What changed in this filing

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Item 1. Business

2021-02-19 compared with 2020-02-21 · 172 added, 98 removed, 230 unchanged (54% of the section changed)

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Description of Business

AdvanSix is an integrated manufacturer of Nylon 6, a polymer resin which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electronic components, sports apparel, food packaging and other industrial applications.

As a result of our backward integration and the configuration of our manufacturing facilities, we also sell a variety of other products, all of which are produced as part of our integrated manufacturing value chain including caprolactam, ammonium sulfate fertilizers, acetone and other chemical intermediates:

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.

Our four key product lines are as follows :

• Nylon – We sell our Nylon 6 resin globally, primarily under the Aegis® brand name.

Nylon 6, is a polymer resin which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electric components, sports apparel, food packaging and other industrial applications.

In addition, our Nylon 6 resin is used to produce nylon films which we sell to our customers primarily under the Capran® brand name.

• Caprolactam – Caprolactam is the key monomer used in the production of Nylon 6 resin.

In recent years, approximately 60% of the caprolactam we have produced at our facility in Hopewell, Virginia has been shipped to our facility in Chesterfield, Virginia where it has been polymerized into Aegis® Nylon 6 resins.

We market and sell the caprolactam that is not consumed internally in Nylon 6 resin production to customers who use it to manufacture polymer resins to produce nylon fibers, films and other nylon products.

We internally polymerize caprolactam into Aegis® Nylon 6 Resins, and we also market and sell the caprolactam that is not consumed internally to customers who use it to manufacture polymer resins to produce nylon fibers, films and other nylon products.

Our Hopewell manufacturing facility is one of the world’s largest single-site producers of caprolactam as of December 31, 2020.

• Ammonium Sulfate Fertilizer – Ammonium sulfate fertilizer is derived from the caprolactam manufacturing process.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of December 31, 2019.

We market and sell ammonium sulfate primarily to North American and South American distributors, farm cooperatives and retailers to fertilize crops.

• Chemical Intermediates – We manufacture, market and sell a number of other chemical products that are derived from the chemical processes within our integrated supply chain.

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Other intermediate chemicals that we manufacture, market and sell include phenol, alpha-methylstyrene (“AMS”), cyclohexanone, oximes (methyl ethyl ketoxime, acetaldehyde oxime and 2-pentanone oxime), cyclohexanol, sulfuric acid, ammonia and carbon dioxide.

• Ammonium Sulfate – Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients.

Ammonium sulfate fertilizer is derived from the caprolactam manufacturing process.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of December 31, 2020.

We market and sell ammonium sulfate primarily to North American and South American distributors, farm cooperatives and retailers to fertilize crops.

Each of these product lines represented the following approximate percentage of total sales:

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Nylon 24% 27% 28%

Ammonium Sulfate Fertilizer 23% 20% 19%

Caprolactam 19% 22% 19%

Chemical Intermediates 32% 28% 33%

Ammonium Sulfate 25% 23% 20%

100% 100% 100%

The following charts illustrate the distribution of our sales by product category and by region, measured by the destination of each sale, for the year ended December 31, 2019:

The following charts illustrate the distribution of our sales by product line and by region, measured by the destination of each sale, for the year ended December 31, 2020:

For information concerning revenues and assets by geographic region, see “Note 3.

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In recent years, approximately 55% of the caprolactam we have produced at our facility in Hopewell, Virginia has been shipped to our facility in Chesterfield, Virginia where it has been polymerized into Aegis® Nylon 6 resins.

In July 2019, the Company ceased operations at its Pottsville, Pennsylvania films plant as part of its broader strategic efforts to improve the Company’s competitive position in providing quality film products and services to its customers.

The Company also announced a strategic alliance with Oben Holding Group S.A.

(“Oben”), a third-party producer of films for the flexible packaging industry, leveraging the Company's sales channels and Nylon 6 supply with Oben's new state-of-the-art manufacturing facility.

Our integrated manufacturing process, scale and the quantity and range of our products make us one of the most efficient manufacturers in our industry.

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Business Strategies

Build on our Low Cost Leadership Position .

Through our backward integration, size, access to low cost raw materials, and high utilization rates, we seek to expand operating margins by reducing our Nylon 6 resin, caprolactam, ammonium sulfate and other chemical intermediate production costs.

Operational Excellence and Improving Through-Cycle Profitability .

Through our backward integration, size, access to low-cost raw materials, and high utilization rates, we seek to build on our low-cost leadership position and expand operating margins by reducing our Nylon 6 resin, caprolactam, ammonium sulfate and other chemical intermediate production costs.

