アセント・インダストリーズ（ACNT）2026年第3四半期決算説明会：売上高37.8%増、EBITDAマージンは13%に達する

要点

• 第3四半期の純売上高は前年同期比37.8%増の2,710万ドルとなった。これには、ミッドウェスト・グラフィック・セールスの買収を除いたオーガニック成長率26.3%が含まれる。
• 調整後EBITDAは前年同期の140万ドルから350万ドルに増加し、調整後EBITDAマージンは前年同期の7.0%から13.0%へ拡大した。
• 売上総利益は710万ドルに達した。売上総利益率は前四半期比で460ベーシスポイント改善して26.2%となったものの、主に原材料コストの上昇により前年同期水準を下回った。
• 進行中の営業案件パイプラインは前年同期比で約60%増の約1億3,500万ドルで四半期末を迎えた。同社は12件の商談を成約させ、約280万ドルの年間換算売上高を獲得した。
• アセントは第3四半期中に約220万ドルの営業キャッシュフローを創出し、9月末時点の現金残高は2,870万ドル、リボルビング信用枠の借入金はゼロとなった。
• 経営陣は2026年第4四半期の売上高が2025年第4四半期を上回ると予想しているものの、製品構成や季節的要因により、第3四半期と比較して利益が減少しマージンが圧迫されると見込んでいる。

主要財務データ

事業および営業業績

アセントは、既存事業の拡大とミッドウェスト・グラフィック・セールスの貢献により、広範な事業で成長を遂げたと述べた。第3四半期中に同社は顧客8社から12件の商談を獲得し、これは年間換算で約280万ドルの売上高に相当する。獲得した案件の半数は新規顧客からのもので、商談1件あたりの平均年間換算額は20万ドルを超えた。

営業サイクルは平均7.5カ月で、技術的に複雑な顧客向けソリューションの開発、テスト、検証に要する時間を反映している。四半期の成約率は約13%で、進行中の案件パイプラインは約1億3,500万ドルと過去最高水準近辺で推移した。

経営陣は、2026年第1四半期を基準として、年末のランレート換算で年間300万ドルから500万ドルの売上総利益改善を達成する軌道に乗っていると述べた。ミッドウェストを除外すると、第2四半期と第3四半期の平均売上総利益は約580万ドルとなり、第1四半期の280万ドルから増加した。

業務改善の取り組みには、価格および製品構成の管理、戦略的調達、プロセス研究開発、エンジニアリング、物流の最適化、生産性の向上が含まれる。テネシー州のある事業所では、特定製品ラインのサイクルタイムが4.5日から4時間に短縮された。また、バージニア州の工程では14.7%の歩留まり改善を記録した。

ミッドウェストは、フルランレート時に年間換算で50万ドル以上の売上高に貢献すると見込まれる新規契約を2件獲得した。買収後、アセントの営業案件パイプラインのうち5,000万ドル以上がミッドウェスト関連のものとなった。

経営陣のガイダンス

経営陣は、2026年第4四半期の売上高が2025年第4四半期を上回ると見込んでいる。ただし、季節的な製品構成、通常のプログラム切り替え、年末の顧客による在庫削減（デストッキング）の影響により、第3四半期から利益とマージンが低下すると注意を促した。同社は、第4四半期の減少幅は前年ほど顕著ではないと予想している。

アセントは、年間売上高がおよそ1億2,000万ドルから1億3,000万ドルに達した時点で、販管費比率が最終的に売上高の約15%まで低下する可能性があると考えている。経営陣は具体的なスケジュールは示さず、営業、技術サービス、製品開発の人員に選択的な投資を継続すると述べた。

四半期末後、アセントはブリストル・メタルズのエスクロー留保金455万ドルの全額を受領した。経営陣は、追加の裁量的資本配分を行う前の段階で、これにより現金が3,000万ドル台前半から半ばへ、総流動性が5,000万ドル台前半から半ばへと押し上げられるはずだと述べた。

