Robust sales, earnings and cash flow - strong
execution in dynamic environment
Sales of $446 million, up 58% versus prior year
driven by price and volume improvement
Earnings Per Share of $1.51, up $1.53 versus
prior year
Cash Flow from Operations of $76 million, up
$41 million versus prior year
AdvanSix (NYSE: ASIX) today announced its financial
results for the third quarter ending September 30, 2021. Overall,
the Company generated robust sales, earnings and cash flow in the
quarter reflecting strong execution amid improving end market
demand and tight industry supply conditions.
Third Quarter 2021
Summary
- Sales up approximately 58% versus prior year driven by 28%
favorable impact of market-based pricing, 22% higher raw material
pass-through pricing and 8% higher volume
- Net Income of $43.9 million, an increase of $44.6 million
versus the prior year
- EBITDA of $75.2 million, an increase of $59.4 million versus
the prior year
- EBITDA Margin of 16.8%, an increase of 1120 bps versus the
prior year
- Cash Flow from Operations of $76.5 million, an increase of
$41.0 million versus the prior year
- Capital Expenditures of $13.0 million, a decrease of $3.0
million versus the prior year
- Free Cash Flow of $63.5 million, an increase of $43.9 million
versus the prior year
- Announced the initiation of a $0.125 per share quarterly
dividend payable November 23, 2021
“We continued to execute well in the third quarter while
supporting our customers to successfully navigate the current set
of industry dynamics," said Erin Kane, president and CEO of
AdvanSix. "Our performance was supported by strong pricing and
volume improvement including continued contributions from
differentiated products amid favorable end market conditions and
tight industry supply. Our earnings results were above the high-end
of the outlook we provided at our September 28th Investor Day
driven primarily by better-than-expected pricing, net of raw
material costs, as well as the timing of ammonium sulfate
sales."
Summary third quarter 2021 financial results for the Company are
included below:
($ in Thousands, Except Earnings Per
Share)
3Q 2021
3Q 2020
Sales
$446,495
$281,910
Net Income (Loss)
43,942
(692)
Diluted Earnings (Loss) Per Share
$1.51
($0.02)
EBITDA (1)
75,188
15,806
EBITDA Margin % (1)
16.8%
5.6%
Cash Flow from Operations
76,488
35,533
Free Cash Flow (1)(2)
63,495
19,572
(1)
See “Non-GAAP Measures” included in this
press release for non-GAAP reconciliations
(2)
Net cash provided by operating activities
less capital expenditures
Sales of $446.5 million increased approximately 58% versus the
prior year. Raw material pass-through pricing was favorable by 22%
following a net cost increase in benzene and propylene (inputs to
cumene which is a key feedstock to our products). Market-based
pricing was favorable by 28% compared to the prior year driven by
higher pricing across each of our product lines. Sales volume in
the quarter increased approximately 8% driven primarily by improved
end market demand across our ammonium sulfate, nylon and
caprolactam product lines.
Sales by product line and approximate percentage of total sales
are included below:
($ in Thousands)
3Q 2021
3Q 2020
Sales
% of Total
Sales
% of Total
Nylon
$
122,110
27%
$
73,555
26%
Caprolactam
80,265
18%
52,409
18%
Chemical Intermediates
130,920
29%
94,770
34%
Ammonium Sulfate
113,200
26%
61,176
22%
$
446,495
100%
$
281,910
100%
EBITDA of $75.2 million in the quarter increased $59.4 million
versus the prior year primarily due to higher market-based pricing,
net of increased raw material costs, and the net approximately $20
million favorable impact of planned plant turnarounds
year-over-year. 3Q 2021 EBITDA included approximately $2 million
favorable impact of additional insurance proceeds related to the
2019 shutdown of cumene supplier Philadelphia Energy Solutions
(PES).
Earnings per share of $1.51 increased $1.53 versus the prior
year driven primarily by the factors discussed above.
Cash flow from operations of $76.5 million in the quarter
increased $41.0 million versus the prior year primarily due to
higher net income and the favorable impact of changes in working
capital. Capital expenditures of $13.0 million in the quarter
decreased $3.0 million versus the prior year reflecting capital
process efficiencies and timing of project execution.
Dividend
As announced on September 28, 2021, the company's Board of
Directors declared a quarterly cash dividend of $0.125 per share on
the company's common stock, payable on November 23, 2021 to
stockholders of record as of the close of business on November 9,
2021.
Credit Agreement
On October 27, 2021, the Company completed a refinancing of its
existing credit facility by entering into a new 5-year, $500
million revolving credit facility providing increased liquidity and
flexibility at lower borrowing costs reflecting strong business
performance and more favorable credit market conditions.
