AdvanSix Announces Second Quarter 2023 Financial Results
Sales of
Earnings Per Share of
Returned
Announced
Second Quarter 2023 Summary
-
Sales down approximately
27% versus prior year driven by19% unfavorable impact of market-based pricing,6% lower raw material pass-through pricing, and2% lower volume -
Net Income of
, a decrease of$32.7 million versus the prior year$32.4 million -
Adjusted EBITDA of
, a decrease of$65.8 million versus the prior year$39.6 million -
Cash Flow from Operations of
, a decrease of$35.0 million versus the prior year$60.9 million -
Capital Expenditures of
, an increase of$19.3 million versus the prior year$1.5 million -
Free Cash Flow of
, a decrease of$15.7 million versus the prior year$62.4 million -
Repurchased 410,862 shares for approximately
in 2Q23$14.9 million
“AdvanSix successfully delivered solid earnings and cash flow results in the second quarter against a record prior year,” said Erin Kane, president and CEO of AdvanSix. “The AdvanSix team executed well within a mixed set of dynamics across the portfolio. We captured strong in-season demand for plant nutrients in a significantly lower nitrogen and raw material environment, navigated a nylon pricing environment pressured by industry supply and demand conditions including increased low-priced imports, while North American acetone supply and demand continued to be balanced. Our team’s collective performance and advantaged business model supporting through-cycle profitability illustrates the value and resilience of our diversified chemistry company. Our confidence is reflected in once again increasing our quarterly cash dividend by 10 percent.”
Summary second quarter 2023 financial results for the Company are included below:
($ in Thousands, Except Earnings Per Share) |
2Q 2023 |
|
2Q 2022 |
Sales |
|
|
|
Net Income |
32,728 |
|
65,157 |
Diluted Earnings Per Share |
|
|
|
Adjusted Diluted Earnings Per Share (1) |
|
|
|
Adjusted EBITDA (1) |
65,785 |
|
105,426 |
Adjusted EBITDA Margin % (1) |
|
|
|
Cash Flow from Operations |
35,004 |
|
95,891 |
Free Cash Flow (1)(2) |
15,713 |
|
78,131 |
(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
Sales by product line and approximate percentage of total sales are included below:
($ in Thousands) |
2Q 2023 |
|
2Q 2022 |
||||||||
|
Sales |
|
% of Total |
|
Sales |
|
% of Total |
||||
Nylon |
$ |
92,953 |
|
|
|
$ |
132,105 |
|
23 % |
||
Caprolactam |
|
74,682 |
|
18 % |
|
|
87,169 |
|
15 % |
||
Chemical Intermediates |
|
121,365 |
|
28 % |
|
|
158,611 |
|
27 % |
||
Ammonium Sulfate |
|
138,940 |
|
32 % |
|
|
205,851 |
|
35 % |
||
|
$ |
427,940 |
|
100 % |
|
$ |
583,736 |
|
100 % |
Adjusted EBITDA of
Adjusted earnings per share of
Cash flow from operations of
Dividend
The Company's Board of Directors declared a quarterly cash dividend of
Outlook
- Expect favorable underlying agriculture industry fundamentals to continue; Typical North American ammonium sulfate seasonality expected to drive 3Q23 sequential domestic pricing decline
- Expect balanced supply and demand conditions for North American acetone to continue
- Expect continued unfavorable supply and demand conditions across nylon and other chemical intermediates due to headwinds in consumer durables and building and construction end markets
-
Continue to expect Capital Expenditures of
to$110 million in 2023, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects$120 million -
Continue to expect pre-tax income impact of planned plant turnarounds to be
to$25 million in 3Q23, totaling$30 million to$28 million in full year 2023$33 million
"We are highly focused on the execution of our upcoming third quarter planned plant turnaround to support safe, stable and sustainable operations at higher utilization rates relative to our industry. While we anticipate the impacts of ammonium sulfate seasonality and soft end market demand overall, we remain well positioned to offer near, medium and long-term value for our shareholders supported by the structural improvements made to the underlying earnings power of this business. We are committed to producing the right chemistries with the right properties to solve our customers' most exciting opportunities, recently illustrated by the introduction of new 100 percent post-consumer recycled content nylon,” 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 2023 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 4 until 12 noon ET on August 11 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international). The access code is 9404240.
