ACNT 10-K & 10-Q changes, risk factors and insider trading

Our industry is highly competitive, and demand for our products and our financial results may be negatively impacted by changes in industry capacity utilization, shifts in production geography, raw material dynamics, and competition from other specialty chemical providers.

We operate in a highly competitive specialty chemicals marketplace. Our financial performance is sensitive to fluctuations in industry capacity utilization; pricing often declines when overall capacity exceeds demand, leading to underutilization and pressure on margins. Overcapacity in regions such as Asia, particularly when production is exported to other markets, can disrupt supply-demand balances globally and reduce demand for our products in key regions.

Our ability to compete effectively depends on maintaining advanced technical capabilities and continuously developing and commercializing innovative, high-value specialty chemical solutions for current and prospective customers. Growing competition from alternative products, especially those with enhanced environmental profiles or lower costs, or from substitutes that deliver similar performance could reduce demand for our offerings and adversely affect our market position, pricing power, and growth opportunities.

Variations in our product, customer, and geographic sales mix make it difficult to predict future performance.

Our net sales and gross margins fluctuate based on the specific mix of products, customers, and regions in any period, which can differ significantly from prior or expected periods. Gross margins are heavily influenced by this mix, as well as by competitive dynamics, product commoditization, rising input or logistics costs, inflation, regulatory changes, and other market factors. These variations have historically caused material period-to-period differences in results (particularly during economic downturns) and can complicate assessments of how external conditions or internal changes may impact our business. As a result, forecasting operating results remains challenging.

Industry dynamics, technological changes, and customer trends may lead to volatility in our results.

The specialty chemicals sector experiences rapid innovation, product obsolescence, pricing pressures, raw material volatility, and shifting supply-demand patterns. End markets such as oil & gas, coatings, personal care, and others are influenced by technological advances, regulatory shifts, consumer preferences for sustainable alternatives, and economic factors. Changes in customer formulations, processes, or specifications could render certain products less relevant or obsolete, while alternatives may emerge that reduce or eliminate the need for our solutions. These factors can cause significant fluctuations in sales, margins, and overall financial condition.

We must continue to enhance existing products, develop new ones, and accurately predict customer needs to remain competitive. Failure to do so effectively could materially and adversely affect our business.

Our business depends on the timely availability of raw materials, and any interruption in our ability to procure such materials, or significant volatility in their pricing, could adversely affect our business, financial condition and results of operations.

We actively manage our sourcing strategy to mitigate supply risk and cost volatility, including maintaining relationships with multiple approved suppliers where commercially practicable, monitoring supplier performance and financial condition, and managing inventory levels. However, these efforts may not fully protect us from supply interruptions, capacity constraints, transportation disruptions, geopolitical developments, force majeure events, or other unforeseen circumstances affecting our suppliers.

While most of our raw materials are available from multiple sources, certain key inputs are obtained from a sole supplier or a limited number of qualified suppliers. The loss of, or significant reduction in supply from, any such supplier could require us to identify and qualify alternative sources, potentially resulting in increased costs, capital expenditures, or production delays. Any such disruption could adversely affect our ability to meet customer demand.

Raw material prices are subject to volatility due to changes in supply and demand, energy costs, global trade conditions, regulatory developments and other macroeconomic factors. Significant or sustained increases in raw material costs may adversely impact our margins if we are unable to timely pass such increases through to customers. Competitive market conditions, contractual arrangements, or customer purchasing behavior may limit our ability to fully recover cost increases or delay the timing of such recovery. In addition, volatility in raw material pricing may influence customer ordering patterns, which could affect our sales volumes and operating results.

Accordingly, any material disruption in our supply chain, inability to secure adequate raw material supply at acceptable prices and terms, or limitations in our ability to pass through cost increases could materially and adversely affect our business, financial condition and results of operations.

The financial health of our customers or suppliers could impair demand, pricing, collections, or our supply chain.

Our customers operate in competitive end markets and face pressures from their own competitors, shifting preferences, and economic conditions. These factors have historically led some customers to experience financial distress, including bankruptcy or receivership. Distressed customers may delay payments, seek concessions on pricing or terms, reduce volumes, or eliminate product lines, and prior payments may be subject to clawback in bankruptcy proceedings. Such developments could negatively affect our sales, margins, and cash flow.

