어센트 인더스트리즈(ACNT) 2026년 3분기 실적 발표 콘퍼런스콜: 매출 37.8% 증가, EBITDA 마진 13% 기록

핵심 요약

• 3분기 순매출은 전년 동기 대비 37.8% 증가한 2,710만 달러를 기록했으며, 미드웨스트 그래픽 세일즈(Midwest Graphic Sales) 인수를 제외한 자체 유기적 성장률은 26.3%였다.
• 조정 EBITDA는 전년 동기 140만 달러에서 350만 달러로 증가했으며, 조정 EBITDA 마진은 전년 동기 7.0%에서 13.0%로 확대됐다.
• 매출총이익은 710만 달러에 달했다. 매출총이익률은 주로 원자재 비용 상승으로 인해 전년 동기 수준을 여전히 밑돌았으나, 전분기 대비로는 460bp 개선된 26.2%를 기록했다.
• 진행 중인 영업 프로젝트 파이프라인은 분기 말 기준 약 1억 3,500만 달러로 전년 동기 대비 60% 가까이 증가했다. 회사는 12건의 사업 기회를 수주로 연결해 약 280만 달러의 연간 환산 매출을 확보했다.
• 어센트(Ascent)는 3분기 동안 약 220만 달러의 영업현금흐름을 창출했으며, 9월 말 기준 현금 2,870만 달러를 보유하고 회전신용공여(리볼빙) 차입금은 전혀 없었다.
• 경영진은 2026년 4분기 매출이 2025년 4분기를 넘어설 것으로 예상하지만, 제품 믹스와 계절적 요인으로 인해 3분기 대비 수익 감소와 마진 축소가 나타날 것으로 내다봤다.

주요 재무 데이터

사업 및 영업 실적

어센트는 자체 성장과 미드웨스트 그래픽 세일즈의 기여에 힘입어 전반적인 성장을 달성했다고 밝혔다. 3분기 동안 회사는 8개 고객사로부터 12건의 사업 기회를 확보했으며, 이는 약 280만 달러의 연간 환산 매출에 해당한다. 수주 건 중 절반은 신규 고객사에서 발생했으며, 건당 평균 연간 환산 가치는 20만 달러를 웃돌았다.

영업 주기는 평균 7.5개월로, 기술적으로 복잡한 고객 솔루션을 개발·시험·검증하는 데 필요한 기간이 반영됐다. 분기 전환율은 약 13%였으며, 진행 중인 프로젝트 파이프라인은 약 1억 3,500만 달러로 역대 최고 수준에 근접했다.

경영진은 2026년 1분기 기준선 대비 연말 런레이트(run rate) 기준으로 연간 300만~500만 달러의 매출총이익 개선 목표를 순조롭게 달성 중이라고 밝혔다. 미드웨스트를 제외한 2분기와 3분기 평균 매출총이익은 약 580만 달러로, 1분기의 280만 달러와 비교된다.

운영 혁신 과제로는 가격 책정 및 제품 믹스 관리, 전략적 조달, 공정 연구개발(R&D), 엔지니어링, 물류 최적화 및 생산성 향상 등이 추진됐다. 테네시주의 한 사업장에서는 특정 제품군의 공정 주기가 4.5일에서 4시간으로 단축됐다. 버지니아주 공정에서는 14.7%의 수율 개선을 기록했다.

미드웨스트는 전면 가동 시 연간 50만 달러 이상의 매출에 기여할 것으로 기대되는 신규 계약 2건을 확보했다. 인수 이후 어센트의 영업 프로젝트 파이프라인 중 5,000만 달러 이상이 미드웨스트와 연계됐다.

경영진 가이던스

경영진은 2026년 4분기 매출이 2025년 4분기보다 높을 것으로 예상했다. 다만 계절적 제품 믹스, 통상적인 프로그램 전환 및 연말 고객사 재고 소진(디스토킹)으로 인해 3분기 대비 수익과 마진이 감소할 것이라고 경고했다. 회사는 4분기 감소 폭이 전년보다는 덜 뚜렷할 것으로 전망했다.

어센트는 연간 매출이 약 1억 2,000만~1억 3,000만 달러에 이르면 판관비(SG&A) 비중이 결국 매출의 약 15% 수준까지 낮아질 수 있다고 보고 있다. 경영진은 구체적인 일정을 제시하지 않았으며 영업, 기술 서비스 및 제품 개발 인력에 대한 선별적 투자를 지속할 것이라고 밝혔다.

분기 종료 후 어센트는 브리스톨 메탈스(Bristol Metals) 에스크로 유보금 455만 달러 전액을 수령했다. 경영진은 추가적인 재량적 자본 배치 전 기준으로 보유 현금이 3,000만 달러대 초중반, 총유동성이 5,000만 달러대 초중반으로 늘어날 것이라고 밝혔다.

리스크 및 주목할 부문

• 매출총이익률은 주로 원자재 비용 상승으로 인해 전년 동기 수준을 여전히 밑돌았다.
• 농업용 제품과 기존 제트연료 첨가제는 2분기와 3분기에 집중되며, 4분기는 위탁 제조의 통상적인 재고 소진 영향을 받는다.
• 고객 일정, 생산 시점, 제품 믹스 및 자산 가동률에 따라 분기 간 매출과 수익성이 변동될 수 있다.
• 매출 성장에 따라 매출채권이 증가하고 일부 신규 계약에서 고객에게 더 유리한 결제 조건을 제공해야 함에 따라 운전자본은 여전히 현금 소진 요인으로 작용했다.
• 파이프라인 전환은 프로젝트 구성과 기술적으로 복잡한 제품에 요구되는 장기간의 시험 및 적격성 평가 절차에 따라 달라질 수 있다.

애널리스트 질의응답(Q&A) 주요 내용

미드웨스트는 3분기 동안 약 마이너스 20만 달러의 조정 EBITDA를 기록했다. 경영진은 이에 대해 주로 본사 배부 비용과 에스크로 관련 비용 때문이라며, 해당 항목을 제외할 경우 피인수 사업 부문은 거의 손익분기점 수준이었다고 덧붙였다.

미드웨스트는 최소 3곳의 고객사와 현장 시험(field trial)을 진행했다. 한 프로젝트는 상용화 단계에 도달했으며, 2건은 영업 및 적격성 평가 단계에 머물러 있다.

경영진은 1억 3,500만 달러 규모의 파이프라인이 구매자가 특정되지 않은 채 내부적으로 개발된 제품이 아니라, 명확히 표출된 고객 수요와 연계된 개별 고객·제품 기회를 나타낸다고 밝혔다. 이 파이프라인에는 다양한 규모의 프로젝트 100여 건이 포함돼 있다.

자본 배분 우선순위는 유동성, 운전자본, 내부 투자, 전략적 인수합병(M&A), 기회주의적 자사주 매입 순으로 유지된다. 경영진은 대차대조표 유연성을 유지하면서 목표 성장 시장에 부합하는 인수를 검토할 것이라고 밝혔다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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].

질의응답

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.