ASIX
$45.27
Advansix
$.92
2.07%
Earnings Details
2nd Quarter June 2021
Friday, July 30, 2021 6:30:00 AM
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Summary

Advansix (ASIX) Recent Earnings

Advansix (ASIX) reported 2nd Quarter June 2021 earnings of $1.53 per share on revenue of $437.7 million. The consensus earnings estimate was $1.08 per share on revenue of $408.6 million. Revenue grew 87.8% on a year-over-year basis.

AdvanSix plays 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, plastics, solvents, packaging, paints, coatings, adhesives and electronics.

Results
Reported Earnings
$1.53
Earnings Whisper
-
Consensus Estimate
$1.08
Reported Revenue
$437.7 Mil
Revenue Estimate
$408.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

AdvanSix Announces Second Quarter 2021 Financial Results

Record sales and earnings - strong execution amid tight supply and demand environment

Sales of $438 million, up 88% versus prior year driven by volume and price improvement

Earnings Per Share of $1.53, up 273% versus prior year

Cash Flow from Operations of $52 million, up $43 million versus prior year

PARSIPPANY, N.J.--(BUSINESS WIRE)--AdvanSix (NYSE:ASIX) today announced its financial results for the second quarter ending June 30, 2021. Overall, the Company generated record sales, earnings and margin in the quarter reflecting strong execution amid improving end market demand and tight industry supply conditions.

Second Quarter 2021 Results

  • Sales up approximately 88% versus prior year driven by 32% higher volume, 31% higher raw material pass-through pricing and 25% favorable impact of market-based pricing
  • Net Income of $44.1 million, an increase of $32.7 million versus the prior year
  • EBITDA of $76.0 million, an increase of $45.2 million versus the prior year
  • EBITDA Margin of 17.4%, an increase of 420 bps versus the prior year
  • Cash Flow from Operations of $51.9 million, an increase of $43.1 million versus the prior year
  • Capital Expenditures of $10.3 million, a decrease of $7.2 million versus the prior year
  • Free Cash Flow of $41.6 million, an increase of $50.3 million versus the prior year

“Our entire organization performed exceptionally well in the current set of industry conditions to support our customers throughout the quarter while delivering record sales, earnings and margin performance," said Erin Kane, president and CEO of AdvanSix. "Our record performance is attributable to strong volume and pricing improvement including continued growth in differentiated products amid favorable end market conditions and tight industry supply. Demand has improved across a number of the diverse end markets we serve including building and construction, auto, electronics, packaging, paints and coatings, and solvents as well as the strongest set of agricultural industry fundamentals seen in the last decade. Across the board, it has been a terrific first half of 2021 with robust earnings and cash flow performance reflecting strong execution and the strength of our business model and portfolio."

Summary second quarter 2021 financial results for the Company are included below:

($ in Thousands, Except Earnings Per Share)

 

2Q 2021

 

2Q 2020

Sales

 

$437,682

 

$233,022

Net Income

 

44,131

 

11,429

Earnings Per Share (Diluted)

 

$1.53

 

$0.41

EBITDA (1)

 

75,956

 

30,721

EBITDA Margin % (1)

 

17.4%

 

13.2%

Cash Flow from Operations

 

51,945

 

8,834

Free Cash Flow (1)(2)

 

41,644

 

(8,668)

(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 $437.7 million increased approximately 88% versus the prior year. Sales volume in the quarter increased 32% driven by improved end market demand across our product lines. Raw material pass-through pricing was favorable by 31% following a net cost increase in benzene and propylene (inputs to cumene which is a key feedstock to our products). Market-based pricing was favorable by 25% compared to the prior year driven by higher pricing across each of our product lines.

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

 

 

2Q 2021

 

2Q 2020

Nylon

 

25%

 

22%

Caprolactam

 

19%

 

15%

Chemical Intermediates

 

33%

 

29%

Ammonium Sulfate

 

23%

 

34%

EBITDA of $76.0 million in the quarter increased $45.2 million versus the prior year primarily due to higher volume and market-based pricing, partially offset by the unfavorable impact of higher raw material costs including natural gas and sulfur. 2Q 2021 EBITDA included approximately $2 million favorable impact of initial insurance proceeds related to the 2019 shutdown of cumene supplier Philadelphia Energy Solutions (PES).

