ASIX AdvanSix Inc

Sales of $453 million, up 6% versus prior year

Earnings Per Share of $1.43; Adjusted Earnings Per Share of $1.55

Cash Flow from Operations of $50 million, up 43% versus prior year

Performance across diversified portfolio supports favorable earnings outlook

AdvanSix (NYSE: ASIX), a diversified chemistry company, today announced its financial results for the second quarter ending June 30, 2024. Overall, the Company returned to targeted utilization rates across its integrated value chain and delivered strong earnings and cash flow results while continuing to invest for long-term sustainable growth.

Second Quarter 2024 Summary

• Sales up approximately 6% versus prior year driven by an approximately 5% increase in volume and approximately 1% favorable net pricing
• Net Income of $38.9 million, an increase of $6.2 million versus the prior year
• Adjusted EBITDA of $78.1 million, an increase of $12.4 million versus the prior year
• Adjusted EBITDA Margin of 17.2%, up 180 bps versus the prior year
• Cash Flow from Operations of $50.2 million, an increase of $15.2 million versus the prior year
• Capital Expenditures of $33.5 million, an increase of $14.2 million versus the prior year
• Free Cash Flow of $16.7 million, an increase of $1.0 million versus the prior year
• Returned $8 million of cash to shareholders through dividends and repurchases in 2Q24

“Our strong second quarter results, featuring top and bottom line growth as well as year-over-year cash flow improvement, reflect our collective organization's execution and the advantages of our business model and diverse product portfolio,” said Erin Kane, president and CEO of AdvanSix. “We realized a 6% improvement in sales reflecting higher domestic nylon sales volume, a robust domestic application season for ammonium sulfate and continued strength in acetone pricing. Plant output returned to targeted utilization rates across our integrated value chain as expected and we delivered our second highest quarter of granular ammonium sulfate production ever. This performance occurred all while continuing to invest in long-term sustainable growth including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program."

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

($ in Thousands, Except Earnings Per Share)

2Q 2024

 

2Q 2023

Sales

$453,479

 

$427,940

Net Income

38,927

 

32,728

Diluted Earnings Per Share

$1.43

 

$1.16

Adjusted Diluted Earnings Per Share (1)

$1.55

 

$1.25

Adjusted EBITDA (1)

78,141

 

65,785

Adjusted EBITDA Margin % (1)

17.2%

 

15.4%

Cash Flow from Operations

50,200

 

35,004

Free Cash Flow (1)(2)

16,705

 

15,713

 

(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 $453 million in the quarter increased approximately 6% versus the prior year. Sales volume increased approximately 5% primarily driven by higher sales of nylon and ammonium sulfate due to favorable North American supply and demand conditions. Net pricing was favorable by 1% including continued strength in acetone.

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

($ in Thousands)

2Q 2024

 

2Q 2023

 

Sales

 

% of Total

 

Sales

 

% of Total

Nylon

$

103,217

 

23%

 

$

92,953

 

22%

Caprolactam

 

81,303

 

18%

 

 

74,682

 

18%

Ammonium Sulfate

 

139,674

 

31%

 

 

138,940

 

32%

Chemical Intermediates

 

129,285

 

28%

 

 

121,365

 

28%

Total

$

453,479

 

100%

 

$

427,940

 

100%

Adjusted EBITDA of $78.1 million in the quarter increased $12.4 million, or 19%, versus the prior year primarily driven by higher sales volume and favorable pricing, net of raw material costs.

Adjusted earnings per share of $1.55 increased $0.30, or 24%, versus the prior year driven primarily by the factors discussed above.

Cash flow from operations of $50.2 million in the quarter increased $15.2 million versus the prior year primarily driven by higher net income and the favorable impact of changes in working capital. Capital expenditures of $33.5 million in the quarter increased $14.2 million versus the prior year primarily reflecting planned increased spend on maintenance and enterprise programs.

Outlook

• Anticipate higher ammonium sulfate pricing in 3Q24 year-over-year reflecting robust demand entering fall fill; however, typical North American ammonium sulfate seasonality expected to drive 3Q24 sequential domestic pricing decline
• Expect balanced to tight global acetone supply and demand conditions
• Expect North American nylon industry spreads to modestly improve through 2024 reflecting tighter regional supply and stable end market demand
• 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

"We expect the current market backdrop to support our favorable second half outlook including a constructive global acetone supply and demand environment and modestly improving North American nylon industry spreads. While we anticipate typical North American ammonium sulfate seasonality, we are starting the third quarter with a strong fall fill program at higher pricing levels compared to the prior year. Over the long-term, we continue to positively position the enterprise through high-return growth and cost savings programs, an improved portfolio mix, and disciplined capital deployment to fuel future earnings, cash flow performance and robust total shareholder returns,” 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 August 27, 2024 to stockholders of record as of the close of business on August 13, 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 second 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 August 2 until 12 noon ET on August 8 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international). The access code is 4182243.