Our focus on operational excellence and ongoing productivity improvements concentrate on the following:

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• Procurement processes, competitive bidding and supplier diversification to reduce raw material and indirect costs.

Leverage our R&D Investments and Applications Expertise.

Enhancing Portfolio Resiliency.

Our diverse portfolio serves us well particularly during times of uncertainty.

Over the past several years, we have invested in capabilities to increase the value of our product portfolio and meet customer specifications in certain high value industries including high-purity applications, high-value intermediates and differentiated nylon.

Although many of these products are still in early stages of development, we have had successes across the portfolio including our oximes-based EZ-Blox™ anti-skinning agent used in paints and strong growth momentum for our Nadone® cyclohexanone product line, which is a solvent used in various high-value applications.

Growing off a small base, we have also seen commercial success with our Nylon-based wire and cable offerings.

Supporting our differentiated nylon portfolio, we installed a production line at our Chesterfield facility that is capable of producing multiple grades of higher value Nylon 6 resin as well as copolymer Nylon 6/66 resin, which are used in engineered plastics for the automotive industry, films for food packaging, as well as other higher value applications.

Our customers typically buy nylon resin and caprolactam for compounding or extruding with additives and other materials, to increase strength or flexibility or to add color to make the resin more suitable for use in their end products such as textiles, packaging and industrial materials.

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We work with our customers serving this market to develop resin products specifically tailored for these product applications.

Likewise, we are working to develop and sell nylon resin products with differentiated characteristics for wire and cable applications and flexible food packaging.

Another focus of our R&D initiatives includes nylon resin processing technologies that can produce existing high value resins at lower costs.

Our R&D team works with existing and potential customers to understand end-use applications, build application development capabilities and protect the value proposition of our new products.

Selective Investments to Produce Higher Value Products.

We installed a production line at our Chesterfield facility that is capable of producing multiple grades of higher value Nylon 6 resin as well as copolymer Nylon 6/66 resin, both of which are used in engineered plastics for the automotive industry, films for food packaging, as well as other higher value applications.

Although many of these products are still in early stages of development, we have had successes across the portfolio including our Nylon-based wire and cable offerings and our oximes-based EZ-Blox™ anti-skinning agent used in paints.

Use of Third-Party Manufacturers to Produce Higher Margin, AdvanSix-Developed Differentiated Products.

We use our technical know-how and customer intimacy to develop products that blend our nylon resin with other types of nylon and non-nylon resin products and additives to produce higher value products.

Where we do not have the in-house manufacturing capabilities to produce these products, we contract with third-parties to manufacture for us.

Utilizing third-party manufacturing has enabled the Company to diversify away from certain commodity end-markets and, in some cases, explore new end-markets and applications with less risk.

Pursue a Highly-Selective Acquisition Strategy.

We evaluate strategic acquisitions and alliances to supplement our organic sales by broadening our customer base, developing our technology and product portfolios, expanding our geographic reach and enhancing our cash flow profile and margin stability.

In addition, as a result of recent efforts and enhancements in crystallizer technology and operations, we are now producing more high-quality granular grade ammonium sulfate to meet the growing demand of our customers.

Strong Capital Stewardship.

We have developed and are executing against a multi-year pipeline of high-return growth and cost savings capital projects.

These efforts target improvement in production rate, cost, quality and yield.

We are focused on improving our return on invested capital and remain disciplined in our approach as we support long-term shareholder value.

On an ongoing basis we evaluate options to return cash to shareholders while also pursuing a highly-selective acquisition and alliance strategy to supplement our organic sales by broadening our customer base, developing our technology and product portfolios, expanding our geographic reach and enhancing our cash flow profile and margin stability.

Industry Overview

Nylon and Caprolactam .

According to Wood Mackenzie, estimated 2019 annual global demand for Nylon 6 resin was approximately 6,330 kMT, spanning a variety of end-uses such as textiles, engineered plastics, industrial filament, food and industrial films, and carpet.

The market growth typically tracks global GDP growth but varies by end-use.

Nylon Solutions.

Global demand for Nylon 6 resin spans a variety of end-uses such as textiles, engineered plastics, industrial filament, food and industrial films, and carpet.

The market growth typically tracks global GDP growth over the long-term but varies by end-use.

Generally, prices for Nylon 6 resin and caprolactam reflect supply and demand in the marketplace as well as the value of the basic raw materials used in the production of caprolactam, consisting primarily of benzene and, depending on the manufacturing process utilized, natural gas and sulfur.