Earnings per share of $1.53 increased $1.12 versus the prior year driven by the factors discussed above, partially offset by a higher effective tax rate in the quarter. The effective tax rate in the quarter was 23.8% compared to 16.6% in the prior year period primarily driven by state taxes and research tax credits in the prior year period, which had a larger impact on reducing the tax rate in that period due to lower income.

Cash flow from operations of $51.9 million in the quarter increased $43.1 million versus the prior year primarily due to higher net income, partially offset by the unfavorable impact of changes in working capital. Capital expenditures of $10.3 million in the quarter decreased $7.2 million versus the prior year reflecting capital process efficiencies and timing of project execution.

Outlook

  • Expect steady North America nylon demand amid favorable end market conditions and tight industry supply
  • Expect strong agricultural industry fundamentals to continue; Typical North America ammonium sulfate seasonality expected to drive 3Q21 higher export mix sequentially
  • Expect robust demand for chemical intermediates to continue; Acetone industry fundamentals to remain strong with continued balancing of supply and demand in 2H 2021
  • Expect Capital Expenditures to be $65 to $70 million in 2021 (compared to prior expectations of $70 to $80 million) reflecting timing of project execution
  • Driving efficiencies in planned plant turnaround programs - expect pre-tax income impact of $24 to $27 million in 2021 (compared to prior expectations of $25 to $30 million)

"We continue to execute against a focused strategy and the outlook for our business remains favorable. The continuation of strong underlying demand trends across our core markets, benefits from our high-return capital projects and differentiated product portfolio, and our operational agility are all supporting expected record earnings and cash flow in 2021. We are approaching the five-year anniversary of our spin-off and our organization's collective efforts throughout this time have positioned the company for long-term success. We are excited to share more about our ability to deliver strong and sustainable shareholder returns at our upcoming Investor Day scheduled for September 28,” 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 (833) 756-0862 (domestic) or (412) 317-5752 (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 2021 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 July 30 until 12 noon ET on August 6 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international). The access code is 10153579.

About AdvanSix

AdvanSix plays 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, plastics, solvents, packaging, paints, coatings, adhesives and electronics. Our reliable and sustainable supply of quality products emerges from the vertically integrated value chain of our three U.S.-based manufacturing facilities. AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, chemical intermediates, and plant nutrients, guided by our core values of Safety, Integrity, Accountability and Respect. More information on AdvanSix can be found at http://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, including the impact of the coronavirus (COVID-19) pandemic and any resurgences; the scope, duration and pace of recovery of the pandemic; the timing of the distribution and efficacy of vaccines or treatments for COVID-19 that are currently available or may be available in the future and related vaccination rates; the severity and transmissibility of newly identified strains of COVID-19; governmental, business and individuals’ actions in response to the pandemic, including our business continuity and cash optimization plans that have been, and may in the future be, implemented; the impact of social and economic restrictions and other containment measures taken to combat virus transmission; the effect 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, including as a result of travel and other COVID-19-related restrictions; the ability of our customers to pay for our products; and any closures of our and our customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks 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 resulting from COVID-19 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 and pandemics; 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; cybersecurity, data privacy incidents and disruptions to our technology infrastructure; failure to maintain effective internal controls; disruptions in 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, 2020, 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.

AdvanSix Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

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

  

 

 

June 30, 2021

 

December 31, 2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

4,251

 

 

$

10,606

 

Accounts and other receivables – net

 

165,381

 

 

123,554

 

Inventories – net

 

140,105

 

 

180,085

 

Taxes receivable

 

363

 

 

12,289

 

Other current assets

 

14,650

 

 

6,969

 

Total current assets

 

324,750

 

 

333,503

 

 

 

 

 

 

Property, plant and equipment – net

 

758,736

 

 

765,469

 

Operating lease right-of-use assets

 

106,297

 

 

114,484

 

Goodwill

 

17,592

 

 

15,005

 

Other assets

 

37,949

 

 

34,946

 

Total assets

 

$

1,245,324

 

 

$

1,263,407

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

194,804

 

 

$

190,227

 

Accrued liabilities

 

