ASCENT INDUSTRIES CO.

Previous wording

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity, and capital resources during the three and six months ended June 30, 2025 and 2024, respectively. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items 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 financial statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the Annual Report), as well as the condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of 2024. This discussion and analysis is presented in five sections:

Current wording

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity, and capital resources during the three and nine months ended September 30, 2025 and 2024, respectively. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items 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 financial statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the Annual Report), as well as the condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of 2024. This discussion and analysis is presented in five sections:

Previous wording

On June 23, 2025, the Company and its wholly-owned subsidiary 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 resulting in a preliminary, pretax gain on sale of $4.6 million, subject to certain measurement period closing adjustments. ASTI's results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, ASTI was reported under the Company's former Tubular Products segment.

Current wording

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. The escrow amount is presented within "Advances and other receivables" on the condensed consolidated balance sheets. The sale resulted in a preliminary, pretax gain on sale of $4.6 million, subject to certain measurement period closing adjustments. ASTI's results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, ASTI was reported under the Company's former Tubular Products segment.

Previous wording

On March 12, 2025, the Company and its wholly-owned subsidiaries Synalloy Metals and 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 resulting in a preliminary, pretax gain on sale of $4.4 million, subject to certain measurement period closing adjustments. As result of the sale, BRISMET results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, Bristol Metals was reported under the Company's Tubular Products segment.

Current wording

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. The escrow amount is presented within "Advances and other receivables" on the condensed consolidated balance sheets. During the three months ended September 30, 2025, the Company and Purchaser completed the measurement period closing adjustments under the terms of the Purchase Agreement resulting in a pretax gain on sale of $2.5 million. As result of the sale, BRISMET results of operations are classified under discontinued operations for all periods presented. Prior to the divestiture, BRISMET was reported under the Company's former Tubular Products segment.

Previous wording

Consolidated net sales for the second quarter of 2025 were $18.7 million, a decrease of$2.8 million, or 13.1%, compared to net sales for the second quarter of 2024. The decrease in net sales was primarily driven by a 29.6% decrease in pounds shipped partially offset by a 23.1% increase in average selling prices.

Current wording

Consolidated net sales for the third quarter of 2025 were $19.7 million, a decrease of$1.2 million, or 5.7%, compared to net sales for the third quarter of 2024. The decrease in net sales was primarily driven by a 12.4% decrease in pounds shipped partially offset by a 6.3% increase in average selling prices.

Previous wording

Consolidated net sales for the six months ended June 30, 2025 were$36.5 million, a decrease of$5.3 million, or 12.6%, compared to net sales for the six months ended June 30, 2024. The decrease in net sales was primarily driven by a 27.4% decrease in pounds shipped partially offset by a 19.2% increase in average selling prices.

Current wording

Consolidated net sales for the nine months ended September 30, 2025 were$56.2 million, a decrease of$6.5 million, or 10.3%, compared to net sales for the nine months ended September 30, 2024. The decrease in net sales was primarily driven by a 23.1% decrease in pounds shipped partially offset by a 15.4% increase in average selling prices.

Previous wording

For the second quarter of 2025, consolidated gross profit increased 73.0% to $4.9 million, or 26.1% of sales, compared to $2.8 million, or 13.1% of sales in the second quarter of 2024. For the six months ended June 30, 2025, consolidated gross profit increased 88.9% to $7.9 million, or 21.7% of sales, compared to $4.2 million, or 10.1% of sales in the six months ended June 30, 2024. The increase for the second quarter and first six months was primarily attributable to continued sourcing improvements resulting in lower raw material costs as well as reductions in other production related costs.

Current wording

For the third quarter of 2025, consolidated gross profit increased 94.2% to $5.8 million, or 29.7% of sales, compared to $3.0 million, or 14.4% of sales in the third quarter of 2024. For the nine months ended September 30, 2025, consolidated gross profit increased 91.1% to $13.8 million, or 24.5% of sales, compared to $7.2 million, or 11.5% of sales in the nine months ended September 30, 2024. The increase for the third quarter was primarily attributable to continued sourcing improvements resulting in lower raw material costs as well as reductions in other production related costs. The increase for the nine months ended September 30, 2025 was primarily attributable to aforementioned price gains, continued sourcing improvements resulting in lower raw material costs, reductions in production related costs and a reclass of $1.2 million from cost of good sold to SG&A to better reflect the nature of the ongoing Munhall and Palmer facility expenses.