The price of benzene is a key driver of caprolactam prices because it is the common chemical compound used in the petrochemical derivatives, such as phenol and cyclohexane, which are the key feedstock materials for caprolactam depending on the chosen manufacturing technology.

As a result, the global prices for caprolactam typically track as a spread over the price of benzene.

Generally, Nylon 6 resin prices track the cyclicality of caprolactam prices, although, to the extent Nylon 6 resin producers are able to manufacture differentiated nylon resin products, prices set above the spread are achievable.

The global prices for nylon resin typically track a spread over the price of caprolactam, which in turn tracks as a spread over benzene because the key feedstock materials for caprolactam, phenol or cyclohexane, are derived from benzene.

This price spread has historically experienced cyclicality as a result of global changes in supply and demand.

Generally, Nylon 6 resin prices track the cyclicality of caprolactam prices, although prices set above the spread are achievable when nylon resin manufacturers, like AdvanSix, formulate and produce differentiated nylon resin products.

Our differentiated Nylon 6 products are typically valued at a higher level than commodity resin products.

We believe that Nylon 6 end-market growth will continue to generally track global GDP over the long-term.

Applications such as engineered plastics and packaging have potential to grow at faster rates given certain macrotrends.

Additionally, one of our strategies is to continue developing higher-value, differentiated Nylon 6 products, such as our wire and cable and co-polymer offerings, in current and new customer applications.

The global market for Nylon 6 resin and caprolactam has undergone significant change over the past decade.

Following a peak in 2011 through the first half of 2016, nylon and caprolactam prices experienced a cyclical period of downturn as Chinese manufacturers entered the market and increased global supply at a time when demand growth remained relatively stable.

As a result of the increased capacity and competitive intensity, margins for Nylon 6 resin and caprolactam had been compressed over this period.

As a result of the increased capacity and competitive intensity, industry margins for Nylon 6 resin and caprolactam compressed over this period to a low point in mid-2016.

In the second half of 2016, capacity reductions by our competitors occurred in North America and Europe improving supply / demand fundamentals in North America with continued dynamic conditions globally.

Industry spreads had fluctuated near marginal producer cost, but, slowing global growth, soft end-market demand, and uncertain market sentiment pressured pricing and spreads throughout the second half of 2019.

Ammonium Sulfate.

Ammonium sulfate fertilizer products are primarily sold in North and South America.

Ammonium sulfate is used as a fertilizer providing the key nutrients of sulfur and nitrogen for major agricultural crops globally such as corn, wheat, coffee, sugar, cotton and rice.

As of December 31, 2019, ammonium sulfate fertilizer accounts for approximately 5% of the global market for nitrogen fertilizer and over 40% of the global market for sulfur fertilizer.

Global prices for ammonium sulfate are influenced by several factors including the price of urea, which is the most widely used source of nitrogen-based fertilizer in the world.

Another global factor driving demand for ammonium sulfate fertilizer is general agriculture trends including acres planted, farmer profitability and the price of crops.

Nitrogen pricing remained subdued in 2019 primarily due to the impact of weather on planted acres and continued historically low crop prices.

Industry spreads had fluctuated near marginal producer cost since 2016, but, slowing global growth and soft end-market demand, combined with capacity increases and an uncertain macro environment, pressured pricing and spreads during the second half of 2019 and throughout 2020.

Chemical Intermediates.

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Acetone and phenol represent approximately 50% and 10%, respectively, of our chemical intermediates sales.

The prices for our chemical intermediates generally correlate to the prices of their underlying raw materials and supply and demand dynamics;

however, there are periods where prices can lag the increase or decrease in the underlying raw materials.

In the United States, where we primarily sell our acetone, we have seen elevated levels of acetone imports over the past two years given high industry operating rates globally, which has pressured regional pricing and spreads.

Imports have moderated throughout the second half of 2019, which has stabilized North American industry supply and demand into 2020.

In the United States, where we primarily sell our acetone, there were elevated levels of acetone imports during 2018 and 2019 given high industry operating rates globally, which pressured regional pricing and spreads.

Prices for acetone are influenced by its own supply and demand dynamics but can also be influenced by the underlying move in propylene input costs.

As a result of the anti-dumping filing and final ruling, acetone imports into the U.S.

declined beginning mid-2019 and continued at lower levels through 2020, creating more favorable supply / demand conditions for the product.

