What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-04-30 · 123 added, 76 removed, 359 unchanged (36% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Sales $ 437,682 $ 233,022 $ 814,065 $ 535,735

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net income $ 44,131 $ 11,429 $ 72,262 $ 20,005

1 unchanged sentence

Cash-flow hedges 402 ( 73 ) 885 ( 1,909 )

Pension obligation adjustments — —

Other comprehensive income (loss), net of tax 467 ( 73 ) 880 ( 1,966 )

33 unchanged sentences

200,000,000 shares authorized;

31,660,339 shares issued and 28,051,056 outstanding at March 31, 2021;

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

Preferred stock, par value $ 0.01 ;

50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020

Treasury stock at par ( 3,609,283 shares at March 31, 2021;

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)

9 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income $ 72,262 $ 20,005

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

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

Depreciation and amortization 32,733 29,564

51 unchanged sentences

Balance at March 31, 2021 31,660,339 317 186,652 303,374 ( 36 ) ( 15,719 ) 474,588

Net Income — — — 44,131 — — 44,131

Comprehensive income

Foreign exchange translation adjustments — — — — — 65 65

Cash-flow hedges — — — — — 402 402

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 467 467

Issuance of common stock 72,450 — 45 — — — 45

Purchase of treasury stock ( 4,919 shares)

— — ( 146 ) — — — ( 146 )

Stock-based compensation — — 3,744 — — — 3,744

Balance at June 30, 2021 31,732,789 $ 317 $ 190,295 $ 347,505 $ ( 36 ) $ ( 15,252 ) $ 522,829

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Equity

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Balance at March 31, 2020 31,578,393 316 181,158 237,742 ( 36 ) ( 11,344 ) 407,836

Net Income — — — 11,429 — — 11,429

Comprehensive income

Foreign exchange translation adjustments — — — — — — —

Cash-flow hedges — — — — — ( 73 ) ( 73 )

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 73 ) ( 73 )

Issuance of common stock 44,517 — — — — — —

Purchase of treasury stock ( 10,361 shares)

— — ( 107 ) — — — ( 107 )

Stock-based compensation — — 1,702 — — — 1,702

Balance at June 30, 2020 31,622,910 $ 316 $ 182,753 $ 249,171 $ ( 36 ) $ ( 11,417 ) $ 420,787

See accompanying notes to Condensed Consolidated Financial Statements.

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In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a global pandemic with numerous countries around the world declaring national emergencies, including the United States.

Since early 2020, COVID-19 has continued to spread rapidly, with most countries and territories worldwide having confirmed cases, and with certain jurisdictions experiencing resurgences.

Since early 2020, COVID-19 has continued to spread, with most countries and territories worldwide having confirmed cases, and with certain jurisdictions experiencing resurgences, including as a result of variant strains.

The spread resulted in authorities implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns.

1 unchanged sentence

The continuously evolving nature of this pandemic and the pace of recovery may continue to have an impact on the United States and global economies.

The Company’s Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting periods presented.

The Company’s Condensed Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting periods presented.

The Company continues to consider the impact of COVID-19 on the estimates and assumptions used for the financial statements.

As previously disclosed, the Company experienced a material impact on its second quarter 2020 results of operations associated with lower demand, particularly in nylon, caprolactam and phenol, and a decrease in overall sales volume related to global markets and the economic impact of COVID-19.

During the second half of 2020, and through the first quarter of 2021, demand improved to pre-COVID-19 levels with states, regions and countries in various phases of re-opening and continued administration of vaccines for COVID-19, although there is no assurance demand recovery will continue given the potential for surges in infection rates and newly identified strains of COVID-19.

Starting in the second half of 2020, and through the second quarter of 2021, demand improved to pre-COVID-19 levels with states, regions and countries in various phases of re-opening and continued administration of vaccines for COVID-19, although there is no assurance demand recovery will continue given vaccination rates, the potential for surges in infection rates and newly identified strains of COVID-19.

The Company will continue to monitor developments and execute our operational and safety mitigation plans as previously disclosed.

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GAAP for complete financial statements.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 2021, and its results of operations for the three months ended March 31, 2021 and 2020 and cash flows for the three months ended March 31, 2021 and 2020.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2021, and its results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

The year-end Condensed Consolidated Balance Sheet data were derived from audited financial statements but does not include all disclosures required by U.S.

