1Q24 Sales of $337 million, down 16% versus prior year

1Q24 Earnings Per Share of ($0.65); Adjusted Earnings Per Share of ($0.56)

1Q24 results include approximately $27 million unfavorable pre-tax income impact from previously announced process-based operational disruption

Continued commitment to corporate social responsibility and sustainability performance with ISCC PLUS certification, and EcoVadis and CDP ratings

AdvanSix (NYSE: ASIX), a diversified chemistry company, today announced its financial results for the first quarter ending March 31, 2024. Overall, its first quarter results were impacted by the previously announced process-based operational disruption at our Frankford, PA manufacturing site with a delayed ramp to targeted utilization rates across our integrated value chain, which has been fully resolved.

First Quarter 2024 Summary

  • Sales down 16% versus prior year driven by 9% unfavorable impact of market-based pricing and a 7% decrease in volume primarily due to the operational disruption at our Frankford site
  • Net Loss of ($17.4) million, a decrease of $52.4 million versus the prior year
  • Adjusted EBITDA of $0.6 million, a decrease of $64.8 million versus the prior year
  • Cash Flow from Operations of ($36.2) million, a decrease of $37.8 million versus the prior year
  • Capital Expenditures of $35.4 million, an increase of $10.8 million versus the prior year
  • Free Cash Flow of ($71.6) million, a decrease of $48.6 million versus the prior year
  • Returned $11 million of cash to shareholders through repurchases and dividends in 1Q24

“I would like to once again thank our customers, partners and teammates for their collaboration throughout the first quarter to mitigate value chain impact as we navigated the operational disruption at our Frankford manufacturing site. The total unfavorable impact to pre-tax income in the first quarter was approximately $27 million comprised of the impact of lost sales and other additional costs, including purchases of replacement product and incremental plant spend,” said Erin Kane, president and CEO of AdvanSix. “We are currently operating at targeted utilization rates across our integrated value chain and are well positioned to serve our key customers, particularly in Plant Nutrients as the domestic planting season progresses and in our acetone portfolio amid a tight global supply and demand environment. Our recent certification to the International Sustainability and Carbon Certification (ISCC) PLUS standard for three of our manufacturing sites helps our customers transform and meet their own sustainability goals, while our third consecutive Platinum rating by EcoVadis and strong ratings by CDP for water security and climate change underscore our commitment to corporate social responsibility and sustainability performance."

Summary first quarter 2024 financial results for the Company are included below:

($ in Thousands, Except Earnings Per Share)

1Q 2024

 

1Q 2023

Sales

$336,829

 

$400,544

Net Income (Loss)

(17,396)

 

34,954

Diluted Earnings Per Share

($0.65)

 

$1.22

Adjusted Diluted Earnings Per Share (1)

($0.56)

 

$1.30

Adjusted EBITDA (1)

595

 

65,354

Adjusted EBITDA Margin % (1)

0.2%

 

16.3%

Cash Flow from Operations

(36,202)

 

1,575

Free Cash Flow (1)(2)

(71,590)

 

(23,028)

(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 $337 million in the quarter decreased approximately 16% versus the prior year. Market-based pricing was unfavorable by 9% compared to the prior year primarily reflecting reduced ammonium sulfate pricing amid lower raw material input costs and a more stable global nitrogen supply environment, as well as lower nylon pricing due to unfavorable supply and demand conditions. Sales volume decreased approximately 7% primarily driven by lost sales resulting from the first quarter operational disruption. Raw material pass-through pricing was approximately flat.

Sales by product line and approximate percentage of total sales are included below:

($ in Thousands)

1Q 2024

 

1Q 2023

 

Sales

 

% of Total

 

Sales

 

% of Total

Nylon

$

84,389

 

25%

 

$

99,372

 

25%

Caprolactam

 

61,476

 

18%

 

 

72,390

 

18%

Ammonium Sulfate

 

85,263

 

25%

 

 

114,218

 

28%

Chemical Intermediates

 

105,701

 

32%

 

 

114,564

 

29%

Total

$

336,829

 

100%

 

$

400,544

 

100%

Adjusted EBITDA of $0.6 million in the quarter decreased $64.8 million versus the prior year primarily due to the impact of the first quarter operational disruption and unfavorable market-based pricing, net of raw material costs.

