Core Insights - AdvanSix has experienced a process-based operational disruption at its Frankford, Pennsylvania manufacturing site, leading to reduced production of phenol and acetone at multiple facilities [1] - The company is focused on safely returning operations to target rates and is collaborating with customers to mitigate the impact of reduced output [1] - An estimated unfavorable impact of $18 to $23 million on pre-tax income is expected in the first quarter of 2024 due to fixed cost absorption, lost sales, and additional costs for replacement products [1] Financial Performance - The unplanned interruption did not materially affect the fourth quarter 2023 results [2] - A conference call is scheduled for February 16th at 9:00 a.m. ET to discuss the fourth quarter and full year 2023 financial results and outlook [2] Company Overview - AdvanSix is a diversified chemistry company producing essential materials for various end markets, including building and construction, fertilizers, agrochemicals, and more [3] - The company operates five U.S.-based manufacturing facilities, which are integral to global supply chains [3] - AdvanSix emphasizes core values of Safety, Integrity, Accountability, and Respect in delivering customer experiences and differentiated products [3]

Company Overview - AdvanSix is a diversified chemistry company that produces essential materials for various end markets and applications, impacting daily life [4] - The company operates five U.S.-based manufacturing facilities, playing a critical role in global supply chains [4] - AdvanSix focuses on industries such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives, and electronics [4] Financial Results Announcement - AdvanSix will issue its fourth quarter and full year 2023 financial results before the opening of the New York Stock Exchange on February 16 [1] - A conference call with investors is scheduled for 9:00 a.m. ET on the same day [1] Conference Call Participation - To participate in the conference call, dial (844) 855-9494 for domestic or (412) 858-4602 for international calls approximately 10 minutes before the start [2] - A replay of the conference call will be available from 12 noon ET on February 16 until 12 noon ET on February 23 [2] Webcast and Presentation Materials - A real-time audio webcast of the presentation can be accessed at the AdvanSix investor website [3] - Related materials will be posted prior to the presentation, and a replay of the webcast will be available afterward [3]

Financial Data and Key Metrics Changes - Sales for Q3 2023 were $323 million, a decrease of approximately 33% compared to the previous year, with pricing unfavorable by 32% overall [10][12] - Adjusted EBITDA was approximately $7 million, with a loss of adjusted earnings per share of $0.36 [11][12] - Free cash flow was negative $4 million, with cash flow from operations decreasing by roughly $38 million year-over-year [12] Business Line Data and Key Metrics Changes - The Nylon Solutions segment continued to experience declines, with global composite caprolactam-over-benzene spreads down nearly 20% sequentially [16][19] - The Plant Nutrients business showed solid results despite seasonal slowdowns, with stable ammonium sulfate pricing compared to urea [17] - In Chemical Intermediates, acetone prices over refinery-grade propylene costs improved year-over-year, although demand remained soft [18] Market Data and Key Metrics Changes - Fertilizer demand remained stable, with order positions in line with historical levels, supporting solid ammonium sulfate demand [17] - The nylon industry faced increased competitive intensity, particularly from China's exports, which pressured pricing dynamics [21][64] - North American producers maintained a better position compared to global operating rates, with estimated rates around 84% [45] Company Strategy and Development Direction - The company is focused on simplifying its portfolio and executing a multi-year expansion in granular ammonium sulfate production through the SUSTAIN program [8][28] - Strategic decisions included exiting low-margin oximes products and accelerating the exit from the alliance with Oben to focus on resin production [7][27] - The company aims to drive productivity and improve unit profitability amid soft end-market demand [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment, particularly for the Nylon Solutions business, but expressed confidence in the fundamentals for plant nutrients and North American acetone [29] - The company expects nylon industry margins to remain at prior trough levels through year-end, while anticipating favorable fundamentals for other segments [29] - Management emphasized a commitment to operational excellence and disciplined capital deployment to navigate current dynamics [30] Other Important Information - The company recorded a net favorable $4.5 million pre-tax income impact from three one-time transactions, which were excluded from adjusted EBITDA results [11] - Capital expenditures for the full year 2023 are expected to be approximately $115 million, reflecting increased spending on critical infrastructure and growth projects [30] Q&A Session Summary Question: Details on the exit from the partnership with Oben - Management clarified that the exit involves transitioning sales and distribution aspects to Oben while maintaining resin supply, allowing focus on core capabilities [34][36] Question: Impact of the nylon downturn on product mix - Management indicated that efforts are being made to commercialize recycled content products to maintain a favorable product mix during the downturn [38][40] Question: Resilience of the Chemical Intermediates portfolio - Management noted that while pricing and margins are resilient, demand has declined due to destocking, particularly in the Ag chemical space [51] Question: Order book for ammonium sulfate - Management confirmed a robust order book consistent with historical levels, expecting continued strength as they approach the spring application season [49] Question: M&A opportunities in the current environment - Management expressed openness to evaluating accretive M&A opportunities that align with their disciplined capital allocation approach [67][68]

