AdvanSix(ASIX) - 2023 Q2 - Quarterly Report

Sales Performance - Sales for the three months ended June 2023 were $427,940, a decrease of 26.7$583,736 for the same period in 2022[99]. - Sales for the six months ended June 2023 were $828,484, down 22.0$1,062,809 for the same period in 2022[99]. - Sales decreased by $155.8 million (approximately 27$234.3 million (approximately 22%), driven by unfavorable market-based pricing and decreased sales volume, partially offset by the acquisition of U.S. Amines (approximately 1%)[101]. - The acquisition of U.S. Amines contributed approximately 1% to sales in the six months ended June 30, 2023, partially offsetting the overall sales decline[101]. Financial Results - Net income for the three months ended June 30, 2023, was $32.7 million, compared to$65.2 million in the prior year period[111]. - Net income for the three months ended June 30, 2023, was $32.7 million, a decrease of 50$65.2 million for the same period in 2022[116]. - Adjusted net income (non-GAAP) for the same period was $35.2 million, down from$67.3 million year-over-year[116]. - Basic EPS for Q2 2023 was $1.19, a decline of 48.6$2.31 in Q2 2022[116]. - Adjusted EBITDA for the three months ended June 30, 2023, was $65.8 million, down from$105.4 million in the prior year period, with an Adjusted EBITDA Margin of 15.4%[114]. Costs and Expenses - Costs of goods sold decreased by $116.8 million (approximately 24$3.2 million in the three months ended June 30, 2023, primarily due to upgrades to enterprise resource planning systems[105]. Cash Flow and Capital Expenditures - Cash provided by operating activities decreased by $108.5 million to$36.6 million for the six months ended June 30, 2023, compared to $145.1 million in the prior year period[134]. - Cash used for investing activities decreased by$91.5 million to $(45.9) million for the six months ended June 30, 2023, primarily due to a prior year acquisition of U.S. Amines for approximately$97.5 million[135]. - Cash used for financing activities increased by $5.7 million to$(11.1) million for the six months ended June 30, 2023, driven by share repurchases of $28.4 million and dividends of approximately$8.0 million[136]. - Capital expenditures for the six months ended June 30, 2023, amounted to $43.9 million, with total expected capital expenditures for 2023 projected to be approximately$110 million to $120 million[138]. - Capital expenditures are projected to be between$110 million and $120 million in 2023, up from$89 million in 2022[119]. Shareholder Returns - The company has authorized a share repurchase program of up to an additional $75 million of common stock, with no expiration date[95]. - The company declared dividends of$0.160 per share on August 4, 2023, $0.145 per share on May 5, 2023, and$0.145 per share on February 17, 2023[98]. - The company declared a dividend of $0.160 per share on August 4, 2023, totaling approximately$4.4 million[126]. - The company has repurchased a total of 5,274,989 shares for $164.4 million at an average price of$31.17 per share as of June 30, 2023[122]. Operational Highlights - The company is the world's largest single-site producer of ammonium sulfate fertilizer as of June 30, 2023, due to its Hopewell manufacturing facility's size and technology[88]. - The company’s Hopewell, VA facility is one of the world's largest single-site producers of caprolactam as of June 30, 2023[86]. - The company produces ammonium sulfate fertilizer continuously, but quarterly sales experience seasonality based on the growing seasons in North and South America[93]. - The company has implemented contingency measures to support operations during labor strikes, ensuring minimal impact on results[96]. - The Hopewell South bargaining unit ratified a new five-year collective bargaining agreement on May 8, 2023, following a labor strike affecting approximately 340 workers[96]. Tax and Regulatory Considerations - The effective tax rate for the three months ended June 30, 2023, was 23.5%, higher than the prior year period due to state tax legislation changes[108]. - The company continues to evaluate the provisions of the Inflation Reduction Act of 2022 related to energy credits in relation to sustainability initiatives[110]. Debt and Liquidity - The company had approximately $10.5 million in cash on hand and$359 million available under its revolving credit facility as of June 30, 2023[119]. - The company had a borrowed balance of $140 million under the Revolving Credit Facility as of June 30, 2023, with available credit of approximately$359 million[133]. - The company is in compliance with all covenants of its credit agreement as of June 30, 2023[132]. - The company expects cash contributions of up to $5 million to its defined benefit pension plan in 2023[121]. - The company has a scheduled maturity date for its revolving credit facility on October 27, 2026[129]. Interest Rate Sensitivity - A 25-basis point fluctuation in interest rates would have resulted in an increase or decrease to the company's interest expense of approximately$0.4 million based on current borrowing levels[141]. Working Capital Management - The company experienced a $69.8 million unfavorable cash impact from working capital changes year-over-year, primarily from accounts receivable and inventories[134]. - The company reported a$60.5 million decrease in net income contributing to the decline in cash provided by operating activities[134]. - Cash payments for capital expenditures increased by approximately $5.1 million during the current year period due to increased spending on critical infrastructure and growth projects[135]. - The company continues to monitor its critical accounting policies and has not made material changes to its methodologies or assumptions[139].