting Policies31Note 2:Discontinued Operations37Note 3:Revenue Recognition39Note 4:Fair Value of Financial Instruments39Note 5:Property,Plant and Equipment41Note 6:Debt41Note 7:Leases42Note 8:Accrued Expenses&Other Current Liabilities44Note 9:Shareholders Equ
306、ity44Note 10:Accounting for Share-Based Payments45Note 11:Income Taxes48Note 12:Earnings Per Share48Note 13:Industry Segments50Note 14:Benefit Plans and Collective Bargaining Agreements52Note 15:Commitments and Contingencies52Note 16:Subsequent Events5224Table of ContentsReport of Independent Regist
307、ered Public Accounting FirmShareholders and Board of DirectorsAscent Industries Co.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Ascent Industries Co.(and subsidiaries)(the Company)as of December 31,2
308、024 and 2023,the relatedconsolidated statements of income(loss),shareholders equity,and cash flows for the years then ended,and the related notes and schedule(collectively referred to as theconsolidated financial statements).We also have audited the Companys internal control over financial reporting
309、 as of December 31,2024,based on criteria established inInternal 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 c
310、onsolidated financial position of the Company as of December31,2024 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 theUnited States of America.Also in our opinion,because of the effect
311、 of the material weaknesses identified below on the achievement of the objectives of the control criteria,theCompany has not maintained effective internal control over financial reporting as of December 31,2024,based on criteria established in Internal Control-IntegratedFramework(2013)issued by COSO
312、.Basis for OpinionsThe Companys management is responsible for these consolidated financial statements,for maintaining effective internal control over financial reporting,and for its assessmentof the effectiveness of internal control over financial reporting,included in the accompanying Managements R
313、eport on Internal Control over Financial Reporting included inItem 9A.Our responsibility is to express an opinion on the Companys consolidated financial statements and an opinion on the Companys internal control over financialreporting based on our audits.We are a public accounting firm registered w
314、ith the Public Company Accounting Oversight Board(United States)(PCAOB)and are required tobe 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 ExchangeCommission and the PCAOB.We conducted our aud
315、its in accordance with the standards of the PCAOB.Those standards require that we plan and perform the audits to obtain reasonable assurance aboutwhether the consolidated financial statements are free of material misstatement,whether due to error or fraud,and whether effective internal control over
316、financial reporting wasmaintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements,whetherdue to error or fraud,and performing procedures to respond to tho
317、se risks.Such procedures included examining,on a test basis,evidence regarding the amounts and disclosuresin the consolidated financial statements.Our audits also included evaluating the accounting principles used and significant estimates made by management,as well as evaluatingthe overall presenta
318、tion of the consolidated financial statements.Our audit of internal control over financial reporting included obtaining an understanding of internal controlover financial reporting,assessing the risk that a material weakness exists,and testing and evaluating the design and operating effectiveness of
319、 internal control based on theassessed risk.Our audits also included performing such other procedures as we considered necessary in the circumstances.We believe that our audits provide a reasonable basisfor our opinions.A material weakness is a deficiency,or a combination of deficiencies,in internal
320、 control over financial reporting,such that there is a reasonable possibility that a materialmisstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis.The following material weaknesses have beenidentified and included in managements asses
321、sment in Item 9A:Information Technology-Management did not design and maintain effective information technology(IT)general controls in the areas of user access,changemanagement,segregation of duties,and cyber-security for systems supporting many of the Companys key financial reporting processes.As a
322、 result,IT applicationcontrols and business process controls that are dependent on the ineffective IT general controls,or that rely on data produced25Table of Contentsfrom systems impacted by the ineffective IT general controls,are also deemed ineffective,which affects substantially all financial st
323、atement account balances anddisclosures within the Company.Inventory-Management did not design and maintain effective controls over inventory.Revenue recognition Management did not design and maintain effective controls over revenue and accounts receivable.Period-end financial reporting,journal entr
324、ies,reconciliations,and account analyses-Management did not design and maintain effective controls to detect potentialmaterial misstatements to period-end financial statements through review of account reconciliations and account analyses on a timely basis.Additionally,managementdid not design and m
325、aintain effective controls over the review of journal entries.Complex Accounting-Management did not design and maintain management review controls at a sufficient level of precision around complex accounting areas such asincome taxes.We considered the material weaknesses in determining the nature,ti
326、ming,and extent of audit tests applied in our audit of the Companys consolidated financial statements as ofand for the year ended December 31,2024,and our opinion on such consolidated financial statements was not affected.Definition and Limitations of Internal Control Over Financial ReportingA compa
327、nys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles.A companys internal contro
328、l over financial reporting includes thosepolicies and procedures that(1)pertain to the maintenance of records that,in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of thecompany;(2)provide reasonable assurance that transactions are recorded as necess
329、ary to permit preparation of financial statements in accordance with generally acceptedaccounting principles,and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;and(3)provide reasonable assurance regarding
330、 prevention or timely detection of unauthorized acquisition,use,or disposition of the companys assets that could have a materialeffect on the financial statements.Because of its inherent limitations,internal control over financial reporting may not prevent or detect misstatements.Also,projections of
331、 any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or proceduresmay deteriorate.Critical Audit MatterCritical audit matters are matters arising from the curr
332、ent period audit of the consolidated financial statements that were communicated or required to be communicated to theaudit committee and that(1)relate to accounts or disclosures that are material to the financial statements and(2)involved our especially challenging,subjective,or complexjudgments.We
333、 determined that there are no critical audit matters./s/Moss Adams LLPIrvine,CaliforniaMarch 4,2025We have served as the Companys auditor since 2023.26Ascent Industries Co.Consolidated Balance SheetsAs of December 31,2024 and 2023(in thousands,except par value and share data)20242023Assets Current assets:Cash and cash equivalents$16,108$1,851 Accounts receivable,net23,880 26,604 Inventories Raw ma
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