Financial Performance - Sales for the three months ended September 30, 2023, decreased by $155.9 million (approximately 32.6%) compared to the prior year period, totaling $322.9 million[102]. - Sales for the nine months ended September 30, 2023, decreased by $390.2 million (approximately 25.3%) compared to the prior year period, totaling $1,151.4 million[104]. - Gross margin percentage for the three months ended September 30, 2023, was 2.5%, down from 7.3% in the prior year period[106]. - Net income for the three months ended September 30, 2023, was a loss of $8.0 million compared to a profit of $10.0 million in the prior year period[115]. - Adjusted EBITDA for the third quarter of 2023 was $7.321 million, a significant decrease from $33.313 million in the third quarter of 2022, resulting in an Adjusted EBITDA margin of 2.3% compared to 7.0% in the prior year[119]. - Total sales for the third quarter of 2023 were $322.907 million, down from $478.769 million in the same quarter of 2022, reflecting a year-over-year decline of approximately 32.5%[119]. Operational Changes - The company ceased production of certain low-margin oximes products, incurring an unfavorable impact of approximately $2.4 million to pre-tax income in Q3 2023[97]. - The company has implemented contingency measures to support operations during labor strikes, with recent agreements ratified for its Hopewell facilities[99][100]. - The company’s integrated supply chain includes five U.S.-based manufacturing facilities, enhancing operational efficiency and product offerings[86]. Capital Management - The company has a share repurchase program authorized for up to an additional $75 million of common stock, with no expiration date[98]. - The company has authorized share repurchase programs totaling $225 million, with $76.6 million remaining available for repurchases as of September 30, 2023[126]. - The Company declared dividends of $0.160 per share on November 3, 2023, payable on November 28, 2023[101]. - The Company declared a dividend of $0.160 per share on November 3, 2023, with an approximate total payout of $4.3 million[130]. - The company expects future cash needs to focus on operating activities, working capital, capital expenditures, and dividends, reflecting a disciplined capital deployment strategy[122]. Cash Flow and Financing - Cash provided by operating activities decreased by $146.6 million for the nine months ended September 30, 2023, totaling $57.4 million compared to $203.9 million in the prior year[138]. - Cash used for investing activities decreased by $88.6 million, primarily due to the absence of a $97.5 million acquisition of U.S. Amines in the current period[139]. - Cash used for financing activities decreased by $39.5 million, with share repurchases totaling $37.7 million and dividends of approximately $12.4 million during the nine months ended September 30, 2023[140]. - As of September 30, 2023, the Company had a borrowed balance of $170 million under the Revolving Credit Facility, with approximately $329 million available credit[137]. - The Company entered into a new Credit Agreement on October 27, 2021, providing a senior secured revolving credit facility of $500 million with a maturity date of October 27, 2026[132]. Market Position and Product Offering - The company is the world's largest single-site producer of ammonium sulfate fertilizer as of September 30, 2023, leveraging its Hopewell facility's size and technology[89]. - The company’s ammonium sulfate product is positioned to deliver the most readily available sulfur and nitrogen to crops compared to other fertilizers[92]. - The North American ammonium sulfate demand and pricing are typically strongest in the first half of the year, reflecting seasonal agricultural cycles[93]. - Global prices for Nylon 6 resin and caprolactam are influenced by supply and demand trends, with prices typically tracking a spread over the cost of raw materials[90]. Tax and Regulatory Considerations - The effective tax rate for the three months ended September 30, 2023, was 20.7%, slightly down from 21.4% in the prior year period[112]. - The Company continues to evaluate the provisions of the Inflation Reduction Act of 2022 related to energy tax credits[114]. Interest and Debt Management - A 25-basis point fluctuation in interest rates would result in an increase or decrease to the Company's interest expense of approximately $0.4 million based on current borrowing levels[146]. - The transition from LIBOR to Adjusted Term SOFR as the benchmark rate was effective July 1, 2023, with applicable margins of 0.25% for base rate loans and 1.25% for Adjusted Term SOFR loans[134]. - The Company is required 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[136]. - The Company was in compliance with all covenants under the Credit Agreement as of September 30, 2023[136].

