ASCENT INDUSTRIES CO. (ACNT)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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, 2026 and 2025, 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, 2025 (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 2025. This discussion and analysis is presented in five sections:

•Executive Overview

•Results of Operations and Non-GAAP Financial Measures

•Liquidity and Capital Resources

•Material Cash Requirements from Contractual and Other Obligations

•Critical Accounting Policies and Estimates

Executive Overview

Ascent Industries Co. is a specialty chemicals platform focused on the development, production, and distribution of tailored, performance-driven chemical solutions. Ascent Industries Co. was incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945 known as Blackman Uhler Industries Inc.

The Company has one reportable segment: Specialty Chemicals. The Specialty Chemicals segment produces 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 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.

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. Following the February 20, 2026, Supreme Court ruling regarding the imposition of tariffs under the International Emergency Economic Powers Act (IEEPA), U.S. Customs and Border Protection is issuing refunds for tariffs previously paid under IEEPA. Concurrently, the Administration imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 subject to several exemptions, including the import into the United States of certain aerospace products. As a result of the tariffs announced by the U.S. presidential administration and continued 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 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 inflation and the effects of increased tariffs, may negatively affect our net sales and profitability in the future.

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.

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Results of Operations

Consolidated Performance Summary

Consolidated net sales for the second quarter of 2026 were $25.7 million, an increase of $7.0 million, or 37.6%, compared to net sales for the second quarter of 2025. The increase in net sales was primarily driven by a 15.2% increase in pounds shipped and a 23.0% increase in average selling prices.

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.

For the second quarter of 2026, consolidated gross profit increased 14.0% to $5.5 million, or 21.6% of sales, compared to $4.9 million, or 26.1% of sales in the second quarter of 2025. For the six months ended June 30, 2026, consolidated gross profit increased 5.4% to $8.4 million, or 18.5% of sales, compared to $7.9 million, or 21.7% of sales in the six months ended June 30, 2025. The increase in dollars for the second quarter and first six months was primarily driven by increases in cost recovery in the period due to increased production, reductions in utilities and repairs and maintenance partially offset by increases in labor and overhead.

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.

Consolidated operating loss in the second quarter of 2026 totaled $0.3 million compared to an operating loss of $2.7 million in the second quarter of 2025. Consolidated operating loss in the six months ended June 30, 2026 totaled $2.6 million compared to an operating loss of $4.7 million in the six months ended June 30, 2025. The operating loss decrease in the six months ended June 30, 2026 was primarily driven by aforementioned increase in gross profit and decrease in SG&A expense as well as decreases in asset impairments and gain on lease modification in the prior year not in the current year.

Specialty Chemicals

SG&A expense for the second quarter of 2026 was $4.8 million, or 18.7% of sales, compared to $2.7 million, or 14.3% of sales in the second quarter of 2025. SG&A expense for the six months ended June 30, 2026 was $9.7 million, or 21.5% of sales, compared to $5.6 million, or 15.3% of sales in the six months ended June 30, 2025. The increase in dollars for the three and six months ended June 30, 2026 was primarily driven by increases in corporate expense allocation, salaries, wages and benefits and amortization expense partially offset by decreases in incentive bonus.

Operating income decreased to $0.6 million for the second quarter of 2026 compared to operating income of $1.5 million for the second quarter of 2025. The current year decrease in operating income was primarily driven by the aforementioned increase in SG&A expense. Operating loss increased to $1.5 million for the six months ended June 30, 2026 compared to operating income of $2.3 million for the six months ended June 30, 2025. The current year increase in operating loss was primarily driven by the aforementioned increase in SG&A expense.

Corporate & Other Items

Unallocated corporate and other expenses for the second quarter of 2026 decreased $2.4 million, or 76.5%, to $0.7 million, or 2.8% of sales, compared to $3.1 million, or 16.6% of sales, in the prior year. The second quarter of 2026 decrease in dollars was primarily driven by increases corporate allocation as well as decreases in incentive bonus, professional fees, taxes and licenses partially offset by increases 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.

Interest income was $0.2 million for the second quarter of 2026 compared to diminimus interest income for the second quarter of 2025. Interest income was $0.5 million for the six months ended June 30, 2026 compared to interest expense of $0.1 million

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for the six months ended June 30, 2025. The change was driven by a higher interest-bearing cash balance in the current year compared to the prior year. The Company had no debt outstanding under its credit facilities in either period.

