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
Parsippany, N.J., May 3, 2024 – 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 https://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.
# # #
| Contacts: | |
| Media | Investors |
| Janeen Lawlor | Adam Kressel |
| (973) 526-1615 | (973) 526-1700 |
| janeen.lawlor@advansix.com | adam.kressel@advansix.com |
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.