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In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures.

Our actual closing dates for the three months ended March 31, 2021 and 2020 wer e April 3, 2021 and March 28, 2020, respe ctively.

Liabilities to creditors to whom we have issued checks that remained outstanding at March 31, 2021 and December 31, 2020 aggregated $ 1.0 million and $ 7.2 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

Our actual closing dates for the three and six months ended June 30, 2021 and 2020 wer e July 3, 2021 and June 27, 2020, respe ctively.

Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2021 and December 31, 2020 aggregated to $ 2.4 million and $ 7.2 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

On May 4, 2018, the Company announced that its Board of Directors (the “Board”) authorized a share repurchase program of up to $ 75 million of the Company’s common stock.

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The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of March 31, 2021, the Company had repurchased 3,609,283 shares of common stock, including 519,521 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 102.2 million at a weighted average market price of $ 28.30 per share.

As of March 31, 2021, $ 59.6 million remained available for share repurchases under the current authorization.

During the period April 1, 2021 through April 23, 2021, no additional shares were repurchased under the currently authorized repurchase program.

As of June 30, 2021, the Company had repurchased 3,614,202 shares of common stock, including 524,440 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 102.3 million at a weighted average market price of $ 28.31 per share.

As of June 30, 2021, $ 59.6 million remained available for share repurchases under the current authorization.

During the period July 1, 2021 through July 23, 2021, no additional shares were repurchased under the currently authorized repurchase program.

Recent Accounting Pronouncements

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Simplifying the Accounting for Income Taxes.

The ASU removes the exception to the general principles in ASC 740, Income Taxes, associated with the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments and interim-period income tax accounting for year-to-date losses that exceed anticipated losses.

The ASU removes the exception to the general principles in FASB Accounting Standards Codification ("ASC") 740, Income Taxes, associated with the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments and interim-period income tax accounting for year-to-date losses that exceed anticipated losses.

In addition, the ASU improves the application of income tax related guidance and simplifies U.S.

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The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption of the amendments in this update is permitted, including adoption in any interim period.

Early adoption of the amendments in this update is permitted, including

ADVANSIX INC.

1 unchanged sentence

(Dollars in thousands, except share and per share amounts and as otherwise noted)

adoption in any interim period.

The Company adopted ASU 2019-12 effective January 1, 2021, which did not have a material impact on the Company’s consolidated financial position or results of operations upon adoption.

1 unchanged sentence

We serve approximately 400 customers annually in approximately 50 countries and across a wide variety of industries.

For the three months ended March 31, 2021 and 2020 the Company's ten largest customers accounted for approximately 38 % and 43 % of total sales, respectively.

For the three months ended June 30, 2021 and 2020, the Company's ten largest customers accounted for approximately 42 % and 50 % of total sales, respectively.

For the six months ended June 30, 2021 and 2020, the Company's ten largest customers accounted for approximately 40 % and 48 % of total sales, respectively.

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

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(“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement.

For the three months ended March 31, 2021 and 2020, our sales to Shaw were 12 % and 17 %, respectively, of our total sales.

Each of the Company’s product lines represented the following approximate percentage of total sales for the three months ended March 31, 2021 and 2020:

For the three months ended June 30, 2021 and 2020, our sales to Shaw were 12 % and 17 %, respectively, of our total sales.

For the six months ended June 30, 2021 and 2020, our sales to Shaw were 12 % and 20 %, respectively, of our total sales.

Each of the Company’s product lines represented the following approximate percentage of total sales for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Nylon 25 % 22 % 24 % 24 %

2 unchanged sentences

Ammonium Sulfate 23 % 34 % 21 % 28 %

The Company's revenues by geographic area for the three months ended March 31, 2021 and 2020 were as follows:

100 % 100 % 100 % 100 %

The Company's revenues by geographic area for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

United States $ 373,409 $ 176,313 $ 674,081 $ 406,756

4 unchanged sentences

Customer advances relate primarily to sales from the ammonium sulfate business.