Adjusted earnings per share of ($0.56) decreased $1.86 versus the prior year driven primarily by the factors discussed above.

Cash flow from operations of ($36.2) million in the quarter decreased $37.8 million versus the prior year primarily driven by lower net income and the impact of changes in working capital. Capital expenditures of $35.4 million in the quarter increased $10.8 million versus the prior year primarily reflecting increased spend on enterprise programs and other maintenance projects.

Outlook

  • Expect second quarter 2024 ammonium sulfate sequential pricing improvement amid continued sulfur demand growth and tight North American supply
  • Expect balanced to tight global acetone supply and demand conditions
  • Expect nylon industry spreads to modestly improve through 2024 off 2023 trough levels
  • Continue to expect Capital Expenditures of $140 million to $150 million in 2024, reflecting increased spend to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program
  • Continue to expect pre-tax income impact of planned plant turnarounds to be $38 to $43 million in 2024; Shifting larger planned turnaround to 4Q24 from 3Q24

"As we look forward into the second quarter and beyond, there are a number of tailwinds at our back including strengthening fertilizer pricing, a continued tight global acetone supply and demand environment, an anticipated modest improvement in nylon industry spreads, and a return to expected robust plant utilization rates. With our proven ability to manage through various cycles, we remain highly focused on executing all levers in our control while driving progress on our long-term potential,” concluded Kane.

Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.16 per share on the Company's common stock. The dividend is payable on May 28, 2024 to stockholders of record as of the close of business on May 14, 2024.

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 first quarter 2024 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 May 3 until 12 noon ET on May 10 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international). The access code is 7285784.

About AdvanSix

AdvanSix is a diversified chemistry company that produces essential materials for our customers in a wide variety of end markets and applications that touch people’s lives. Our integrated value chain of our five U.S.-based manufacturing facilities plays a critical role in global supply chains and enables us to innovate and deliver essential products for our customers across building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives, electronics and other end markets. Guided by our core values of Safety, Integrity, Accountability and Respect, AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients, and chemical intermediates. 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; 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 conflict in Israel and Gaza, and the possible expansion of such conflicts; the effect of the foregoing 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, data privacy incidents and disruptions to our technology infrastructure; risks associated with 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 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, 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; 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, 2023, 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)

 

 

March 31, 2024

 

December 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

20,633

 

 

$

29,768

 

Accounts and other receivables – net

 

171,196

 

 

 

165,393

 

Inventories – net

 

190,921

 

 

 

211,831

 

Taxes receivable

 

8

 

 

 

1,434

 

Other current assets

 

8,549

 

 

 

11,378

 

Total current assets

 

391,307

 

 

 

419,804

 

 

 

 

 

Property, plant and equipment – net

 

861,982

 

 

 

852,642

 

Operating lease right-of-use assets

 

86,835

 

 

 

95,805

 

Goodwill

 

56,192

 

 

 

56,192

 

Intangible assets

 

45,431

 

 

 

46,193

 

Other assets

 

26,236

 

 

 

25,384

 

Total assets

$

1,467,983

 

 

$

1,496,020

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

196,772

 

 

$

259,068

 

Accrued liabilities

 

46,771

 

 

 

44,086

 

Income taxes payable

 

935

 

 

 

8,033

 

Operating lease liabilities – short-term

 

28,358

 

 

 

32,053

 

Deferred income and customer advances

 

11,286

 

 

 

15,678

 

Total current liabilities

 

284,122

 

 

 

358,918

 

 

 

 

 

Deferred income taxes

 

152,160

 

 