Similarly, if key suppliers face insolvency or fail to meet obligations, we may need to secure replacement supplies at higher costs or on less favorable terms, with limited recovery options. Raw materials for our specialty chemicals are generally available from multiple sources, but some needs are met by sole or limited suppliers with terminable relationships. Interruptions, significant price volatility, or inability to pass through cost increases due to competition could adversely affect our business and results of operations.

Capital projects are complex and subject to delays, cost overruns, or underperformance.

Our capital expenditures support maintenance, upgrades, and expansions of manufacturing facilities and equipment. These projects involve complexities such as construction timelines, equipment commissioning, customer quality certifications, and demand forecasting. Delays, budget overruns, or failure to achieve expected returns are possible. Some projects rely on government incentives or funding, which could change or be unavailable. If we lack sufficient capital or face higher-than-anticipated needs due to technology shifts or competition, we may struggle to maintain or expand capabilities in key markets.

Ascent relies on information technology systems that are vulnerable to disruption and cybersecurity threats.

Our operations depend heavily on IT systems for efficient functioning and, in some cases, core business processes. We outsource significant portions of IT management, including infrastructure, networks, data centers, end-user support, backups, and security to third-party providers. Any prolonged failure or disruption of these systems, whether ours or a third party's, could cause substantial operational interruptions, damage our reputation, and harm our financial results.

Given the nature of our business and customer base, we are a potential target for evolving cybersecurity threats, including those from hackers, insiders, or advanced tools such as artificial intelligence. While we maintain controls, policies, and procedures to mitigate these threats, they may not always prevent breaches or detect issues promptly. A significant breach could result in loss or theft of proprietary information, intellectual property, customer/supplier data, or employee information, triggering legal notifications, litigation, regulatory penalties, remediation costs, and harm to customer relationships, brand reputation, and financial performance.

If we fail to maintain an efficient cost structure, our profitability may suffer.

Our competitiveness and profitability depend on controlling costs across manufacturing, operations, sales, and support functions. We pursue ongoing efficiency and cost-reduction initiatives, which may involve facility optimizations, workforce adjustments, or process changes. These efforts require significant management focus and carry risks, including employee relations issues or failure to achieve targeted savings. If we cannot sustain efficiencies amid market price pressures, our margins and financial performance could decline.

Natural disasters, pandemics, or other catastrophic events could disrupt operations and materially affect our results.

Events such as severe weather (hurricanes, floods, storms), earthquakes, pandemics, or other catastrophes at our facilities, those of suppliers, customers, or in key regions could interrupt production, supply chains, or demand. Past events, including hurricanes and global health crises such as COVID-19, have impacted volumes, costs, and operations. Future occurrences could similarly harm results, financial position, and cash flows, depending on severity, duration, and broader economic effects.

Evolving ESG expectations and requirements could increase costs and create new risks.

Heightened emphasis on environmental, social, and governance (ESG) factors require ongoing investment in tracking, reporting, and progress toward sustainability goals amid changing standards. Third-party ESG ratings influence investor decisions, and failure to meet expectations could harm our reputation. Disclosure rules, which are rapidly growing in complexity and number, demand resources and may necessitate revisions to methodologies, goals, or reported data. Compliance with emerging climate or environmental regulations could drive additional capital spending, operating expenses, or product changes, with potentially material costs.

We may be adversely affected by changes in tax laws or tax rates.

Our business, which involves manufacturing operations, custom chemical production, and sales to industries such as coatings, adhesives, pulp & paper, textiles, automotive, water treatment, construction, heavy industrial, petrochemical, food processing, pharmaceutical, oil & gas, and others, may be impacted by factors outside our control. These include changes in tax laws or tax rates, as well as conditions in financial services and capital markets, including counterparty risk from suppliers or customers, rising interest rates that could increase borrowing costs for capital-intensive manufacturing, inflation affecting raw material and energy costs (e.g., petroleum-derived inputs), deflation impacting pricing, and fluctuations in currencies relevant to our international sales or sourcing.

Macroeconomic challenges, such as volatility in financial and capital markets, unemployment levels, and the U.S. and other governments' ability to manage rising debt, may persist and exert pressure on the broader economy. This could lead to shifts in tax policies or rates, reduced demand for our specialty chemicals, supply chain disruptions, higher input costs, or competitive pressures.

There can be no assurance that changes in tax laws or tax rates will not materially affect our future cash taxes, effective tax rate, deferred tax assets and liabilities, or overall profitability.

