Parsippany - AdvanSix (NYSE: ASIX) today announced its financial results for the third quarter ending September 30, 2023.
Overall, the Company navigated challenging nylon market conditions in the third quarter while executing its larger planned plant turnaround for the year as expected.
Third Quarter 2023 Summary
Sales down approximately 33% versus prior year driven by 24% unfavorable impact of market-based pricing, 8% lower raw material pass-through pricing, and 1% lower volume
Net Loss of ($8.0) million, a decrease of $18.0 million versus the prior year
Adjusted EBITDA of $7.3 million, a decrease of $26.0 million versus the prior year
Pre-tax Income impact of planned plant turnarounds of approximately $27 million
Cash Flow from Operations of $8 million, a decrease of $38.1 million versus the prior year
Capital Expenditures of $1 million, an increase of $2.9 million versus the prior year
Free Cash Flow of ($4.3) million, a decrease of $41.0 million versus the prior year
Repurchased 266,959 shares for approximately $9.3 million in 3Q23
'In the third quarter, AdvanSix navigated continued challenging market conditions in Nylon Solutions while executing its larger planned multi-plant turnaround for the year,' said Erin Kane, president and CEO of AdvanSix. 'These factors overshadowed resilient performance within our acetone portfolio and solid results from our plant nutrients business in the seasonally slowest quarter of the year and amid lower nitrogen nutrient values and raw material input costs. The nylon environment has been pressured by unfavorable global industry supply and demand conditions for several quarters and has approached trough industry spreads. We have a demonstrated playbook to navigate these dynamics, while maintaining our focus on smart, disciplined investments, and the healthy balance sheet we have established supports our ability to weather this environment as reflected in our ongoing repurchases and an increased dividend.'
Third Quarter 2023 Transactions
Exit of alliance with Oben Group: $11.4 million pre-tax gain recorded in 3Q23 which represents our estimate of the value of the termination fee payable by Oben, a third-party producer of films for the flexible packaging industry, to AdvanSix in exchange for full transition of AdvanSix's share of the alliance based upon a formula that takes into account a combination of historical and future performance. Approximately 60% of the termination fee is subject to change as it is based on an estimate of future performance. This fee is payable in three installments, with the first installment of $4.4 million received in 4Q 2023. Subsequent installments are expected to be paid in 3Q 2024 and 3Q 2025.
Licensee exit of legacy technology: $4.5 million unfavorable impact to pre-tax income in 3Q23 as a result of a non-cash write-down of the assets associated with a licensee of certain legacy ammonium sulfate fertilizer technology operated at the licensee's fertilizer manufacturing facility. The licensee announced its intent to close its facility no later than August 31, 2024.
Exit of certain low-margin oximes products: $2.4 million unfavorable impact to pre-tax income in 3Q23 as a result of a non-cash write-down of the assets associated with the ceasing of production of certain low-margin oximes products, namely AAO and MEKO. Expect a net neutral impact to 2024 earnings as a result of this exit.
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 November 28, 2023 to stockholders of record as of the close of business on November 14, 2023.
Outlook
Expect nylon industry margins to remain at prior trough levels through year-end due to unfavorable supply and demand conditions; Anticipate continued higher Nylon Solutions exports in near-term
Expect favorable underlying agriculture industry fundamentals to continue
Expect balanced supply and demand conditions for North American acetone to continue
Capital Expenditures tracking to approximately $115 million for the full year 2023, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects
'To drive long-term, sustainable performance, we are focusing our resources and efforts around higher value components of our portfolio. Simplification reduces complexity to ensure our investments and resources are aligned with supporting our customers' success in areas of highest impact. Of note, we are accelerating profitable growth through our SUSTAIN program's planned expansion in granular ammonium sulfate production. We're committed to driving best possible outcomes in the current set of industry dynamics and executing levers in our control, including remaining disciplined on cost and optimizing working capital to create shareholder value,' concluded Kane.
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, chemical intermediates, and plant nutrients. 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 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 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, 2022, as updated in subsequent reports filed with the SEC.
Contact:
Tel: 1-844-890-8949
Email: info@advansix.com
ADVANSIX INC. 