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
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
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, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
10,536 |
|
|
$ |
30,985 |
|
Accounts and other receivables – net |
|
153,148 |
|
|
|
175,429 |
|
Inventories – net |
|
225,986 |
|
|
|
215,502 |
|
Taxes receivable |
|
1,442 |
|
|
|
9,771 |
|
Other current assets |
|
20,043 |
|
|
|
9,241 |
|
Total current assets |
|
411,155 |
|
|
|
440,928 |
|
|
|
|
|
||||
Property, plant and equipment – net |
|
816,885 |
|
|
|
811,065 |
|
Operating lease right-of-use assets |
|
109,816 |
|
|
|
114,688 |
|
Goodwill |
|
56,192 |
|
|
|
56,192 |
|
Intangible assets |
|
47,717 |
|
|
|
49,242 |
|
Other assets |
|
25,244 |
|
|
|
23,216 |
|
Total assets |
$ |
1,467,009 |
|
|
$ |
1,495,331 |
|
|
|
|
|
||||
LIABILITIES |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
220,158 |
|
|
$ |
272,770 |
|
Accrued liabilities |
|
43,310 |
|
|
|
48,820 |
|
Operating lease liabilities – short-term |
|
34,342 |
|
|
|
37,472 |
|
Deferred income and customer advances |
|
2,333 |
|
|
|
34,430 |
|
Total current liabilities |
|
300,143 |
|
|
|
393,492 |
|
|
|
|
|
||||
Deferred income taxes |
|
164,256 |
|
|
|
160,409 |
|
Operating lease liabilities – long-term |
|
75,829 |
|
|
|
77,571 |
|
Line of credit – long-term |
|
140,000 |
|
|
|
115,000 |
|
Postretirement benefit obligations |
|
2,279 |
|
|
|
— |
|
Other liabilities |
|
10,143 |
|
|
|
10,679 |
|
Total liabilities |
|
692,650 |
|
|
|
757,151 |
|
|
|
|
|
||||
STOCKHOLDERS' EQUITY |
|
|
|
||||
Common stock, par value |
|
326 |
|
|
|
320 |
|
Preferred stock, par value |
|
— |
|
|
|
— |
|
Treasury stock at par (5,274,989 shares at June 30, 2023; 4,531,073 shares at December 31, 2022) |
|
(53 |
) |
|
|
(45 |
) |
Additional paid-in capital |
|
151,706 |
|
|
|
174,585 |
|
Retained earnings |
|
626,885 |
|
|
|
567,517 |
|
Accumulated other comprehensive loss |
|
(4,505 |
) |
|
|
(4,197 |
) |
Total stockholders' equity |
|
774,359 |
|
|
|
738,180 |
|
Total liabilities and stockholders' equity |
$ |
1,467,009 |
|
|
$ |
1,495,331 |
|
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, |
|||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Sales |
$ |
427,940 |
|
|
$ |
583,736 |
|
$ |
828,484 |
|
|
$ |
1,062,809 |
|
|
|
|
|
|
|
|
|
|||||||
Costs, expenses and other: |
|
|
|
|
|
|
|
|||||||
Costs of goods sold |
|
360,017 |
|
|
|
476,835 |
|
|
690,059 |
|
|
|
852,482 |
|
Selling, general and administrative expenses |
|
24,011 |
|
|
|
20,841 |
|
|
49,126 |
|
|
|
42,051 |
|
Interest expense, net |
|
1,954 |
|
|
|
769 |
|
|
3,221 |
|
|
|
1,332 |
|
Other non-operating (income) expense, net |
|
(1,325 |
) |
|
|
172 |
|
|
(1,433 |
) |
|
|
(431 |
) |
Total costs, expenses and other |
|
384,657 |
|
|
|
498,617 |
|
|
740,973 |
|
|
|
895,434 |
|
|
|
|
|
|
|
|
|
|||||||
Income before taxes |
|
43,283 |
|
|
|
85,119 |
|
|
87,511 |
|
|
|
167,375 |
|
Income tax expense |
|
10,555 |
|
|
|
19,962 |
|
|
19,829 |
|
|
|
39,145 |
|
Net income |
$ |
32,728 |
|
|
$ |
65,157 |
|
$ |
67,682 |
|
|
$ |
128,230 |
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share |
|
|
|
|
|
|
|
|||||||
Basic |
$ |
1.19 |
|
|