43,155

 

 

41,152

 

Operating lease liabilities – short-term

 

28,196

 

 

29,279

 

Deferred income and customer advances

 

2,950

 

 

26,379

 

Total current liabilities

 

269,105

 

 

287,037

 

 

 

 

 

 

Deferred income taxes

 

133,681

 

 

125,575

 

Operating lease liabilities – long-term

 

78,560

 

 

85,605

 

Line of credit – long-term

 

195,000

 

 

275,000

 

Postretirement benefit obligations

 

38,002

 

 

39,168

 

Other liabilities

 

8,147

 

 

6,899

 

Total liabilities

 

722,495

 

 

819,284

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

Common stock, par value $0.01; 200,000,000 shares authorized; 31,732,789 shares issued and 28,118,587 outstanding at June 30, 2021; 31,627,139 shares issued and 28,033,227 outstanding at December 31, 2020

 

317

 

 

316

 

Preferred stock, par value $0.01; 50,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020

 

 

 

 

Treasury stock at par (3,614,202 shares at June 30, 2021; 3,593,912 shares at December 31, 2020)

 

(36)

 

 

(36)

 

Additional paid-in capital

 

190,295

 

 

184,732

 

Retained earnings

 

347,505

 

 

275,243

 

Accumulated other comprehensive loss

 

(15,252)

 

 

(16,132)

 

Total stockholders' equity

 

522,829

 

 

444,123

 

Total liabilities and stockholders' equity

 

$

1,245,324

 

 

$

1,263,407

 

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,

 

 

2021

 

2020

 

2021

 

2020

Sales

 

$

437,682

 

 

$

233,022

 

 

$

814,065

 

 

$

535,735

 

 

 

 

 

 

 

 

 

 

Costs, expenses and other:

 

 

 

 

 

 

 

 

Costs of goods sold

 

356,884

 

 

198,739

 

 

674,783

 

 

470,746

 

Selling, general and administrative expenses

 

21,682

 

 

17,911

 

 

40,990

 

 

34,651

 

Interest expense, net

 

1,379

 

 

1,887

 

 

2,923

 

 

3,846

 

Other non-operating expense (income), net

 

(211

)

 

783

 

 

19

 

 

549

 

Total costs, expenses and other

 

379,734

 

 

219,320

 

 

718,715

 

 

509,792

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

57,948

 

 

13,702

 

 

95,350

 

 

25,943

 

Income tax expense

 

13,817

 

 

2,273

 

 

23,088

 

 

5,938

 

Net income

 

$

44,131

 

 

$

11,429

 

 

$

72,262

 

 

$

20,005

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

Basic

 

$

1.57

 

 

$

0.41

 

 

$

2.57

 

 

$

0.72

 

Diluted

 

$

1.53

 

 

$

0.41

 

 

$

2.51

 

 

$

0.71

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

28,131,981

 

 

28,012,883

 

 

28,112,978

 

 

27,977,684

 

Diluted

 

28,920,177

 

 

28,073,648

 

 

28,830,727

 

 

28,062,301

 

AdvanSix Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

  

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2021

 

2020

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

44,131

 

 

$

11,429

 

 

$

72,262

 

 

$

20,005

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

16,629

 

 

15,132

 

 

32,733

 

 

29,564

 

Loss on disposal of assets

 

349

 

 

13

 

 

433

 

 

48

 

Deferred income taxes

 

5,575

 

 

(698

)

 

7,812

 

 

10,506

 

Stock-based compensation

 

3,744

 

 

1,702

 

 

6,107

 

 

2,900

 

Accretion of deferred financing fees

 

141

 

 

141

 

 

282

 

 

271

 

Changes in assets and liabilities, net of business acquisitions:

 

 

 

 

 

 

 

 

Accounts and other receivables

 

(15,855

)

 

38,576

 

 

(40,974

)

 

29,830

 

Inventories

 

1,706

 

 

(25,658

)

 

40,692

 

 

(12,014

)

Taxes receivable

 

(23

)

 

(472

)

 

11,926

 

 

(8,126

)

Accounts payable

 

20,602

 

 

(31,472

)

 

6,821

 

 

(41,224

)

Accrued liabilities

 

3,663

 

