Ascent Industries Co. (ACNT) Earnings Call Transcript & Summary

Good morning, everyone. We are pleased that you could join us today for Synalloy's 2021 Annual Meeting of Shareholders. This meeting is now called to order. My name is Henry Guy. I am Chairman of the Board of Directors, and I will be presiding over today's meeting. With me today are my colleagues, Chris Hutter, Synalloy's Interim President and CEO and member of the Board; Sally Cunningham, Senior Vice President and Chief Financial Officer; and Robby Peay, Corporate Secretary. As in previous years, Synalloy's Annual Meeting of Shareholders is being presented today as a live audio webcast. We strongly believe in engaging our shareholders and maximizing their ability to meaningfully engage with us. The virtual meeting enhances this very important goal, as all shareholders may attend and participate, regardless of their location. Not only can you view the meeting live, but you can also submit questions and vote your shares online before the polls are closed. Our agenda today includes items of business, closing of the polls and a presentation of the preliminary results of voting, followed by a question-and-answer session. The polls are now open for voting and will be closing shortly. If you have previously voted by proxy and you do not wish to change your vote, no further action is needed. If you are a shareholder and wish to change your vote or have not already cast your vote, you may cast your vote now or at any time before the polls close. Please remember that you may vote your shares online anytime during this meeting before the closing of the polls. Robby Peay has been appointed Secretary for this meeting. Beth W. VanDerbeck, representative of Broadridge Corporation, has been appointed to act as Inspector of Elections. Robby, was there a proper notice of this meeting? And do we have a quorum?

Yes. I have here a copy of the affidavit of mailing establishing that notice of this meeting was duly given. All shareholders at the close of business on March 22, 2021, the record date, are entitled to vote at this meeting. A complete list of shareholders was available at our corporate headquarters for the last 10 days preceding this meeting. We do have a quorum for this meeting. The certified shareholders list shows that holders of 9,202,045 shares of common stock of the company are entitled to vote at this meeting. We are informed by the Inspector of Elections that there are represented in person or by proxy 7,955,253 shares of common stock or approximately 86.45% of all shares entitled to vote at this meeting. Therefore, we have a quorum.

Thank you. I declare that a quorum is present and that we may proceed with the business of the meeting. The next order of business is a description of the matters to be voting on at today's meeting. The first proposal to be voted upon is the slate of 4 Directors to serve until the Annual Meeting of Shareholders in 2022. Based on the recommendation of the Corporate Governance Committee of the Board of Directors, the Board has nominated for election the following persons as Directors of the company: Chris Hutter, Henry Guy, Ben Rosenzweig and John Schauerman. The nominees' qualifications and biographies are described in this year's proxy statement. The second proposal to be voted on is the approval on a nonbinding basis of the compensation of our named executive officers, otherwise known as say on pay. The third proposal to be voted on is the approval of an increase in the number of shares of company stock reserved for issuance under the 2015 stock plan. The fourth and final proposal to be voted on is the ratification of BDO USA, LLP to serve as the independent registered public accounting firm for the company for the fiscal year ending December 31, 2021. I have now described the 4 proposals that shareholders have been asked to vote on. The Synalloy Board of Directors recommends that you vote for proposals 1, 2, 3 and 4. We will now pause a moment to allow shareholders time to complete their voting. If you logged into today's annual meeting as a shareholder with your proxy card control number, then you should see a blue voting button at the bottom right-hand side of your screen. Shareholders who wish to cast or change their vote should click on the blue voting button now. [Voting]

With there being no further business, I now declare the polls closed for voting on items of business. All electronic ballots are now in the custody of the Inspector of Elections. Robby will announce the preliminary result of the vote.

Following are the preliminary totals of the shareholder vote. Please note that final vote totals will be filed on a current report on Form 8-K with the Securities and Exchange Commission within 4 business days of this annual meeting. Regarding proposal 1, the election of Directors, each Director was elected with no fewer than 5,277,826 shares. Regarding proposal 2, the approval on an advisory basis of the compensation of our named executive officers, this proposal was ratified with 5,316,464 shares. Regarding proposal 3, the approval of an increase in the number of shares of company stock reserved for issuance under the 2015 stock plan, it was ratified with 5,320,252 shares. Regarding proposal 4, the ratification of the independent registered public accounting firm BDO USA, LLP, it was ratified with 7,899,906 shares.

Thank you. I declare that all proposals have been approved. This concludes the business part of Synalloy's 2021 Annual Meeting of Shareholders, which is officially adjourned. We would be happy to answer any questions at this time.

First question is directed towards Sally Cunningham and Chris Hutter, and comes from [ David Siegfried ]. Good job with lowering SG&A expense. Is there room to lower that even further?

I can handle that. David, there is definitely every area of our SG&A expenses we are looking at and looking to optimize cost throughout the organization. With the collective effort of the team, we will continue to discover areas of opportunity and make changes where appropriate and necessary.

Thank you, Chris. The second question also comes from [ David Siegfried ]. Any chance you can recuperate more proxy expense -- proxy contest expense from last year?

This is Sally. I'll take that one. We did receive about $465,000 in insurance proceeds earlier this year. I can tell you that the claim is still open, and so we're still working with the carrier. But at this point in time, additional proceeds are not estimable for us to be able to report.

Thank you. The next question also comes from [ David Siegfried ]. With some high-profile changes on the management team lately, what is the mood in the organization today?

Yes. I can handle that. David, that's a great question, and that's something that, obviously, the Board, myself and everyone at the senior leadership level is always astutely aware of. I can say I've been with the team. I'm actually here with the team in Fountain Inn and was in Cleveland, Tennessee yesterday with the news of our change of leadership, the chemicals side. Everyone is definitely filled with optimism. We have a renewed focus on safety. Employees absolutely feel engaged at all levels within the organization, and I'm sensing that individuals here can truly feel that they can make a difference, something they probably have not felt in a long time. So there's definitely a very large sense of optimism and renewed excitement about the business. So I'm very pleased with what I've observed.

Thank you. The next question comes from -- also comes from [ David Siegfried ]. With the throughput challenges the company is experiencing, can you capture enough revenue and profit to power this turnaround?

Yes. There's definitely opportunity within our existing footprint and asset base to grow revenue with optimization and OEE utilization and really understanding what assets we have truly drive profit and growth. There's significant organic opportunity we can capture here within the next 6 to 12 months, and look forward to explaining that on future earnings calls.

Thank you. Next question comes from [ David Siegfried ]. I love the inducement grants with the new VPs. Have you begun -- can you and have you begun implementing that approach through all levels of the organization?

I would say, my comment to that would be, we definitely have a new view on compensation and aligning results in growth with compensation and incentivizing from an equity standpoint delivering that. So I think it's definitely something the Board and the management team will look at going forward. So I agree. I think it's takeaway of individuals that accepted the structure we put forward.

Thank you. And the last question in the queue is directed towards our Audit Committee Chair, Jeff Kaczka. It comes from Anthony Callander. Did KPMG resign as auditors? If terminated by the company, why?

Is my mic free? This is Jeff.

Yes.

Yes. Okay. Great. So thank you, Anthony, for that question. And KPMG did not resign. We went through a competitive process to find new auditors, and this was driven by the SG&A initiatives that Chris had mentioned. And we're very pleased to have qualified auditors join us in BDO.

Thank you, Jeff. Henry, there are no further questions.

Thank you, Robby, and thank you all very much for joining us this morning and your continued support of Synalloy.