Supply and demand conditions for the remaining intermediates we sell are generally balanced or favorable.

Plant Nutrients.

Ammonium sulfate fertilizer products are primarily sold in North and South America.

Ammonium sulfate is used as a fertilizer providing the key nutrients of sulfur and nitrogen for major agricultural crops globally such as corn, wheat, coffee, sugar, cotton and rice.

As of December 31, 2020, ammonium sulfate fertilizer accounts for approximately 5% of the global market for nitrogen fertilizer and over 40% of the global market for sulfur fertilizer.

Global prices for ammonium sulfate are influenced by several factors including the price of urea, which is the most widely used source of nitrogen-based fertilizer in the world.

Other global factors driving ammonium sulfate fertilizer demand are general agriculture trends, including the price of crops.

Our ammonium sulfate product is positioned with the added value proposition of sulfur nutrition to increase yields of key crops.

In addition, due to its nutrient density, the typical ammonium sulfate product delivers pound for pound the most readily available sulfur and nitrogen to crops than other fertilizers.

We recently expanded our offering to directly supply packaged ammonium sulfate to customers, primarily in North and South America, and diversified and optimized our offerings to include spray-grade adjuvant to support crop protection, as well as other specialty fertilizers and products for industrial use.

We produce ammonium sulfate fertilizer continuously throughout the year as part of our manufacturing process, but quarterly sales experience seasonality based on the timing and length of the growing seasons in North and South America.

North America ammonium sulfate prices are typically strongest during second quarter fertilizer application and then typically decline seasonally with new season fill in the third quarter.

Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous and not tied to seasonal demand for fertilizers.

Sales of most of our other products have generally been subject to minimal, or no, seasonality.

Competition across our product offerings is based on a variety of factors including price, reliability of supply, product innovation, and quality.

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Product Overview

Nylon and Caprolactam

We manufacture our Nylon 6 resin in our Chesterfield plant.

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In 2020, 2019 and 2018, caprolactam sales were 19%, 22% and 19% of our total sales, respectively.

Ammonium Sulfate

Ammonium sulfate fertilizer is produced simultaneously with caprolactam as part of our integrated caprolactam manufacturing process at our Hopewell plant.

We manufacture this product in a ratio of approximately four pounds of ammonium sulfate to one pound of caprolactam.

Our competitors typically produce approximately two pounds or less of ammonium sulfate for each pound of caprolactam.

We target converting approximately 60% of the ammonium sulfate we produce in granular form.

We sell ammonium sulfate under the brand name Sulf-N®, and in 2019, our ammonium sulfate products generated $299 million of sales.

In 2019, 2018 and 2017, ammonium sulfate sales were 23%, 20% and 19% of our total sales, respectively.

Chemical Intermediates

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We use some of these products in our manufacturing process and sell some to customers for use in end-products such as resins, inks, paints, coatings and agricultural chemical intermediates and electronic components.

Ammonium Sulfate

Ammonium sulfate fertilizer is produced simultaneously with caprolactam as part of our integrated caprolactam manufacturing process at our Hopewell plant.

We manufacture this product in a ratio of approximately four pounds of ammonium sulfate to one pound of caprolactam.

Our competitors typically produce approximately two pounds or less of ammonium sulfate for each pound of caprolactam.

We are targeting conversion of approximately 65% of the ammonium sulfate we produce in higher-value granular form, an increase of approximately 5% compared to historical targets.

We sell ammonium sulfate under the brand name Sulf-N®, and in 2020, our ammonium sulfate products generated $288 million of sales.

In 2020, 2019 and 2018, ammonium sulfate sales were 25%, 23% and 20% of our total sales, respectively.

Raw Materials

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We sell Nylon 6 resin and caprolactam to Shaw under a long-term agreement.

Sales to Shaw were 22% of our total sales for each of the years ended December 31, 2019, 2018 and 2017.

Sales to Shaw were 14% of our total sales for the year ended December 31, 2020 and 22% of our total

sales for each of the years ended December 31, 2019 and 2018.

We typically sell to our other customers under master services agreements, with primarily one-year terms, or by purchase orders.

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Sales of most of our other products have generally been subject to minimal, or no, seasonality.

In general, the Company does not manufacture its products against a backlog of orders and does not consider backlog to be a significant indicator of the level of future sales activity.

Therefore, the Company believes that backlog information is not material to understanding its overall business and should not be considered a reliable indicator of the Company’s ability to achieve any particular level of revenue or financial return.

We typically sell to customers under master services agreements, with primarily one-year terms, or by purchase orders.