Below is a roll-forward of Deferred income and customer advances for the three months ended March 31, 2021:

Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2021:

Opening balance January 1, 2021 $ 26,379

1 unchanged sentence

Less amounts recognized in revenues ( 24,965 )

Ending balance March 31, 2021 $ 19,576

The Company expects to recognize as revenue the March 31, 2021 ending balance of Deferred income and customer advances within one year or less.

Earnings (Loss) Per Share

Ending balance June 30, 2021 $ 2,950

ADVANSIX INC.

1 unchanged sentence

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The computation of basic and diluted earnings (loss) per share ("EPS") is based on Net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.

The details of the basic and diluted EPS calculations for the three months ended March 31, 2021 and 2020 were as follows:

The Company expects to recognize as revenue the June 30, 2021 ending balance of Deferred income and customer advances within one year or less.

Earnings Per Share

The computation of basic and diluted earnings per share ("EPS") is based on Net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.

The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended

Net Income (loss) $ 28,131 $ 8,576

June 30, Six Months Ended

2021 2020 2021 2020

Net Income $ 44,131 $ 11,429 $ 72,262 $ 20,005

Weighted average common shares outstanding 28,131,981 28,012,883 28,112,978 27,977,684

3 unchanged sentences

EPS – Diluted $ 1.53 $ 0.41 $ 2.51 $ 0.71

Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year.

The diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period.

The anti-dilutive common stock equivalents outstanding at the three months ended March 31, 2021 and 2020 were as follows:

The anti-dilutive common stock equivalents outstanding at the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Options and stock equivalents 425,816 1,369,522 643,596 1,152,462

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Total accounts and other receivables – net $ 165,381 $ 123,554

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

2021 December 31,

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Postretirement Benefit Cost

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The components of Net periodic benefit cost of the Company’s pension plan are as follows:

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Service cost $ 1,954 $ 2,005 $ 3,908 $ 4,010

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Net periodic benefit cost $ 1,827 $ 2,025 $ 3,654 $ 4,049

The Company made cash contributions to the defined benefit pension plan of $ 1.2 million during the three months ended March 31, 2021.

The Company made cash contributions to the defined benefit pension plan of $ 4.8 million during the six months ended June 30, 2021 with $ 1.2 million in the first quarter of 2021 and $ 3.6 million in the second quarter of 2021.

The Company currently plans to make pension plan contributions during 2021 sufficient to satisfy funding requirements under the AdvanSix Retirement Earnings Plan in an aggregate amount of approximately $ 11.0 million to $ 13.0 million.

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The components of lease expense were as follows:

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Finance lease cost:

5 unchanged sentences

Total lease cost $ 13,389 $ 13,061 $ 27,065 $ 26,173

As of March 31, 2021, we have additional operating leases that have not yet commenced for approximately $ 24.4 million.

As of June 30, 2021, we have additional operating leases that have not yet commenced for approximately $ 27.3 million.

These leases commence during 2021 with lease terms of up to 6 years.

Commitments and Contingencies

The Company is subject to a number of lawsuits, investigations and disputes, some of which involve substantial amounts claimed, arising out of the conduct of the Company or other third-parties in the normal and ordinary course of business.

The Company is subject to a number of lawsuits, investigations and disputes, some of which may involve substantial amounts claimed, arising out of the conduct of the Company or other third-parties in the normal and ordinary course of business.

A liability is recognized for any contingency that is probable of occurrence and reasonably estimable.

The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters.

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Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations.

The provision for income taxes was $ 9.3 million and $ 3.7 million for the three months ended March 31, 2021 and 2020, respectively, resulting in an effective tax rate of 24.8 % and 29.9 %, respectively.

The provision for income taxes was $ 13.8 million and $ 2.3 million for the three months ended June 30, 2021 and 2020, respectively, resulting in an effective tax rate of 23.8 % and 16.6 %, respectively.

The provision for income taxes was $ 23.1 million and $ 5.9 million for the six months ended June 30, 2021 and 2020, respectively, resulting in an effective tax rate of 24.2 % and 22.9 %, respectively.

Under a provision included in the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, the Company filed a Federal net operating loss (NOL) carryback claim in July 2020 which generated a refund of previously paid taxes in the amount of $ 12.3 million.

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The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter.

The Company’s estimated annual effective tax rate applied against the three months ended March 31, 2021 and 2020 was higher compared to the U.S.

federal statutory rate, due primarily to state taxes and executive compensation deduction limitations, partially offset by tax credits.