$ |
2.31 |
|
$ |
2.46 |
|
|
$ |
4.55 |
|
Diluted |
$ |
1.16 |
|
|
$ |
2.23 |
|
$ |
2.39 |
|
|
$ |
4.37 |
|
|
|
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|||||||
Basic |
|
27,494,555 |
|
|
|
28,168,207 |
|
|
27,547,874 |
|
|
|
28,183,951 |
|
Diluted |
|
28,113,402 |
|
|
|
29,262,709 |
|
|
28,348,266 |
|
|
|
29,316,792 |
|
AdvanSix Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
32,728 |
|
|
$ |
65,157 |
|
|
$ |
67,682 |
|
|
$ |
128,230 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
18,113 |
|
|
|
17,534 |
|
|
|
35,958 |
|
|
|
34,226 |
|
Loss on disposal of assets |
|
400 |
|
|
|
441 |
|
|
|
568 |
|
|
|
800 |
|
Deferred income taxes |
|
4,064 |
|
|
|
3,077 |
|
|
|
3,894 |
|
|
|
2,558 |
|
Stock-based compensation |
|
2,436 |
|
|
|
2,005 |
|
|
|
4,449 |
|
|
|
5,379 |
|
Amortization of deferred financing fees |
|
154 |
|
|
|
154 |
|
|
|
309 |
|
|
|
309 |
|
Changes in assets and liabilities, net of business acquisitions: |
|
|
|
|
|
|
|
||||||||
Accounts and other receivables |
|
8,116 |
|
|
|
(23,743 |
) |
|
|
22,123 |
|
|
|
(52,145 |
) |
Inventories |
|
(1,351 |
) |
|
|
4,901 |
|
|
|
(10,484 |
) |
|
|
3,012 |
|
Taxes receivable |
|
(419 |
) |
|
|
— |
|
|
|
8,329 |
|
|
|
— |
|
Accounts payable |
|
6,172 |
|
|
|
42,535 |
|
|
|
(47,216 |
) |
|
|
52,439 |
|
Accrued liabilities |
|
2,664 |
|
|
|
2,897 |
|
|
|
(5,744 |
) |
|
|
(8,821 |
) |
Deferred income and customer advances |
|
(23,339 |
) |
|
|
(827 |
) |
|
|
(32,097 |
) |
|
|
(1,142 |
) |
Other assets and liabilities |
|
(14,734 |
) |
|
|
(18,240 |
) |
|
|
(11,192 |
) |
|
|
(19,792 |
) |
Net cash provided by operating activities |
|
35,004 |
|
|
|
95,891 |
|
|
|
36,579 |
|
|
|
145,053 |
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
||||||||
Expenditures for property, plant and equipment |
|
(19,291 |
) |
|
|
(17,760 |
) |
|
|
(43,894 |
) |
|
|
(38,779 |
) |
Acquisition of businesses |
|
— |
|
|
|
1,133 |
|
|
|
— |
|
|
|
(97,456 |
) |
Other investing activities |
|
(1,031 |
) |
|
|
(925 |
) |
|
|
(2,034 |
) |
|
|
(1,221 |
) |
Net cash used for investing activities |
|
(20,322 |
) |
|
|
(17,552 |
) |
|
|
(45,928 |
) |
|
|
(137,456 |
) |
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
||||||||
Borrowings from line of credit |
|
152,500 |
|
|
|
82,000 |
|
|
|
230,500 |
|
|
|
230,500 |
|
Payments of line of credit |
|
(139,500 |
) |
|
|
(155,500 |
) |
|
|
(205,500 |
) |
|
|
(219,000 |
) |
Principal payments of finance leases |
|
(225 |
) |
|
|
(244 |
) |
|
|
(456 |
) |
|
|
(481 |
) |
Dividend payments |
|
(3,984 |
) |
|
|
(3,515 |
) |
|
|
(8,004 |
) |
|
|
(7,032 |
) |
Purchase of treasury stock |
|
(14,886 |
) |
|
|
(3,407 |
) |
|
|
(28,385 |
) |
|
|
(10,419 |
) |
Issuance of common stock |
|
123 |
|
|
|
318 |
|
|
|
745 |
|
|
|
1,032 |
|
Net cash used for financing activities |
|
(5,972 |
) |
|
|
(80,348 |
) |
|
|
(11,100 |
) |
|
|
(5,400 |
) |
|
|
|
|
|
|
|
|
||||||||
Net change in cash and cash equivalents |
|
8,710 |
|
|
|
(2,009 |
) |
|
|
(20,449 |
) |
|
|
2,197 |
|
Cash and cash equivalents at beginning of period |
|
1,826 |
|
|
|
19,306 |
|
|
|
30,985 |
|
|
|
15,100 |
|
Cash and cash equivalents at the end of period |
$ |
10,536 |
|
|
$ |
17,297 |
|
|
$ |
10,536 |
|
|
$ |
17,297 |
