Ascent Industries Co.

Good day and thank you for standing by. Welcome to the Ascent Industries Coast fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, Brian Kitchen.

Thanks, Josh, and good afternoon, everyone. Before we continue, I would like to remind all participants that the discussion today may contain certain forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. The SIN advises all those listening to this call to review the latest 10Q and 10K posted on its website for a summary of these risks and uncertainties. The SIN does not undertake the responsibility to update any forward-looking statements. Further, the discussion today may include non-GAAP measures. In accordance with Regulation G, the company has reconciled these amounts back to the closest GAAP-based measurement. The reconciliations can be found in the earnings press release issued earlier today and posted on the investor section of the company's website at www.asynco.com. Please note that this call is available for replay via our webcast link that is also posted on the investor section of the company's website. Now with that, let's talk about the business. We exited 2025 as a pure play specialty chemical company. and a structurally stronger business. Gross margin expanded nearly 1,000 basis points. Gross profit increased 61%. Adjusted EBITDA improved by more than $4 million year over year, despite operating on approximately 7% lower revenue. And we delivered these results while fully exiting our legacy tubular segment. That is not cyclical recovery. That is structural improvement. The business we are building has a higher earning power, and we are still in the early stages of unlocking it. Fourth quarter results reflected continued in-market softness and unfavorable mix, which pressured absorption and led to sequential moderation in margin and adjusted EBITDA. While the quarter did not extend the momentum of Q2 and Q3, it does not alter the trajectory of our business. Importantly, we did not chase volume to protect optics. We protected margin integrity. We are reshaping our book of business towards higher margin, lower volatility revenue. That transition can create short-term variability, but the earnings foundation today is materially stronger and more durable than what it was 12 months ago. Against that backdrop, the fourth quarter was defined by several tangible advances that reinforce our structural progress. We permanently exited the monhaul, eliminating a legacy drag that will contribute approximately $2.1 million of run rate improvement in 2026. We secured a significant new commercial program expected to generate more than $10 million of incremental annualized revenue that will improve operating leverage across two of our manufacturing sets. Our pipeline conversion reached 25% in Q4. We won 38 projects across 23 customers with an average sales cycle of 2.9 months. These wins generated commitments of $9.4 million of annualized revenue. Approximately 7.1 came from new customer program, and 2.3 came from additional wins carrying margins in excess of 40%. The majority of these wins came from existing customers, reinforcing strong runway with shareable alt expansions. Product sales represented 47% of the wins, with custom manufacturing contributing the balance. In the fourth quarter, we added a record $43.4 million of new selling projects and sunsetted $40.8 million. Of the projects that we removed, some reflected continued demand softness, while others were opportunities we chose not to pursue because they did not meet our return thresholds. Finally, in December, we modernized the demand engines. Website traffic increased 218% and contact submissions rose 122% within weeks of repositioning our digital strategy. These advances were achieved while removing more than $5 million of labor, overhead, and other costs as compared to 2024, more than offsetting targeted reinvestment. We are strengthening the business while lowering the structural cost base. What underpins this progress and gives it durability is a deliberate upgrade of our operating platform across marketing, sales, R&D, and operations. These were not defensive moves. They were intentional investments in people, processes, tools, and capabilities designed to improve coordination, discipline, and earnings quality. In marketing, we built and scaled measurable demand engine that did not exist two years ago. This function is tightly integrated with both sales and R&D, generating qualified opportunities and strengthening our authority in priority chemistries and markets. In 2025, marketing delivered a return on investment well in excess of 100% across trade shows, digital demand, and inside sales campaigns. And that engine is translating into commercial momentum. In sales, resources are directed towards customers and programs that meet defined return thresholds and generate durable earnings. We are not managing for pipeline optics. We are managing for margin, cash generation, and long-term retention. Through structured account planning and executive engagement, we are embedding our solutions in the customer formulations and validated workflows, increasing defensibility as integration deepens. R&D has become a growth catalyst. Approximately 95% of our fourth quarter wins were driven by or enabled by R&D efforts. including formulation development, process optimization, scale-up support, and that depth is elevating conversion quality, strengthening our margins, and shortening our sales cycle times. In operations, we prioritize leverage over expansion. Rather than adding fixed costs, we revitalize existing assets and debottle net capacity. Guided by a disciplined return on investment mindset, We deployed approximately $435,000 to bring idle equipment back online, capability that would have required more than $3.7 million of new investment. This improves asset utilization and expands capability without increasing structural overhead. What gives us confidence in this next phase is the operating discipline now embedded across the organization. Quality, service, reliability across our asset base have never been stronger. Teams are increasing uptime, driving out waste, and executing with appropriate urgency. And that execution is the backbone of our margin expansion story. It enables us to grow efficiently, protect profitability, and deliver for customers in any environment. Every investment we make in people, processes, or technology is deliberate and return-driven. And we are doing this from a position of financial strength. We ended the year with significant liquidity, no debt, and a clean balance sheet. And that's after buying back approximately 7% of our outstanding shares. Our strong balance sheet gives us resilience in soft demand environment and flexibility to continue investing in high return opportunities. Stepping back, as I reflect on 2025, I'm proud of what the team has delivered. We improved margins and earnings in a difficult market while reshaping the portfolio and reinforcing the foundation of the business. And that doesn't happen by accident. It reflects ownership, accountability, and disciplined execution across the organization. As we look ahead, our priorities are clear. Deepen customer partnerships through innovation, reliability, and speed. Fill available capacity with high-margin organic growth. And preserve balance sheet strengths and allocate capital with discipline. We are not waiting on the market to recover. The market didn't do it to us, and the market's not going to fix it for us. We are building a stronger company regardless of the cycle and positioning it to compound. Our company looks very different today than when we began this journey two short years ago. It is stronger, more disciplined, and built for durability. To the entire Ascent team, thank you. You are our unfair advantage. And with that, I'll turn it over to Ryan to walk through the financials in more detail. Ryan?

