Core Insights - The article emphasizes the importance of value investing, which focuses on identifying undervalued companies in the market [1] - Zacks has developed a Style Scores system to help investors find stocks with specific traits, particularly in the Value category [1] Company Overview: AdvanSix (ASIX) - AdvanSix currently holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating strong investment potential [2] - The stock has a P/E ratio of 7.71, significantly lower than the industry average P/E of 22.37 [2] - Over the past 52 weeks, ASIX's Forward P/E has fluctuated between a high of 16.05 and a low of 6.08, with a median of 9.19 [2] - ASIX has a P/CF ratio of 7.28, which is also lower than the industry's average P/CF of 21.94, suggesting it may be undervalued [2] - The P/CF ratio for ASIX has ranged from a high of 10.29 to a low of 3.95 over the past year, with a median of 5.56 [2] Investment Outlook - The combination of ASIX's strong Value grade and favorable earnings outlook suggests that the stock is likely undervalued at present [3]

Core Viewpoint - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment based on recent earnings estimate increases [1]. Group 1: Company Summaries - **AdvanSix Inc. (ASIX)**: This manufacturer of polymer resins has seen a 5.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]. - **SM Energy Company (SM)**: This independent crude oil and natural gas company has experienced an 11.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]. - **Eldorado Gold Corporation (EGO)**: This mining and exploration company has seen a 10.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]. - **Primo Water Corporation (PRMW)**: This pure-play water solutions company has experienced nearly an 8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]. - **Telephone and Data Systems, Inc. (TDS)**: This telecommunications company has seen a significant 68% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1].

Group 1 - Eldorado Gold Corporation (EGO) has a Zacks Rank 1 and a 10.1% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - Eldorado Gold's price-to-earnings ratio (P/E) is 14.48, compared to 22.54 for the S&P 500, and it has a Value Score of B [1] - SM Energy Company (SM) also holds a Zacks Rank 1 with an 11.4% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] Group 2 - SM Energy has a price-to-earnings ratio (P/E) of 6.28, which is lower than the industry average of 7.50, and it possesses a Value Score of B [1] - AdvanSix Inc. (ASIX) carries a Zacks Rank 1 and has seen a 5.6% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - AdvanSix has a price-to-earnings ratio (P/E) of 14.23, which is slightly lower than the industry average of 14.50, and it also has a Value Score of B [2]

Group 1 - AdvanSix Inc. (ASIX) has seen a 5.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and offers a dividend yield of 3%, significantly higher than the industry average of 0.9% [1] - Calavo Growers, Inc. (CVGW) has experienced a 10.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and provides a dividend yield of 1.8%, compared to the industry average of 0.0% [1] - SM Energy Company (SM) has a Zacks Rank 1 and has seen an 11.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]

Company Overview - AdvanSix Inc. (ASIX) is currently experiencing significant activity in the options market, particularly with the Sep 20, 2024 $12.50 Call option showing high implied volatility, indicating potential for a major price movement [1]. Implied Volatility Insights - Implied volatility reflects market expectations for future price movements, suggesting that investors anticipate a significant change in AdvanSix's stock price, possibly due to an upcoming event [2]. Analyst Sentiment - AdvanSix holds a Zacks Rank 3 (Hold) within the Chemical - Specialty industry, which is positioned in the bottom 36% of the Zacks Industry Rank. Over the past 60 days, three analysts have raised their earnings estimates for the current quarter, increasing the Zacks Consensus Estimate from earnings of 84 cents per share to $1.19 [3]. - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility, aiming to benefit from time decay [3].

Core Viewpoint - The article emphasizes the importance of value investing and highlights AdvanSix (ASIX) as a strong candidate for value investors due to its favorable metrics and strong Zacks Rank [1][2][3] Company Metrics - AdvanSix (ASIX) holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating strong potential for value investors [2] - The stock is currently trading with a P/E ratio of 9.19, significantly lower than the industry average of 22.84 [2] - Over the past 12 months, ASIX's Forward P/E has fluctuated between a high of 16.05 and a low of 6.08, with a median of 8.84 [2] - ASIX has a P/CF ratio of 7.93, which is also lower than the industry's average P/CF of 22.12, suggesting it is undervalued based on cash flow [2] - The P/CF for ASIX has ranged from a high of 10.29 to a low of 3.95 over the last year, with a median of 5.33 [2] Investment Outlook - The combination of ASIX's strong earnings outlook and favorable valuation metrics positions it as an impressive value stock at the moment [3]