リスクと注目点

• 主に原材料コストの上昇により、売上総利益率は前年同期を下回る水準にとどまった。
• 農業関連製品および既存のジェット燃料添加剤は第2四半期と第3四半期に需要が集中しており、第4四半期は受託製造における通常の在庫削減の影響を受ける。
• 顧客のスケジュール、生産時期、製品構成、資産稼働率は、四半期ごとの売上高や収益性を変動させる要因となり得る。
• 売上高の増加に伴い売掛金が増加したことや、一部の新規契約で顧客により有利な支払い条件が求められたことから、運転資本は依然として現金の減少要因となった。
• パイプラインの成約は、案件構成や、技術的に複雑な製品の長期にわたるテストおよび認証プロセスによって変動する可能性がある。

アナリスト質疑応答の要点

第3四半期中、ミッドウェストの調整後EBITDAへの寄与は約20万ドルのマイナスとなった。経営陣は主に本社費用の配賦やエスクロー関連コストが原因であるとし、これらを除外すれば買収事業はほぼ損益分岐点だったと付け加えた。

ミッドウェストは少なくとも3社の顧客と実地試験（フィールドトライアル）を実施した。1件のプロジェクトが商業化段階に達した一方、2件は営業および認証プロセスの段階にある。

経営陣は、1億3,500万ドルのパイプラインについて、買い手が未定の自社開発製品ではなく、明確に示された顧客ニーズに直結した個別の「顧客・製品」案件を表していると述べた。このパイプラインには、さまざまな規模のプロジェクトが100件以上含まれている。

資本配分の優先順位は、流動性、運転資本、内部投資、戦略的M&A、機動的な自社株買いの順で維持されている。経営陣は、バランスシートの柔軟性を維持しつつ、注力する成長市場に合致した買収を検討すると述べた。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and thank you for standing by. Welcome to the Ascent Industries Co.'s Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kenny Herring, Vice President of Finance. Please go ahead.

Kenneth Wayne Herring Jr.

Thanks, Therese, and good afternoon, everyone. Before we continue, I would 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 of 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. These reconciliations can be found in the earnings press release issued earlier today and posted on the Investors section of the company's website at www.ascentco.com. Please note that this call is also available for replay via webcast link that is also posted on the Investors section of the company's website. With that, I'd like to turn the call over to Bryan Kitchen, Ascent's CEO, to discuss third quarter results.

Bryan Kitchen

Great. Thanks, Kenny, and good afternoon, everyone. We are encouraged by the progress we saw in the third quarter, not because of any single performance metric, but because the improvement was broad-based. Revenue and adjusted EBITDA improved sequentially year-over-year and on a trailing 12-month basis. For the past 2 years, we focused on strengthening our foundation, optimizing our portfolio, improving efficiency and margins, scaling through commercial execution in our core technologies and allocating capital to the highest return opportunities. Our strategy has not changed. What is changing is that we are seeing these capabilities produce measurable results. Q3 shows both the progress we have made and the work still ahead.

Ryan will discuss the financial results in greater detail, but the headlines are straightforward. In the third quarter, net sales increased 37.8% year-over-year to $27.1 million. Organic sales, excluding the Midwest Graphic Sales acquisition, grew 26.3%. Adjusted EBITDA rose $2.1 million to $3.5 million. Sequentially, revenue increased 5.7%. Gross profit increased approximately 28.3% to $7.1 million and adjusted EBITDA increased approximately $2.1 million to $3.5 million. Adjusted EBITDA margin expanded from 5. 7% to 13.0%. We are improving the business and its ability to generate earnings. Through September, net sales increased 28.5% to $72.2 million. Notably, $11.9 million or 21.2% of the growth was delivered organically, excluding the impact of the Midwest acquisition. Adjusted EBITDA improved by $3.43 million to $4 million.

On a trailing 12-month basis, continuing operations, including Midwest Graphic Sales, generated $91 million of revenue, an increase of $16.7 million or 22.4% year-over-year. Adjusted EBITDA was $2.86 million compared with $0.02 million in the prior comparable trailing 12-month period. These results should be viewed in the context of our business' built-in seasonality. Portions of our legacy custom manufacturing portfolio experienced normal program turnover and seasonal patterns, particularly in the fourth and the first quarters. We're working to grow out that seasonality over time, but it remains a near-term characteristic of the business. Customer schedules, product mix and production timing can shift results between the quarters, making the trailing 12-month view helpful in assessing our broader trajectory.

