asix-20230331

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 March 31, 2023


☐			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 27,564,614 shares of common stock, $0.01 par value, outstanding at April 28, 2023.

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 months ended March 31, 2023 and 2022 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2023 and 2022 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

Part II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	30
	Signature	31

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 March 31,
	2023		2022
Sales	$	400,544	$	479,073
Costs, expenses and other:
Costs of goods sold	330,042		375,646
Selling, general and administrative expenses	25,114		21,210
Interest expense, net	1,267		563
Other non-operating (income) expense, net	(108)		(603)
Total costs, expenses and other	356,315		396,816

Income before taxes	44,229		82,257
Income tax expense	9,275		19,184
Net income	$	34,954	$	63,073

Earnings per common share
Basic	$	1.27	$	2.24
Diluted	$	1.22	$	2.15
Weighted average common shares outstanding
Basic	27,601,784		28,199,871
Diluted	28,586,563		29,371,051

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)


	Three Months Ended March 31,
	2023		2022
Net income	$	34,954	$	63,073
Foreign exchange translation adjustment	(33)		57
Cash-flow hedges	(150)		512

Other comprehensive income (loss), net of tax	(183)		569
Comprehensive income	$	34,771	$	63,642

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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


	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,826	$	30,985
Accounts and other receivables – net	161,389		175,429
Inventories – net	224,635		215,502
Taxes receivable	1,023		9,771
Other current assets	6,295		9,241
Total current assets	395,168		440,928
Property, plant and equipment – net	812,518		811,065
Operating lease right-of-use assets	113,225		114,688
Goodwill	56,192		56,192
Intangible assets	48,480		49,242
Other assets	23,232		23,216
Total assets	$	1,448,815	$	1,495,331

LIABILITIES
Current liabilities:
Accounts payable	$	212,506	$	272,770
Accrued liabilities	40,611		48,820

Operating lease liabilities – short-term	36,171		37,472
Deferred income and customer advances	25,672		34,430


Total current liabilities	314,960		393,492
Deferred income taxes	160,192		160,409
Operating lease liabilities – long-term	77,418		77,571
Line of credit – long-term	127,000		115,000

Postretirement benefit obligations	1,139		—
Other liabilities	10,039		10,679
Total liabilities	690,748		757,151

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 200,000,000 shares authorized; 32,532,842 shares issued and 27,668,715 outstanding at March 31, 2023; 31,977,593 shares issued and 27,446,520 outstanding at December 31, 2022	325		320
Preferred stock, par value $0.01; 50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Treasury stock at par (4,864,127 shares at March 31, 2023; 4,531,073 shares at December 31, 2022)	(48)		(45)
Additional paid-in capital	163,831		174,585
Retained earnings	598,339		567,517
Accumulated other comprehensive loss	(4,380)		(4,197)
Total stockholders' equity	758,067		738,180
Total liabilities and stockholders' equity	$	1,448,815	$	1,495,331

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	34,954	$	63,073
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,845		16,692
Loss on disposal of assets	168		359
Deferred income taxes	(170)		(519)
Stock-based compensation	2,013		3,374
Amortization of deferred financing fees	155		155

Changes in assets and liabilities, net of business acquisitions:
Accounts and other receivables	14,007		(28,402)
Inventories	(9,133)		(1,889)
Taxes receivable	8,748		—
Accounts payable	(53,388)		9,904

Accrued liabilities	(8,408)		(11,718)
Deferred income and customer advances	(8,758)		(315)
Other assets and liabilities	3,542		(1,552)
Net cash provided by operating activities	1,575		49,162

Cash flows from investing activities:
Expenditures for property, plant and equipment	(24,603)		(21,019)
Acquisition of businesses	—		(98,589)

Other investing activities	(1,003)		(296)
Net cash used for investing activities	(25,606)		(119,904)

Cash flows from financing activities:



Borrowings from line of credit	78,000		148,500
Payments of line of credit	(66,000)		(63,500)

Principal payments of finance leases	(231)		(237)
Dividend payments	(4,020)		(3,517)
Purchase of treasury stock	(13,499)		(7,012)
Issuance of common stock	622		714

Net cash (used for) provided by financing activities	(5,128)		74,948

Net change in cash and cash equivalents	(29,159)		4,206
Cash and cash equivalents at beginning of period	30,985		15,100
Cash and cash equivalents at the end of period	$	1,826	$	19,306

Supplemental non-cash investing activities:
Capital expenditures included in accounts payable	$	8,193	$	7,335

Supplemental cash activities:
Cash paid for interest	$	1,191	$	408
Cash paid for income taxes	$	91	$	22

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, 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)
Pension obligation adjustments	—	—		—		—		—		—		—
Other comprehensive income (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

SEC Form 10-Q filed by AdvanSix Inc.