The effective tax rate for continuing operations was (869.2)% and 27.1% for the three and six months ended June 30, 2026, respectively. The three months ended June 30, 2026 effective tax rate was lower than the U.S. statutory rate of 21.0%, primarily due to changes in forecasted income (loss) and the resulting changes in the valuation allowance on federal and state deferred tax assets. The six months ended June 30, 2026 effective tax rate was higher than the U.S. statutory rate of 21.0% primarily due to changes in the valuation allowance over federal and U.S. state deferred tax assets.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we use the following non-GAAP financial measures: EBITDA and Adjusted EBITDA. Management believes that these non-GAAP measures are useful because they are key measures used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions as well as allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analy

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity, and capital resources during the fiscal years ended December 31, 2025 and 2024. Unless otherwise noted, all references herein for the years 2025 and 2024 represent the fiscal years ended December 31, 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 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in this Annual Report that have been prepared in accordance with accounting principles generally accepted in the United States of America. This discussion and analysis is presented in five sections:

•Executive Overview

•Results of Operations and Non-GAAP Financial Measures

•Liquidity and Capital Resources

•Material Cash Requirements from Contractual and Other Obligations

•Critical Accounting Policies and Estimates

Executive Overview

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".

Divestiture of Bristol Metals

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.

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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.

Results of Operations

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.

Comparison of 2025 to 2024 – Continuing Operations

Net sales from continuing operations for the full-year 2025 decreased $5.8 million, or 7.2%, over the full-year 2024 to $74.9 million. The decrease in net sales was primarily driven by a 17.7% decrease in pounds shipped partially offset by a 10.9% increase in average selling prices .

Full-year 2025 gross profit from continuing operations increased 61.0% to $17.2 million, or 23.0% of sales, compared to $10.7 million, or 13.2% of sales, in the full-year 2024. The increase in dollars and percentage of sales for the full-year 2025 were primarily driven by improved strategic sourcing initiatives and product line management resulting in lower raw material costs as well as operational cost management and efficiencies.

Selling, general and administrative expense (SG&A) from continuing operations for the full-year 2025 increased $3.2 million to $24.1 million compared to $20.9 million for the full-year 2024. SG&A as a percentage of sales was 32.1% of sales for 2025 and 25.9% of sales for 2024. The changes in SG&A expense were primarily driven by:

•strategic investments in salaries, wages and benefits resulting in higher headcount in the current year;

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

•increases in other expenses primarily driven by increases in share-based compensation expense, incentive bonus, taxes and licenses and dues and subscription fees.

The full-year increases were partially offset by:

•decreases in professional fees driven by decreased legal, accounting and information technology professional fees in the current year;

•decreases in bad debt expense; and,

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•decreases in repair and maintenance expense.

Operating loss from continuing operations for the full-year 2025 improved to $7.0 million compared to an operating loss of $10.8 million for the full-year 2024. The operating loss decrease for the full-year 2025 was primarily driven by aforementioned increase in gross profit and non-cash lease modification gains partially offset by increases in SG&A expense and asset impairment expense.

Comparison of 2025 to 2024 – Specialty Chemicals

The following table summarizes operating results for the two years indicated. Reference should be made to Note 13 to the consolidated financial statements included in Item 8 of this Form 10-K.

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.

SG&A expense increased by $3.8 million, or 40.0%, to $13.4 million in 2025 compared to $9.5 million in 2024. SG&A as a percentage of sales increased to 17.8% in 2025 from 11.8% in 2024. The changes in SG&A expense were primarily driven by increases in corporate allocation expense and incentive bonus expense, partially offset by decreases in salaries, wages and benefits, bad debt expense, professional fees and travel expense.

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.

Interest income was $0.8 million for 2025 compared to interest expense of $0.3 million in 2024 The change was driven by a higher interest-bearing cash balance in the current year compared to the prior year. The Company had no debt outstanding as of December 31, 2025.

The Company's effective tax rate for 2025 was less than the U.S. statutory rate of 21% primarily driven by state taxes, net of federal benefit, adjustments to the valuation allowance in the period and increases in stock-based compensation. The Company's effective tax rate for 2024 was less than the U

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