Good afternoon, everyone and thank you for participating in today's Conference Call to discuss Ascent's Financial Results for the Third Quarter ended September 30, 2023. Joining us today are Ascent's Executive Chairman of the Board, Ben Rosenzweig; President and CEO, Chris Hutter; CFO, Bill Steckel; and the company's outside Investor Relations Adviser, Cody Cree. [Operator Instructions] Before we go further, I would like to turn the call over to Cody Cree as he reads the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thanks, Sheri. Before we continue, I'd 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. Ascent advises all those listening to this call to review the latest 10-Q and 10-K posted on its website for a summary of these risks and uncertainties. Ascent 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 Investors section of the company's website at ascentco.com. Please note that this call is available for replay via webcast link that is also posted on the Investors section of the company's website. Additionally, an updated presentation is available on the Investor Relations section of the website which we encourage you to view. With that, I'd like to turn the call over to Ascent's Executive Chairman of the Board, Ben Rosenzweig. Ben?

Thank you, Cody and good afternoon, everyone. After a challenging last few quarters and the closing of our Munhall operations officially behind us, we began seeing signs of improvement within our operations during the third quarter. I want to be clear that we still do not view our current level of performance as acceptable and there is much work left to be done but we are turning the corner. Persistent volatility in the macro environment still hampered sales volumes across both segments in the third quarter as we continue to see larger-scale projects being pushed out or delayed, along with several of our end markets experiencing a decline in demand. Despite the lower sales volumes, we were able to return to positive adjusted EBITDA in the quarter and continued to manage working capital more efficiently. Most impactfully, towards the end of the quarter, we were pleased to welcome Bryan Kitchen to Ascent as President of Ascent Chemicals. Bryan joins Ascent with a proven track record of taking underperforming businesses and putting them back on the road to growth and profit maximization. We believe Bryan has the potential to take Ascent Chemicals to new heights with a durable growth strategy and we are pleased with the actions he has already taken to return this segment to profitable growth. Within our tubular segment, we continue to streamline and optimize our operations now that we have completely shuttered our Munhall facility. While we do expect some cash and noncash costs within the ranges we laid out last call, we have worked through the vast majority of the expected costs and look forward to having this completely off our books as we enter 2024. We continue to believe we have a healthy asset base and strong reputation within the tubular industry that can return…

Thanks, Ben and thank you all for joining today's call. Jumping right into our tubular products segment. We are pleased to be moving forward with our focus being squarely on Bristol tubular products, American stainless tubing and specialty pipe and tube now that operations have completely ceased at Munhall. During Q3, destocking trends within the industry continued to persist as many of our customers remained over-inventoried relative to their immediate needs. This is directly correlated with both the prolonged volatility we continue to experience in our broader macroeconomic economy and our distribution customers' uncertainty surrounding near-term commodity pricing. Surcharges continue to work down, especially on a year-over-year basis which is not necessarily bad for us long term but certainly played a role in slowing inventory buys from distributors. Though difficult to predict, we'd expect surcharges to come down a bit more throughout the end of the year with larger buys coming during periods of flattened surcharges. As we've discussed in the past, we've been targeting larger infrastructure projects for this segment that provide a healthier margin profile for us. Unfortunately, we have seen many of these orders pushed out 1 to 2 quarters which continue to be a drag in our volumes. However, we have a scrappy team that is turning over every stone to drum up demand and we are working hard to optimize factors within our control. Import products continue to impact volumes, specifically in our smaller-diameter products. However, we're seeing some signs of stabilization and have begun to begin winning business back due to quality issues of the imported products. We would expect this to continue to help us but some of it still depends on the health of the broader economy which ultimately impacts the price versus quality decisions of our customers. Within ASTI we're holding…

Thank you, Chris and good afternoon, everyone. Before I jump into the financials, I want to remind everyone that we have categorized the financial results from our Munhall facility into discontinued operations given that we permanently ceased operations at the end of August. To give a more accurate representation of our performance ex Munhall, the results I'll be discussing today are from continuing operations and we have adjusted our prior year periods to reflect the results ex Munhall to enable more relevant comparisons. Additionally, I want to update you all on the impact of the Munhall closure on our financials to date. Through the third quarter, we have incurred approximately $2.6 million of pre-tax cash charges and approximately $10.1 million of noncash charges which remain in line with the original expectations. With that, let's talk about the third quarter continuing operations. Net sales from continuing operations were $56.1 million compared to $78.2 million in the prior year period. The decrease is due to lower overall sales volume within both tubular products and specialty chemicals segments. Gross profit from continuing operations was $6 million or 10.7% of net sales compared to $14.1 million or 18% of net sales in the third quarter of 2022. The decrease is primarily attributable to the decline in net sales. Net loss from continuing operations was $12.8 million or $1.26 diluted loss per share compared to net income from continuing operations of $3.1 million or $0.30 per diluted share in the third quarter of 2022. The decrease is primarily attributable to an $11.4 million noncash goodwill impairment within the specialty chemicals segment, along with the aforementioned decline in gross profit. Adjusted EBITDA was $0.9 million compared to $8.2 million in the third quarter of 2022. Adjusted EBITDA margin was 1.7% compared to 10.5% in the prior year period. Lastly, looking at our liquidity position as of September 30, 2023. Total debt was $53 million compared to $71.5 million at December 31, 2022. As of September 30, we had $41.8 million of borrowing capacity under our revolving credit facility compared to $37.6 million at December 31, 2022. During the third quarter of 2023, we repurchased 44,799 shares at an average cost of $8.87 per share for approximately $400,000, bringing total year-to-date purchases for 2023 to nearly 96,000 shares. We currently have 584,024 shares remaining under our share repurchase authorization. With that, I'll now turn it back over to the operator for Q&A.

