Ascent Industries Co. Common Stock 17th Annual Midwest IDEAS Conference

Great. Thanks everyone for joining. I'm a little bit over-caffeinated, so if I go too quick, it's a small group, call me out. Just tell me to slow down. We'll try and make sure that we have enough time for questions on the back end. Before we go and jump in and talk about Ascent Industries, a couple of quick things. Ryan Kavalauskas, our CFO, and I have been working together for about 10 years at three different companies along the way. Starting with Advancion Corporation, then prior to Ascent at Clearon Corp. I think that's important context because at Clearon Corp., we joined the company, we were losing about $8 million a year of adjusted EBITDA. We were on the verge of bankruptcy on a couple of occasions. That's where cash management became very near and dear to our heart.

Over the course of about four or four and a half years, we turned the company around, we sold it, and at the time of sale to a strategic, we were doing about $36 million of adjusted EBITDA on a trailing 12 basis. So pretty good turnaround, pretty short period of time. But really blessed to have just a great team. It's not just Ryan and I that have worked together for a long time, but the vast majority of our management team has worked together previously. More specifically at the last company that we worked for. So great team, and that's really what's helped us accelerate the transformation of Ascent over the past two to three years.

For those of you not familiar with Ascent, we started off about 75 years ago as a specialty chemical company, and then about 20 years into that journey, a decision was made to acquire stainless steel assets. I get asked that question all the time, "Well, why in the world would anybody do that?" It's a great question. I have no idea. We maintained two different operating segments literally for decades, up until last year. Ryan and I and the new management team came in in 2024. 2024 for us was a year of stabilization and fixing the foundation. We got settled into our roles, really focused in on the specialty chemicals segment, and then about three or four months into that journey, the board said, "Just kidding. Can you please take over the whole company?" And we did.

After stabilizing and fixing the foundation, 2025, we focused really in on optimizing the portfolio. We spun off or sold off our stainless steel assets, and we walked out of the year, out of 2025 as a pure play, incredibly focused specialty chemical company. You can see some of the stats down there at the bottom. Roughly 200 employees. We have four manufacturing sites, six different manufacturing plants. Roughly 95% of our sales are supported with domestically supplied raw materials. We ended last year right around $75 million of sales. The other notable addition to this slide, for those of you that have seen this deck in the past, early May, we did announce our first acquisition, that took place May the 4th, if I am not mistaken. Great company, coatings for packaging applications. We will get more into that here in a little bit. Good foundation. We are heading in the right direction.

What I would say, look, we have been at this now for about 2 and a half years. Our strategy has not changed at all. Our evidence has. Like I mentioned earlier, early on it was focused in on stabilizing, fixing the foundation, getting that scale through commercial execution, driving organic growth inside of our grossly underutilized assets, and being really disciplined in capital allocation. Now what we have been able to show over the past couple of years is we are beginning to deliver that organic growth, and not in an insignificant way. In fact, in Q2, we posted record revenues on a TTM basis all the way going back to the COVID days. The same thing from an adjusted EBITDA standpoint. Our pipeline, our sales pipeline continues to grow. Our conversion rate success continues to improve.

Like I said earlier, we are demonstrating our ability to be acquisitive in a smart way. Just taking a look back at the past 12 months, what have we done? We delivered 9.2% increase in our revenue, or $7 million. We have increased significantly our adjusted EBITDA. We optimized out about $2.1 million worth of cost. We announced a very large new commercial win in the fourth quarter of last year. As of late Q1, early Q2, that is actually at full run rate now. We are seeing that very important growth roll through the income statement. I mentioned capital allocation earlier. We have been very disciplined in capital allocation from January 1st, 2025 through the end of the second quarter. We have repurchased about 12.4% of our outstanding shares. As I mentioned a minute ago, our first acquisition was announced inside of Q2.