However, certain master services agreements (including with respect to our largest customer) may contain minimum purchase volumes which can be satisfied by the customer on a periodic basis by choosing from various products offered by the Company.

Research & Development and Intellectual Property

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We intend to continue taking steps as necessary to protect our intellectual property, including when appropriate, filing patent applications for inventions that are deemed important to our business.

In 2019, we conducted R&D at technology centers with researchers at our site in Frankford, Pennsylvania and Colonial Heights, Virginia where we leased R&D space.

In early 2020, our former Colonial Heights R&D facility is relocating to our AdvanSix site in Chesterfield enabling an improved configuration of our labs to drive productivity, increased connectivity with our resin manufacturing and more effective collaboration with customers.

In 2020, we conducted R&D at technology centers with researchers at our sites in Frankford, Pennsylvania and Chesterfield, Virginia where our former Colonial Heights R&D facility relocated in early 2020 enabling an improved configuration of our labs to drive productivity, increased connectivity with our resin manufacturing and more effective collaboration with customers.

Regulation and Environmental Matters

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There are also numerous other federal, state, local and foreign laws and regulations governing materials transport and packaging, under which we may be designated as a potentially responsible party liable for cleanup costs associated with current operating sites and various hazardous waste sites.

In July 2013, a consent decree was finalized among the United States, the Commonwealth of Virginia and AdvanSix regarding alleged violations of the CAA and the air operating permit at our manufacturing facility in Hopewell, Virginia.

On March 13, 2018, a federal search warrant was executed at the Company’s Hopewell, Virginia manufacturing facility.

On the same date, the Company was separately served with a grand jury subpoena issued by the U.S.

District Court for the Eastern District of Virginia, which requested documents related to the Hopewell facility’s air emissions and its compliance with the terms of the previously disclosed 2013 consent decree with the federal government and the Commonwealth of Virginia.

The Company was notified during the first quarter of 2019 that the U.S.

Attorney’s Office for the Eastern District of Virginia had closed its investigation and no further action by the Company was required.

On May 13, 2019, the Company announced that the United States Government notified the Company that the balance of the criminal investigation concluded with no further action required.

Our business may be impacted by potential climate change legislation, regulation or international treaties or accords in the foreseeable future.

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See “Risk Factors – Extensive environmental, health and safety laws and regulations applicable to our operations, including initiatives related to discharges into the air and water, hazardous waste, sustainability, global warming and climate change, may result in substantial costs and unanticipated loss or liability, which could adversely affect our business, financial condition and results of operations” in Item 1A.

Human Capital Management

As a company, we recognize that our people are our greatest asset and the foundation of our success.

We feel a deep sense of responsibility to provide a safe, inclusive and engaging workplace for all our employees and contractors, and strive for a zero-incident safety culture.

Our core values of Safety, Integrity, Accountability and Respect guide our day-to-day activities and inform our broader business strategy as we drive safe, stable and sustainable operations through an ownership mentality aligned to shareholder value creation.

Our Board of Directors (“Board”), along with management and cross-functional teams, work closely to evaluate and proactively address human capital management topics such as safety, inclusion and diversity, employee development, employee benefits and employee engagement.

As of December 31, 2020, the Company employed approximately 1,400 people.

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Approximately 705 employees are covered under collective bargaining agreements that expire between 2021 and 2024.

The Company strives to maintain positive and productive relationships with all of its employees, including the unions representing those employees.

Oversight and Management

Our Board and Board committees provide oversight on various human capital management matters.

As noted in their respective charters:

• Our Health, Safety, Environmental and Sustainability Committee oversees policies and programs relating to compliance with health, safety, environmental, and sustainability matters, including process safety, supply chain security, asset reliability, product stewardship, community engagement and government affairs, as well as such other matters regarding the Company’s role as a responsible corporate citizen.

• Our Nominating and Governance Committee annually evaluates the effectiveness of our governance framework and social responsibility policies, goals and programs.

• Our Audit Committee exercises oversight of enterprise risk assessments and risk management including with respect to current and emerging labor and human capital management risks and seeks to mitigate exposure to those risks.

• Our Compensation and Leadership Development Committee is responsible for oversight of the performance, development and retention of management necessary to support the growth and success of the Company.

Health and Safety

At AdvanSix, safety is our number one core value — we “Live Safety” in all we do.

“Live Safety” is an interdependent concept meaning that employees care not only for their own safety, but for the safety of their teammates and communities in which we operate.