Core Viewpoint - AdvanSix (ASIX) is experiencing significant selling pressure, having declined 22.2% over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously expected [1]. Group 1: Stock Performance and Indicators - ASIX shares have seen heavy selling, indicated by an RSI reading of 29.72, suggesting that the stock may soon reverse its trend and return to a previous equilibrium of supply and demand [4]. - The consensus EPS estimate for ASIX has increased by 10.7% over the last 30 days, indicating a positive trend in earnings estimate revisions, which typically correlates with price appreciation [4]. Group 2: Analyst Sentiment and Rankings - There is strong agreement among sell-side analysts in raising earnings estimates for ASIX, which supports the potential for a turnaround [4]. - ASIX holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further indicating its potential for a near-term turnaround [5].

Sales Performance - Sales for the three months ended March 31, 2024, decreased by approximately 16% to $336.8 million compared to $400.5 million in the prior year period, primarily due to unfavorable market-based pricing and a decrease in sales volume [80]. - The decrease in sales volume was approximately 6.7%, driven by lost sales resulting from an operational disruption at the Frankford, Pennsylvania manufacturing site [80]. - Sales for the three months ended March 31, 2024, were $336.8 million, compared to $400.5 million for the same period in 2023, reflecting a decline of approximately 15.9% [89]. Financial Results - The Company's net income (loss) for the three months ended March 31, 2024, was $(17.4) million, a decrease from $35.0 million in the same period of 2023 [86]. - Adjusted EBITDA for the three months ended March 31, 2024, was $595 thousand, significantly down from $65.4 million in the prior year period [89]. - The adjusted net income (loss) for the three months ended March 31, 2024, was $(15.1) million, compared to $37.1 million in the same period of 2023 [89]. - The adjusted EBITDA margin for the three months ended March 31, 2024, was 0.2%, a significant decrease from 16.3% in the prior year [89]. Costs and Expenses - Costs of goods sold increased by approximately 1% to $333.9 million, influenced by lower production volumes and incremental costs from the operational disruption [81]. - Gross margin percentage decreased to approximately 0.9% from 17.6% in the prior year period, primarily due to lower sales volume and changes in sales mix [82]. - Selling, general and administrative expenses decreased by $1.5 million to $23.6 million, representing 7.0% of sales compared to 6.3% in the prior year [83]. Operational Disruptions - The operational disruption in January 2024 resulted in an unfavorable impact to pre-tax income of approximately $27 million due to lost sales and additional costs [79]. - The company aims to run its production facilities continuously for maximum efficiency, although this exposes it to risks associated with material disruptions [78]. Capital Expenditures and Cash Flow - The Company expects capital expenditures to be between $140 million and $150 million in 2024, an increase from $107 million in 2023 [95]. - Cash provided by operating activities decreased by $37.8 million for the three months ended March 31, 2024, primarily due to a $52.4 million decrease in net income [110]. - Cash used for investing activities increased by $11.2 million for the three months ended March 31, 2024, mainly due to capital expenditures of approximately $10.8 million [111]. Debt and Credit Facilities - The Company completed a refinancing of its Credit Agreement, establishing a new senior secured revolving credit facility with an aggregate principal amount of $500 million [104]. - As of March 31, 2024, the Company had a borrowed balance of $245 million under the Revolving Credit Facility, with available credit of approximately $254 million [109]. - The Credit Agreement requires the Company to maintain a Consolidated Interest Coverage Ratio of not less than 3.00 to 1.00 and a Consolidated Leverage Ratio of 4.00 to 1.00 or less until September 30, 2023 [108]. - The Company has the option to increase the Revolving Credit Facility by up to $175 million, subject to maintaining a Consolidated First Lien Secured Leverage Ratio of not greater than 2.75 to 1.00 [105]. - The transition from LIBOR to Adjusted Term SOFR as the benchmark rate was effective July 1, 2023, with applicable margins set at 0.25% for base rate loans and 1.25% for Adjusted Term SOFR loans [106]. - The Company was in compliance with all covenants under the Credit Agreement as of March 31, 2024 [108]. Market Conditions - The global prices for ammonium sulfate fertilizer are influenced by factors such as the price of urea and general agriculture trends, impacting demand and pricing [75]. - The company is the world's largest single-site producer of ammonium sulfate fertilizer as of March 31, 2024, leveraging its integrated operations at the Hopewell manufacturing facility [72]. - The company produces Nylon 6 resin globally, primarily under the Aegis® brand, which is used in various end-products including automotive components and food packaging [71]. Shareholder Returns - The Company has repurchased a total of 6,108,939 shares of common stock for an aggregate of $189.0 million at a weighted average price of $30.94 per share [98]. - The Company declared dividends of $0.160 per share for the periods ending May 28, 2024, and March 18, 2024, totaling approximately $4.3 million each [102]. Taxation - The effective tax rate for the three months ended March 31, 2024, was 25.7%, up from 21.0% in the prior year, primarily due to the larger impact of equity compensation vestings [84]. Interest Rate Sensitivity - A 25-basis point fluctuation in interest rates would have resulted in an increase or decrease to the Company's interest expense of approximately $0.6 million for the three months ended March 31, 2024 [116].

