AdvanSix Announces First Quarter 2019 Financial Results

Sales of $315 million, down 12% versus prior year driven by raw
material pass-through pricing

Cash Flow from Operations of $42 million, down 5% versus prior year

Earnings Per Share of $0.68, up 84% versus prior year

Strategic alliance with Oben Group to sell BOPA film offerings in
North America; Closure of Pottsville, PA manufacturing by 3Q19

PARSIPPANY, N.J.–(BUSINESS WIRE)–AdvanSix (NYSE: ASIX) today announced its financial results for
the first quarter ending March 31, 2019. Overall, the Company delivered
higher earnings compared to the prior year.

First Quarter 2019 Highlights

  • Sales down approximately 12% versus prior year, including
    approximately 12% lower raw material pass-through pricing, 3%
    favorable impact of market-based pricing, and 3% lower volume
  • Net Income of $20.2 million, an increase of $8.6 million versus the
    prior year
  • EBITDA of $42.0 million, an increase of $11.2 million versus the prior

    • 1Q19 pre-tax income includes: approximately $8 million unfavorable
      impact from the phenol force majeure and approximately $6.6
      million benefit from business interruption insurance proceeds
      related to the 1Q18 weather event claim
  • Cash Flow from Operations of $42.1 million, a decrease of $2.0 million
    versus the prior year
  • Free Cash Flow of $2.6 million, a decrease of $10.8 million versus the
    prior year
  • Repurchased 785,919 shares for approximately $24 million

In the first quarter, we successfully navigated through shortages and
delivery delays of cumene, our key raw material, maintained our focus on
safe and stable operations and generated higher earnings versus the
prior year. We once again captured the benefit of improved market-based
pricing overall, despite ongoing acetone industry challenges,” said Erin
Kane, president and CEO of AdvanSix. “Our focused efforts and
performance have supported smart deployment of capital into high-return
growth and cost savings projects, further enhancing our integrated value
chain. Further, following a thorough strategic review of our nylon films
business, we announced a new strategic alliance with a leading producer
of films for the flexible packaging industry and the closure of our
Pottsville films plant, which will position us for improved performance
in this industry.”

Summary first quarter 2019 financial results for the Company are
included below:


First Quarter 2019 Results

($ in Thousands, Except Earnings Per Share)   1Q 2019     1Q 2018  
Sales $314,895 $359,238
Net Income 20,174 11,593
Earnings Per Share (Diluted) $0.68 $0.37
EBITDA (1) 42,020 30,790
EBITDA Margin % (1) 13.3% 8.6%
Cash Flow from Operations 42,076 44,067
Free Cash Flow (1)(2) 2,564 13,354
(1)   See “Non-GAAP Measures” included in this press release for non-GAAP
(2) Net cash provided by operating activities less capital expenditures

Sales of $314.9 million decreased approximately 12% versus the prior
year. Pricing overall decreased 9% versus the prior year, including a
12% unfavorable impact from raw material pass-through pricing following
cost decreases in benzene and propylene (inputs to cumene which is a key
feedstock to our products). Market-based pricing was favorable by 3%
compared to the prior year reflecting improved performance in our nylon,
ammonium sulfate, and caprolactam product lines, partially offset by
declines in chemical intermediates due to the lengthening of acetone
supply globally. Sales volume in the quarter decreased 3% versus the
prior year primarily due to the unfavorable impact of the phenol force
majeure and continued challenging acetone industry dynamics, partially
offset by improved nylon production.

Sales by product line represented the following approximate percentage
of our total sales:

    1Q 2019       1Q 2018  
Nylon   31%     28%
Caprolactam 20% 18%
Ammonium Sulfate Fertilizers 21% 19%
Chemical Intermediates 28% 35%

EBITDA of $42.0 million in the quarter increased $11.2 million versus
the prior year primarily due to the approximately $30 million
unfavorable impact of the 1Q18 weather event and favorable market-based
pricing, partially offset by the $8 million unfavorable impact of the
phenol force majeure, lower than expected operational performance and
the unfavorable impact of challenging acetone industry dynamics. First
quarter 2019 results also included an approximately $6.6 million benefit
from business interruption insurance proceeds related to the 1Q18
weather event.

Earnings per share of $0.68 increased 84% versus the prior year driven
by the factors discussed above, lower interest expense and a lower share
count driven by continued repurchases, partially offset by an increase
in our effective tax rate as well as higher depreciation and

Cash flow from operations of $42.1 million in the quarter decreased $2.0
million versus the prior year. Capital expenditures of $39.5 million in
the quarter increased $8.8 million versus the prior year primarily due
to an increase in spend on growth and cost savings projects.


