Sales of $584 million, up 33% versus prior
year
Earnings Per Share of $2.23; Adjusted Earnings
Per Share of $2.30, up 40% versus prior year
Cash Flow from Operations of $96 million, up
85% versus prior year
Announced 16% increase in quarterly dividend to
$0.145 per share
AdvanSix (NYSE: ASIX) today announced its financial
results for the second quarter ending June 30, 2022. Overall, the
Company generated robust quarterly sales, earnings and cash
flow.
Second Quarter 2022
Summary
- Sales up approximately 33% versus prior year driven by 26%
favorable impact of market-based pricing, 6% higher raw material
pass-through pricing, and 5% contribution from acquisitions,
partially offset by 4% lower volume
- Net Income of $65.2 million, an increase of $21.0 million
versus the prior year
- Adjusted EBITDA of $105.4 million, an increase of $25.7 million
versus the prior year
- Cash Flow from Operations of $95.9 million, an increase of
$43.9 million versus the prior year
- Capital Expenditures of $17.8 million, an increase of $7.5
million versus the prior year
- Free Cash Flow of $78.1 million, an increase of $36.5 million
versus the prior year
- Repurchased 87,251 shares for approximately $3 million
“Our robust second quarter results, featuring top and bottom
line growth sequentially and year-over-year, reflect the continued
strength and advantage of our business model and diverse product
portfolio," said Erin Kane, president and CEO of AdvanSix. "In the
quarter, strong commercial performance to meet customer demand more
than offset higher inflation as well as lower sales volume
primarily due to unfavorable weather conditions driving a reduction
of in-season fertilizer demand. Our healthy cash flow performance
reflects the quality of our earnings while supporting continued
reinvestment in the business and return of cash to shareholders
including opportunistic share repurchases and a 16 percent increase
in our quarterly cash dividend. Our integration of U.S. Amines is
progressing very well as expected, adding additional value to our
portfolio."
Summary second quarter 2022 financial results for the Company
are included below:
($ in Thousands, Except Earnings Per
Share)
2Q 2022
2Q 2021
Sales
$583,736
$437,682
Net Income
65,157
44,131
Diluted Earnings Per Share
$2.23
$1.53
Adjusted Diluted Earnings Per Share
(1)
$2.30
$1.64
Adjusted EBITDA (1)
105,426
79,700
Adjusted EBITDA Margin % (1)
18.1%
18.2%
Cash Flow from Operations
95,891
51,945
Free Cash Flow (1)(2)
78,131
41,644
(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 $583.7 million in the quarter increased approximately
33% versus the prior year. Market-based pricing was favorable by
26% compared to the prior year driven by strong commercial
execution to capture higher pricing across our ammonium sulfate and
nylon product lines, partially offset by lower pricing in chemical
intermediates, primarily acetone. Raw material pass-through pricing
was favorable by 6% following a net cost increase in benzene and
propylene (inputs to cumene which is a key feedstock to our
products). The acquisition of U.S. Amines contributed approximately
5% to sales in the quarter. Sales volume decreased approximately 4%
driven primarily by unfavorable weather conditions driving a
reduction of in-season fertilizer demand, and lower production
output compared to the prior year.
Sales by product line and approximate percentage of total sales
are included below:
($ in Thousands)
2Q 2022
2Q 2021
Sales
% of Total
Sales
% of Total
Nylon
$
132,105
23%
$
111,710
25%
Caprolactam
87,169
15%
81,792
19%
Chemical Intermediates
158,611
27%
144,201
33%
Ammonium Sulfate
205,851
35%
99,979
23%
$
583,736
100%
$
437,682
100%
Adjusted EBITDA of $105.4 million in the quarter increased $25.7
million versus the prior year primarily due to higher market-based
pricing, net of increased raw material costs, particularly natural
gas and sulfur, partially offset by lower sales volume, inflation,
and higher utilities cost driven by natural gas prices.
Adjusted earnings per share of $2.30 increased $0.66 versus the
prior year driven primarily by the factors discussed above.
Cash flow from operations of $95.9 million in the quarter
increased $43.9 million versus the prior year primarily due to
higher net income and the favorable impact of changes in working
capital. Capital expenditures of $17.8 million in the quarter
increased $7.5 million versus the prior year.
Dividend
The Company's Board of Directors declared a quarterly cash
dividend of $0.145 per share on the Company's common stock. This
represents a 16% increase from the previous quarter's dividend. The
dividend is payable on August 30, 2022 to stockholders of record as
of the close of business on August 16, 2022.