 

151,059

 

Operating lease liabilities – long-term

 

58,621

 

 

 

63,961

 

Line of credit – long-term

 

245,000

 

 

 

170,000

 

Postretirement benefit obligations

 

4,790

 

 

 

3,660

 

Other liabilities

 

10,133

 

 

 

9,185

 

Total liabilities

 

754,826

 

 

 

756,783

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

Common stock, par value $0.01; 200,000,000 shares authorized; 32,922,935 shares issued and 26,813,996 outstanding at March 31, 2024; 32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023

 

329

 

 

 

326

 

Preferred stock, par value $0.01; 50,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

 

 

 

Treasury stock at par (6,108,939 shares at March 31, 2024; 5,848,475 shares at December 31, 2023)

 

(61

)

 

 

(58

)

Additional paid-in capital

 

133,823

 

 

 

138,046

 

Retained earnings

 

583,218

 

 

 

605,067

 

Accumulated other comprehensive loss

 

(4,152

)

 

 

(4,144

)

Total stockholders' equity

 

713,157

 

 

 

739,237

 

Total liabilities and stockholders' equity

$

1,467,983

 

 

$

1,496,020

 

 

AdvanSix Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except share and per share amounts)

 

 

Three Months Ended

March 31,

 

 

2024

 

 

 

2023

 

Sales

$

336,829

 

 

$

400,544

 

 

 

 

 

Costs, expenses and other:

 

 

 

Costs of goods sold

 

333,864

 

 

 

330,042

 

Selling, general and administrative expenses

 

23,593

 

 

 

25,114

 

Interest expense, net

 

2,699

 

 

 

1,267

 

Other non-operating (income) expense, net

 

90

 

 

 

(108

)

Total costs, expenses and other

 

360,246

 

 

 

356,315

 

 

 

 

 

Income (loss) before taxes

 

(23,417

)

 

 

44,229

 

Income tax expense (benefit)

 

(6,021

)

 

 

9,275

 

Net Income (loss)

$

(17,396

)

 

$

34,954

 

 

 

 

 

Earnings per common share

 

 

 

Basic

$

(0.65

)

 

$

1.27

 

Diluted

$

(0.65

)

 

$

1.22

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

Basic

 

26,878,660

 

 

 

27,601,784

 

Diluted

 

26,878,660

 

 

 

28,586,563

 

 

AdvanSix Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

March 31,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(17,396

)

 

$

34,954

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

19,102

 

 

 

17,845

 

Loss on disposal of assets

 

89

 

 

 

168

 

Deferred income taxes

 

1,108

 

 

 

(170

)

Stock-based compensation

 

2,211

 

 

 

2,013

 

Amortization of deferred financing fees

 

155

 

 

 

155

 

Changes in assets and liabilities, net of business acquisitions:

 

 

 

Accounts and other receivables

 

(5,818

)

 

 

14,007

 

Inventories

 

20,910

 

 

 

(9,133

)

Taxes receivable

 

1,426

 

 

 

8,748

 

Accounts payable

 

(52,995

)

 

 

(54,489

)

Income taxes payable

 

(7,098

)

 

 

1,101

 

Accrued liabilities

 

2,150

 

 

 

(8,408

)

Deferred income and customer advances

 

(4,392

)

 

 

(8,758

)

Other assets and liabilities

 

4,346

 

 

 

3,542

 

Net cash provided by (used for) operating activities

 

(36,202

)

 

 

1,575

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Expenditures for property, plant and equipment

 

(35,388

)

 

 

(24,603

)

Other investing activities

 

(1,419

)

 

 

(1,003

)

Net cash used for investing activities

 

(36,807

)

 

 

(25,606

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Borrowings from line of credit

 

184,500

 

 

 

78,000

 

Payments of line of credit

 

(109,500

)

 

 

(66,000

)

Principal payments of finance leases

 

(239

)

 

 

(231

)

Dividend payments

 

(4,290

)