  • Targeting strong nylon plant utilization rates while navigating
    through uncertain carpet and auto end markets
  • Nitrogen fertilizer environment expected to strengthen seasonally
    through Spring planting season
  • Expect global acetone supply to lengthen into 2Q19 reflecting Gulf
    Coast terminal fire disruption and customer force majeures
  • Continue to expect full year 2019 Capital Expenditures to be $140 to
    $150 million and full year 2019 pre-tax income impact of planned plant
    turnarounds to be $35 to $40 million

The Company announced it has entered into a strategic alliance with Oben
Group, a leading producer of films for the flexible packaging industry,
combining AdvanSix’s channel to North America with Oben Group’s new
state-of-the-art manufacturing facility. The Company also approved the
closure of its Pottsville, Pennsylvania films plant as part of its
broader strategic efforts associated with the films product line in
North America. “This capital efficient and highly synergistic
combination best positions us for success in the nylon films industry.
We are thankful for the hard work and dedication of the Pottsville team
and are committed to ensuring a seamless transition for our employees
and nylon films customers. Under our strategic alliance, we look forward
to continuing to support our customers through quality products and
service,” said Kane. The closure is expected to be completed during the
third quarter of 2019. Subject to the finalization of certain estimates,
the Company expects to take a pre-tax repositioning charge associated
with the closure of $10 to $12 million in the second quarter of 2019.
The expected charge consists of approximately $6 million associated with
a non-cash impairment of plant and business related assets. Future cash
expenses associated with the charge are anticipated to be approximately
$2 million for employee separation benefits and $3 million of other exit
and removal costs.

Our strategic priorities remain centered on driving safe and stable
operations, enhancing our long-term growth capabilities, and making
smart and disciplined investments in the business to drive higher
returns. We’re confident in our ability to build on our advantaged
foundation and create value for our shareholders over the long-term,”
added 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 (786) 789-4797 (domestic) or (800) 239-9838 (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 2019
earnings call. The live webcast of the investor call as well as related
presentation materials can be accessed at
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 (719) 457-0820 (domestic) or
(888) 203-1112 (international). The access code is 7296411.

About AdvanSix

AdvanSix is a leading manufacturer of Nylon 6, a polymer resin which is
a synthetic material used by our customers to produce engineered
plastics, fibers, filaments and films that, in turn, are used in such
end-products as automotive and electronic components, carpets, sports
apparel, fishing nets and food and industrial packaging. As a result of
our backward integration and the configuration of our manufacturing
facilities, we also sell caprolactam, ammonium sulfate fertilizer,
acetone and other intermediate chemicals, all of which are produced as
part of our Nylon 6 integrated manufacturing chain. More information on
AdvanSix can be found at

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 like
“expect,” “anticipate,” “estimate,” “outlook”, “project,” “strategy,”
“intend,” “plan,” “target,” “goal,” “may,” “will,” “should” and
“believe” or other variations or similar terminology. 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;
growth rates and cyclicality of the industries we serve; 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, and natural disasters; price fluctuations and supply
of raw materials; our operations requiring substantial capital; risks
associated with our indebtedness including with respect to restrictive
covenants; 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;
cybersecurity and data privacy incidents; failure to maintain effective
internal controls; disruptions in transportation and logistics; our
inability to achieve some or all of the anticipated benefits of the
spin-off from Honeywell including uncertainty regarding qualification
for expected tax treatment; 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, including our Annual Report on Form
10-K for the year ended December 31, 2018.

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
in thousands, except share and per share amounts)

March 31, 2019 December 31, 2018
Current assets:
Cash and cash equivalents $ 7,803 $ 9,808
Accounts and other receivables – net 117,247 160,266
Inventories – net 140,598 137,182
Other current assets 3,237 3,807
Total current assets 268,885 311,063
Property, plant and equipment – net 685,366 672,210
Operating lease right-of-use assets 116,614
Goodwill 15,005 15,005
Other assets 37,902 36,348
Total assets $ 1,123,772 $ 1,034,626
Current liabilities:
Accounts payable $ 188,169 $ 231,720
Accrued liabilities 22,910 30,448
Operating lease liabilities – short-term 24,929
Deferred income and customer advances 20,694 22,556
Total current liabilities 256,702 284,724
Deferred income taxes 107,466 103,783
Operating lease liabilities – long-term 91,802
Line of credit – long-term 220,000 200,000
Postretirement benefit obligations 22,980 21,080
Other liabilities 5,578 4,701
Total liabilities 704,528 614,288

Common stock, par value $0.01; 200,000,000 shares authorized;
shares issued and 28,573,744 outstanding at March 31,
30,555,715 shares issued and 29,345,001 outstanding at
31, 2018

