Ascent Industries Co. · NASDAQ:ACNT
Ascent Industries — Synalloy — Sidoti & Company Fall Conference 2017
50 slides from Ascent Industries's conference presentation, Oct 4, 2017
Slide 1: Sidoti & Company Fall Conference September 28, 2017
Sidoti & Company Fall Conference September 28, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This Presentation includes and incorporates by reference "forward-looking statements" within the meaning of the federal securities laws. All statements that are not historical facts are "forward-looking statements." The words "estimate," "project," "intend," "expect," "bel
Slide 3: Non-GAAP Financial Information
Non-GAAP Financial Information Statements included in this Presentation include non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Adjusted Net Income (Loss) and Adju
Slide 4: Important Note: EBITDA means Adjusted EBITDA
Throughout this presentation, “EBITDA” means Adjusted EBITDA as defined and reported by Synalloy IMPORTANT NOTE
Slide 5: Presenters
PRESENTERS Craig C. Bram – CEO & President Synalloy Board Member Since 2004 CEO & President Since Jan 2011 Dennis Loughran – SVP & CFO Joined Synalloy in 2015 Previous: Citadel Plastics (CFO), Rogers Corporation (CFO), Alcoa, Reynolds Metals
Slide 6: Today's Discussion
Company Overview Financial Performance TODAY’S DISCUSSION Investment Opportunity Appendix 1: Bristol Metals Cover Story Appendix 2: Synalloy Chemicals – Overview
Slide 7: Company Overview
Synalloy Company Overview Me as a=
Slide 8: Holding Co. Focused on Manufacturing & Distribution
Mineral Ridge, OH HOLDING CO. FOCUSED ON MANUFACTURING & DISTRIBUTION 8 A family of metals and chemicals businesses with long operating histories and proven management teams Liquid Storage Tanks & Pressure Vessels Specialty Seamless Carbon Steel Pipe & Tube Welded Stainless Steel & Alloy Pipe Andrew
Slide 9: Welded Stainless Steel & Alloy Pipe
9 Markets: Chemical & Petrochemical, Oil & Gas, LNG, Nuclear, Energy, Water, Mining, Pulp & Paper, etc. Sells To: Distributors and Selected End-Users Representative Customers: Differentiated By: Extensive range of (1) sizes, (2) materials, and (3) in-house capabilities Invested $5 million in Heavy W
Slide 10: Liquid Storage Tanks & Pressure Vessels
10 Manufacturer “Palmer of Texas” Founded in 1987; Acquired in 2012 Markets: Oil & Gas, Chemical, Municipal Water, Aquarium & Zoological Sells To: End-Users Representative Customers: Differentiated By: One-stop for steel tanks, fiberglass tanks, and ASME code vessels; semi-automated line for 21’6” d
Slide 11: Specialty Seamless Carbon Steel Pipe & Mechanical Tubing
11 Master Distributor “Specialty Pipe & Tube” Founded in 1964; Acquired in 2014 Markets: Heavy Equipment, Capital Goods, Oil & Gas (any high pressure application) Sells To: Distributors and Selected End-Users Differentiated By: The go-to provider for large diameter, heavy wall hot finish seamless ca
Slide 12: Specialty Chemicals Products
“Manufacturers Chemicals” Founded in 1919; Acquired in 1996 Synalloy’s Legacy Chemicals Business Markets: FIFRA, HI&I, Water Treatment, Oil & Gas, Paper, Textiles, Lubricants, Coatings Sells To: Chemical Companies Differentiated By: Expertise in surfactants, defoamers, lubricants and other widely ap
Slide 13: Largest Institutional Shareholders
LARGEST INSTITUTIONAL SHAREHOLDERS (as of 6/30/17) 13 Holder Shares % of Outstanding Privet Fund Management 948,997 10.9% Royce & Associates 640,452 7.4% Century Management 629,159 7.2% DePrince, Race & Zollo 466,574 5.4% Markel Corp 414,804 4.8% Dimensional Fund Advisors 375,954 4.3% Vanguard Group
Slide 14: Financial Performance
Synalloy Financial Performance
Slide 15: Metals Segment Revenue