Financial Data and Key Metrics Changes - Sales for Q2 2023 were $428 million, a decrease of approximately 27% compared to the prior year [9] - Adjusted EBITDA was $66 million, with adjusted earnings per share at $1.25 [11] - Free cash flow was approximately $16 million, with cash flow from operations decreasing by roughly $61 million year-over-year [11] Business Line Data and Key Metrics Changes - In the Nylon Solutions segment, global pricing pressure continued due to unfavorable supply and demand conditions, with significant challenges from low-priced imports [14] - The Chemical Intermediates segment saw improved acetone prices over refinery-grade propylene costs, although demand remained soft [16] - The Plant Nutrients segment experienced a decline in nitrogen fertilizer pricing, but in-season customer demand picked up, particularly for ammonium sulfate [17][18] Market Data and Key Metrics Changes - The Asia caprolactam over benzene spreads averaged roughly $800 per ton, remaining flat sequentially but down significantly year-over-year [14] - Building construction indicators were mixed, with no recovery in volume or price in the fiber and filament space [15] - The export market for nitrogen saw cautious buying behavior, particularly from Brazil, as nitrogen prices fell [18] Company Strategy and Development Direction - The company is focused on sustainability initiatives, including the launch of 100% post-consumer recycled nylon [22] - A disciplined capital deployment framework is being executed to drive operational performance and shareholder value [8] - The company anticipates seasonality impacts in its Plant Nutrients business and demand weakness in certain market segments [25] Management's Comments on Operating Environment and Future Outlook - Management noted the dynamic macro environment and the challenges posed by lower nitrogen and raw material pricing [5] - There is confidence in the company's ability to navigate through various macroeconomic cycles, supported by a diversified business model [7] - The outlook for 2023 remains consistent, with expectations of continued resilience despite headwinds in certain markets [25] Other Important Information - The company plans to publish its annual sustainability report, highlighting progress in ESG performance [6] - A planned plant turnaround is expected to impact pre-tax income by $25 million to $30 million in Q3 2023 [26] Q&A Session Summary Question: How would a trade case against Nylon 6 from China compare to acetone or ammonium sulfate? - Management is assessing options and monitoring industry dynamics, emphasizing the importance of fair trade practices [30] Question: What types of agricultural products does the U.S. supply and how did it perform this quarter? - The company supplies herbicides and has seen destocking due to high inventory levels, but underlying fundamentals may support future opportunities [32] Question: What is the feedstock for the post-consumer recycled nylon? - The feedstock includes monomers reclaimed from customer waste streams, expanding the opportunity set for the company [34] Question: What is the comfort level with inventories as of June 30? - The company ended Q2 with $226 million in inventory, which is flat sequentially but up year-over-year, with expectations for a reduction in the second half [38] Question: What are the CapEx plans for this year? - The company expects a significant ramp-up in CapEx spending in the second half of the year, particularly related to planned turnarounds and infrastructure projects [42] Question: Are there other nylon chain products being exported from China? - Management noted that China is exporting significant volumes of nylon and ammonium sulfate, impacting global markets [45] Question: Is the U.S. in an industrial recession? - Management acknowledged the contraction in manufacturing PMIs and destocking trends, indicating challenges in the current macro environment [47]