Outlook
- Targeting significant earnings growth in 2022 supported by
strength of our integrated business model and diverse end market
exposure
- Expect continued healthy North America demand for nylon and
chemical intermediates
- Expect favorable underlying agriculture industry fundamentals
to continue; North America ammonium sulfate seasonality expected to
drive 3Q22 higher export mix sequentially
- Successful integration of U.S. Amines expected to deliver year
one earnings accretion
- Continue to expect Capital Expenditures to be $95 to $105
million in 2022
- Continue to expect pre-tax income impact of planned plant
turnarounds to be approximately $32 to $37 million in 2022
"Looking forward, we expect continued healthy North America
demand for nylon and chemical intermediates as well as favorable
agriculture, nitrogen and sulfur fertilizer industry fundamentals
particularly into next year's planting season. While the macro
environment continues to be dynamic, we have substantially
increased the earnings power of this business. We are
well-positioned to fuel future earnings and cash flow performance
with continued contributions from high-return growth and cost
savings projects, an improved portfolio mix with over $200 million
in sales from differentiated products, and strong and disciplined
capital deployment. Our core strategies continue to support
expectations for AdvanSix's long-term, sustainable performance,”
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
second quarter 2022 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 August 5 until 12 noon ET on
August 12 by dialing (877) 344-7529 (domestic) or (412) 317-0088
(international). The access code is 4764025.
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,
agrochemicals, plastics, solvents, packaging, paints, coatings,
adhesives and electronics. Our reliable and sustainable supply of
quality products emerges from the integrated value chain of our
five 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 potential effects of inflationary
pressures, labor market shortages and supply chain issues;
instability or volatility in financial markets or other unfavorable
economic or business conditions caused by geopolitical concerns,
including as a result of the conflict between Russia and Ukraine;
the scope, shape and pace of recovery of the pandemic including 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; the ability of our customers to
pay for our products; 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; 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, pandemics and geopolitical conflicts and related
events; 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, 2021, 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)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
17,297
$
15,100
Accounts and other receivables – net
246,371
179,087
Inventories – net
155,447
149,570
Other current assets
16,798
6,097
Total current assets
435,913
349,854
Property, plant and equipment – net
785,974
767,964
Operating lease right-of-use assets
130,146
136,207
Goodwill
58,192
17,592
Intangible assets
50,766
17,980
Other assets
22,266
22,402
Total assets
$
1,483,257
$
1,311,999
LIABILITIES
Current liabilities:
Accounts payable
$
272,261
$
211,511
Accrued liabilities
43,449
49,712
Income taxes payable
32
9,723
Operating lease liabilities –
short-term
38,995
36,127
Deferred income and customer advances
1,607
2,749
Total current liabilities
356,344
309,822
Deferred income taxes
148,263
133,330
Operating lease liabilities –
long-term
91,377
100,580
Line of credit – long-term
146,500
135,000
Postretirement benefit obligations
10,659
18,243
Other liabilities
10,905
13,834
Total liabilities
764,048
710,809
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 200,000,000
shares authorized; 31,961,956 shares issued and 28,077,693
outstanding at June 30, 2022; 31,755,430 shares issued and
28,139,954 outstanding at December 31, 2021
320
318
Preferred stock, par value $0.01;
50,000,000 shares authorized and 0 shares issued and outstanding at
June 30, 2022 and December 31, 2021
—
—
Treasury stock at par (3,884,263 shares at
June 30, 2022; 3,615,476 shares at December 31, 2021)
(39
)
(36
)
Additional paid-in capital
192,392
195,931
Retained earnings
532,246
411,516
Accumulated other comprehensive loss
(5,710
)
(6,539
)
Total stockholders' equity
719,209
601,190
Total liabilities and stockholders'
equity
$
1,483,257
$
1,311,999
AdvanSix Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(Dollars in thousands, except
share and per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Sales
$
583,736
$
437,682
$
1,062,809
$
814,065
Costs, expenses and other:
Costs of goods sold
476,835
356,884
852,482
674,783
Selling, general and administrative
expenses
20,841
21,682
42,051
40,990
Interest expense, net
769
1,379
1,332
2,923
Other non-operating (income) expense,