[Operator Instructions] Our first question will come from the line of Vincent Anderson with Stifel.

So just starting off, I was hoping you could discuss if there are any specific drivers of the goodwill impairment, maybe specifically if that was the loss of a single customer or just a more normal review of the recent operating environment.

Yes, it's pretty much related to the Danville operation and not necessarily the loss of a customer but the normalization of the customers' go forward estimated annual volume.

Okay. And then sticking to a high level. I know guidance is not on the table. But just looking at your overall level of profitability, how much leverage do you think you have in hand right now from self-help over the next few quarters, if we were to assume no real help in the overall demand environment?

I'd say a lot, Vince. I mean we feel pretty good that we can get back to where we were before on the chemical side within the next few quarters without necessarily feeling like there's going to be a boisterous market environment. Now obviously, I'll caveat that with -- I know it's pretty bad out there on the chem side and we would hope that it doesn't get worse. But there are a lot of things under our control that can get us back to where we were before which if you recall, is still not where we think we need to be. So if you were to kind of make that bridge from that mid-single-digit EBITDA margin on the chem side back to where we were in the, call it, 10% range is within our control and then that bridge up to the much higher mid-teens or so, we think, hopefully, there will be a little bit of a normalization in the market and some of these headwinds will abate. But there is a lot within our control.

Okay. Excellent. And then -- I've got a few. I assume that's okay. I'm just going to keep going. But can you just maybe discuss at a high -- I don't know if you want to speak for Bryan too soon but at a high level in your chemicals portfolio right now, how you're thinking about securing new business for volumes lost during this destocking period versus trying to keep the door open for existing relationships. And I don't want to say counting on the assumption that next year is better but how aggressive are you right now in getting things filled versus maybe managing more of the cost side and just how you go about securing...

That's a great question. I mean we're doing both. I mean we're extremely aggressive on the customer touch side. And it's somewhat difficult or noisy in the numbers but we have facilities. Obviously, our chemical business is 3 facilities. We have certain facilities that are overperforming and certain facilities that are underperforming. So this is -- I would say it's more limited to one facility, the operational struggles right now which we're addressing and have some light at the end of the tunnel on it. But there's also a lot of good things and some very good wins we've had within other parts of the chemical business that we're extremely excited about. So after discussing with Bryan, this is -- he's very optimistic about 2024.

Okay. No, that's good to hear. And that probably answers my next question. But maybe more specifically, you have some larger customers on the chemical side in areas that used to be more predictable revenue streams like agriculture and parts of personal care. I'm curious if they've started to offer you guys any kind of color on their planning into next year or if it's too early to even be counting on those conversations having any weight.

I mean we're having them but I think it's -- they're -- they have cloudiness in their forecast also. So we're getting -- I would say the band of -- the range band we have is much wider than normal with the customer volume expectations, whether it be the personal care side and -- or even just oil and gas or case. It's -- historically, we'd have -- here's our standard deviation of volume. There will be 1 million to 1.5 million pounds. Now it's ought to be 500,000 pounds to 2 million pounds. So we're having those discussions and doing the best we can to also backfill additional demand with other customers.

Okay. All right. Excellent. And then I know Bryan came in with a lot of experience and we've talked a bit about the commercial side already, obviously. But curious if you shared any initial thoughts on your procurement and inventory management side of things and just if you've had a chance to do like a proper post-mortem on how the business was managed through the last couple of years on that front.

Yes. The high-level view is he has and we've already recognized opportunity and we have a team being put in place. Bryan's a very aggressive, hard-working person that has deep connections within the chemical business. And he's already identified a few people that he's brought on board with him and we continue to upgrade the talent really on a weekly basis. So we're feeling really good. We had a meeting last week with Bryan and I think Ben and myself, Bill and the entire Board are very optimistic about what he's going to deliver.

Great. And then -- so to move to tubular for just a minute, Chris, I know you hate to look like you're hiding behind the macro environment when the business isn't operating as well as you want it to, so if I can pose this as a hypothetical instead. If the tubular business was already where you wanted it to be coming into the year that we've had in 2023, looking at the environment right now, what parts of the portfolio, whether it's the sales channels or just specific products, would you really be leaning on in this environment to support your through-cycle margins? And which parts would you have to just kind of set expectations lower and focus on costs?

No. I mean I'll fall on the short here. I mean there's tremendous opportunity in tubular. Again, you have to look at each business unit specifically. Especially pipe and tube, they're killing it. They're doing a great job. They've got demand and there's tremendous opportunity in growing that business. As well as the oil and gas market which is one of the larger markets in Texas. Bristol is -- we definitely -- we missed the mark. There's huge demand for our large-diameter pipe that goes into infrastructure applications and just didn't deliver on the sales forecast. So there's a lot of things going on behind the scenes on improving the team there and getting that dialed in. But I mean that's a very good business when it's operating the way it should operate. Just not on the way it needs to. So we have work to do there. Absolutely.

All right. That's fair enough. Do you have -- I mean I assume it's a constant review from your perspective but are you still looking for any key leaders in the steel business? Or do you feel pretty good already?

Yes. I mean I think we're always looking for the right talent leaders and we're always discussing how we grow the business and who we have run the business. So we're always looking for the right opportunity.

[Operator Instructions] I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Chris Hutter for any closing remarks.

Thank you, Sheri. We'd like to thank everyone for listening to today's call and we look forward to speaking with you again for our fourth quarter and full year results for 2023.

This concludes today's program. Thank you for participating. You may now disconnect.