METALS SEGMENT REVENUE* 15 * Excluding discontinued Fabrication Division Revenue (in millions)
Slide 16: Metals Segment EBITDA
16 METALS SEGMENT EBITDA* * Excluding discontinued Fabrication Division ** Compared to prior periods, 2017 and forward reduced by $1.1 million as result of Sale Lease Back transaction in 2016 EBITDA
Slide 17: Chemicals Segment Revenue
CHEMICALS SEGMENT REVENUE 17 Revenue (in millions)
Slide 18: Chemicals Segment EBITDA
CHEMICALS SEGMENT EBITDA 18 EBITDA * Compared to prior periods, 2017 and forward reduced by $0.8 million as result of Sale Lease Back transaction in 2016 *
Slide 19: Synalloy EBITDA
SYNALLOY EBITDA (excluding discontinued Fabrication Division) 19 EBITDA * Compared to prior periods, 2017 and forward reduced by $1.9 million as result of Sale Lease Back transaction in 2016
Slide 20: Projected 2017 Financial Metrics
20 PROJECTED 2017 FINANCIAL METRICS (at year-end) EBITDA $17MM Net Debt $20MM Net Debt to EBITDA 1.18x Book Value $94.2MM BV per share $10.82 Tangible Book Value $77.2MM TBV per share $8.87 Balance Sheet Remains Strong; Sufficient Liquidity for Organic and Acquisitive Growth Plans
Slide 21: Earnings Potential
EARNINGS POTENTIAL 21 WTI Approached $25 Nickel Near 25-Year Lows Pipe Distributors Destocking Infrastructure Spend Weak Pipe Product Mix Weighted toward commodity WTI Approximately $50 Nickel Stable (or up) for 5+ Months Infrastructure Spend at Normalized Levels Pipe Product Mix includes higher com
Slide 22: Earnings Potential Components 2017 to 2020
EARNINGS POTENTIAL 22 EARNINGS POTENTIAL COMPONENTS 2017 to 2020 (In Millions)
Slide 23: Investment Opportunity
Synalloy Investment Opportunity _ as a=
Slide 24: Value Creation Going Forward
Organic Growth • Consolidation in the NA SS Pipe Market • Product Mix at BRISMET • Product Line Extension at BRISMET – Heavy Wall • Section 232 Impact • Product Mix at SPT • Product Line Extensions at Synalloy Chemicals Acquisitive Growth • Benefits of BRISMET-Munhall and Small OD • Targeting Acquis
Slide 25: New World Order – North American Stainless Pipe
New World Order – North American Stainless Pipe 25 Outokumpu Divests Its Pipe Plant in Wildwood, FL to Ta Chen International for $30M Ta Chen International is a master distributer of stainless, aluminum, duplex and nickel alloy products in the US including coils, sheets, plates, welded pipe and
Slide 26: New World Order – US Manufacturing (Primus Pipe & Tube)
New World Order – US Manufacturing 26 (Primus Pipe & Tube)
Slide 27: Product Mix at BRISMET
Understanding Metals Product Mix Impact on Profitability PRODUCT MIX AT BRISMET 27
Slide 28: Expansion into Heavy Wall Pipe
EXPANSION INTO HEAVY WALL PIPE 28 Product: Wall Thickness > 2’’ Stainless, Carbon, Chrome US Market Size: $175 million Synalloy Investment: $5.0 million Payback: < 24 months Completed: Q4 2016 Note: All dollar amounts are approximate figures Key Equipment: Beyeler 4,000 Tonne Press Brake; Among the
Slide 29: Specialty Pipe & Tube – Improving Product Mix Picture
SPECIALTY PIPE & TUBE – IMPROVING PRODUCT MIX PICTURE 29 Buyout 0.3% Alloy 36.0%Carbon 59.3% Non Traditional 4.4% Buyout 0.6% Alloy 46.1% Carbon 45.4% Non Traditional 7.8% YTD 20172016 Higher % of more profitable Alloys Expanded share with Non Traditional
Slide 30: New Products & Expanded Capacity
NEW PRODUCTS & EXPANDED CAPACITY Signed new 3-Year tolling agreement with a global chemical manufacturer • Fire Retardant for computer and telephone cable • Production ramp up in late Q317 • Annual revenue estimated at $7 million • Additional products in testing with annual potential of $2 million 3
Slide 31: Acquisitive Growth