Financial Data and Key Metrics Changes - Sales for Q1 2024 were $337 million, a decrease of approximately 16% compared to the prior year, primarily due to unfavorable market-based pricing and lost sales from operational disruptions [8][9] - Adjusted EBITDA was approximately $1 million, down from $65 million in the prior year, driven by operational disruptions and unfavorable pricing [9] - Adjusted earnings per share was a loss of $0.56, with an effective tax rate of 25.7% compared to 21% in the prior year [9][10] - Free cash flow was negative $72 million, worsening from negative $23 million in Q1 2023, attributed to lower net income and changes in working capital [10] Business Line Data and Key Metrics Changes - The nylon segment saw global industry spreads stabilize, but demand remains soft, particularly in building and construction markets [12][13] - In the fertilizer space, ammonium sulfate pricing strengthened amid reduced supply in North America, with a strong order book as the planting season progresses [14][15] - Chemical intermediates, particularly acetone, experienced improved pricing over refinery-grade propylene costs, although demand has softened [15] Market Data and Key Metrics Changes - North American nylon demand has been stable but lower than previous years, with production downtime across the industry leading to modest pricing increases [13] - Global nitrogen pricing began steady but declined mid-March, while ammonium sulfate pricing strengthened due to sulfur demand growth [14] - Acetone prices over propylene costs reached multiyear highs, supported by tight global supply despite soft demand in some applications [15] Company Strategy and Development Direction - The company aims to position itself for long-term sustainable performance through disciplined investments and focusing on profitable growth areas [6][16] - The SUSTAIN program targets a 70% conversion to ammonium sulfate granular by the end of 2024, reflecting a commitment to sustainable practices [16][20] - The company anticipates operational and commercial tailwinds in the second quarter, with a focus on returning to robust plant utilization rates [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for a rebound in earnings and cash flow performance as operational disruptions have been resolved [5][58] - The company expects positive trends for ammonium sulfate and acetone to continue, with nylon anticipated to improve modestly as the year progresses [18] - Management highlighted the importance of sustainability initiatives, receiving high ratings for corporate social responsibility and sustainability performance [19][20] Other Important Information - The company incurred a pretax income impact of approximately $27 million due to operational disruptions in Q1 2024 [5] - Capital expenditures are expected to be in the range of $140 million to $150 million in 2024, reflecting increased spending on risk mitigation and growth projects [16] - The company has been recognized for its sustainability efforts, achieving a Platinum rating from EcoVadis and strong ratings from CDP [19][20] Q&A Session Summary Question: Nylon export rates and operational disruption impact on agricultural product movement - Management indicated that nylon export rates dropped to about 15% due to operational disruptions, but they expect to realign the value chain as production constraints ease [22][23] - There was minimal impact on ammonium sulfate sales due to operational disruptions, with purchases made to protect customer demand during the planting season [24][25] Question: Ammonium sulfate pricing relative to urea pricing - Management explained that the favorable pricing of ammonium sulfate is driven by the value placed on sulfur nutrition, which is in demand due to yield benefits [28][30] Question: Granular product sales strategy - Management confirmed that there has never been a time when granular products were not more profitable than standard, and they are on track to increase granular conversion to 70% [32][33] Question: Anticipated improvement in nylon fundamentals - Management expressed cautious optimism for a slow recovery in nylon demand, citing potential improvements in auto and packaging sectors, despite ongoing challenges in construction markets [35][37] Question: U.S. Amines business and agricultural market dynamics - Management noted that the U.S. Amines segment is experiencing slow demand, but they are progressing with their project pipeline to grow the business [39][40] Question: Inventory management and export market participation - Management indicated that they have mostly resolved destocking issues and expect a more typical demand signal moving forward [54][55]