Previous wording

Consolidated selling, general, and administrative expense (SG&A) for the second quarter of 2025 increased $1.8 million to $6.4 million, or 34.5% of sales, compared to $4.6 million, or 21.4% of sales in the second quarter of 2024. The increase in SG&A expense for the second quarter of 2025 was primarily driven by increases in salaries, wages and benefits and rent expense, partially offset by decreases in incentive bonus, taxes and licenses and insurance expense.

Current wording

Consolidated selling, general, and administrative expense (SG&A) for the third quarter of 2025 increased $1.2 million to $6.3 million, or 31.7% of sales, compared to $5.0 million, or 24.1% of sales in the third quarter of 2024. The increase in SG&A expense for the third quarter of 2025 was primarily driven by increases in salaries, wages and benefits, stock compensation, incentive bonus, taxes and licenses, utilities and insurance expense, partially offset by decreases in professional fees.

Previous wording

Consolidated selling, general, and administrative expense (SG&A) for the six months ended June 30, 2025 was $11.3 million, or 31.0% of sales, compared to $10.5 million, or 25.1% of sales in the six months ended June 30, 2024. The increase in SG&A expense for the six months ended June 30, 2025 was primarily driven by increases in salaries, wages and benefits and rent expense, partially offset by decreases in professional fees, taxes and licenses, insurance expense and bad debt expense.

Current wording

Consolidated selling, general, and administrative expense (SG&A) for the nine months ended September 30, 2025 was $17.6 million, or 31.3% of sales, compared to $15.5 million, or 24.8% of sales in the nine months ended September 30, 2024. The increase in SG&A expense for the nine months ended September 30, 2025 was primarily driven by increases in salaries, wages and benefits, stock compensation, incentive bonus, taxes and licenses and utilities expenses, partially offset by decreases in professional fees and bad debt expense. The increase in SG&A is attributable to the aforementioned reclass of $1.2 million from cost of good sold to SG&A, and other labor related increases, partially offset by decrease in professional fees and bad debt expense.

Previous wording

Consolidated operating loss in the second quarter of 2025 totaled $2.7 million compared to operating loss of $1.8 million in the second quarter of 2024. The operating loss increase in the second quarter of 2025 was primarily driven by the asset impairment on the remaining Munhall facility right-of-use asset and the aforementioned increase in SG&A expense offset by increases in gross profit.

Current wording

Consolidated operating loss in the third quarter of 2025 totaled $0.8 million compared to operating loss of $2.0 million in the third quarter of 2024. Consolidated operating loss in the nine months ended September 30, 2025 totaled $5.5 million compared to operating loss of $8.3 million in the nine months ended September 30, 2024. The operating loss decrease in the third quarter of 2025 and nine months ended September 30, 2025 was primarily driven by aforementioned increase in gross profit offset by increases in SG&A expense.

Previous wording

Gross profit for the second quarter of 2025 increased to $4.2 million, or 22.4% of sales, compared to $2.9 million, or 13.6% of sales in the second quarter of 2024. Gross profit for the six months ended June 30, 2025 increased to $7.9 million, or 21.7% of sales, compared to $4.5 million, or 10.7% of sales in the six months ended June 30, 2024. The increases for the second quarter and first six months were primarily attributable to higher selling prices and continued sourcing improvements resulting in lower raw material cost.

Current wording

24.5% of sales, compared to $7.6 million, or 12.1% of sales in the nine months ended September 30, 2024. The increases for the third quarter and nine months were primarily attributable to higher selling prices and continued sourcing improvements resulting in lower raw material cost.

Previous wording

SG&A expense for the second quarter of 2025 was $2.7 million, or 14.3% of sales, compared to $2.5 million, or 11.6% of sales in the second quarter of 2024. SG&A expense for the six months ended June 30, 2025 was $5.6 million, or 15.3% of sales, compared to $5.5 million, or 13.1% of sales in the six months ended June 30, 2024. The increase in dollars for the second quarter and first six months was driven by increases in corporate expense allocation, offset by decreases in salaries, wages and benefits, incentive bonus, professional fees and bad debt expense.