AdvanSix is a Responsible Care® company with a focus on personal and process safety and advancing as a sustainable enterprise.

Responsible Care® is the environmental, health, safety and security performance initiative of the American Chemistry Council (ACC).

AdvanSix has demonstrated its commitment to the Responsible Care® Guiding Principles, which encourage ethical leadership, product safety, a culture which reduces and manages process safety risk, reduction of pollution and waste, and continuous improvement in environmental, health, safety and security performance.

As an organization, we maintain a relentless focus on continuous improvement and our expectation is zero injuries for employees and contractors.

Toward the end of 2019, we launched a new program, CARE — Courage to Act, Respond and Engage — as the next step in our safety journey and to inspire us to Live Safety in all we do.

We use the industry standard Total Case Incident Rate ("TCIR") to

measure our ongoing safety performance and compare with benchmarks.

TCIR is defined as the number of occupational injuries and illnesses per 100 employees.

Our TCIR was 0.91 in 2020, 0.86 in 2019 and 0.76 in 2018.

In the first quarter of 2020, the Company began executing its business continuity plans with dedicated teams chartered to proactively implement measures to mitigate COVID-19 impacts while continuing to operate all of its manufacturing facilities to meet customer demand.

In response to COVID-19, the Company took many actions during 2020 to protect its employees, customers, suppliers, shareholders and surrounding communities including, but not limited to:

(i) 100% thermal screening process at all facilities and restrictions on non-essential visitors;

(ii) telecommuting across all sites, where possible;

(iii) prohibiting all non-essential domestic and international business travel;

(iv) establishing social distancing while limiting the number of employees in control rooms, labs and in-person meetings;

and (v) maintaining policies and practices consistent with CDC and government guidelines including upgraded personal protective equipment, face coverings at all facilities, and exposure management protocols.

Our telecommuting policies have been designed to allow for continued operation of non-production business-critical functions, including financial reporting systems and internal controls.

The Company has protocols in place at all sites, including on-site medical personnel at manufacturing facilities to actively monitor employees and contractors who report symptoms of or exposure to COVID-19.

In addition, the Company has trained a contingent workforce to operate the plants as part of its business continuity planning.

The Company continued its execution of these measures at all sites through the end of 2020 and intends to continue to do so through the duration of the pandemic.

Inclusion and Diversity

At AdvanSix, we strive for an inclusive work environment that fosters respect for all our coworkers, customers, suppliers and business partners.

We value the diversity reflected in the various backgrounds, experiences, and ideas of our employees, contractors, and other stakeholders.

Our Code of Conduct outlines our commitment to provide employees a workplace that is free from discrimination or harassment (specifically related to gender, race, disability, ethnicity, nationality, religion and sexual orientation) or personal behavior not conducive to a productive work climate.

We believe it is important that each employee feels a sense of belonging and valued as part of the organizational culture we are cultivating, and we feel it is important that each employee sees diverse representation across our AdvanSix team.

AdvanSix joined hundreds of companies in signing the CEO Action for Diversity and Inclusion pledge, which centers around three main commitments:

to have complex discussions about diversity and inclusion, implement and expand upon unconscious bias education and share diversity and inclusion practices.

AdvanSix also seeks to improve gender equality in the manufacturing industry, starting with supporting science, technology, engineering and math (STEM) education and work in related fields.

In 2019, a group of employees formed Supporting Women in Manufacturing (SWiM), an AdvanSix Employee Resource Group, to promote women in manufacturing, female leadership and growth in STEM-related fields.

SWiM seeks to raise awareness on these matters through programs, events and discussions, including networking, professional development, outreach, volunteering and internal programs highlighting leadership and career paths in multiple disciplines.

AdvanSix is committed to pay equity for its employees and regularly performs reviews of its compensation practices to evaluate and maintain pay equity in several respects, including by gender, ethnicity and race.

At a national level, AdvanSix not only participates as a Board member, but is a patron level supporter of the American Institute of Chemical Engineers’ (AIChE) “Doing a World of Good” initiative that actively supports five high priority pillars within the chemical engineering field that align closely with sustainability and ESG principles including equity, diversity and inclusion.

In addition, AdvanSix has supported and participated in the Future of STEM Scholars Initiative ("FOSSI"), a national, industry-wide program which provides scholarships to students pursuing STEM degrees at Historically Black Colleges and Universities (HBCU) and connections to internships, leadership development and mentoring opportunities.

During 2020, we introduced a number of key actions to progress inclusion and diversity within the organization including focus group discussions, review of our talent pipeline and overall development programs.