Even with quarter-to-quarter variability from seasonality and program timing, the broader results show that we are building a better business, not simply a bigger one. We've delivered material year-on-year growth in a muted market with significant contributions coming from new products and processes. Supporting that level of growth takes coordinated work across commercial, technical, quality and operations from qualifying raw materials and establishing processes to preparing our systems and people to service our customers reliably. Our priority is to scale efficiently while executing flawlessly. Our Q3 business wins provide another measure of progress. During the quarter, we converted 12 opportunities across 8 customers into approximately $2.8 million of annualized revenue.

Nearly half of the revenue came from our focused growth markets, 25% from coatings and 25% from oil and gas. Approximately 84% of that revenue came from sales and half of the wins came from new customers. Our average win size is also increasing and is now north of $200,000 of annualized revenue. Our 7.5-month average sales cycle reflects the technical challenges customers bring us and the time it's required to develop and validate solutions in the lab, in the plants and in the field. For the quarter, our conversion rate was approximately 13% within the specialty chemical industry benchmark of 10% to 15%. Our active selling project pipeline ended the quarter at approximately $135 million, near record levels and nearly 60% higher than 1 year ago.

A strong pipeline creates potential. Disciplined conversion into profitable, repeatable earnings creates shareholder value. We are managing SG&A with discipline while preferentially investing in market-facing talent across sales, technical service and product development to accelerate growth in our focused markets. At the same time, we're aligning operational resources around the highest value opportunities to improve gross profit. Earlier this year, we set a goal of $3 million to $5 million of annualized gross profit improvement at run rate by year-end, measured against our first quarter 2026 baseline. We remain on track, supported by actions already realized and initiatives in play. Excluding Midwest, gross profit averaged approximately $5.8 million in the second and the third quarters as compared with $2.8 million in the first quarter.

The improvement reflects disciplined pricing and mix management, strategic sourcing, process R&D, engineering and network and logistics optimization. We are seeing these efforts translate into operating gains. In Tennessee, process engineers reduced cycle time on a product line from 4.5 days to 4 hours, a 96.3% reduction. In Virginia, they improved yield by 14.7% on a specific process. These are examples of a broader pipeline spanning operations, logistics, quality, process R&D and commercial initiatives. Our focus is to sustain these gains and build on them to strengthen gross profit and earnings conversion. We are beginning to apply our commercial capabilities and operating discipline beyond our legacy platform.

In the third quarter, Midwest secured 2 new pieces of business expected to deliver more than $500,000 of annualized revenue at full run rate. We are also seeing early benefits of Ascent's marketing capabilities. SEO is driving a surge in web inquiries and trade show preparation has generated dozens of promising prospects. Customers are committed to advancing several selling projects into lab and production scale trials and the manufacturing transition into Ascent's network remains on schedule. By combining Midwest's application expertise and customer relationships with Ascent's marketing capabilities and broader manufacturing network, we are now pursuing opportunities that neither business could access on its own.

Before I turn it over to Ryan, I want to leave you with one final thought. Our strategy hasn't changed. We remain focused on improving the quality of our business through stronger commercial capabilities, greater operational discipline and disciplined capital allocation. The progress this quarter sequentially, year-to-date and across our trailing 12-month performance shows that the capabilities we have built are translating into measurable results. Our next priority is to convert more of our growth into stronger margins, more consistent cash generation and higher returns on invested capital. We're not waiting on the market to improve our business. We are improving it through disciplined execution, continuous improvement and thoughtful capital allocation. That is how we create lasting value for our shareholders. None of this would be possible without the dedication of our employees, the trust of our customers and the confidence of our shareholders. To each of you, thank you for your continued support. And with that, I'll turn it over to Ryan to review our financial results and capital allocation in greater detail.

Ryan Kavalauskas

Thanks, Bryan. The third quarter gives us reasons to be encouraged while also keeping our focus on the work still in front of us. Revenue and earnings improved meaningfully and importantly, our cash profile improved as well. Our objective now is to make that progress more consistent and durable by converting more of the growth already in the business into margin, cash flow and returns. Third quarter net sales were $27.1 million, up 37.8% from the prior year. As Bryan noted, that growth was broad-based with strong organic growth in sales, excluding the Midwest Graphic Sales acquisition, alongside positive contribution from Midwest. Adjusted EBITDA increased to $3.5 million or 13.0% of sales compared with $1.4 million or 7.0% a year ago.