Current wording

SG&A expense for the third quarter of 2025 was $3.7 million, or 18.8% of sales, compared to $2.7 million, or 13.2% of sales in the third quarter of 2024. SG&A expense for the nine months ended September 30, 2025 was $9.3 million, or 16.5% of sales, compared to $8.2 million, or 13.1% of sales in the nine months ended September 30, 2024. The increase in dollars for the third quarter and nine months ended September 30, 2025 were driven by increases in corporate expense allocation, offset by decreases in salaries, wages and benefits, incentive bonus, professional fees and bad debt expense.

Previous wording

Operating income increased to $1.5 million for the second quarter of 2025 compared to operating income of $0.4 million for the second quarter of 2024. Operating income increased to $2.3 million for the six months ended June 30, 2025 compared to operating loss of $1.0 million for the six months ended June 30, 2024. The current year increases in operating income was primarily driven by the aforementioned increases in gross profit.

Current wording

Operating income increased to $2.1 million for the third quarter of 2025 compared to operating income of $0.4 million for the third quarter of 2024. Operating income increased to $4.4 million for the nine months ended September 30, 2025 compared to operating loss of $0.6 million for the nine months ended September 30, 2024. The current year increases in operating income was primarily driven by the aforementioned increases in gross profit offset by increase in SG&A expense.

Previous wording

Unallocated corporate and other expenses for the second quarter of 2025 increased $0.9 million, or 39.4%, to $3.1 million, or 16.6% of sales, compared to $2.2 million, or 10.3% of sales, in the prior year. The second quarter of 2025 increase in dollars was primarily driven by increases in salaries, wages and benefits, professional fees, taxes and licenses and insurance expenses, partially offset by decreases in corporate allocation expense related to the divestiture of BRISMET and ASTI.

Current wording

Unallocated corporate and other expenses for the third quarter of 2025 increased $0.1 million, or 6.0%, to $2.6 million, or 13.0% of sales, compared to $2.4 million, or 11.6% of sales, in the prior year. The third quarter of 2025 increase in dollars was primarily driven by increases in salaries, wages and benefits, professional fees, taxes and licenses and insurance expenses, partially offset by decreases in corporate allocation expense related to the divestiture of BRISMET and ASTI.

Previous wording

Unallocated corporate and other expenses for the six months ended June 30, 2025 increased $0.5 million, or 8.9%, to $5.7 million, or 15.7% of sales, compared to $5.3 million, or 12.6% of sales, in the prior year. The six months of 2025 increase in dollars was primarily driven by increases in salaries, wages and benefits, incentive bonus, tax and licenses and insurance expenses, partially offset by decreases in corporate allocation expense related to the divestiture of BRISMET and ASTI and professional fees.

Current wording

Unallocated corporate and other expenses for the nine months ended September 30, 2025 increased $0.6 million, or 8.0%, to $8.3 million, or 14.8% of sales, compared to $7.7 million, or 12.3% of sales, in the prior year. The nine months of 2025 increase in dollars was primarily driven by increases in salaries, wages and benefits, incentive bonus, tax and licenses and insurance expenses, partially offset by decreases in professional fees and corporate allocation expense related to the divestiture of BRISMET and ASTI and professional fees.

Previous wording

Interest expense was $0.2 million and $0.3 million for the second quarter and first six months of 2025 compared to $0.1 million and $0.2 million for the second quarter and six months of 2024. The Company had no debt outstanding in either period.

Current wording

Interest income was $0.5 million and $0.4 million for the third quarter and nine months of 2025 compared to interest expense of $0.1 million and $0.3 million for the third quarter and nine months of 2024 due to escrow interest from ASTI and BRIMET divestiture. The Company had no debt outstanding in either period.

Previous wording

The effective tax rate for continuing operations was 2.1% and 2.0% for the three and six months ended June 30, 2025, respectively. The three and six months ended June 30, 2025 effective tax rate was lower than the U.S. statutory rate of 21.0% primarily due to the valuation allowance over federal and U.S. state deferred tax assets.