Notably, we enhanced our recruiting processes by implementing a program mandating a diverse candidate slate with the goal to increase our organization’s workforce diversity and improve outreach in the local communities where we operate.

In addition, we introduced unconscious bias training at leadership and managerial levels enterprise-wide to enhance our recruitment efforts and the evaluation process of candidates.

Our senior leadership team was comprised of over 50% women in 2020, including our Chief Executive Officer, Chief Human Resource Officer, Chief Technology Officer, Chief Information Officer, Vice President, Nylon Solutions and Vice President, Business Development.

Two of our eight-member Board of Directors are women.

Employee Development

AdvanSix seeks to attract the best talent from a diverse range of sources in order to meet the needs of our business now and in the future.

We have established strong relationships with community colleges, universities, professional associations and industry groups with a focus on technical positions and development in order to attract talent including by utilizing co-op, internship programs and university relations as a talent pipeline.

Early career development and continual learning is part of our employee engagement strategy.

To support the advancement of our employees, we promote development through training that broadens work-related skills and

believe that the most effective model combines an “experience, exposure, and education” approach.

We acknowledge that learning is a career-long endeavor and place the greatest emphasis on learning by doing, supported by feedback, training, and self-reflection.

AdvanSix promotes development through training that broadens work-related skills.

These include:

• Core competencies for all employees to develop and apply

• Leadership competencies needed by all employees managing people

• Functional competencies that are position specific and used to inform job progression

We support the continued development of our employees through semi-annual performance and development reviews, including annual enterprise-wide talent development assessments.

We conduct safety and environmental training modules for new employees as part of Health, Safety and Environmental ("HSE") orientation, along with job-specific training aligned to roles.

We have instituted an initiative to empower our First Line Supervisors ("FLS") to be HSE leaders within our organization including serving as decision makers and chief communicators on shift, while developing, coaching and mentoring their shift teammates.

On an annual basis, senior leadership recognizes the FLS who demonstrates excellence with this initiative with an FLS of the Year Award.

We also hold an annual Technical Career Progression event in order to recognize those employees who have displayed technical capability and regularly deliver in three key areas — results, behaviors and capability.

A highly trained and engaged workforce is essential for AdvanSix to be our customers’ trusted partner, and those partnerships are built by delivering best-in-class experiences that result in satisfied customers and support shareholder return.

Employee Benefits

Our compensation programs are designed to align employee compensation with Company performance and to provide appropriate incentives in order to attract, retain and motivate our employees.

We believe that in order to maintain the strength of our workforce, it is critical to monitor and assess the current business environment and labor market to refine our compensation and benefits programs and other resources available to our employees.

We seek to offer compensation that is competitive and consistent with employee positions, skill levels, experience and geographic location.

In addition to offering competitive base salaries, AdvanSix structures its compensation programs to balance incentive earnings for both short-term and long-term performance.

Our compensation and benefit programs are designed to support our business strategy through four key objectives:

• Attract and retain world-class talent;

• Drive and pay for performance that creates superior results and sustainable stockholder value;

• Manage risk through oversight and sound management;

• Nurture a culture of employee health and wellness.

Information about our Executive Officers

The executive officers of AdvanSix, listed as follows, are appointed annually by the Board of Directors (the "Board").

Each of the individuals was first appointed as an executive officer in 2016, other than Mr.

Blindenbach who joined AdvanSix and was appointed an executive officer in 2019.

Preston and Mr.

Gramm were each first appointed as an executive officer in 2016, Mr.

Blindenbach was first appointed as an executive officer in 2019, and Ms.

Slieter and Mr.

Kintiroglou were each appointed as executive officers in 2020.

There are no family relationships among them.

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Preston is a Chartered Financial Analyst (CFA) Charterholder and is a member of the CFA Institute and CFA Society New York.

Quitmeyer, 69 Senior Vice President, General Counsel and Corporate Secretary Prior to joining the Company, Mr.

Quitmeyer served as vice president and general counsel of Honeywell’s Automation and Control Solutions strategic business group since 2005.

He joined Honeywell in 1997 as general counsel of Honeywell’s safety restraint business.

From 1997 until 1998, Mr.

Quitmeyer served as general counsel of Honeywell’s automotive products group.

From 1998 until 2000, Mr.

Quitmeyer served as general counsel of Honeywell’s consumer products group.

From 2000 until 2002, Mr.

Quitmeyer was Honeywell’s chief litigation counsel.