We also continue to demonstrate SG&A leverage. SG&A declined to $5.3 million or 19.6% of revenue from 31.7% in the prior year quarter. Over time, we continue to believe a run rate SG&A level around 15% of revenue is achievable as we grow the revenue base, standardize processes and create additional operating leverage. Turning to gross profit. We generated $7.1 million in the quarter, an increase of 21.9% year-over-year, while gross margin improved approximately 460 basis points sequentially to 26.2%. We are pleased with that progression, but we are not viewing one quarter as a finish line. Gross margin remained below the prior year period, driven primarily by higher material costs even as gross profit dollars increased and conversion costs improved as a percentage of revenue. Pricing and mix have been important contributors to the improvement we have seen.

The opportunity from here is to complement that commercial execution with greater benefits from sourcing, process consistency, automation, productivity and better utilization of our cost structure. As revenue and volumes continue to grow, we have a larger base over which to improve absorption and standardize execution, which helps reduce the impact that customer schedules, production timing and asset utilization can have on an individual quarter. At the same time, as Bryan noted, normal program turnover and seasonality remain part of the business as we move through year-end and into the first quarter. For that reason, we continue to believe the trailing 12-month view is the clearest way to evaluate the direction of the business through normal quarterly variability.

On that basis, continuing operations, including Midwest, generated approximately $91.0 million of revenue, up more than 22% year-over-year, while gross profit and Adjusted EBITDA improved and SG&A continued to leverage against the larger revenue base. On a trailing 12-month basis, SG&A declined to approximately 25% of revenue from approximately 31% in the prior year period, an improvement of more than 600 basis points. Adjusted EBITDA increased to approximately $2.9 million from essentially breakeven in the prior year period. We believe that progression better reflects the underlying direction of the business and the opportunity to convert a larger revenue base into stronger margins, cash generation and returns over time.

Turning to cash. We ended September with $28.7 million of cash and no borrowings under our revolving credit facility, with $21.1 million of remaining revolver availability. More importantly, operating cash flow turned positive during the quarter. Cash used in operating activities improved from approximately $7.7 million through June to $5.5 million through September, meaning the business generated approximately $2.2 million of operating cash during Q3. That improvement is particularly important when viewed alongside the capital we deliberately deployed earlier in the year. Through September, we used approximately $13.6 million for the Midwest acquisition, $6.9 million for share repurchases and $2.3 million for capital expenditures. Working capital remained a use of cash, led by receivables as revenue grew, but the operating cash inflection in Q3 is encouraging and the cash use rate has moderated materially from the first half.

Subsequent to quarter end, we received the full $4.55 million Bristol Metals escrow holdback, which is additive to the September 30 cash balance. We remain focused on further improving cash conversion, particularly through inventory discipline, vendor terms and collections. At our current scale, we continue to estimate that each 5-day improvement in the cash conversion cycle could release approximately $1 million to $1.5 million of cash, depending on the mix of improvements. Consistent with the outlook we provided last quarter, the escrow release brings cash into the low to mid-$30 million range before any additional discretionary capital deployment. Together with more than $20 million of available borrowing capacity at September 30, that supports total liquidity in the low to mid-$50 million range and preserves meaningful flexibility as we move through year-end.

That brings me to capital allocation. Our priorities remain the same and importantly, remain in order: first, liquidity; second, working capital; third, internal investments; fourth, strategic M&A; and fifth, opportunistic share repurchases. The order does not take M&A or buybacks off the table. It means we intend to protect the balance sheet, improve the cash efficiency of the business and fund the investments in people, process, automation, maintenance and high-return growth that can strengthen the earnings power of the platform before deploying incremental capital elsewhere. We believe that discipline is particularly important at this stage of Ascent's development. Third quarter demonstrated the earnings potential of the revenue base we have built and provided an encouraging improvement in cash generation. The work now is to make those results more repeatable, improve the quality of the conversion and continue building the flexibility to invest when attractive opportunities arise. With that, I'll turn it back to the operator for questions. Thank you.

Operator

[Operator Instructions] Our first question comes from David [indiscernible].

質疑応答

Unknown Analyst

Yes, pleased to see the legacy business having a good quarter and growing. I had a question about the Midwest acquisition. Why was there a negative $200,000 adjusted EBITDA contribution in the quarter from that?

