What changed in this filing

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Item 1. Financial Statements

2021-10-29 compared with 2021-07-30 · 147 added, 72 removed, 410 unchanged (35% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Total costs, expenses and other 388,806 283,582 1,107,522 793,374

Income before taxes 57,948 13,702 95,350 25,943

Income tax expense 13,817 2,273 23,088 5,938

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

Earnings per common share

Income (loss) before taxes 57,689 ( 1,672 ) 153,039 24,270

Income tax expense (benefit) 13,747 ( 980 ) 36,835 4,957

Net income (loss) $ 43,942 $ ( 692 ) $ 116,204 $ 19,313

Earnings (loss) per common share

Basic $ 1.56 $ ( 0.02 ) $ 4.13 $ 0.69

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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

Net income (loss) $ 43,942 $ ( 692 ) $ 116,204 $ 19,313

Foreign exchange translation adjustment ( 15 ) ( 10 ) ( 20 ) ( 67 )

6 unchanged sentences

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

September 30,

2021 December 31,

27 unchanged sentences

200,000,000 shares authorized;

31,732,789 shares issued and 28,118,587 outstanding at June 30, 2021;

31,738,648 shares issued and 28,124,446 outstanding at September 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 June 30, 2021 and December 31, 2020

Treasury stock at par ( 3,614,202 shares at June 30, 2021;

50,000,000 shares authorized and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020

Treasury stock at par ( 3,614,202 shares at September 30, 2021;

3,593,912 shares at December 31, 2020)

9 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

65 unchanged sentences

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

Net Income — — — 43,942 — — 43,942

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 15 ) ( 15 )

Cash-flow hedges — — — — — 415 415

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 400 400

Issuance of common stock 5,859 — 156 — — — 156

Purchase of treasury stock ( 0 shares)

— — — — — — —

Stock-based compensation — — 2,499 — — — 2,499

Dividends — — — ( 3,515 ) — — ( 3,515 )

Balance at September 30, 2021 31,738,648 $ 317 $ 192,950 $ 387,932 $ ( 36 ) $ ( 14,852 ) $ 566,311

ADVANSIX INC.

26 unchanged sentences

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

Net loss — — — ( 692 ) — — ( 692 )

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 10 ) ( 10 )

Cash-flow hedges — — — — — 346 346

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 336 336

Issuance of common stock — — — — — — —

Purchase of treasury stock ( 0 shares)

— — — — — — —

Stock-based compensation — — 603 — — — 603

Balance at September 30, 2020 31,622,910 $ 316 $ 183,356 $ 248,479 $ ( 36 ) $ ( 11,081 ) $ 421,034

See accompanying notes to Condensed Consolidated Financial Statements.

9 unchanged sentences

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, with most countries and territories worldwide having confirmed cases, and with certain jurisdictions experiencing resurgences, including as a result of variant strains.

Since early 2020, COVID-19 has continued to spread, with confirmed cases worldwide, 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.

The pandemic and these containment measures have had a substantial impact on businesses around the world and on global, regional and national economies, including disruptions to supply chains, reduced demand, production and sales across most industries, declines and volatility within global financial markets, and decreased workforces causing increased unemployment.

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 pandemic and these containment measures have had a substantial impact on businesses around the world and on global, regional and national economies, including disruptions to supply chains, volatility in demand, production and sales across most industries, volatility within global financial markets, inflationary pressures in commodity pricing and an increasingly dynamic workforce environment.

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

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.

1 unchanged sentence

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.

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.

Starting in the second half of 2020, and through the third 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.

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

5 unchanged sentences

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 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.

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 September 30, 2021, and its results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 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 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.

Our actual closing dates for the three and nine months ended September 30, 2021 and 2020 wer e October 2, 2021 and September 26, 2020, respe ctively.

Liabilities to creditors to whom we have issued checks that remained outstanding at September 30, 2021 and December 31, 2020 aggregated to $ 2.3 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.

4 unchanged sentences

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 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.

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

During the period October 1, 2021 through October 22, 2021, no additional shares were repurchased under the currently authorized repurchase program.

Recent Accounting Pronouncements

9 unchanged sentences

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The Company is evaluating the impact that the amendments of this standard would have on the Company's consolidated financial position or results of operations upon adoption.