Additionally, for interim reporting purposes, the Company recorded Income tax expense of $ 0.1 million and $ 0.6 million as discrete items for the three months ended March 31, 2021 and 2020, respectively, resulting in an increase in the effective tax rate of 0.3 % and 4.5 %, respectively.

The discrete tax adjustments in the prior year period relate to tax deficiencies on the vesting of equity compensation and the loss of 2018 foreign-derived intangible income tax benefits related to the Federal NOL carryback claim.

The Company’s estimated annual effective tax rate applied against the three and six months ended June 30, 2021 and 2020 differed

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

from the U.S.

federal statutory rate, due primarily to state taxes and executive compensation deduction limitations which increase the tax rate, partially offset by tax credits which decrease the tax rate.

Additionally, the deduction for foreign-derived intangible income further decreased the tax rate for the three and six months ended June 30, 2021.

In the second quarter of 2020, the Company recorded a discrete Income tax benefit of $ 1.1 million, which decreased the quarterly effective tax rate by approximately 8 %.

These discrete items were related to additional research tax credits claimed on the Company's 2019 U.S.

federal income tax return and the impact of changes in the Company's geographical sales mix on state tax.

On March 11, 2021, the American Rescue Plan Act ("ARPA") was signed into law.

1 unchanged sentence

This legislative relief, along with the previous governmental relief packages, provide for numerous changes to current tax law.

The ARPA did not have a material impact on our financial statements in the first quarter of 2021, and we do not anticipate that it will have a material impact on our financial statements throughout the remainder of 2021.

The ARPA did not have a material impact on our financial statements for the three and six months ended June 30, 2021, and we do not anticipate that it will have a material impact on our financial statements throughout the remainder of 2021.

Fair Value Measurements

1 unchanged sentence

In November 2018 and July 2019, the Company entered into two interest rate swap transactions related to its credit agreement.

The fair value of the interest rate swaps at March 31, 2021 was a loss of approximately $ 2.4 million and is considered a Level 2 liability.

The fair value of the interest rate swaps at June 30, 2021 was a loss of approximately $ 1.9 million and is considered a Level 2 liability.

The pension plan assets are invested in collective investment trust funds.

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The Company’s Condensed Consolidated Balance Sheets also include Cash and cash equivalents, Accounts receivable and Accounts payable all of which are recorded at amounts which approximate fair value.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The Company also has assets that are required to be recorded at fair value on a non-recurring basis.

1 unchanged sentence

Goodwill must be evaluated at least annually.

Our annual evaluation occurred on March 31, 2021 and we have concluded that an impairment for goodwill did no t occur.

Our annual evaluation occurred on March 31, 2021 and we concluded that an impairment for goodwill did no t occur.

Derivative and Hedging Instruments

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The terms and conditions of credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

The Company did not have any customers with significant concentrations of trade accounts receivable – net at March 31, 2021 or December 31, 2020.

The Company did not have any customers with significant concentrations of trade accounts receivable – net at June 30, 2021 or December 31, 2020.

Allowance for doubtful accounts is calculated based upon the Company's estimate of expected credit losses over the life of exposure based upon both historical information as well as future expected losses.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Commodity Price Risk Management – The Company's exposure to market risk for commodity prices can result in changes in the cost of production.

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Forward commodity contracts are marked-to-market, with the resulting gains and losses recognized in earnings, in the same category as the items being hedged, when the hedged transaction is recognized.

At March 31, 2021 and 2020, we had no financial contracts related to forward commodity agreements.

At June 30, 2021 and 2020, we had no financial contracts related to forward commodity agreements.

Interest Rate Risk Management – The Company has entered into two interest rate swap agreements for a total notional amount of $ 100 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings.

These interest rate swaps had a fair value of zero at inception and were effective November 30, 2018 and July 31, 2019 with respective maturity dates of November 30, 2021 and February 21, 2023.

In accordance with FASB Accounting Standards Codification (“ASC”) 815, the Company designated the interest rate swaps as cash flow hedges of floating-rate borrowings.

In accordance with ASC 815, the Company designated the interest rate swaps as cash flow hedges of floating-rate borrowings.

The interest rate swaps convert the Company’s interest rate payments on the first $ 100 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate.