Ryan Kavalauskas

David, that's largely due to the corporate allocation that we burden the business with now. So if you remove that along with the escrow that's also carrying on that business, it's roughly breakeven. So that's what's driving.

Unknown Analyst

Okay. And then the Midwest field trial, has that -- how is that -- has that advanced toward commercial production?

Bryan Kitchen

Yes. We've actually had several field trials, David, with 1, 2, 3, at least 3 different customers, and we're progressing each of those projects through the sales cycle. So we're not -- we're commercial on one of them, we are not commercial on the other 2. So the pipeline continues to grow. I mean we're incredibly pleased with how the pipeline is shaping up. There are opportunities over the past 2 weeks that we've gotten our eyes on that we didn't have access to 2 months ago. So very pleased with how Midwest acquisition is beginning to shape up.

Unknown Analyst

Got it. Now you did -- I think if I looked at Q2, the pipeline was, what, $140 million and then the Q3 pipeline, I think, was like $135 million, conversion rate 26% in Q2, 13% in Q3. So will you just expect a variable conversion rate going forward? You never really know how the customer is going to accept the formula or whatever that you've been working on?

Bryan Kitchen

Yes, it's largely a function of the mix of the projects that we have in the pipeline at that point in time. I mean what we're seeing now, if you remember, what, 2 years ago, the selling project cycle time was much lower than what it is today, and it's expanded or extended largely because of the technical challenges that we're being presented with and the time that it takes to innovate a solution, develop that, put it through our lab, get it qualified in our customers' lab and get it qualified in the field and then take it to full commercial scale. So it's really just a function of mix, not discourage...

Unknown Analyst

Yes. Okay. And then you talked about the legacy business having seasonality. So not that I'm asking for guidance, but do you think that you can consistently deliver and generate quarterly profitability going forward?

Bryan Kitchen

Yes, I think from a revenue standpoint, David, I mean, I would look for this Q4 to be better than Q4 of 2025, certainly. From a profitability standpoint, look, I mean, we're still going to have that funky mix that we have built into the existing book of business that we're still trying to grow through. So margins will be compressed without question in the fourth quarter. Ryan, I don't know if you want to add any additional color to that.

Ryan Kavalauskas

No. I mean I think, yes, you're going to see until we're able to kind of build the business a little bit differently. You're always going to have that ramp in Q2 that peaks in Q3 with some of the product mix that flow through. And like Bryan said, I think we'll see a little compression in earnings in Q4 compared to Q3. But I don't believe what we're seeing today is that it will be less pronounced than it was last year. So we do believe ultimately that the profile we're building that we've shown in Q3 can be built upon. It's -- right now, we're just -- we're still seeing that Q3 bump and then we'll always have that kind of Q4 until we can kind of build the business...

Unknown Analyst

Got it. And is that a function of just needing to grow the revenue $30 million a quarter, $40 million -- $35 million a quarter before you could optimize the margins and kind of get rid of the seasonality?

Bryan Kitchen

That's part of it, certainly. And I think one thing that we're encouraged by, I think I referenced earlier in the script that we still have work to do. And I think one of the things that I'm encouraged about is just how much improvement runway we have operationally to unlock additional earnings through optimization, things like cycle time, things like waste elimination, other structural costs. Like we did a lot in the early days of the transformation, but there's still much more to be done. I mean, look at it through the lens of one of the examples I gave earlier, we had a product at a 4.5-day cycle time, we were able to take that down to 4 hours. Now that might be an extreme example. But nonetheless, there are a number of opportunities that we have across the business to optimize.

Unknown Analyst

Good. Yes. And then SG&A, so I think you said 19% this Q3. The goal is 15%. Is that something that can be achieved kind of the 15% level like in 2027 as you grow your top line and optimize, you think you can get there sometime in 2027?

Bryan Kitchen

Yes. I think what we flashed initially was when we're at that kind of $120 million to $130 million mark, we should be in that 15% range. We're a little bit ahead of the curve right now. Like I mentioned earlier, we're -- any time that we can find incredible sales force, we're going to go out and we're going to bring them on because that return on that investment is enormous. But I think we're growing into our SG&A. It's exactly what we said we were going to do a couple of years ago. We're not quite where we want to be yet, and we're going to have to grow into...