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)

 

 

June 30, 2024

 

December 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

12,105

 

$

29,768

Accounts and other receivables – net

 

170,155

 

 

165,393

Inventories – net

 

175,827

 

 

211,831

Taxes receivable

 

179

 

 

1,434

Other current assets

 

20,326

 

 

11,378

Total current assets

 

378,592

 

 

419,804

 

 

 

 

Property, plant and equipment – net

 

878,491

 

 

852,642

Operating lease right-of-use assets

 

91,876

 

 

95,805

Goodwill

 

56,192

 

 

56,192

Intangible assets

 

44,668

 

 

46,193

Other assets

 

28,131

 

 

25,384

Total assets

$

1,477,950

 

$

1,496,020

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

189,326

 

$

259,068

Accrued liabilities

 

50,223

 

 

44,086

Income taxes payable

 

1,007

 

 

8,033

Operating lease liabilities – short-term

 

31,250

 

 

32,053

Deferred income and customer advances

 

1,148

 

 

15,678

Total current liabilities

 

272,954

 

 

358,918

 

 

 

 

Deferred income taxes

 

151,803

 

 

151,059

Operating lease liabilities – long-term

 

60,783

 

 

63,961

Line of credit – long-term

 

230,000

 

 

170,000

Postretirement benefit obligations

 

5,919

 

 

3,660

Other liabilities

 

9,894

 

 

9,185

Total liabilities

 

731,353

 

 

756,783

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

Common stock, par value $0.01; 200,000,000 shares authorized; 32,959,588 shares issued and 26,709,407 outstanding at June 30, 2024; 32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023

 

330

 

 

326

Preferred stock, par value $0.01; 50,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023

 

—

 

 

—

Treasury stock at par (6,250,181 shares at June 30, 2024; 5,848,475 shares at December 31, 2023)

 

(63)

 

 

(58)

Additional paid-in capital

 

132,786

 

 

138,046

Retained earnings

 

617,723

 

 

605,067

Accumulated other comprehensive loss

 

(4,179)

 

 

(4,144)

Total stockholders' equity

 

746,597

 

 

739,237

Total liabilities and stockholders' equity

$

1,477,950

 

$

1,496,020

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,

 

2024

 

2023

 

2024

 

2023

Sales

$

453,479

 

$

427,940

 

$

790,308

 

$

828,484

 

 

 

 

 

 

 

 

Costs, expenses and other:

 

 

 

 

 

 

 

Costs of goods sold

 

372,111

 

 

360,017

 

 

705,975

 

 

690,059

Selling, general and administrative expenses

 

24,431

 

 

24,011

 

 

48,024

 

 

49,126

Interest expense, net

 

3,514

 

 

1,954

 

 

6,213

 

 

3,221

Other non-operating (income) expense, net

 

1,351

 

 

(1,325)

 

 

1,441

 

 

(1,433)

Total costs, expenses and other

 

401,407

 

 

384,657

 

 

761,653

 

 

740,973

 

 

 

 

 

 

 

 

Income before taxes

 

52,072

 

 

43,283

 

 

28,655

 

 

87,511

Income tax expense

 

13,145

 

 

10,555

 

 

7,124

 

 

19,829

Net income

$

38,927

 

$

32,728

 

$

21,531

 

$

67,682

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

Basic

$

1.45

 

$

1.19

 

$

0.80

 

$

2.46

Diluted

$

1.43

 

$

1.16

 

$

0.79

 

$

2.39

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

26,839,429

 

 

27,494,555

 

 

26,859,044

 

 

27,547,874

Diluted

 

27,150,347

 

 

28,113,402

 

 

27,251,326

 

 

28,348,266

AdvanSix Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

38,927

 

$

32,728

 

$

21,531

 

$

67,682

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

 

 

 

 

 

 

 

Depreciation and amortization

 

19,162

 

 

18,113

 

 

38,264

 

 

35,958

Loss on disposal of assets

 

172

 

 

400

 

 

261

 

 

568

Deferred income taxes

 

(357)

 

 

4,064

 

 

751

 

 

3,894

Stock-based compensation

 

2,193

 

 

2,436

 

 

4,404

 

 

4,449

Amortization of deferred financing fees

 

154

 

 

154

 

 

309

 

 

309

Operational asset adjustments

 

1,200

 

 

—

 

 

1,200

 

 

—

Changes in assets and liabilities, net of business acquisitions:

 

 

 

 

 

 

 

Accounts and other receivables

 

(186)

 

 

8,116

 

 

(6,004)

 

 

22,123

Inventories

 

15,094

 

 

(1,351)

 

 

36,004

 

 

(10,484)

Taxes receivable

 

(171)

 

 

(419)

 

 

1,255

 

 

8,329

Accounts payable

 

(8,686)

 

 

8,611

 

 

(61,681)

 

 

(45,878)

Income taxes payable

 

72

 

 

(2,439)

 

 

(7,026)

 

 

(1,338)

Accrued liabilities

 

3,999

 

 

2,664

 

 

6,149

 

 

(5,744)

Deferred income and customer advances

 

(10,138)

 

 

(23,339)

 

 

(14,530)

 

 

(32,097)

Other assets and liabilities

 

(11,235)

 