 

 

(4,020

)

Purchase of treasury stock

 

(7,023

)

 

 

(13,499

)

Issuance of common stock

 

426

 

 

 

622

 

Net cash provided by (used for) financing activities

 

63,874

 

 

 

(5,128

)

 

 

 

 

Net change in cash and cash equivalents

 

(9,135

)

 

 

(29,159

)

Cash and cash equivalents at beginning of period

 

29,768

 

 

 

30,985

 

Cash and cash equivalents at the end of period

$

20,633

 

 

$

1,826

 

 

 

 

 

Supplemental non-cash investing activities:

 

 

 

Capital expenditures included in accounts payable

$

13,442

 

 

$

8,193

 

 

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

March 31,

 

 

2024

 

 

 

2023

 

Net cash provided by (used for) operating activities

$

(36,202

)

 

$

1,575

 

Expenditures for property, plant and equipment

 

(35,388

)

 

 

(24,603

)

Free cash flow (1)

$

(71,590

)

 

$

(23,028

)

 

 

 

 

(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

March 31,

 

 

2024

 

 

 

2023

 

Net Income (Loss)

$

(17,396

)

 

$

34,954

 

Non-cash stock-based compensation

 

2,211

 

 

 

2,013

 

Non-recurring, unusual or extraordinary income

 

 

 

 

 

Non-cash amortization from acquisitions

 

532

 

 

 

532

 

Non-recurring M&A costs

 

 

 

 

 

Benefit from income taxes relating to reconciling items

 

(465

)

 

 

(435

)

Adjusted Net Income (Loss)

 

(15,118

)

 

 

37,064

 

Interest expense, net

 

2,699

 

 

 

1,267

 

Income tax expense (benefit) - Adjusted

 

(5,556

)

 

 

9,710

 

Depreciation and amortization - Adjusted

 

18,570

 

 

 

17,313

 

Adjusted EBITDA

$

595

 

 

$

65,354

 

 

 

 

 

Sales

$

336,829

 

 

$

400,544

 

 

 

 

 

Adjusted EBITDA Margin (2)

 

0.2

%

 

 

16.3

%

 

 

 

 

(2) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales

 

Three Months Ended

March 31,

 

 

2024

 

 

 

2023

Net Income (Loss)

$

(17,396

)

 

$

34,954

Adjusted Net Income (Loss)

 

(15,118

)

 

 

37,064

 

 

 

 

Weighted-average number of common shares outstanding - basic

 

26,878,660

 

 

 

27,601,784

Dilutive effect of equity awards and other stock-based holdings

 

 

 

 

984,779

Weighted-average number of common shares outstanding - diluted

 

26,878,660

 

 

 

28,586,563

 

 

 

 

EPS - Basic

$

(0.65

)

 

$

1.27

EPS - Diluted

$

(0.65

)

 

$

1.22

Adjusted EPS - Basic

$

(0.56

)

 

$

1.34

Adjusted EPS - Diluted

$

(0.56

)

 

$

1.30

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

Primary Unit Operation

2017

~$10

~$4

~$20

~$34

Sulfuric Acid

2018

~$2

~$10

~$30

~$42

Ammonia

2019

~$5

~$5

~$25

~$35

Sulfuric Acid

2020

~$2

~$7

~$20

~$2

~$31

Ammonia

2021

~$3

~$8

~$18

~$29

Sulfuric Acid

2022

~$1

~$5

~$44

~$50

Ammonia

2023

~$2

~$1

~$27

~$30

Sulfuric Acid

2024E

~$5

~$3

~$2

$28-$33

$38-$43

Ammonia

(3) Primarily reflects the impact of fixed cost absorption, maintenance expense, and the purchase of feedstocks which are normally manufactured by the Company.

 

Media Janeen Lawlor (973) 526-1615 janeen.lawlor@advansix.com

Investors Adam Kressel (973) 526-1700 adam.kressel@advansix.com

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