Financial Performance - 1Q24 sales were $337 million, a decrease of 16% compared to the prior year, driven by a 9% unfavorable impact from market-based pricing and a 7% decrease in volume due to operational disruptions[2]. - Net loss for 1Q24 was $17.4 million, a decline of $52.4 million versus the prior year, with adjusted EBITDA of $0.6 million, down $64.8 million year-over-year[2][4]. - Adjusted diluted earnings per share for 1Q24 were ($0.56), a decrease of $1.86 compared to the prior year[7]. - Cash flow from operations was ($36.2) million, a decrease of $37.8 million year-over-year, while free cash flow was ($71.6) million, down $48.6 million from the prior year[2][7]. - Total sales for the three months ended March 31, 2024, were $336,829,000, a decrease of 16% compared to $400,544,000 for the same period in 2023[21]. - Net loss for the three months ended March 31, 2024, was $17,396,000, compared to a net income of $34,954,000 for the same period in 2023[21]. - Adjusted EBITDA for the three months ended March 31, 2024, was $595,000, significantly lower than $65,354,000 for the same period in 2023, resulting in an adjusted EBITDA margin of 0.2%[27]. - Free cash flow for the three months ended March 31, 2024, was $(71,590,000), compared to $(23,028,000) for the same period in 2023[25]. - The company incurred interest expense of $2,699,000 for the three months ended March 31, 2024, compared to $1,267,000 for the same period in 2023[21]. - The company reported a basic earnings per share (EPS) of $(0.65) for the three months ended March 31, 2024, compared to $1.27 for the same period in 2023[21]. Capital Expenditures and Investments - Capital expenditures in 1Q24 were $35.4 million, an increase of $10.8 million compared to the prior year, reflecting increased spending on enterprise programs[7]. - Anticipated capital expenditures for 2024 are projected to be between $140 million and $150 million, focusing on critical enterprise risk mitigation and growth projects[8]. - The company plans to shift a larger planned plant turnaround to 4Q24 from 3Q24, expecting a pre-tax income impact of $38 to $43 million in 2024[8]. Operational Strategy and Market Outlook - The company expects ammonium sulfate pricing to improve sequentially in 2Q24 amid continued sulfur demand growth and tight North American supply[8]. - The company has consistently shown fluctuations in pre-tax income impacts across different quarters, with notable peaks in Q4 of various years[32]. - Fixed cost absorption and maintenance expenses are key factors influencing the pre-tax income impacts reported by the company[32]. - The company’s operational strategy includes a focus on maintaining production efficiency in its Sulfuric Acid and Ammonia units[32]. - AdvanSix Inc. is actively managing its feedstock purchases to optimize production costs and enhance profitability[32]. Sustainability and Corporate Responsibility - The company received ISCC PLUS certification for three manufacturing sites, enhancing its commitment to sustainability and corporate social responsibility[3]. - AdvanSix declared a quarterly cash dividend of $0.16 per share, payable on May 28, 2024[9]. Balance Sheet and Liabilities - Cash and cash equivalents decreased to $20,633,000 as of March 31, 2024, from $29,768,000 at the end of 2023[23]. - Total current liabilities decreased to $284,122,000 as of March 31, 2024, from $358,918,000 at the end of 2023, reflecting a reduction of approximately 21%[21]. - Total assets decreased to $1,467,983,000 as of March 31, 2024, from $1,496,020,000 at the end of 2023[21]. - The company’s total liabilities slightly decreased to $754,826,000 as of March 31, 2024, from $756,783,000 at the end of 2023[21].