asix-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 1-37774


AdvanSix Inc.
(Exact name of registrant as specified in its charter)


Delaware						81-2525089
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


300 Kimball Drive, Suite 101, Parsippany, New Jersey						07054
(Address of principal executive offices)						(Zip Code)

(973) 526-1800

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ASIX	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ý	Accelerated filer o	Non-accelerated filer o	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The Registrant had 26,712,936 shares of common stock, $0.01 par value, outstanding at July 26, 2024.

ADVANSIX INC.

FORM 10-Q

TABLE OF CONTENTS


Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2024 and 2023 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

Part II.	OTHER INFORMATION	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signature	29

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	38,927	$	32,728	$	21,531	$	67,682
Foreign exchange translation adjustment	(27)		(125)		(42)		(158)
Cash-flow hedges	—		—		7		(150)

Other comprehensive loss, net of tax	(27)		(125)		(35)		(308)
Comprehensive income	$	38,900	$	32,603	$	21,496	$	67,374

See accompanying notes to Condensed Consolidated Financial Statements.

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

COMMITMENTS AND CONTINGENCIES (Note 9)

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 and 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

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	21,531	$	67,682
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	38,264		35,958
Loss on disposal of assets	261		568
Deferred income taxes	751		3,894
Stock-based compensation	4,404		4,449
Amortization of deferred financing fees	309		309
Operational asset adjustments	1,200		—

Changes in assets and liabilities, net of business acquisitions:
Accounts and other receivables	(6,004)		22,123
Inventories	36,004		(10,484)
Taxes receivable	1,255		8,329
Accounts payable	(61,681)		(45,878)
Income taxes payable	(7,026)		(1,338)
Accrued liabilities	6,149		(5,744)
Deferred income and customer advances	(14,530)		(32,097)
Other assets and liabilities	(6,889)		(11,192)
Net cash provided by operating activities	13,998		36,579

Cash flows from investing activities:
Expenditures for property, plant and equipment	(68,883)		(43,894)


Other investing activities	(3,736)		(2,034)
Net cash used for investing activities	(72,619)		(45,928)

Cash flows from financing activities:



Borrowings from line of credit	257,500		230,500
Payments of line of credit	(197,500)		(205,500)

Principal payments of finance leases	(502)		(456)
Dividend payments	(8,582)		(8,004)
Purchase of treasury stock	(10,385)		(28,385)
Issuance of common stock	427		745

Net cash provided by (used for) financing activities	40,958		(11,100)

Net change in cash and cash equivalents	(17,663)		(20,449)
Cash and cash equivalents at beginning of period	29,768		30,985
Cash and cash equivalents at the end of period	$	12,105	$	10,536

Supplemental non-cash investing activities:
Capital expenditures included in accounts payable	$	14,932	$	9,832

Supplemental cash activities:
Cash paid for interest	$	6,015	$	3,027
Cash paid for income taxes	$	13,587	$	7,024

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(Dollars in thousands)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares	Amount
Balance at December 31, 2023	32,598,946	$	326	$	138,046	$	605,067	$	(58)	$	(4,144)	$	739,237

Net loss	—	—		—		(17,396)		—		—		(17,396)
Comprehensive income
Foreign exchange translation adjustments	—	—		—		—		—		(15)		(15)
Cash-flow hedges	—	—		—		—		—		7		7

Other comprehensive loss, net of tax	—	—		—		—		—		(8)		(8)
Issuance of common stock	323,989	3		423		—		—		—		426
Purchase of treasury stock (260,464 shares)	—	—		(7,020)		—		(3)		—		(7,023)
Stock-based compensation	—	—		2,211		—		—		—		2,211
Dividends	—	—		163		(4,453)		—		—		(4,290)
Balance at March 31, 2024	32,922,935	329		133,823		583,218		(61)		(4,152)		713,157

Net income	—	—		—		38,927		—		—		38,927
Comprehensive income
Foreign exchange translation adjustments	—	—		—		—		—		(27)		(27)


Other comprehensive loss, net of tax	—	—		—		—		—		(27)		(27)
Issuance of common stock	36,653	1		—		—		—		—		1
Purchase of treasury stock (141,242 shares)	—	—		(3,360)		—		(2)		—		(3,362)
Stock-based compensation	—	—		2,193		—		—		—		2,193
Dividends	—	—		130		(4,422)		—		—		(4,292)
Balance at June 30, 2024	32,959,588	$	330	$	132,786	$	617,723	$	(63)	$	(4,179)	$	746,597

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(Dollars in thousands)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares	Amount
Balance at December 31, 2022	31,977,593	$	320	$	174,585	$	567,517	$	(45)	$	(4,197)	$	738,180

Net income	—	—		—		34,954		—		—		34,954
Comprehensive income
Foreign exchange translation adjustments	—	—		—		—		—		(33)		(33)
Cash-flow hedges	—	—		—		—		—		(150)		(150)