 

3,024

 

 

4,575

 

 

5,936

 

Deferred income and customer advances

 

(16,626

)

 

(7,807

)

 

(23,429

)

 

(14,433

)

Other assets and liabilities

 

(12,091

)

 

4,924

 

 

(10,205

)

 

5,290

 

Net cash provided by operating activities

 

51,945

 

 

8,834

 

 

109,035

 

 

28,553

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

(10,301

)

 

(17,502

)

 

(24,478

)

 

(51,602

)

Acquisition of business

 

 

 

 

 

(9,523

)

 

 

Other investing activities

 

(251

)

 

(140

)

 

(482

)

 

(525

)

Net cash used for investing activities

 

(10,552

)

 

(17,642

)

 

(34,483

)

 

(52,127

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings from line of credit

 

50,500

 

 

86,000

 

 

104,500

 

 

219,500

 

Payments of line of credit

 

(101,500

)

 

(35,000

)

 

(184,500

)

 

(128,500

)

Payment of line of credit facility fees

 

 

 

 

 

 

 

(425

)

Principal payments of finance leases

 

(165

)

 

(176

)

 

(364

)

 

(358

)

Purchase of treasury stock

 

(146

)

 

(107

)

 

(589

)

 

(1,032

)

Issuance of common stock

 

45

 

 

 

 

46

 

 

2

 

Net cash provided by (used for) financing activities

 

(51,266

)

 

50,717

 

 

(80,907

)

 

89,187

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

(9,873

)

 

41,909

 

 

(6,355

)

 

65,613

 

Cash and cash equivalents at beginning of period

 

14,124

 

 

30,754

 

 

10,606

 

 

7,050

 

Cash and cash equivalents at the end of period

 

$

4,251

 

 

$

72,663

 

 

$

4,251

 

 

$

72,663

 

 

 

 

 

 

 

 

 

 

Supplemental non-cash investing activities:

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

 

 

 

 

$

3,739

 

 

$

6,038

 

AdvanSix Inc.

Non-GAAP Measures

(Dollars in thousands)

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

   

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2021

 

2020

 

2021

 

2020

Net cash provided by operating activities

 

$

51,945

 

 

$

8,834

 

 

$

109,035

 

 

$

28,553

 

Expenditures for property, plant and equipment

 

(10,301

)

 

(17,502

)

 

(24,478

)

 

(51,602

)

Free cash flow (1)

 

$

41,644

 

 

$

(8,668

)

 

$

84,557

 

 

$

(23,049

)

(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 EBITDA

   

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2021

 

2020

 

2021

 

2020

Net income

 

$

44,131

 

 

$

11,429

 

 

$

72,262

 

 

$

20,005

 

Interest expense, net

 

1,379

 

 

1,887

 

 

2,923

 

 

3,846

 

Income tax expense

 

13,817

 

 

2,273

 

 

23,088

 

 

5,938

 

Depreciation and amortization

 

16,629

 

 

15,132

 

 

32,733

 

 

29,564

 

EBITDA (2)

 

$

75,956

 

 

$

30,721

 

 

$

131,006

 

 

$

59,353

 

 

 

 

 

 

 

 

 

 

Sales

 

$

437,682

 

 

$

233,022

 

 

$

814,065

 

 

$

535,735

 

 

 

 

 

 

 

 

 

 

EBITDA margin (3)

 

17.4%

 

13.2%

 

16.1%

 

11.1%

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

(3) EBITDA margin is defined as EBITDA divided by Sales

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 (4)

      

 

 

1Q

 

2Q

 

3Q

 

4Q

 

FY

2017

 

 

~$10

 

~$4

 

~$20

 

~$34

2018

 

~$2

 

~$10

 

~$30

 

 

~$42

2019

 

 

~$5

 

~$5

 

~$25

 

~$35

2020

 

~$2

 

~$7

 

~$20

 

~$2

 

~$31

2021E

 

~$3

 

~$8

 

 

$13-$16

 

$24-$27

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

 

Media
Debra Lewis
(973) 526-1767
debra.lewis@advansix.com

Investors
Adam Kressel
(973) 526-1700
adam.kressel@advansix.com

Source: AdvanSix Inc.