Four Acquisitions Since Aug 2012 Each EBITDA-Accretive in Year One ACQUISITIVE GROWTH 31 Purchase Price $83MM (including earn-out potential) 1.18x Net Debt to EBITDA (projected year-end 2017) Active and disciplined in M&A; Committed to balance sheet strength 2017 EBITDA $11.6MM* (pro forma assuming
Slide 32: Acquisition of Marcegaglia USA
ACQUISITION OF MARCEGAGLIA USA 32 • Completed Acquisition – March 1, 2017 • Synalloy investment - $20.2 million, primarily for equipment, working capital and earn out • Doubles BRISMET’s pipe and tube capacity • Brings greater pricing discipline to the welded stainless steel pipe industry • Enables
Slide 33: Margin Contribution – Current Projection
33 9.6% EBITDA Margin (up from 8.9% in 2011) 49% of Total EBITDA 13.5% EBITDA Margin 51% of Total EBITDA * 2017Pro forma assuming full year with Munhall Legacy Businesses (Continuing Operations) Acquisitions* (Since 2011) MARGIN CONTRIBUTION – CURRENT PROJECTION 2017 EBITDA Composition & Margin
Slide 34: Margin Contribution – Normalized Market
34 13.5% EBITDA Margin (up from 8.9% in 2011) 59% of Total EBITDA 15.6% EBITDA Margin 41% of Total EBITDA Legacy Businesses (Continuing Operations) Acquisitions (Since 2011) MARGIN CONTRIBUTION – NORMALIZED MARKET 2020 PROJECTED EBITDA Composition & Margin
Slide 35: Enterprise Value & EV to EBITDA
ENTERPRISE VALUE & EV to EBITDA 35 • 2014 to 2016 Based on Annual High Stock Price • **2017 Based on 9/21/17 Close of $11.85 • ***2020 Based on assumed EV to EBITDA of 7.5x 2014* 2015* 2016* 2017 Projected ** 2020 Projected *** EBITDA (As Reported Ex Disc Ops) 21.68$ 19.42$ 5.52$ 17.00$ 35.00$ Annua
Slide 36: Appendix 1: Stainless Steel World Cover Story
Appendix 1: Stainless Steel World Cover Story Bristol Metals: Expanding pipe, tube and global portfolio
Slide 37: Bristol Metals Cover Story
BRISTOL METALS COVER STORY 37
Slide 38: Bristol Metals Cover Story
BRISTOL METALS COVER STORY 38
Slide 39: Bristol Metals Cover Story
BRISTOL METALS COVER STORY 39
Slide 40: Appendix 2: Synalloy Chemicals Solving Problems for Customers
Appendix 2: Synalloy Chemicals Solving Problems for Customers
Slide 41: Problem Solving Chemicals Since 1919
“Problem Solving Chemicals Since 1919”
Slide 42: Contract Manufacturing and Product Development Capabilities
South Carolina Providing solutions to specialty chemical companies through contract manufacturing and product development. Tennessee Capabilities Markets Equipment/Tanks Products Reactions Oil and Gas 12 Reactor Vessels SynBurst Particle Size Reduction FIFRA 10 High Shear Vessels FlameQuest Homogeni
Slide 43: ISO 9001:2015 Registered
ISO 9001:2015 Registered
Slide 44: Customer Base and Product Mix
Customer Base Large Global Chemical Companies Small to Medium Size Chemical Companies Product Mix Contract Manufacturing Products
Slide 45: Synalloy Products & Services
Synalloy Products & Services
Slide 46: TN and SC Plant Facts
125,000 sq. ft. facility on 20 acres of land 55,000 sq. ft. partitioned production space 70,000 sq. ft. warehouse, office and lab space > 75 Employees > 22 Stainless Steel Mixing Tanks w/ Load Cells 8 Reactors 5 Homogenizers Bulk Storage TN Plant Facts SC Plant Facts 150,000 sq. ft
Slide 47: Synalloy Products
Synalloy peau a Synalloy Products
Slide 48: SynBurst, FlameQuest, SynLube
SynBurst Defoamers, Antifoams, Silicone Raw Materials FlameQuest Fire retardant chemistry and systems SynLube Lubricants & raw materials for metals and textiles
Slide 49: SynSurf, SynPeg, SynPhos
SynSurf Surfactants for HI&I, oil and gas, and textiles SynPeg Peg esters for emulsifiers, lubricants, and dispersants SynPhos Phosphate esters, acid forms and neutralized
Slide 50: SynZoline, SynQuat, SynSafe
SynZoline High closure imidazolines for corrosion formulation SynQuat Quats for cationic emulsifiers and softeners SynSafe Replacements for HCL and Sulfuric