Tariff and Trade Environment may significantly affect our industry and business, and economic decline can materially impact our financial results.

The recently imposed U.S. tariffs did not materially impact our fiscal 2025 results, but their effects and the potential imposition of modified or additional tariffs may, among other things, create new trade barriers that disrupt supply chains, raise costs, weaken consumer confidence and impact consumer demand for our products, and impact our ability to export our products, all of which could have an adverse effect on our business and financial results. The extent of the impact of tariffs on the Company’s business is highly uncertain and difficult to predict. We are closely monitoring the rapidly evolving tariff landscape and are working diligently with key suppliers to mitigate risks. Deterioration in general economic conditions that in turn diminishes consumer confidence or discretionary income may reduce our sales, or we may decide to lower pricing for our products, which could adversely affect our financial results, including increasing the potential for future impairment charges. In addition, economic uncertainty may also increase certain costs of operation, such as financing costs, energy costs and insurance premiums, which in turn may impact our results of operations. We cannot predict the strength of global economies or the timing of economic recovery, either globally or in the specific markets in which we compete.

Our ability to operate effectively, execute our business strategy and achieve future growth depends significantly on our ability to identify, attract, recruit, develop and retain qualified employees. The loss of key personnel, or our failure to successfully identify, attract, recruit, develop and retain talent in a competitive labor market, could adversely affect our operations, customer relationships and financial performance.

Our future success also depends on maintaining a workforce with the technical expertise, operational experience and commercial knowledge necessary to support our manufacturing processes, product development efforts and customer engagement activities. Competition for skilled personnel, including experienced production employees, engineers, technical service professionals and commercial leadership, may increase labor costs and limit our ability to staff our facilities and support growth initiatives. If we are unable to maintain a stable and capable workforce, our competitiveness and ability to execute our strategic objectives could be materially adversely affected.

Our recent exit from the Tubular Products Segment may result in unexpected costs, liabilities, or disruptions that could adversely affect our financial condition and results of operations.

In the past year, we have completely exited our Tubular Products Segment, which previously included our Welded Pipe & Tube operations. This exit involved the cessation of operations, divestiture of assets, and winding down of related activities across facilities in Tennessee and North Carolina. As a result of this strategic shift, we are now solely focused on our Specialty Chemicals Segment. While this exit was intended to streamline our operations and allocate resources to higher-growth areas, it exposes us to several risks. We may incur unanticipated costs related to the wind-down process. Additionally, we could face potential liabilities from discontinued operations, such as product liability claims, contractual disputes, or regulatory investigations arising from historical activities in industries like oil and gas, chemical, petrochemical, and water treatment, where our tubular products were used. Any such claims or obligations could require significant financial resources to resolve and may not be fully covered by insurance. Furthermore, the loss of revenue and diversification from the Tubular Products Segment, which served diverse markets including automotive, power generation, and mining, increases our dependence on the Specialty Chemicals Segment. This concentration could amplify the impact of adverse events in the chemicals industry, such as raw material price volatility, supply chain disruptions, or shifts in demand from end markets like pulp and paper, coatings, and oil and gas. If we are unable to successfully mitigate these risks or if the benefits of the exit do not materialize as anticipated, our business, financial condition, results of operations, and cash flows could be materially adversely affected.

The inability to successfully complete or integrate future acquisitions or strategic investments may harm our results.

As part of our strategy to expand and strengthen our specialty chemicals platform, we may pursue acquisitions, joint ventures, or other investments. Success in these efforts requires identifying suitable opportunities, negotiating favorable terms, securing financing, completing transactions, and integrating operations effectively. There is no guarantee that we will achieve these objectives or realize the anticipated benefits, such as revenue growth, cost synergies, or enhanced capabilities.

Ascent Industries Co. is a specialty chemicals platform focused on the development, production, and distribution of tailored, performance-driven chemical solutions with three production facilities located in Cleveland, Tennessee, Fountain Inn, South Carolina and Danville, Virginia. These facilities produce 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 Company produces specialty formulations and intermediates for use in a wide variety of applications and industries with primary product lines focusing on the production of surfactants, defoamers, lubricating agents, flame retardants and chemical intermediates while offering products that are petroleum derived, as well as bio-based alternatives. End users include companies that use our products as raw materials or process aids in the manufacturing of products such as cleaners, coatings, water treatment chemicals, metal working fluids, textiles, oilfield production chemicals, agrochemical formulations and other applications The Company was incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries, Inc. The Company's common stock is listed on the NASDAQ Global Market - ticker symbol "ACNT".