Outlook
- Expect steady North America nylon demand amid favorable end
market conditions and tight industry supply
- Expect robust agricultural industry fundamentals to continue
through 2022 planting season
- Expect strong demand for chemical intermediates to continue;
Expect continued balancing of North America acetone supply and
demand
- Expect Capital Expenditures to be approximately $63 million in
2021; Continue to expect $95 to $105 million in 2022 reflecting
scope of planned plant turnarounds and timing of project
execution
- Expect pre-tax income impact of planned plant turnarounds to be
approximately $30 million in 2021
"The outlook for our business remains favorable. We are building
off a strong foundation with leading positions across our key
product lines aligned to a diverse and growing set of end uses and
applications. Our enhanced capital allocation strategy, including
the recent initiation of a quarterly dividend, is creating further
shareholder value over the long-term. We've demonstrated our
ability to successfully perform through all market conditions and
expand our earnings base and are even more excited about the
opportunities that lie ahead for AdvanSix,” concluded Kane.
Conference Call
Information
AdvanSix will discuss its results during its investor conference
call today starting at 9:00 a.m. ET. To participate on the
conference call, dial (844) 855-9494 (domestic) or (412) 858-4602
(international) approximately 10 minutes before the 9:00 a.m. ET
start, and tell the operator that you are dialing in for AdvanSix’s
third quarter 2021 earnings call. The live webcast of the investor
call as well as related presentation materials can be accessed at
http://investors.advansix.com. Investors can hear a replay of the
conference call from 12 noon ET on October 29 until 12 noon ET on
November 5 by dialing (877) 344-7529 (domestic) or (412) 317-0088
(international). The access code is 10160663.
About AdvanSix
AdvanSix plays a critical role in global supply chains,
innovating and delivering essential products for our customers in a
wide variety of end markets and applications that touch people’s
lives, such as building and construction, fertilizers, plastics,
solvents, packaging, paints, coatings, adhesives and electronics.
Our reliable and sustainable supply of quality products emerges
from the vertically integrated value chain of our three U.S.-based
manufacturing facilities. AdvanSix strives to deliver best-in-class
customer experiences and differentiated products in the industries
of nylon solutions, chemical intermediates, and plant nutrients,
guided by our core values of Safety, Integrity, Accountability and
Respect. More information on AdvanSix can be found at
http://www.advansix.com.
Forward Looking Statements
This release contains certain statements that may be deemed
“forward-looking statements” within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical fact, that address activities,
events or developments that our management intends, expects,
projects, believes or anticipates will or may occur in the future
are forward-looking statements. Forward-looking statements may be
identified by words such as "expect," "anticipate," "estimate,"
“outlook,” "project," "strategy," "intend," "plan," "target,"
"goal," "may," "will," "should" and "believe" and other variations
or similar terminology and expressions. Although we believe
forward-looking statements are based upon reasonable assumptions,
such statements involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control and difficult
to predict, which may cause the actual results or performance of
the Company to be materially different from any future results or
performance expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not
limited to: general economic and financial conditions in the U.S.
and globally, including the impact of the coronavirus (COVID-19)
pandemic and any resurgences; the scope, shape and pace of recovery
of the pandemic; the timing of the distribution and efficacy of
vaccines or treatments for COVID-19 that are currently available or
may be available in the future and related vaccination rates; the
severity and transmissibility of newly identified strains of
COVID-19; governmental, business and individuals’ actions in
response to the pandemic, including our business continuity and
cash optimization plans that have been, and may in the future be,
implemented; the impact of social and economic restrictions and
other containment measures taken to combat virus transmission; the
effect on our customers’ demand for our products and our suppliers’
ability to manufacture and deliver our raw materials, including
implications of reduced refinery utilization in the U.S.; our
ability to sell and provide our goods and services, including as a
result of travel and other COVID-19-related restrictions; the
ability of our customers to pay for our products; and any closures
of our and our customers’ offices and facilities; risks associated
with increased phishing, compromised business emails and other
cybersecurity attacks and disruptions to our technology
infrastructure; risks associated with employees working remotely or
operating with a reduced workforce; risks associated with our
indebtedness including compliance with financial and restrictive
covenants, and our ability to access capital on reasonable terms,
at a reasonable cost or at all due to economic conditions resulting
from COVID-19 or otherwise; the impact of scheduled turnarounds and
significant unplanned downtime and interruptions of production or
logistics operations as a result of mechanical issues or other
unanticipated events such as fires, severe weather conditions,
natural disasters and pandemics; price fluctuations, cost increases
and supply of raw materials; our operations and growth projects
requiring substantial capital; growth rates and cyclicality of the
industries we serve including global changes in supply and demand;
failure to develop and commercialize new products or technologies;
loss of significant customer relationships; adverse trade and tax
policies; extensive environmental, health and safety laws that
apply to our operations; hazards associated with chemical
manufacturing, storage and transportation; litigation associated
with chemical manufacturing and our business operations generally;
inability to acquire and integrate businesses, assets, products or
technologies; protection of our intellectual property and
proprietary information; prolonged work stoppages as a result of
labor difficulties or otherwise; cybersecurity, data privacy
incidents and disruptions to our technology infrastructure; failure
to maintain effective internal controls; our ability to declare and
pay quarterly cash dividends and the amounts and timing of any
future dividends; our ability to repurchase our common stock and
the amount and timing of any future repurchases; disruptions in
supply chain, transportation and logistics; potential for
uncertainty regarding qualification for tax treatment of our
spin-off; fluctuations in our stock price; and changes in laws or
regulations applicable to our business. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this release. Such forward-looking
statements are not guarantees of future performance, and actual
results, developments and business decisions may differ from those
envisaged by such forward-looking statements. We identify the
principal risks and uncertainties that affect our performance in
our filings with the Securities and Exchange Commission (SEC),
including the risk factors in Part 1, Item 1A of our Annual Report
on Form 10-K for the year ended December 31, 2020, as updated in
subsequent reports filed with the SEC.