|
|
|
|
|
|
|
|
|
||||||||
Supplemental non-cash investing activities: |
|
|
|
|
|
|
|
||||||||
Capital expenditures included in accounts payable |
|
|
|
|
$ |
9,832 |
|
|
$ |
9,207 |
|
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, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
$ |
35,004 |
|
|
$ |
95,891 |
|
|
$ |
36,579 |
|
|
$ |
145,053 |
|
Expenditures for property, plant and equipment |
|
(19,291 |
) |
|
|
(17,760 |
) |
|
|
(43,894 |
) |
|
|
(38,779 |
) |
Free cash flow (1) |
$ |
15,713 |
|
|
$ |
78,131 |
|
|
$ |
(7,315 |
) |
|
$ |
106,274 |
|
|
|
|
|
|
|
|
|
||||||||
(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, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
32,728 |
|
|
$ |
65,157 |
|
|
$ |
67,682 |
|
|
$ |
128,230 |
|
Non-cash stock-based compensation |
|
2,436 |
|
|
|
2,005 |
|
|
|
4,449 |
|
|
|
5,379 |
|
Non-recurring, unusual or extraordinary expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-cash amortization from acquisitions |
|
532 |
|
|
|
551 |
|
|
|
1,064 |
|
|
|
752 |
|
Non-recurring M&A costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
277 |
|
Benefit from income taxes relating to reconciling items |
|
(498 |
) |
|
|
(439 |
) |
|
|
(933 |
) |
|
|
(995 |
) |
Adjusted Net Income |
|
35,198 |
|
|
|
67,274 |
|
|
|
72,262 |
|
|
|
133,643 |
|
Interest expense, net |
|
1,954 |
|
|
|
769 |
|
|
|
3,221 |
|
|
|
1,332 |
|
Income tax expense - adjusted |
|
11,053 |
|
|
|
20,401 |
|
|
|
20,763 |
|
|
|
40,141 |
|
Depreciation and amortization - adjusted |
|
17,580 |
|
|
|
16,982 |
|
|
|
34,893 |
|
|
|
33,474 |
|
Adjusted EBITDA |
$ |
65,785 |
|
|
$ |
105,426 |
|
|
$ |
131,139 |
|
|
$ |
208,590 |
|
|
|
|
|
|
|
|
|
||||||||
Sales |
$ |
427,940 |
|
|
$ |
583,736 |
|
|
$ |
828,484 |
|
|
$ |
1,062,809 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin (2) |
|
15.4 |
% |
|
|
18.1 |
% |
|
|
15.8 |
% |
|
|
19.6 |
% |
|
|
|
|
|
|
|
|
||||||||
(2) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Net Income |
$ |
32,728 |
|
$ |
65,157 |
|
$ |
67,682 |
|
$ |
128,230 |
Adjusted Net Income |
|
35,198 |
|
|
67,274 |
|
|
72,262 |
|
|
133,643 |
|
|
|
|
|
|
|
|
||||
Weighted-average number of common shares outstanding - basic |
|
27,494,555 |
|
|
28,168,207 |
|
|
27,547,874 |
|
|
28,183,951 |
Dilutive effect of equity awards and other stock-based holdings |
|
618,847 |
|
|
1,094,502 |
|
|
800,392 |
|
|
1,132,841 |
Weighted-average number of common shares outstanding - diluted |
|
28,113,402 |
|
|
29,262,709 |
|
|
28,348,266 |
|
|
29,316,792 |
|
|
|
|
|
|
|
|
||||
EPS - Basic |
$ |
1.19 |
|
$ |
2.31 |
|
$ |
2.46 |
|
$ |
4.55 |
EPS - Diluted |
$ |
1.16 |
|
$ |
2.23 |
|
$ |
2.39 |
|
$ |
4.37 |
Adjusted EPS - Basic |
$ |
1.28 |
|
$ |
2.39 |
|
$ |
2.62 |
|
$ |
4.74 |
Adjusted EPS - Diluted |
$ |
1.25 |
|
$ |
2.30 |
|
$ |
2.55 |
|
$ |
4.56 |
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 |
— |
|
|
|
|
2018 |
|
|
|
— |
|
2019 |
— |
|
|
|
|
2020 |
|
|
|
|
|
2021 |
|
|
— |
|
|
2022 |
|
|
|
— |
|
2023E |
|
|
|
— |
|
(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/20230803655711/en/
Media
Janeen Lawlor
(973) 526-1615
janeen.lawlor@advansix.com
Investors
Adam Kressel
(973) 526-1700
adam.kressel@advansix.com
Source: AdvanSix