AdvanSix(ASIX) - 2024 Q1 - Quarterly Report

Sales Performance - Sales for the three months ended March 31, 2024, decreased by approximately 16% to $336.8 million compared to$400.5 million in the prior year period, primarily due to unfavorable market-based pricing and a decrease in sales volume [80]. - The decrease in sales volume was approximately 6.7%, driven by lost sales resulting from an operational disruption at the Frankford, Pennsylvania manufacturing site [80]. - Sales for the three months ended March 31, 2024, were $336.8 million, compared to$400.5 million for the same period in 2023, reflecting a decline of approximately 15.9% [89]. Financial Results - The Company's net income (loss) for the three months ended March 31, 2024, was $(17.4) million, a decrease from$35.0 million in the same period of 2023 [86]. - Adjusted EBITDA for the three months ended March 31, 2024, was $595 thousand, significantly down from$65.4 million in the prior year period [89]. - The adjusted net income (loss) for the three months ended March 31, 2024, was $(15.1) million, compared to$37.1 million in the same period of 2023 [89]. - The adjusted EBITDA margin for the three months ended March 31, 2024, was 0.2%, a significant decrease from 16.3% in the prior year [89]. Costs and Expenses - Costs of goods sold increased by approximately 1% to $333.9 million, influenced by lower production volumes and incremental costs from the operational disruption [81]. - Gross margin percentage decreased to approximately 0.9$1.5 million to $23.6 million, representing 7.0$27 million due to lost sales and additional costs [79]. - The company aims to run its production facilities continuously for maximum efficiency, although this exposes it to risks associated with material disruptions [78]. Capital Expenditures and Cash Flow - The Company expects capital expenditures to be between $140 million and$150 million in 2024, an increase from $107 million in 2023 [95]. - Cash provided by operating activities decreased by$37.8 million for the three months ended March 31, 2024, primarily due to a $52.4 million decrease in net income [110]. - Cash used for investing activities increased by$11.2 million for the three months ended March 31, 2024, mainly due to capital expenditures of approximately $10.8 million [111]. Debt and Credit Facilities - The Company completed a refinancing of its Credit Agreement, establishing a new senior secured revolving credit facility with an aggregate principal amount of$500 million [104]. - As of March 31, 2024, the Company had a borrowed balance of $245 million under the Revolving Credit Facility, with available credit of approximately$254 million [109]. - The Credit Agreement requires the Company to maintain a Consolidated Interest Coverage Ratio of not less than 3.00 to 1.00 and a Consolidated Leverage Ratio of 4.00 to 1.00 or less until September 30, 2023 [108]. - The Company has the option to increase the Revolving Credit Facility by up to $175 million, subject to maintaining a Consolidated First Lien Secured Leverage Ratio of not greater than 2.75 to 1.00 [105]. - The transition from LIBOR to Adjusted Term SOFR as the benchmark rate was effective July 1, 2023, with applicable margins set at 0.25$189.0 million at a weighted average price of $30.94 per share [98]. - The Company declared dividends of$0.160 per share for the periods ending May 28, 2024, and March 18, 2024, totaling approximately $4.3 million each [102]. Taxation - The effective tax rate for the three months ended March 31, 2024, was 25.7$0.6 million for the three months ended March 31, 2024 [116].