These interest rate swaps involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the interest rate swap without an exchange of the underlying principal amount.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Liability Derivatives

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value

3 unchanged sentences

The following table summarizes adjustments related to cash flow hedge included in Cash-flow hedges, in the Condensed Consolidated Statements of Comprehensive Income:

Loss on derivative instruments included in Accumulated other comprehensive income at December 31, 2020 $ ( 3,063 )

Loss on derivative instruments included in Accumulated other comprehensive loss at December 31, 2020 $ ( 3,063 )

Fair value adjustment 1,179

Loss on derivative instruments included in Accumulated other comprehensive income at March 31, 2021 $ ( 2,419 )

At March 31, 2021, the Company expects to reclassify approximately $ 1.7 million of net losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months due to the payment of variable interest associated with the floating rate debt with the remainder recognized in future periods through the expiration date.

Loss on derivative instruments included in Accumulated other comprehensive loss at June 30, 2021 $ ( 1,884 )

At June 30, 2021, the Company expects to reclassify approximately $ 1.4 million of net losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months due to the payment of variable interest associated with the floating rate debt with the remainder recognized in future periods through the expiration date.

The following table summarizes the reclassification of net losses on derivative instruments from AOCI into earnings:

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Interest Rate Contracts $ 562 $ 579 $ 1,119 $ 1,079

Total Derivatives $ 562 $ 579 $ 1,119 $ 1,079

We actively target potential acquisitions that build on our competitive advantage and core capabilities, create opportunities for broader expansion and value chain integration, portfolio diversification, increased exposure to attractive end markets and the potential for long-term value creation.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

We actively target potential acquisitions that build on our competitive advantage and core capabilities and create opportunities for broader expansion, value chain integration, portfolio diversification, increased exposure to attractive end markets and the potential for long-term value creation.

In January 2021, the Company acquired certain assets associated with ammonium sulfate packaging, warehousing and logistics services in Virginia from Commonwealth Industrial Services, Inc.

for approximately $ 9.5 million.

This acquisition will enable the Company to expand its product offerings by directly supplying packaged ammonium sulfate to customers, primarily in North and South America.

It diversifies and optimizes our product offerings to include spray-grade adjuvant to support crop protection, as well as other specialty fertilizer and products for industrial use.

This acquisition enables the Company to expand its product offerings by directly supplying packaged ammonium sulfate to customers, primarily in North and South America.

It diversifies and optimizes our product offerings to include spray-grade adjuvant to support crop protection and products for industrial use.

The Company also expects the addition of packaging and warehousing capabilities to bolster logistics and operational efficiency in the Richmond, Virginia area plants.

The Company did not make any acquisitions during the three months ended March 31, 2020.

The Company did not make any acquisitions during the three or six months ended June 30, 2020.

In accordance with ASC 805, this transaction has been accounted for as a business combination.

The Company used its best estimates and assumptions to assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

at the acquisition date based on the information that was available as of the acquisition date.

The Company used its best estimates and assumptions to assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that was available as of the acquisition date.

The transaction resulted in the Company acquiring tangible assets and a finite-lived intangible asset, comprised of customer relationships which reflects the value of the benefit derived from incremental revenue and related cash flows as a direct result of the customer relationships.

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The residual amount of the purchase price in excess of the value of the tangible and definite-lived intangible assets was allocated to goodwill.

Pro forma financial information related to the acquisition has not been included as the impact on the Company's consolidated results of operations was not considered material.

The preliminary measurements of fair value set forth herein are subject to change and such changes could be material.

The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

The following table summarizes the current allocation of the purchase price consideration as of the acquisition date:

Three Months Ended

March 31, 2021

Pro forma financial information related to the acquisition has not been included as the impact on the Company's consolidated results of operations was below the reporting thresholds of the significance test.

Although the Company believes the preliminary measurements of fair value set forth herein to be substantially complete, they are subject to change within one year from the acquisition date.

The following table summarizes the allocation of the purchase price consideration as of the acquisition date:

Six months ended June 30, 2021

Accounts receivable $ 858

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Total purchase price $ 9,523

Cash paid to date, net of cash acquired $ 9,523

Cash paid to date $ 9,523

Due to seller —

2 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-Q

Item 1. Financial Statements