Sure, management is executing. There is one more subsidiary to get divested, which should be worth $15-25 million. So we have $125 market cap, $63 million EV and $8-10m current earnings power in a soft chemical market. $13-15m in normal chemical market. Money will be invested into tuck-in acquisitions of specialty chemical companies for 6-8x EBITDA.
Ok thanks! I wasn't sure how much value was in the other segment. So looking at something like 2.6x to 3.7x EV/EBITDA (normalized) assuming low/high estimates for sale of remaining sub (ignoring taxes on sale proceeds) and improving industry.
Thanks for the writup, and congratulations on your thesis playing out today exactly as you suggested with the sale of Bristol metals!
The 'metals PF evolution' slide published today shows combined revenue of Bristol and ASTI of $31M for FY25 against $97M last year, which implies sale of ASTI is imminent..
Great write-up - thank you. Any concern on the material weaknesses they're reporting in internal control over financial reporting? Is it something they've spoken to / assured on publicly? Wondering on the extent to which (a) we could see some material restatements and (b) there might be considerable IT investments (and associated disruption) ahead.
Glad you liked the write-up, and thanks for your question.
It‘s obviously not something you like to read, but it does not concern me much as of now, the reason for that is that the material weakness goes back to 2020 and by my reading of it sounds like the potential effects on restatement may be small "no material misstatements in 2023." Therefore, I would also expect that the investments into resolving this material weakness are already included in the expanses from 2020-2024.
Also see the comment from the auditor: "We considered the material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the Company’s consolidated financial statements as of and for the year ended December 31, 2023, and our opinion on such consolidated financial statements was not affected."
Could it be, that Privete sold his stake, because there will be no sale (despite the hints).
Selling is hard, because there can be 1000 reasons , but it wonders me that they sold everything, especially due to this section:
“Over the past 2 years, Chris and I have recognized the inherited challenges facing our tubular segment and have focused our growth and capital allocation priorities on our Specialty Chemicals business, which we firmly believe has the potential to be the long-term growth engine for Ascent”.
We can also speculate what the reason for the sale was. As always, "there are 100 reasons to sell, but only one to buy."
However, I would doubt if it had to do with not selling the tubular segment, when Privet wanted to take Ascent private at $20 per share, it was mainly a steel company.
Any updated thoughts on this after the sale ?
Sure, management is executing. There is one more subsidiary to get divested, which should be worth $15-25 million. So we have $125 market cap, $63 million EV and $8-10m current earnings power in a soft chemical market. $13-15m in normal chemical market. Money will be invested into tuck-in acquisitions of specialty chemical companies for 6-8x EBITDA.
Ok thanks! I wasn't sure how much value was in the other segment. So looking at something like 2.6x to 3.7x EV/EBITDA (normalized) assuming low/high estimates for sale of remaining sub (ignoring taxes on sale proceeds) and improving industry.
Very interesting ! Thanks for the great idea.
https://planetmicrocap.podbean.com/
with CEO and CFO..
Nice thanks for sharing!
Thanks for the writup, and congratulations on your thesis playing out today exactly as you suggested with the sale of Bristol metals!
The 'metals PF evolution' slide published today shows combined revenue of Bristol and ASTI of $31M for FY25 against $97M last year, which implies sale of ASTI is imminent..
Thank you! Yes, I expect them to sell the other operation as well. Could be a good fit for a PE firm, form what management told me.
Great write-up - thank you. Any concern on the material weaknesses they're reporting in internal control over financial reporting? Is it something they've spoken to / assured on publicly? Wondering on the extent to which (a) we could see some material restatements and (b) there might be considerable IT investments (and associated disruption) ahead.
Glad you liked the write-up, and thanks for your question.
It‘s obviously not something you like to read, but it does not concern me much as of now, the reason for that is that the material weakness goes back to 2020 and by my reading of it sounds like the potential effects on restatement may be small "no material misstatements in 2023." Therefore, I would also expect that the investments into resolving this material weakness are already included in the expanses from 2020-2024.
Also see the comment from the auditor: "We considered the material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the Company’s consolidated financial statements as of and for the year ended December 31, 2023, and our opinion on such consolidated financial statements was not affected."
Thank you for the writeup. Interesting story.
Could it be, that Privete sold his stake, because there will be no sale (despite the hints).
Selling is hard, because there can be 1000 reasons , but it wonders me that they sold everything, especially due to this section:
“Over the past 2 years, Chris and I have recognized the inherited challenges facing our tubular segment and have focused our growth and capital allocation priorities on our Specialty Chemicals business, which we firmly believe has the potential to be the long-term growth engine for Ascent”.
We can also speculate what the reason for the sale was. As always, "there are 100 reasons to sell, but only one to buy."
However, I would doubt if it had to do with not selling the tubular segment, when Privet wanted to take Ascent private at $20 per share, it was mainly a steel company.