On March 12, 2025, the Company and its wholly-owned subsidiaries Synalloy Metals, Inc. ("Synalloy Metals") and Bristol Metals, LLC. ("BRISMET"), entered into an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which they sold substantially all of the assets related to BRISMET to Bristol Pipe and Tube, Inc., a Delaware corporation and wholly-owned subsidiary of Ta Chen International, Inc. (the “Purchaser”). Ascent and Purchaser also entered into a Transition Services Agreement (the “TSA”) dated March 12, 2025, pursuant to which Ascent has agreed to provide certain transition services to Purchaser immediately after the closing for certain agreed upon transition periods. On April 4, 2025, the Company and Purchaser completed the transaction contemplated by the Purchase Agreement. The consideration for the transaction was approximately $45 million of cash proceeds, of which $4.5 million was placed in an escrow account to be received in 18 months from the closing date.

Divestiture of American Stainless Tubing

On June 23, 2025, the Company and its wholly-owned subsidiary American Stainless Tubing, Inc. ("ASTI"), entered into an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which they sold substantially all of the assets related to ASTI to First Tube, LLC., a Texas limited liability company and wholly-owned subsidiary of Triple-S Steel Holdings, Inc (the “Purchaser”). On June 30, 2025, the Company and Purchaser completed the transaction contemplated by the Purchase Agreement. The consideration for the transaction was approximately $16 million of cash proceeds, of which $0.8 million was placed in an escrow account to be received in 12 months from the closing date.

Macroeconomic Events

We continue to monitor macroeconomic trends and uncertainties such as key material inflation, the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs, which may have adverse effects on net sales and profitability. As a result of the recent tariffs announced by the U.S. presidential administration and potential tariff modifications or the imposition of tariffs or export controls by other countries, we have worked with our suppliers to mitigate supply chain challenges, cost volatility, and consumer and economic uncertainty due to rapid changes in global trade policies. Much of our raw material used in production is domestically sourced and while we do not expect these factors to result in a material negative effect on our net sales or profitability in the near future, we are continuing to evaluate these factors and their potential effects as well as our ability to potentially offset all or a portion of cost increases through pricing actions and additional cost savings efforts. Economic pressures on customers and consumers, including the challenges of high inflation and the effects of increased tariffs, may negatively affect our net sales and profitability in the future.

The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of income (loss). This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements, including the related notes to the consolidated financial statements.

•increases in rent expense, specifically related to the reclass of remaining Munhall rent expense to SG&A from COGS in the current year; and,

The full-year increases were partially offset by:

•decreases in bad debt expense; and,

•decreases in repair and maintenance expense.

Comparison of 2025 to 2024 – Specialty Chemicals

Net sales for the Specialty Chemicals segment decreased 7.2%, or $5.8 million, to $74.9 million for 2025 compared to $80.8 million in 2024. The decrease in net sales was primarily driven by a 17.7% decrease in pounds shipped partially offset by a 10.9% decrease in average selling prices.

Operating income for the full-year 2025 totaled $3.8 million compared to $1.2 million for the full-year 2024. The increase in operating income was primarily driven by increases in gross profit as a result of improved strategic sourcing initiatives and product line management resulting in lower raw material costs as well as operational cost management and efficiencies and lower SG&A costs.

Comparison of 2025 to 2024 - Corporate

Corporate expenses decreased $1.2 million to $10.7 million, or 14.4% of sales, in 2025 down from $11.9 million, or 14.8% of sales, in 2024. The full-year decrease results are primarily driven by increases in corporate allocation expense to operating locations and decreases in professional fees partially offset by increases in salaries, wages and benefits, stock compensation, incentive bonus, dues and subscriptions and rent expense.

Credit Facilities

The Company may also withhold shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of share-based awards.

1Includes 745 shares repurchased under previous share repurchase program which expired on February 17, 2025 and 743,283 shares repurchased under the repurchase program authorized on February 17, 2025

2Includes broker fees incurred as part of repurchase transactions

The second quarter represented an important inflection point in Ascent's evolution. Despite continued challenges across the broader specialty chemicals market, our legacy business delivered organic growth well above both the market and many of our peers, reflecting disciplined commercial and operational execution. At the same time, the acquisition of Midwest Graphic Sales has exceeded our expectations, delivering earnings accretion from day one and integrating ahead of schedule. Together, these results reinforce our confidence that the strategic roadmap we have been executing is creating a stronger, higher-quality specialty chemicals platform.