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures
intended to supplement, not to act as substitutes for, comparable
GAAP measures. Reconciliations of non-GAAP financial measures to
GAAP financial measures are provided in this press release.
Investors are urged to consider carefully the comparable GAAP
measures and the reconciliations to those measures provided.
Non-GAAP measures in this press release may be calculated in a way
that is not comparable to similarly-titled measures reported by
other companies.
AdvanSix Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(Dollars in thousands, except
share and per share amounts)
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
7,239
$
10,606
Accounts and other receivables – net
170,941
123,554
Inventories – net
142,911
180,085
Taxes receivable
337
12,289
Other current assets
11,654
6,969
Total current assets
333,082
333,503
Property, plant and equipment – net
759,373
765,469
Operating lease right-of-use assets
142,931
114,484
Goodwill
17,592
15,005
Other assets
37,384
34,946
Total assets
$
1,290,362
$
1,263,407
LIABILITIES
Current liabilities:
Accounts payable
$
217,993
$
190,227
Accrued liabilities
48,315
41,152
Operating lease liabilities –
short-term
36,694
29,279
Deferred income and customer advances
3,138
26,379
Total current liabilities
306,140
287,037
Deferred income taxes
137,241
125,575
Operating lease liabilities –
long-term
106,773
85,605
Line of credit – long-term
135,000
275,000
Postretirement benefit obligations
27,119
39,168
Other liabilities
11,778
6,899
Total liabilities
724,051
819,284
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 200,000,000
shares authorized; 31,738,648 shares issued and 28,124,446
outstanding at September 30, 2021; 31,627,139 shares issued and
28,033,227 outstanding at December 31, 2020
317
316
Preferred stock, par value $0.01;
50,000,000 shares authorized and 0 shares issued and outstanding at
September 30, 2021 and December 31, 2020
—
—
Treasury stock at par (3,614,202 shares at
September 30, 2021; 3,593,912 shares at December 31, 2020)
(36
)
(36
)
Additional paid-in capital
192,950
184,732
Retained earnings
387,932
275,243
Accumulated other comprehensive loss
(14,852
)
(16,132
)
Total stockholders' equity
566,311
444,123
Total liabilities and stockholders'
equity
$
1,290,362
$
1,263,407
AdvanSix Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(Dollars in thousands, except
share and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Sales
$
446,495
$
281,910
$
1,260,561
$
817,644
Costs, expenses and other:
Costs of goods sold
366,180
265,758
1,040,965
736,504
Selling, general and administrative
expenses
21,121
16,177
62,112
50,827
Interest expense, net
1,174
1,981
4,096
5,827
Other non-operating expense (income),
net
331
(334
)
349
216
Total costs, expenses and other
388,806
283,582
1,107,522
793,374
Income (loss) before taxes
57,689
(1,672
)
153,039
24,270
Income tax expense (benefit)
13,747
(980
)
36,835
4,957
Net income (loss)
$
43,942
$
(692
)
$
116,204
$
19,313
Earnings (loss) per common share
Basic
$
1.56
$
(0.02
)
$
4.13
$
0.69
Diluted
$
1.51
$
(0.02
)
$
4.02
$
0.69
Weighted average common shares
outstanding
Basic
28,182,810
28,079,937
28,136,511
28,037,651
Diluted
29,100,276
28,079,937
28,920,832
28,092,712
AdvanSix Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Cash flows from operating
activities:
Net income
$
43,942
$
(692
)
$
116,204
$
19,313
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
16,325
15,497
49,058
45,061
Loss on disposal of assets
409
95
842
143
Deferred income taxes
3,423
1,389
11,235
11,895
Stock-based compensation
2,499
603
8,606
3,503
Accretion of deferred financing fees
142
141
424
412
Changes in assets and liabilities, net of
business acquisitions:
Accounts and other receivables
(5,575
)
(22,385
)
(46,549
)
7,445
Inventories
(2,807
)
9,851
37,885
(2,163
)