Current wording

The effective tax rate for continuing operations was 0.7% and (92.3)% for the three and nine months ended September 30, 2025, respectively. The three and nine months ended September 30, 2025 effective tax rate was lower than the U.S. statutory rate of 21.0% primarily due to the valuation allowance over federal and U.S. state deferred tax assets.

Previous wording

Funds generated by operating activities supplemented by our available cash and cash equivalents and our credit facilities are our most significant sources of liquidity. As of June 30, 2025, we held $60.5 million of cash and cash equivalents, as well as $13.4 million of remaining available capacity on our revolving line of credit. We believe our sources of liquidity will be sufficient to fund operations and anticipated capital expenditures as well as repay our debt obligations as they become due over the next 12 months and beyond.

Current wording

Funds generated by operating activities supplemented by our available cash and cash equivalents and our credit facilities are our most significant sources of liquidity. As of September 30, 2025, we held $58.0 million of cash and cash equivalents, as well as $13.7 million of remaining available capacity on our revolving line of credit. We believe our sources of liquidity will be sufficient to fund operations and anticipated capital expenditures as well as repay our debt obligations as they become due over the next 12 months and beyond.

Previous wording

The increase in cash used in operating activities for the six months ended June 30, 2025, compared to cash provided by operating activities in the six months ended June 30, 2024, was primarily driven by changes in working capital partially offset by decreases in net loss year over year. Changes in working capital can vary significantly depending on factors such as the timing of inventory production and purchases, customer payments of accounts receivable and payments to vendors in the regular course of business. Inventory decreased operating cash flows for the first six months of 2025 by $0.9 million compared to an increase of $2.3 million for the first six months of 2024, while accounts payable decreased operating cash flows by $1.7 million for the first six months of 2025, compared to decrease of $0.1 million in the first six months of 2024. The changes in inventory and accounts payable is primarily driven by higher inventory purchases to match inventory levels with expected sales growth, higher inventory turns year-over-year and decreases in days payables outstanding. Accounts receivable decreased operating cash flows by $4.9 million in the first six months of 2025 compared to a $1.0 million increase in the first six months of 2024. The decrease in cash generated by accounts receivable and advances is primarily driven by the escrow receivables from the BRISMET and ASTI divestitures partially offset by a slight decrease in days sales outstanding compared to the first six months of 2024.

Current wording

The increase in cash used in operating activities for the nine months ended September 30, 2025, compared to cash provided by operating activities in the nine months ended September 30, 2024, was primarily driven by changes in working capital and increases in advances partially offset by decreases in net loss year over year. Changes in working capital can vary significantly depending on factors such as the timing of inventory production and purchases, customer payments of accounts receivable and payments to vendors in the regular course of business. Inventory decreased operating cash flows for the first nine months of 2025 by $1.5 million compared to an increase of $3.7 million for the first nine months of 2024, while accounts payable decreased operating cash flows by $1.5 million for the first nine months of 2025, compared to decrease of $2.6 million in the first nine months of 2024. The changes in inventory and accounts payable is primarily driven by higher inventory purchases to match inventory levels with expected sales growth, higher inventory turns year-over-year and decreases in days payables outstanding. Accounts receivable and advances decreased operating cash flows by $5.2 million in the first nine months of 2025 compared to a $0.2 million decrease in the first nine months of 2024. The decrease in cash generated by accounts receivable and advances is primarily driven by the $5.3 million of escrow receivables from the BRISMET and ASTI divestitures partially offset by a slight decrease in days sales outstanding compared to the first nine months of 2024.

Previous wording

Net cash used in investing activities primarily consists of transactions related to capital expenditures. The increase in cash used in investing activities for the six months ended June 30, 2025 compared to the cash used in investing activities for the six months ended June 30, 2024 was primarily due to increases in capital expenditures in the current year compared to the prior year.

Current wording

Net cash used in investing activities primarily consists of transactions related to capital expenditures. The increase in cash used in investing activities for the nine months ended September 30, 2025 compared to the cash used in investing activities for the nine months ended September 30, 2024 was primarily due to increases in capital expenditures in the current year compared to the prior year.