Geopolitical conflicts, including the continuation or escalation of ongoing tensions and military conflicts in the Middle East may also disrupt business operations of suppliers and/or customers, causing supply chain constraints or delays, increased pricing or delayed spending by our customers. The full impact of such events are not known at this time, but they could have a material adverse impact on our business, financial condition, results of operations, and stock price.

These developments did not have a material impact on our financial position, results of operations and cash flows during the three and six months ended June 30, 2026.

Consolidated net sales for the six months ended June 30, 2026 were $45.1 million, an increase of $8.6 million, or 23.6%, compared to net sales for the six months ended June 30, 2025. The increase in net sales was primarily driven by an 11.5% increase in pounds shipped and a 14.6% increase in average selling prices.

Consolidated selling, general, and administrative expense (SG&A) for the second quarter of 2026 decreased $0.9 million to $5.5 million, or 21.5% of sales, compared to $6.4 million, or 34.5% of sales in the second quarter of 2025. Consolidated selling, general, and administrative expense (SG&A) for the six months ended June 30, 2026 decreased $0.7 million to $10.7 million, or 23.6% of sales, compared to $11.3 million, or 31.0% of sales in the six months ended June 30, 2025. The decrease in SG&A expense for the second quarter of 2026 and six months ended June 30, 2026 was primarily driven by decreases in incentive bonus, professional fees and repairs and maintenance partially offset by increase in salaries, wages and benefits.

Unallocated corporate and other expenses for the six months ended June 30, 2026 decreased $5.9 million, or 83.7%, to $1.1 million, or 2.5% of sales, compared to $7.0 million, or 19.2% of sales, in the prior year. The six months ended June 30, 2026 decrease in dollars was primarily driven by increases in corporate allocation to Chemicals locations as well as decreases in professional fees, taxes and licenses, incentive bonus and IT software costs partially offset by increases in salaries, wages and benefits and dues and subscriptions.

Business Combinations

Description

Business combinations are accounted for using the acquisition method of accounting in accordance with GAAP. Under this method, the total consideration transferred to consummate the business combination is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the closing date of the transaction.

Judgments and uncertainties involved in the estimate

The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired, if any, and liabilities assumed. Fair value determinations involve significant assumptions about highly subjective variables, including future cash flows, discount rates, customer attrition and expected business performance. There are also different valuation models and inputs for each component, the selection of which requires considerable judgment. Our estimates and assumptions may be based, in part, on the availability of listed market prices or other transparent market data. These determinations will affect the amount of amortization expense recognized in future periods as well the residual amount recognized as goodwill, if any, attributable to the transaction.

Effect if actual results differ from assumptions

We 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 price of a particular acquisition, the mix of intangible assets acquired and expected business performance, the purchase price allocation could be materially impacted by applying a different set of assumptions and estimates. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

Goodwill

Description

Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less fair value of liabilities assumed, in a business combination. The Company reviews goodwill for impairment at the reporting unit level, which is the operating segment level or one level below the operating segment level. A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. Goodwill is not amortized but is evaluated for impairment at least annually on October 1 or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is performed.

Judgments and uncertainties involved in the estimate

We make various estimates and assumptions about our goodwill, including whether any potential impairment events have occurred. Examples of such events or changes in circumstances, many of which are subjective in nature, include the following:

•Significant negative industry or economic trends;

•A significant change in the use of the acquired assets or our strategy;

•A significant divestiture or other disposition activity;

•A significant decrease in the market value of the asset;

•A significant change in legal factors or the business climate that could affect the value of the asset; and

•A change in segment by one or more reporting unit

Additionally, we make estimates and assumptions regarding the inputs used to perform a quantitative assessment of our goodwill, if necessary, and the Company will perform a discounted cash flow analysis and a market multiple analysis. The discounted cash flow analysis includes management assumptions for expected sales growth, capital expenditures and overall operational forecasts. The market multiple analysis includes historical and projected performance, market capitalization, volatility and multiples for industry peers.

Effect if actual results differ from assumptions

We have not made any material changes in our methodology used to determine whether potential impairment events have occurred or any material changes in the estimates and assumptions used in our quantitative goodwill impairment testing. As of June 30, 2026, the Company's goodwill balance is $4.7 million.