A little bit more context about who we are, and what we do and where we play. We manufacture specialty chemicals that go into a wide array of different markets. Markets like agriculture, personal care, water treatment, textiles, oil and gas, coatings, and you name it. When we came into the company a few short years ago, roughly 90% of our sales were in the custom manufacturing space. In other words, customers would call us and they would say, "We have a product. We would like you to make it for us inside of your assets." Then about 10% were product sales. What we have been doing over the past couple of years is making that very deliberate shift over to more product sales versus contract manufacturing.

The reason why, it's because generally when you're selling your own products that are solving customers' problems, generally that business is more ratable, it's more predictable, and more margin accretive. Our strategy and operating model, really what we like to do is come alongside of our customers or come alongside of customers in the moments that matter most for them. What does this mean? What we really like to do is engage with the R&D organization to understand their most pressing challenges that they're dealing with and solve their most difficult problems. Because when we do that, what we have found is generally that relationship is lasting. It lasts for a very long time, and generally, again, volumes are more ratable, more predictable, and more margin accretive.

But in other instances, we come alongside of customers that may be experiencing service-related challenges and develop innovative supply chain strategies to help solve their problems. Just a couple of examples. This goes back to 2024. We received a phone call from a prospect that wasn't even an existing customer, and they said, "Okay, we're going to give you a chance. We have a very deep technical and service-related problem." Over the weekend, we developed three samples. We shot them the samples. They qualified those samples in the lab. They picked the one that they liked the most, and then they said, "That's great. We want to go ahead and move to a commercial scale trial." Because we were able to operate at the speed of their need, we were awarded $7 million of net new business in a relatively short period of time, about two months.

Today that business is actually much larger than where we started. Again, this gets back to what we're not doing is selling products out of a catalog. What we're doing is we're selling customized solutions to solve customers' problems. Another example, this was a very large win for us, that we locked down in the fourth quarter of last year. A large programmatic win. Customer had some technical and more service-related challenges that they were dealing with. We took a look at a basket of products. It was 15, 20 different products that they had in the portfolio. They wanted to know if we could help manufacture those products for them.

We leaned in, we leaned in hard, we allocated the resources, and over a course of a six-month period of time, and after a lot of work on our part, as well as the customer's, we were awarded a $10 million piece of business in pretty short order. For some companies, $10 million of net new business is a rounding error. For us, as a $75 million company at the time, it was transformational. We have a variety of ways in which to engage our customers, and what we try to do is come alongside of them and meet them where they are. Some of our customers want dedicated manufacturing assets. We do that, and that's not normal. It's not a normal capability, but we have the ability, and we do that today. We buy, build, and operate plants for specific customer needs. Some other customers want custom manufacturing.

They've developed some IP. They don't want to invest capital to build a manufacturing plant, and we can come alongside of them and manufacture their products in our equipment. Other customers want an innovation partner, right? An innovation partner that can really come alongside of them and be an extension of their R&D organization. Just a deep solution set that's really structured around how can we best service each and every customer? We have three manufacturing assets, actually four. Got to update the graph. We have four manufacturing assets today, one in Danville, Virginia, one in Fountain Inn, South Carolina, so think Greenville, Spartanburg area, and then one in Cleveland, Tennessee, or in the Chattanooga area. This is a story of good news, bad news, right? The bad news is we have grossly underutilized assets, right? From a fixed cost absorption standpoint.

The good news is, from an investment standpoint, is, oh my gosh, we have a lot of available capacity that we can go out and monetize without significant CapEx required to do that. Today we're operating across those three assets at about 45-ish percent utilization. You can see our historical CapEx requirements over the past four years or so. We've averaged kind of in that $1.5 million range. I want to be clear, that's not because we're running our plants on the cheap. We're not running our plants with duct tape and popsicle sticks. We're investing the right amount of capital required to maintain our reliability and safety. What we've been focused on over the past couple of years from a commercial standpoint is really filling the plants with better quality business that's more ratable and more predictable.