306 306

Preferred stock, par value $0.01; 50,000,000 shares authorized and
shares issued and outstanding at March 31, 2019 and December

Treasury stock at par (2,004,468 shares at March 31, 2019;
shares at December 31, 2018)

(20) (12)
Additional paid-in capital 213,632 234,699
Retained earnings 207,993 187,819
Accumulated other comprehensive loss (2,667) (2,474)
Total stockholders’ equity 419,244 420,338
Total liabilities and stockholders’ equity $ 1,123,772 $ 1,034,626

AdvanSix Inc.
Condensed Consolidated Statements of

(Dollars in
thousands, except share and per share amounts)



Three Months Ended
March 31,

2019     2018
Sales $ 314,895 $ 359,238
Costs, expenses and other:
Costs of goods sold 266,880 321,320
Selling, general and administrative expenses 19,413 19,213
Other non-operating expense (income), net 1,604 3,546
Total costs, expenses and other 287,897 344,079
Income before taxes 26,998 15,159
Income tax expense 6,824 3,566
Net income $ 20,174 $ 11,593
Earnings per common share
Basic $ 0.70 $ 0.38
Diluted $ 0.68 $ 0.37
Weighted average common shares outstanding
Basic 28,820,603 30,488,601
Diluted 29,786,957 31,285,365

AdvanSix Inc.
Condensed Consolidated Statements of
Cash Flows

(Dollars in




Three Months Ended
March 31,

2019     2018
Cash flows from operating activities:
Net income $ 20,174 $ 11,593

Adjustments to reconcile net income to net cash
(used for)
provided by operating activities:

Depreciation and amortization 13,915 12,542
Loss on disposal of assets 415 311
Deferred income taxes 3,747 1,741
Stock based compensation 2,762 2,281
Accretion of deferred financing fees 107 1,480
Changes in assets and liabilities:
Accounts and other receivables 43,018 33,092
Inventories (3,416) 4,573
Accounts payable (30,674) (15,652)
Accrued liabilities (7,232) (9,631)
Deferred income and customer advances (1,862) (68)
Other assets and liabilities 1,122 1,805
Net cash provided by operating activities 42,076 44,067
Cash flows from investing activities:
Expenditures for property, plant and equipment (39,512) (30,713)
Other investing activities (587) (1,002)
Net cash used for investing activities (40,099) (31,715)
Cash flows from financing activities:
Payments of long-term debt (266,625)
Borrowings from line of credit 85,500 246,000
Payments of line of credit (65,500) (16,000)
Payment of line of credit facility fees (1,362)
Principal payments of finance leases (145) (75)
Purchase of treasury stock (23,853) (370)
Issuance of common stock 16
Net cash used for financing activities (3,982) (38,432)
Net change in cash and cash equivalents (2,005) (26,080)
Cash and cash equivalents at beginning of period 9,808 55,432
Cash and cash equivalents at the end of period $ 7,803 $ 29,352
Supplemental non-cash investing activities:
Capital expenditures included in accounts payable $ 14,039 $ 9,753

AdvanSix Inc.

Non-GAAP Measures

(Dollars in thousands)


Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow

Three Months Ended
March 31,
2019   2018
Net cash provided by operating activities $ 42,076 $ 44,067
Expenditures for property, plant and equipment (39,512) (30,713)
Free cash flow (1) $ 2,564 $ 13,354
(1)   Free cash flow is a non-GAAP measure defined as Net cash provided by
operating activities less Expenditures for property, plant and

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


Reconciliation of Net Income to EBITDA


Three Months Ended
March 31,

2019   2018
Net income $ 20,174 $ 11,593
Interest expense, net 1,107 3,089
Income taxes 6,824 3,566
Depreciation and amortization 13,915 12,542
EBITDA (2) $ 42,020 $ 30,790
Sales $ 314,895 $ 359,238
EBITDA margin (3) 13.3% 8.6%


EBITDA is a non-GAAP measure defined as Net Income before
Interest, Income Taxes, Depreciation and Amortization


EBITDA margin is defined as EBITDA divided by Sales


The Company believes these non-GAAP financial measures 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.
(Pre-tax income
impact, Dollars in millions)


Planned Plant Turnaround Schedule







2017 ~$10 ~$4 ~$20 ~$34
2018 ~$2 ~$10 ~$30 ~$42
2019E ~$5 ~$5 $25-$30 $35-$40
2020E X X

In-line with

(4) Primarily reflects the impact of fixed cost absorption, maintenance
expense, and the purchase of feedstocks which are normally
manufactured by the Company


Debra Lewis
(973) 526-1767
[email protected]

Adam Kressel
(973) 526-1700
[email protected]

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