The Company adopted ASU 2020-04 effective September 30, 2021, which did not have a material impact on the Company's consolidated financial position or results of operations upon adoption.

On December 18, 2019, the FASB issued ASU No.

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

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.

For the three months ended September 30, 2021 and 2020, the Company's ten largest customers accounted for approximately 43 % and 48 % of total sales, respectively.

For the nine months ended September 30, 2021 and 2020, the Company's ten largest customers accounted for approximately 41 % and 43 % of total sales, respectively.

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

2 unchanged sentences

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

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:

For the three months ended September 30, 2021 and 2020, our sales to Shaw were 13 % and 14 %, respectively, of our total sales.

For the nine months ended September 30, 2021 and 2020, our sales to Shaw were 12 % and 13 %, respectively, of our total sales.

The Company's revenue by product line, and related approximate percentage of total sales, for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

4 unchanged sentences

$ 446,495 100 % $ 281,910 100 % $ 1,260,561 100 % $ 817,644 100 %

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

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

5 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 six months ended June 30, 2021:

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

Opening balance January 1, 2021 $ 26,379

1 unchanged sentence

Less amounts recognized in revenues ( 26,975 )

Ending balance June 30, 2021 $ 2,950

Ending balance September 30, 2021 $ 3,138

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

ADVANSIX INC.

1 unchanged sentence

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

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:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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

Net income (loss) $ 43,942 $ ( 692 ) $ 116,204 $ 19,313

Weighted average common shares outstanding 28,182,810 28,079,937 28,136,511 28,037,651

5 unchanged sentences

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 and six months ended June 30, 2021 and 2020 were as follows:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Options and stock equivalents 318,706 890,484 535,299 1,042,020

Dividend activity for the three and nine months ended September 30, 2021 and 2020 was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Cash dividends declared per share $ 0.125 $ — $ 0.125 $ —

Aggregate dividends paid to shareholders $ — $ — $ — $ —

Accounts and Other Receivables – Net

September 30,

2021 December 31,

7 unchanged sentences

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

September 30,

2021 December 31,

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

4 unchanged sentences

Net periodic benefit cost $ 1,827 $ 2,025 $ 5,482 $ 6,074

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 made cash contributions to the defined benefit pension plan of $ 17.5 million during the nine months ended September 30, 2021 with $ 1.2 million in the first quarter of 2021, $ 3.6 million in the second quarter of 2021 and $ 12.7 million in the third 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 $ 18 million to $ 23 million.

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Total lease cost $ 13,008 $ 13,396 $ 40,072 $ 39,569

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

As of September 30, 2021, we have additional operating leases that have not yet commenced for approximately $ 3.7 million.

These leases commence during 2021 with lease terms of up to 5 years.

2 unchanged sentences

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.

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

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.

4 unchanged sentences

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 $ 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.

The provision for income taxes was $ 13.7 million and $( 1.0 ) million for the three months ended September 30, 2021 and 2020, respectively, resulting in an effective tax rate of 23.8 % and 58.6 %, respectively.

The provision for income taxes was $ 36.8 million and $ 5.0 million for the nine months ended September 30, 2021 and 2020, respectively, resulting in an effective tax rate of 24.1 % and 20.4 %, 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.

The refund was received in the first quarter of 2021.

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 and six months ended June 30, 2021 and 2020 differed

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (Loss) 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 and nine months ended September 30, 2021 and 2020 differed from the U.S.

federal statutory rate, due primarily to state taxes and executive compensation deduction limitations

ADVANSIX INC.

1 unchanged sentence

(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.

which generally increase the tax rate, partially offset by tax credits which generally decrease the tax rate.

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

The Company’s effective tax rate for the nine months ended September 30, 2020 was also further decreased by discrete tax adjustments related to 2019 return-to-provision tax credits and the impact of changes in the Company’s geographical sales mix on state tax.

The Company's effective tax rate of 58.6 % recorded in the third quarter of 2020 was mainly driven by research tax credits and the 2019 state return-to-provision adjustments which increased the effective tax rate by approximately 30 % mainly due to the nominal Loss before taxes recorded in that quarter which resulted in these adjustments having a larger than normal impact on the effective tax rate.