Other comprehensive loss, net of tax	—	—		—		—		—		(183)		(183)
Issuance of common stock	555,249	5		617		—		—		—		622
Purchase of treasury stock (333,054 shares)	—	—		(13,496)		—		(3)		—		(13,499)
Stock-based compensation	—	—		2,013		—		—		—		2,013
Dividends	—	—		112		(4,132)		—		—		(4,020)
Balance at March 31, 2023	32,532,842	325		163,831		598,339		(48)		(4,380)		758,067

Net income	—	—		—		32,728		—		—		32,728
Comprehensive income
Foreign exchange translation adjustments	—	—		—		—		—		(125)		(125)


Other comprehensive loss, net of tax	—	—		—		—		—		(125)		(125)
Issuance of common stock	45,020	1		122		—		—		—		123
Purchase of treasury stock (410,862 shares)	—	—		(14,881)		—		(5)		—		(14,886)
Stock-based compensation	—	—		2,436		—		—		—		2,436
Dividends	—	—		198		(4,182)		—		—		(3,984)
Balance at June 30, 2023	32,577,862	$	326	$	151,706	$	626,885	$	(53)	$	(4,505)	$	774,359

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

1. Organization, Operations and Basis of Presentation

Description of Business

AdvanSix Inc. ("AdvanSix," the "Company," "we" or "our") is a diversified chemistry company playing a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. Our reliable and sustainable supply of quality products emerges from the integrated value chain of our five U.S.-based manufacturing facilities. AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates, guided by our core values of Safety, Integrity, Accountability and Respect.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2024, and its results of operations for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). All intercompany transactions have been eliminated.

Certain prior period amounts have been reclassified for consistency with the current period presentation.

It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice have generally not been significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three and six months ended June 30, 2024 and 2023 were June 29, 2024 and July 1, 2023, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2024 and December 31, 2023 aggregated to $3.4 million and $2.9 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

The Company's Board of Directors (the "Board") has authorized share repurchase programs to repurchase shares of the Company's common stock as follows:


Date of Authorization	Authorized Amount (millions)		Authorized Amount Remaining as of June 30, 2024 (millions)
May 4, 2018	$	75.0	$	—
February 22, 2019	75.0		—
February 17, 2023	75.0		62.0
Totals	$	225.0	$	62.0

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions,

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

legal and contractual requirements and other factors. The share repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of June 30, 2024, the Company has repurchased a total of 6,250,181 shares of common stock, including 1,004,725 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $192.4 million at a weighted average market price of $30.78 per share. As of June 30, 2024, $62.0 million remained available for share repurchases under the current authorization. During the period July 1, 2024 through July 26, 2024, 1,933 additional shares were repurchased for tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $21.64, and no additional shares were repurchased under the currently authorized repurchase program.

2. Recent Accounting Pronouncements

Recent Accounting Pronouncements – The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

On December 13, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that are equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendments also require that the Company disclose the following (net of refunds received): (1) the amount of income taxes paid disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid. Additionally, the amendments in this update eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or to make a statement that an estimate of the range cannot be made, and remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. The guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption of the amendments in this update are permitted for annual financial statements that have not yet been issued. The Company is evaluating the pronouncement and does not expect adoption to have a material impact on the Company's consolidated financial position or results of operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require incremental disclosures about the Company's reportable segments, but do not change the definition of a segment or the guidance for determining reportable segments. The incremental disclosures should include (1) significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition, (3) profit or loss and assets currently required by Topic 280 in interim periods, (4) clarification if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources and (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The guidance is effective for public entities with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Additionally, public entities should apply the amendments retrospectively to all prior periods presented in the financial statements, unless impractical. The Company is evaluating the pronouncement and does not expect adoption to have a material impact on the Company's consolidated financial position or results of operations.

3. Revenues

Revenue Recognition

We serve approximately 400 customers annually in approximately 45 countries across a wide variety of industries. For the three months ended June 30, 2024 and 2023, the Company's ten largest customers accounted for approximately 39% and 40% of total sales, respectively. For each of the six months ended June 30, 2024 and 2023, the Company's ten largest customers accounted for approximately 38% of total sales.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

We typically sell to customers under master service agreements, with primarily one-year terms, or by purchase orders. We have historically experienced low customer turnover and have long-standing customer relationships, which span decades. Our largest customer is Shaw Industries Group, Inc. (“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement. For the three months ended June 30, 2024 and 2023 the Company's sales to Shaw were 9% and 10% of our total sales, respectively. For the six months ended June 30, 2024 and 2023, the Company's sales to Shaw were 9% and 10% of our total sales, respectively.

The Company's revenue by product line, and related approximate percentage of total sales, for the three and six months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Nylon	$	103,217	23%	$	92,953	22%	$	187,606	24%	$	192,325	23%
Caprolactam	81,303		18%	74,682		18%	142,779		18%	147,073		18%
Ammonium Sulfate	139,674		31%	138,940		32%	224,936		28%

SEC Form 10-Q filed by AdvanSix Inc.