net
172
(211
)
(431
)
19
Total costs, expenses and other
498,617
379,734
895,434
718,715
Income before taxes
85,119
57,948
167,375
95,350
Income tax expense
19,962
13,817
39,145
23,088
Net income
$
65,157
$
44,131
$
128,230
$
72,262
Earnings per common share
Basic
$
2.31
$
1.57
$
4.55
$
2.57
Diluted
$
2.23
$
1.53
$
4.37
$
2.51
Weighted average common shares
outstanding
Basic
28,168,207
28,131,981
28,183,951
28,112,978
Diluted
29,262,709
28,920,177
29,316,792
28,830,727
AdvanSix Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Cash flows from operating
activities:
Net income
$
65,157
$
44,131
$
128,230
$
72,262
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
17,534
16,629
34,226
32,733
Loss on disposal of assets
441
349
800
433
Deferred income taxes
3,077
5,575
2,558
7,812
Stock-based compensation
2,005
3,744
5,379
6,107
Accretion of deferred financing fees
154
141
309
282
Changes in assets and liabilities, net of
business acquisitions:
Accounts and other receivables
(23,743
)
(15,878
)
(52,145
)
(29,048
)
Inventories
4,901
1,706
3,012
40,692
Accounts payable
70,159
20,602
62,130
6,821
Income taxes payable
(27,624
)
—
(9,691
)
—
Accrued liabilities
2,897
3,663
(8,821
)
4,575
Deferred income and customer advances
(827
)
(16,626
)
(1,142
)
(23,429
)
Other assets and liabilities
(18,240
)
(12,091
)
(19,792
)
(10,205
)
Net cash provided by operating
activities
95,891
51,945
145,053
109,035
Cash flows from investing
activities:
Expenditures for property, plant and
equipment
(17,760
)
(10,301
)
(38,779
)
(24,478
)
Acquisition of business
1,133
—
(97,456
)
(9,523
)
Other investing activities
(925
)
(251
)
(1,221
)
(482
)
Net cash used for investing activities
(17,552
)
(10,552
)
(137,456
)
(34,483
)
Cash flows from financing
activities:
Borrowings from line of credit
82,000
50,500
230,500
104,500
Payments of line of credit
(155,500
)
(101,500
)
(219,000
)
(184,500
)
Principal payments of finance leases
(244
)
(165
)
(481
)
(364
)
Dividend payments
(3,515
)
—
(7,032
)
—
Purchase of treasury stock
(3,407
)
(146
)
(10,419
)
(589
)
Issuance of common stock
318
45
1,032
46
Net cash used for financing activities
(80,348
)
(51,266
)
(5,400
)
(80,907
)
Net change in cash and cash
equivalents
(2,009
)
(9,873
)
2,197
(6,355
)
Cash and cash equivalents at beginning of
period
19,306
14,124
15,100
10,606
Cash and cash equivalents at the end of
period
$
17,297
$
4,251
$
17,297
$
4,251
Supplemental non-cash investing
activities:
Capital expenditures included in accounts
payable
$
9,207
$
3,739
AdvanSix Inc.
Non-GAAP Measures
(Dollars in thousands, except
share and per share amounts)
Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
95,891
$
51,945
$
145,053
$
109,035
Expenditures for property, plant and
equipment
(17,760
)
(10,301
)
(38,779
)
(24,478
)
Free cash flow (1)
$
78,131
$
41,644
$
106,274
$
84,557
(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 Adjusted EBITDA and Earnings Per Share to Adjusted Earnings Per
Share
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net income
$
65,157
$
44,131
$
128,230
$
72,262
Non-cash stock-based compensation
2,005
3,744
5,379
6,107
Non-recurring, unusual or extraordinary
expenses
—
—
—
—
Non-cash amortization from
acquisitions
551
65
752
109
One-time M&A costs
—
—
277
172
Benefit from income taxes relating to
reconciling items
(439
)
(578
)
(995
)
(986
)
Adjusted Net Income
67,274
47,362
133,643
77,664
Interest expense, net
769
1,379
1,332
2,923
Income tax expense - adjusted
20,401
14,395
40,141
24,074
Depreciation and amortization -
adjusted
16,982
16,564
33,474
32,624
Adjusted EBITDA
$
105,426
$
79,700
$
208,590
$
137,285
Sales
$
583,736
$
437,682
$
1,062,809
$
814,065
Adjusted EBITDA Margin (2)
18.1%
18.2%
19.6%
16.9%
(2) Adjusted EBITDA Margin is defined as
Adjusted EBITDA divided by Sales
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net Income
$
65,157
$
44,131
$
128,230
$
72,262
Adjusted Net Income
67,274
47,362
133,643
77,664
Weighted-average number of common shares
outstanding - basic
28,168,207
28,131,981
28,183,951
28,112,978
Dilutive effect of equity awards and other
stock-based holdings
1,094,502
788,196
1,132,841
717,749
Weighted-average number of common shares
outstanding - diluted
29,262,709
28,920,177
29,316,792
28,830,727
EPS - Basic
$
2.31
$
1.57
$
4.55
$
2.57
EPS - Diluted
$
2.23
$
1.53
$
4.37
$
2.51
Adjusted EPS - Basic
$
2.39
$
1.68
$
4.74
$
2.76
Adjusted EPS - Diluted
$
2.30
$
1.64
$
4.56
$
2.69
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 (3)
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
2021
~$3
~$8
—
~$18
~$29
2022E
~$1
~$5
$26-31
—
$32-$37
(3) 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/20220804006037/en/
Media Janeen Lawlor (973) 526-1615
janeen.lawlor@advansix.com
Investors Adam Kressel (973) 526-1700
adam.kressel@advansix.com
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