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 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.

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

We are subject to income taxes in the United States and to a lesser extent several foreign jurisdictions.

Changes to income tax laws and regulations, or the interpretation of such laws, in any of the jurisdictions in which we operate could increase our effective tax rate and reduce our cash flows from operating activities.

The current U.S.

administration has released various draft tax reform proposals that, if enacted, would generally increase U.S.

federal income taxes on corporations.

These proposals, if implemented, could have an unfavorable effect on our business, results of operations and financial condition.

As such, we continue to monitor these legislative proposals to evaluate the impact on our business.

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 June 30, 2021 was a loss of approximately $ 1.9 million and is considered a Level 2 liability.

The fair value of the interest rate swaps at September 30, 2021 was a loss of approximately $ 1.3 million and is considered a Level 2 liability.

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

14 unchanged sentences

The Company’s counterparties in derivative transactions are substantial investment and commercial banks with significant experience using such derivative instruments.

The Company monitors the impact of market risk on the fair value and cash flows of its derivative and other financial instruments considering reasonably possible changes in commodity prices, interest rates and foreign currency exchange rates and restricts the use of derivative financial instruments to hedging activities.

The Company continually monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business.

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 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.

The Company monitors the impact of market risk on the fair value and cash flows of its derivative and other financial instruments considering

ADVANSIX INC.

1 unchanged sentence

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

reasonably possible changes in commodity prices, interest rates and foreign currency exchange rates and restricts the use of derivative financial instruments to hedging activities.

The Company continually monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business.

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 September 30, 2021 or December 31, 2020.

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

3 unchanged sentences

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

At September 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.

4 unchanged sentences

Liability Derivatives

June 30, 2021 December 31, 2020

September 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:

September 30,

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

Fair value adjustment 1,731

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.

Loss on derivative instruments included in Accumulated other comprehensive loss at September 30, 2021 $ ( 1,332 )

At September 30, 2021, the Company expects to reclassify approximately $ 1.0 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:

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Amount of Loss Recognized in Earnings

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

1 unchanged sentence

Total Derivatives $ 565 $ 595 $ 1,684 $ 1,675

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.

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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 or six months ended June 30, 2020.

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

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

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

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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.

Although the Company believes the 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

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Nine months ended September 30, 2021

Accounts receivable $ 858

10 unchanged sentences

Goodwill deductible for tax purposes $ 2,587

Subsequent Events

Credit Agreement

On October 27, 2021, the Company completed a refinancing of its existing senior secured revolving credit facility under that certain Credit Agreement, dated as of September 30, 2016, among the Company, the guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (as amended by Amendment No.

1 on February 21, 2018 and Amendment No.

2 on February 19, 2020), by entering into a new Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a new senior secured revolving credit facility in an aggregate principal amount of $ 500 million (the “Revolving Credit Facility”).

The Revolving Credit Facility has a scheduled maturity date of October 27, 2026.

The Credit Agreement permits the Company to utilize up to $ 40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $ 40 million for swing line loans.

The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $ 175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

Borrowings under the Credit Agreement bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.250 % to 1.25 % or the sum of a LIBOR plus a margin ranging from 1.25 % to 2.25 %, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement).

The Company is also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.15 % to 0.35 % per annum depending on the Company’s Consolidated Leverage Ratio.

As of October 27, 2021, the applicable margin under the Credit Agreement is 0.375 % for base rate loans and 1.375 % for LIBOR loans and the applicable commitment fee rate is 0.175 % per annum.

Substantially all tangible and intangible assets of the Company and its domestic subsidiaries are pledged as collateral to secure the obligations under the Credit Agreement.

As of October 27, 2021, the Company has borrowed $ 150 million under the Revolving Credit Facility.

The Company expects to use the Revolving Credit Facility to meet any ongoing cash needs in excess of internally generated or available cash flows and to issue letters of credit in the ordinary course of its business.

Future borrowings under the Revolving Credit Facility will be subject to customary borrowing conditions.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets.

The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00 or less for the fiscal quarter ending December 31, 2021, through and including the fiscal quarter ending September 30, 2023 and (ii) 3.75 to 1.00 or less for each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility.

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