Thanks, Ryan, and good afternoon, everyone. Starting with net revenue, the key takeaway for the quarter is that we delivered year-over-year growth despite an uneven demand environment. Net sales increased 4%, supported by a 6% lift in shipments as several higher throughput programs ramped. As expected, that benefit came with a mixed shift. Incremental pounds skewed toward lower price, lower margin wins, which compressed spreads on a consolidated basis. Turning to the full year, net sales declined 7.2% as a 17.7% contraction in demand, more than offset 10.9% in pricing action. In that context, we remain disciplined on value and continue to sharpen mix and execution, positioning the book to participate as volumes normalize. From a profitability standpoint in the quarter, While mix in the broader cycle remained uneven, gross profit was essentially flat year over year, down less than $50,000. And gross margin declined by approximately 90 basis points. Holding margin movement to that level, given the spread compression and demand variability, is a solid outcome. And it reinforces that we're scaling throughput without compromising the earning profile we're building. Stepping back to the full year, gross profit increased by $6.5 million. and gross margin expanded by nearly 1,000 basis points, driven by 2.5% improvement in material profit as our sourcing initiatives, product line management, and operating execution took hold across the portfolio. Moving to SG&A, expenses were $6.5 million compared to $5.4 million in the prior year period. The year-over-year comparison is influenced by merit accrual reversals in the fourth quarter of 2024, along with an unfavorable impact from litigation settlement expenses in the current period. On a full year basis, SG&A was up $3.2 million, largely driven by $2.1 million related to legacy Mulholland Palmer activity that was reclassed SG&A in the second quarter, as well as stock compensation and incentive payouts, partially offset by reductions in professional fees. Adjusted EBITDA for the quarter was a loss of $1.1 million, a decrease of roughly $600,000 year-over-year. Full-year EBITDA was a loss of $570,000, an improvement of $4.1 million year-over-year. Turning to the balance sheet, we ended the quarter with $57.6 million of cash, no debt, and $11.4 million of incremental availability under our revolver. We finished the year with significant liquidity and a clean balance sheet, which gives us flexibility and staying power as we move through this part of the cycle. And with the cash conversion cycle down to 61 days, we're demonstrating tighter working capital discipline, building confidence that the business is getting more resilient, even as demand softens. With that, I'll turn it back to the operator for questions. Thank you.