 

(14,734)

 

 

(6,889)

 

 

(11,192)

Net cash provided by operating activities

 

50,200

 

 

35,004

 

 

13,998

 

 

36,579

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

(33,495)

 

 

(19,291)

 

 

(68,883)

 

 

(43,894)

Other investing activities

 

(2,317)

 

 

(1,031)

 

 

(3,736)

 

 

(2,034)

Net cash used for investing activities

 

(35,812)

 

 

(20,322)

 

 

(72,619)

 

 

(45,928)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings from line of credit

 

73,000

 

 

152,500

 

 

257,500

 

 

230,500

Payments of line of credit

 

(88,000)

 

 

(139,500)

 

 

(197,500)

 

 

(205,500)

Principal payments of finance leases

 

(263)

 

 

(225)

 

 

(502)

 

 

(456)

Dividend payments

 

(4,292)

 

 

(3,984)

 

 

(8,582)

 

 

(8,004)

Purchase of treasury stock

 

(3,362)

 

 

(14,886)

 

 

(10,385)

 

 

(28,385)

Issuance of common stock

 

1

 

 

123

 

 

427

 

 

745

Net cash provided by (used for) financing activities

 

(22,916)

 

 

(5,972)

 

 

40,958

 

 

(11,100)

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

(8,528)

 

 

8,710

 

 

(17,663)

 

 

(20,449)

Cash and cash equivalents at beginning of period

 

20,633

 

 

1,826

 

 

29,768

 

 

30,985

Cash and cash equivalents at the end of period

$

12,105

 

$

10,536

 

$

12,105

 

$

10,536

 

 

 

 

 

 

 

 

Supplemental non-cash investing activities:

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

 

 

 

$

14,932

 

$

9,832

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,

 

2024

 

2023

 

2024

 

2023

Net cash provided by operating activities

$

50,200

 

$

35,004

 

$

13,998

 

$

36,579

Expenditures for property, plant and equipment

 

(33,495)

 

 

(19,291)

 

 

(68,883)

 

 

(43,894)

Free cash flow (1)

$

16,705

 

$

15,713

 

$

(54,885)

 

$

(7,315)

 

 

 

 

 

 

 

 

(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,

 

2024

 

2023

 

2024

 

2023

Net income

$

38,927

 

$

32,728

 

$

21,531

 

$

67,682

Non-cash stock-based compensation

 

2,193

 

 

2,436

 

 

4,404

 

 

4,449

Non-recurring, unusual or extraordinary expenses (income) (2)

 

1,200

 

 

—

 

 

1,200

 

 

—

Non-cash amortization from acquisitions

 

532

 

 

532

 

 

1,064

 

 

1,064

Non-recurring M&A costs

 

—

 

 

—

 

 

—

 

 

—

Benefit from income taxes relating to reconciling items

 

(762)

 

 

(498)

 

 

(1,227)

 

 

(933)

Adjusted Net Income

 

42,090

 

 

35,198

 

 

26,972

 

 

72,262

Interest expense, net

 

3,514

 

 

1,954

 

 

6,213

 

 

3,221

Income tax expense - Adjusted

 

13,907

 

 

11,053

 

 

8,351

 

 

20,763

Depreciation and amortization - Adjusted

 

18,630

 

 

17,580

 

 

37,200

 

 

34,893

Adjusted EBITDA

$

78,141

 

$

65,785

 

$

78,736

 

$

131,139

 

 

 

 

 

 

 

 

Sales

$

453,479

 

$

427,940

 

$

790,308

 

$

828,484

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin (3)

 

17.2%

 

 

15.4%

 

 

10.0%

 

 

15.8%

 

 

 

 

 

 

 

 

(2) Includes a pre-tax loss of approximately $1.2 million related to the reduction of the Company's anticipated receivable related to the gain on the termination fee recorded upon the exit from the Oben alliance during the third quarter of 2023

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

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Net income

$

38,927

 

$

32,728

 

$

21,531

 

$

67,682

Adjusted Net income (non-GAAP)

 

42,090

 

 

35,198

 

 

26,972

 

 

72,262

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding - basic

 

26,839,429

 

 

27,494,555

 

 

26,859,044

 

 

27,547,874

Dilutive effect of equity awards and other stock-based holdings

 

310,918

 

 

618,847

 

 

392,282

 

 

800,392

Weighted-average number of common shares outstanding - diluted

 

27,150,347

 

 

28,113,402

 

 

27,251,326

 

 

28,348,266

 

 

 

 

 

 

 

 

EPS - Basic

$

1.45

 

$

1.19

 

$

0.80

 

$

2.46

EPS - Diluted

$

1.43

 

$

1.16

 

$

0.79

 

$

2.39

Adjusted EPS - Basic (non-GAAP)

$

1.57

 

$

1.28

 

$

1.00

 

$

2.62

Adjusted EPS - Diluted (non-GAAP)

$

1.55

 

$

1.25

 

$

0.99

 

$

2.55

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

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

~$3

$27-$32

$38-$43

Ammonia

   

(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/20240801793646/en/

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

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