Unknown Analyst

Yes. And then just capital allocation. So it looks like share buybacks are essentially -- if you could be opportunistic, obviously, but protect the balance sheet, which is wise, would you be opportunistic on an acquisition if the right one came along? I mean, is there anything you could talk about on that subject?

Bryan Kitchen

Yes. Go ahead, Ryan. Sorry.

Ryan Kavalauskas

Yes, I mean you could hear. We're both aligned there. So yes, absolutely. I think that's kind of what we're focusing on right now. We -- it's working capital, and we -- to win some business, we had to give some terms and that required a little bit more working capital than we've historically needed for the business. So we're comfortable knowing that that's where it's at and they are right now. So it's really all about protecting the balance sheet and leaving us with optionality. So if the right acquisition comes along, we're always looking and it supports the growth of the business in our targeted markets. We've left ourselves the ability to go do that. So we'll continue to look at that. If the share price provides an opportunity, too, we'll be opportunistic there as well. So I think really, it's about focusing on that optionality and looking for internal investments to drive the margin growth through process automation and things like that. It's really -- those are kind of the priorities we're looking at.

Operator

Our next question is from Eric McCarthy with InLight Capital.

Eric McCarthy

And just to echo David, great results. David did address a number of the questions that I had, but maybe just to dig in on them a little bit more. When you quote the sales pipeline number of, I believe it's $112 million, $120 million, is that to be taken as something that's an annual number that could become recurring in the future?

Bryan Kitchen

Yes, it's an absolute value of the overall selling project pipeline that we've built up. So the way in which we look at our pipeline, Eric, nothing makes its way into the selling project pipeline unless it's driven by an expressed customer need. What does that mean? Well we don't have projects in there just as fillers. We're not saying, well, we're going to go develop a product and hope that we sell it to 50 different customers. These are very discrete product customer combinations where a customer has said, I have a need for X, Y and Z can -- you help us. So there's ebbs and flows every month in and out of the pipeline.

But I'd say right now, I think one of the things that I'm most encouraged about is the quality of the pipeline continues to improve month-on-month, quarter-on-quarter. We're starting to see the pipeline really begin to be structured around our focused growth markets versus buckshot. I'm also encouraged to see that our average new win is increasing in size and scale. We're north of $200,000 right now for each new win. So for us, the selling project pipeline, I mean, it's 100-plus projects deep. There's going to be some singles in there. There's going to be some doubles in there, some triples and then few and far between, there'll be that home run. So again, encouraged by how that thing is beginning to be developed and structured by the commercial team.

Eric McCarthy

Great. And then with respect to Midwest and the integration of the acquisition, is there a particular portion of that pipeline that you could allocate to Midwest that shows the benefits of this acquisition and the potential that it still has in front of it?

Bryan Kitchen

Yes. I mean, I guess there's a couple of things. So if you look at the overall pipeline itself, over $50 million of the selling project pipeline is structured around Midwest. So those are relatively new entrants that we put into the pipeline post acquisition. Pipeline size is certainly important, but that conversion is also incredibly important. So we've already -- within this past quarter, we've already won 2 new pieces of business that will generate over $0.5 million a year of annualized top line growth. So these are good piece -- good quality pieces of business. So yes, very exciting.

Eric McCarthy

Great. And then just the last question for -- to unpack some of the seasonality in the business, what's the primary driver of that? Is it the industries in which you serve the end customers? Is it some sort of inventory restock, destock phenomenon? What drives the seasonality across the quarters?

Bryan Kitchen

I mean the primary driver for -- the outsized Q2, Q3 versus Q1, Q4 is built-in seasonality around there's some ag business that we have, a couple of 2, 3 pieces of ag business that squarely sit in Q2, Q3. There's also some legacy jet fuel additive business that's inside of Q2 and Q3 as well. That, coupled with normal Q4 destocking, especially when you're looking at it through the lens of contract manufacturing. Those are really the 2 primary drivers for that built-in seasonality. So our challenge is simple, right? We've got to grow out of it. It's not just grow with size and scale, but it's to find the right pieces of good quality business to put into the mix.

Operator

[Operator Instructions] We are showing no further questions at this time. So I would now like to turn it back to Bryan Kitchen for closing remarks.

Bryan Kitchen

All right. Great. Thank you, Therese. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you all again when we report our fourth quarter 2026 results.

Operator

This does conclude today's conference. You may now disconnect.