Taxes receivable
26
(3,634
)
11,952
(11,760
)
Accounts payable
20,226
31,285
27,047
(9,939
)
Accrued liabilities
1,843
1,840
6,418
7,776
Deferred income and customer advances
188
913
(23,241
)
(13,520
)
Other assets and liabilities
(4,153
)
630
(14,358
)
5,920
Net cash provided by operating
activities
76,488
35,533
185,523
64,086
Cash flows from investing
activities:
Expenditures for property, plant and
equipment
(12,993
)
(15,961
)
(37,471
)
(67,563
)
Acquisition of business
—
—
(9,523
)
—
Other investing activities
(493
)
(373
)
(975
)
(898
)
Net cash used for investing activities
(13,486
)
(16,334
)
(47,969
)
(68,461
)
Cash flows from financing
activities:
Borrowings from line of credit
29,000
49,000
133,500
268,500
Payments of line of credit
(89,000
)
(124,000
)
(273,500
)
(252,500
)
Payment of line of credit facility
fees
—
—
—
(425
)
Principal payments of finance leases
(170
)
(176
)
(534
)
(534
)
Purchase of treasury stock
—
—
(589
)
(1,032
)
Issuance of common stock
156
—
202
2
Net cash provided by (used for) financing
activities
(60,014
)
(75,176
)
(140,921
)
14,011
Net change in cash and cash
equivalents
2,988
(55,977
)
(3,367
)
9,636
Cash and cash equivalents at beginning of
period
4,251
72,663
10,606
7,050
Cash and cash equivalents at the end of
period
$
7,239
$
16,686
$
7,239
$
16,686
Supplemental non-cash investing
activities:
Capital expenditures included in accounts
payable
$
6,783
$
5,802
AdvanSix Inc.
Non-GAAP Measures
(Dollars in thousands)
Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net cash provided by operating
activities
$
76,488
$
35,533
$
185,523
$
64,086
Expenditures for property, plant and
equipment
(12,993
)
(15,961
)
(37,471
)
(67,563
)
Free cash flow (1)
$
63,495
$
19,572
$
148,052
$
(3,477
)
(1) Free cash flow is a non-GAAP measure
defined as Net cash provided by operating activities less
Expenditures for property, plant and equipment
The Company believes that this metric is useful to investors and
management as a measure to evaluate our ability to generate cash
flow from business operations and the impact that this cash flow
has on our liquidity.
Reconciliation of Net Income
to EBITDA
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Net income (loss)
$
43,942
$
(692
)
$
116,204
$
19,313
Interest expense, net
1,174
1,981
4,096
5,827
Income tax expense (benefit)
13,747
(980
)
36,835
4,957
Depreciation and amortization
16,325
15,497
49,058
45,061
EBITDA (2)
$
75,188
$
15,806
$
206,193
$
75,158
Sales
$
446,495
$
281,910
$
1,260,561
$
817,644
EBITDA margin (3)
16.8
%
5.6
%
16.4
%
9.2
%
(2) EBITDA is a non-GAAP measure defined
as Net Income before Interest, Income Taxes, Depreciation and
Amortization
(3) EBITDA margin is defined as EBITDA
divided by Sales
The Company believes the non-GAAP financial measures presented
in this release provide meaningful supplemental information as they
are used by the Company’s management to evaluate the Company’s
operating performance, enhance a reader’s understanding of the
financial performance of the Company, and facilitate a better
comparison among fiscal periods and performance relative to its
competitors, as these non-GAAP measures exclude items that are not
considered core to the Company’s operations.
AdvanSix Inc.
Appendix
(Pre-tax income impact,
Dollars in millions)
Planned
Plant Turnaround Schedule (4)
1Q
2Q
3Q
4Q
FY
2017
—
~$10
~$4
~$20
~$34
2018
~$2
~$10
~$30
—
~$42
2019
—
~$5
~$5
~$25
~$35
2020
~$2
~$7
~$20
~$2
~$31
2021E
~$3
~$8
—
~$19
~$30
(4) Primarily reflects the impact of fixed
cost absorption, maintenance expense, and the purchase of
feedstocks which are normally manufactured by the Company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211029005125/en/
Media Debra Lewis (973) 526-1767
debra.lewis@advansix.com
Investors Adam Kressel (973) 526-1700
adam.kressel@advansix.com
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