From 2002 until 2005, Mr.

Quitmeyer served as general counsel of Honeywell’s Specialty Materials business.

Prior to joining Honeywell, Mr.

Quitmeyer was a litigation partner at Rogers & Wells.

Jonathan Bellamy, 54 Senior Vice President and Chief Human Resources Officer Prior to joining the Company, Mr.

Bellamy served as vice president of human resources of the Defense and Space business of Honeywell’s Aerospace division since 2015.

He joined Honeywell in 1997 as human resources manager of the Turbo Technologies division.

From March 2000 until February 2003, Mr.

Bellamy served as human resources manager, then regional human resources director of Honeywell’s Turbo Technologies division.

From February 2003 until December 2004, he served as director of human resources of Honeywell Transportation Systems, Asia.

From December 2004 until November 2005, Mr.

Bellamy served as global human resources director of Honeywell’s Friction Materials division.

From November 2005 until July 2010, Mr.

Bellamy served as corporate human resources director.

From 2010 to 2015, he was vice president of human resources of Honeywell UOP.

Prior to joining Honeywell, Mr.

Bellamy held human resources and operations positions at BTR Brook Hansen and N.S.K./RHP Bearings.

Kintiroglou, 42 Senior Vice President, General Counsel and Corporate Secretary Prior to being named to his current role, Mr.

Kintiroglou was the deputy general counsel of AdvanSix since the spin-off in 2016.

Before joining AdvanSix, he was a corporate and securities partner at Day Pitney LLP and a corporate and finance associate at Pillsbury Winthrop Shaw Pittman LLP and Pitney Hardin LLP.

Slieter, 46 Senior Vice President and Chief Human Resources Officer Prior to joining the Company, Ms.

Slieter served as vice president of human resources of Honeywell International Inc.

She joined Honeywell in 1997 as an intern and subsequently served in various human resources roles through 2003, including as M&A integration leader and as HR manager for multiple business units.

From 2003 to 2004, she served as human resources manager at Bristol-Myers Squibb Company.

From 2004 to 2005, she served as organization development manager for Tyco International.

Slieter rejoined Honeywell in 2005 and served in roles with increasing responsibility through 2015, including, director of HR functional excellence, corporate;

director of organization development & learning for the Automation & Control Solutions business;

director of human resources for Honeywell Building Solutions;

and senior director, human resources corporate.

From 2015 through 2018, she served as vice president, human resources of the Honeywell UOP business.

Christopher Gramm, 51 Vice President, Controller Prior to joining the Company, Mr.

8 unchanged sentences

Gramm was a manager at Corning Life Sciences.

Blindenbach, 51 Vice President, Integrated Supply Chain Prior to joining the Company, Mr.

Blindenbach, 52 Senior Vice President, Integrated Supply Chain Prior to joining the Company, Mr.

Blindenbach served as Vice President of Mobil International Company Operations Manager, EMEA since 2018.

He joined ExxonMobil in 1994 and has served in several roles with increasing responsibility including Sales Engineer, Technical Support Supervisor, Pernis Plant Operations Manager, Europe Project Advisor, Europe Supply Manager, and Global Operations Project Advisor.

He joined ExxonMobil in 1994 and served in several roles with increasing responsibility including Sales Engineer, Technical Support Supervisor, Pernis Plant Operations Manager, Europe Project Advisor, Europe Supply Manager, and Global Operations Project Advisor.

From 2006 to 2007, he served as Executive Advisor to the President of ExxonMobil Lubes and Fuels.

2 unchanged sentences

From 2010 to 2011, he served as Vice President, ExxonMobil Lubricants, Trading and Supply Manager, Global Basestocks.

From 2011 to 2012, he served a Manager of Global Product Integrity.

From 2011 to 2012, he served as Manager of Global Product Integrity.

From 2012 to 2013, he served as Project Executive.

3 unchanged sentences

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports are available free of charge on our website (www.AdvanSix.com) under the heading Investors (see SEC filings) immediately after they are filed with, or furnished to, the Securities and Exchange Commission ("SEC").

In addition, in this Form 10-K, the Company incorporates by reference certain information from parts of its Proxy Statement for the 2020 Annual Meeting of Stockholders, which will also be available free of charge on our website.

In addition, in this Form 10-K, the Company incorporates by reference certain information from parts of its Proxy Statement for the 2021 Annual Meeting of

Stockholders, which will also be available free of charge on our website.

Information contained on, or that may be accessed through, our website does not and will not constitute part of this Form 10-K.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business