Financial Performance - AdvanSix reported sales of $428 million for 2Q23 [4], a decrease of 27% compared to the prior year [6, 8] - Adjusted EBITDA for 2Q23 was $66 million, with an Adjusted EBITDA Margin of 154% [4] This represents a 38% decrease in Adjusted EBITDA compared to 2Q22 [8] - The company's Net Income for 2Q23 was $327 million, a 46% decrease compared to $652 million in 2Q22 [4, 8] - Adjusted Diluted EPS for 2Q23 was $125, compared to $230 in 2Q22 [8] - Free Cash Flow for 2Q23 was $16 million [4] Market Dynamics - Global nylon pricing remains pressured due to soft industry conditions and unfavorable supply and demand [4] - North American acetone supply and demand continues to be balanced [4] - Global Composite CPL-BNZ Spread decreased by 31% year-over-year in 2Q23, while Asia CPL-BNZ Spread decreased by 21% [14] - Corn Belt Ammonium Sulfate (AS) price decreased by 45% year-over-year in 2Q23 [14] - Acetone prices also experienced declines, with Sm/Med Buyer Price down 23% and Large Buyer Price down 28% year-over-year [14] Capital Allocation and Sustainability - AdvanSix returned approximately $19 million of cash to shareholders in 2Q23, including ~$15 million in share repurchases and ~$4 million in dividends [4] - The quarterly cash dividend was increased by 10% to $016 per share [4] - The company introduced a new line of Aegis® Nylon 6 resin products certified as 100% Post-Consumer Recycled (PCR) [4, 21] Outlook - AdvanSix anticipates a sequential domestic pricing decline for North American ammonium sulfate in 3Q23 due to typical seasonality [24] - The company expects pre-tax income impact of planned plant turnarounds to be $25 million to $30 million in 3Q23, totaling $28 million to $33 million for the full year [24] - Capex is expected to be $110 million to $120 million for 2023 [24]

Sales Performance - Sales for the three months ended June 2023 were $427,940, a decrease of 26.7% compared to $583,736 for the same period in 2022[99]. - Sales for the six months ended June 2023 were $828,484, down 22.0% from $1,062,809 for the same period in 2022[99]. - Sales decreased by $155.8 million (approximately 27%) in the three months ended June 30, 2023, compared to the prior year period, primarily due to unfavorable market-based pricing and lower sales volume[100]. - For the six months ended June 30, 2023, sales decreased by $234.3 million (approximately 22%), driven by unfavorable market-based pricing and decreased sales volume, partially offset by the acquisition of U.S. Amines (approximately 1%)[101]. - The acquisition of U.S. Amines contributed approximately 1% to sales in the six months ended June 30, 2023, partially offsetting the overall sales decline[101]. Financial Results - Net income for the three months ended June 30, 2023, was $32.7 million, compared to $65.2 million in the prior year period[111]. - Net income for the three months ended June 30, 2023, was $32.7 million, a decrease of 50% compared to $65.2 million for the same period in 2022[116]. - Adjusted net income (non-GAAP) for the same period was $35.2 million, down from $67.3 million year-over-year[116]. - Basic EPS for Q2 2023 was $1.19, a decline of 48.6% from $2.31 in Q2 2022[116]. - Adjusted EBITDA for the three months ended June 30, 2023, was $65.8 million, down from $105.4 million in the prior year period, with an Adjusted EBITDA Margin of 15.4%[114]. Costs and Expenses - Costs of goods sold decreased by $116.8 million (approximately 24%) in the three months ended June 30, 2023, due to decreased prices of raw materials and lower sales volume[102]. - Gross margin percentage decreased to 15.9% in the three months ended June 30, 2023, down from 18.3% in the prior year period, primarily due to market-based pricing impacts[104]. - Selling, general and administrative expenses increased by $3.2 million in the three months ended June 30, 2023, primarily due to upgrades to enterprise resource planning systems[105]. Cash Flow and Capital Expenditures - Cash provided by operating activities decreased by $108.5 million to $36.6 million for the six months ended June 30, 2023, compared to $145.1 million in the prior year period[134]. - Cash used for investing activities decreased by $91.5 million to $(45.9) million for the six months ended June 30, 2023, primarily due to a prior year acquisition of U.S. Amines for approximately $97.5 million[135]. - Cash used for financing activities increased by $5.7 million to $(11.1) million for the six months ended June 30, 2023, driven by share repurchases of $28.4 million and dividends of approximately $8.0 million[136]. - Capital expenditures for the six months ended June 30, 2023, amounted to $43.9 million, with total expected capital expenditures for 2023 projected to be approximately $110 million to $120 million[138]. - Capital expenditures are projected to be between $110 million and $120 million in 2023, up from $89 million in 2022[119]. Shareholder Returns - The company has authorized a share repurchase program of up to an additional $75 million of common stock, with no expiration date[95]. - The company declared dividends of $0.160 per share on August 4, 2023, $0.145 per share on May 5, 2023, and $0.145 per share on February 17, 2023[98]. - The company declared a dividend of $0.160 per share on August 4, 2023, totaling approximately $4.4 million[126]. - The company has repurchased a total of 5,274,989 shares for $164.4 million at an average price of $31.17 per share as of June 30, 2023[122]. Operational Highlights - The company is the world's largest single-site producer of ammonium sulfate fertilizer as of June 30, 2023, due to its Hopewell manufacturing facility's size and technology[88]. - The company’s Hopewell, VA facility is one of the world's largest single-site producers of caprolactam as of June 30, 2023[86]. - The company produces ammonium sulfate fertilizer continuously, but quarterly sales experience seasonality based on the growing seasons in North and South America[93]. - The company has implemented contingency measures to support operations during labor strikes, ensuring minimal impact on results[96]. - The Hopewell South bargaining unit ratified a new five-year collective bargaining agreement on May 8, 2023, following a labor strike affecting approximately 340 workers[96]. Tax and Regulatory Considerations - The effective tax rate for the three months ended June 30, 2023, was 23.5%, higher than the prior year period due to state tax legislation changes[108]. - The company continues to evaluate the provisions of the Inflation Reduction Act of 2022 related to energy credits in relation to sustainability initiatives[110]. Debt and Liquidity - The company had approximately $10.5 million in cash on hand and $359 million available under its revolving credit facility as of June 30, 2023[119]. - The company had a borrowed balance of $140 million under the Revolving Credit Facility as of June 30, 2023, with available credit of approximately $359 million[133]. - The company is in compliance with all covenants of its credit agreement as of June 30, 2023[132]. - The company expects cash contributions of up to $5 million to its defined benefit pension plan in 2023[121]. - The company has a scheduled maturity date for its revolving credit facility on October 27, 2026[129]. 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 $0.4 million based on current borrowing levels[141]. Working Capital Management - The company experienced a $69.8 million unfavorable cash impact from working capital changes year-over-year, primarily from accounts receivable and inventories[134]. - The company reported a $60.5 million decrease in net income contributing to the decline in cash provided by operating activities[134]. - Cash payments for capital expenditures increased by approximately $5.1 million during the current year period due to increased spending on critical infrastructure and growth projects[135]. - The company continues to monitor its critical accounting policies and has not made material changes to its methodologies or assumptions[139].

AdvanSix Inc. (NYSE:ASIX) Q1 2023 Earnings Conference Call May 5, 2023 9:00 AM ET Company Participants Erin Kane - President, Chief Executive Officer Michael Preston - Senior Vice President, Chief Financial Officer Adam Kressel - Vice President, Investor Relations, Treasurer Conference Call Participants Vincent Anderson - Stifel David Silver - CL King Charles Neivert - Piper Sandler Operator Good day and welcome to the AdvanSix first quarter 2023 earnings conference call. All participants will be in a list ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 1-37774 AdvanSix Inc. (Exact name of registrant as specified in its charter) | --- | --- | |--------------------------- ...

AdvanSix Inc. (NYSE:ASIX) Q4 2022 Results Conference Call February 17, 2023 9:00 AM ET Company Participants Adam Kressel - Vice President, Investor Relations and Treasurer Erin Kane - President, Chief Executive Officer Michael Preston - Senior Vice President, Chief Financial Officer Conference Call Participants Charles Neivert - Piper Sandler Vincent Anderson - Stifel David Silver - CL King Operator Good morning, and welcome to the AdvanSix Fourth Quarter 2022 Earnings Conference Call. All participants will ...