Previous wording

Net cash used in financing activities primarily consists of transactions related to our credit facilities and share repurchases. The increase in cash used in financing activities for the six months ended June 30, 2025 compared to cash used in financing activities for the six months ended June 30, 2024 was primarily due to increased repurchases of common stock. The Company had no debt outstanding as of June 30, 2025 and December 31, 2024.

Current wording

Net cash used in financing activities primarily consists of transactions related to our credit facilities and share repurchases. The increase in cash used in financing activities for the nine months ended September 30, 2025 compared to cash used in financing activities for the nine months ended September 30, 2024 was primarily due to increased repurchases of common stock. The Company had no debt outstanding as of September 30, 2025 and December 31, 2024.

Previous wording

The Company has a note payable in the amount of $1.1 million with an annual interest rate of 3.68% maturing April 1, 2026, associated with the financing of the Company's insurance premium in 2025. As of June 30, 2025, the outstanding balance was $1.1 million.

Current wording

The Company has a note payable in the amount of $1.1 million with an annual interest rate of 3.68% maturing April 1, 2026, associated with the financing of the Company's insurance premium in 2025. As of September 30, 2025, the outstanding balance was $0.8 million.

Previous wording

On June 30, 2025, Ascent entered into a Limited Consent, Fifth Amendment to Credit Agreement to Loan Documents with BMO Bank N.A. under Ascent’s credit facility (the “Fifth Credit Facility Amendment”) which released the lien on the assets of ASTI and removed ASTI as a loan party. The maximum revolving loan commitment under the credit facility remains $30 million with an interest rate between 1.85% and 2.35%, depending on average availability under the credit facility and the Company''s consolidated fixed charge coverage ratio. The term of the credit facility remains through December 31, 2027.

Current wording

On June 30, 2025, Ascent entered into a Limited Consent, Fifth Amendment to Credit Agreement to Loan Documents with BMO Bank N.A. under Ascent’s credit facility (the “Fifth Credit Facility Amendment”) which released the lien on the assets of ASTI and removed ASTI as a loan party. The maximum revolving loan commitment under the credit facility remains $30 million with an interest rate between 1.85% and 2.35%, depending on average availability under the credit facility and the Company's consolidated fixed charge coverage ratio. The term of the credit facility remains through December 31, 2027.

Previous wording

We have a share repurchase program, authorized by the Company's Board of Directors, that is executed through purchases made from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Shares repurchased are returned to status of authorized, but unissued shares of common stock or held in treasury. As of June 30, 2025, the Company has 339,752 shares of its share repurchase authorization remaining.

Current wording

We have a share repurchase program, authorized by the Company's Board of Directors, that is executed through purchases made from time to time at prevailing market prices, through open market or privately negotiated transactions, depending on market conditions. Shares repurchased are returned to status of authorized, but unissued shares of common stock or held in treasury. As of September 30, 2025, the Company has 274,970 shares of its share repurchase authorization remaining.

Previous wording

Shares repurchased for the three and six months ended June 30, 2025 and 2024 were as follows:

Current wording

Shares repurchased for the three and nine months ended September 30, 2025 and 2024 were as follows:

Previous wording

•Operating and Finance Leases - The Company enters into various lease agreements for the real estate and manufacturing equipment used in the normal course of business. Operating and finance lease obligations were $21.0 million, with $1.3 million payable within 12 months. See Note 9 for further detail of our lease obligations and the timing of expected future payments.

Current wording

•Operating and Finance Leases - The Company enters into various lease agreements for the real estate and manufacturing equipment used in the normal course of business. Operating and finance lease obligations were $20.7 million, with $1.3 million payable within 12 months. See Note 9 for further detail of our lease obligations and the timing of expected future payments.

Previous wording

The Company has no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on the Company's financial position, revenues, results of operations, liquidity, or capital expenditures. We expect capital spending to be as much as $2.1 million for the remainder of fiscal 2025.

Current wording

The Company has no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on the Company's financial position, revenues, results of operations, liquidity, or capital expenditures. We expect capital spending to be as much as $1.6 million for the remainder of fiscal 2025.