What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-04 compared with 2022-08-05 · 80 added, 66 removed, 272 unchanged (35% of the section changed)

54 unchanged sentences

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, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of June 30, 2022.

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of September 30, 2022.

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

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Ammonium sulfate fertilizer is derived from the integrated operations at the Hopewell manufacturing facility.

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 June 30, 2022.

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 September 30, 2022.

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

51 unchanged sentences

5/6/2022 5/17/2022 5/31/2022 $0.125

2/18/2022 3/1/2022 3/15/2022 $0.125

Results of Operations

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2022

September 30, 2022 Nine Months Ended

September 30, 2022

Volume (18.1)% (8.8)%

1 unchanged sentence

Acquisition 2.9% 3.3%

Sales increased in the three months ended June 30, 2022 compared to the prior year period by $146.1 million (approximately 33%) due primarily to (i) net favorable market-based pricing (approximately 26%) reflecting strength in our ammonium sulfate and nylon product lines partially offset by lower pricing in chemical intermediates (primarily acetone), (ii) favorable raw material pass-through pricing (approximately 6%) as a result of net cost increases in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) the acquisition of U.S.

Amines (approximately 5%), partially offset by decreased sales volume (approximately 4%) driven primarily by unfavorable weather conditions driving a reduction of in-season fertilizer demand as well as lower production output limiting supply of nylon resin and chemical intermediates compared to the prior year.

Sales increased in the six months ended June 30, 2022 compared to the prior year period by $248.7 million (approximately 31%) due primarily to (i) net favorable market-based pricing (approximately 26%) reflecting strength in our ammonium sulfate and nylon product lines partially offset by lower pricing in chemical intermediates (primarily acetone), (ii) favorable raw material pass-through pricing (approximately 5%) as a result of net cost increases in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) the acquisition of U.S.

Amines (approximately 3%), partially offset by decreased sales volume (approximately 4%) driven primarily by higher sales in the first quarter of 2021 through a reduction of finished goods inventory in that period to meet a recovery in customer demand and lower production in the second quarter of 2022 compared to the prior year period.

Sales increased in the three months ended September 30, 2022 compared to the prior year period by $32.3 million (approximately 7%) due primarily to (i) net favorable market-based pricing (approximately 18%) reflecting strength in our ammonium sulfate and nylon product lines, (ii) favorable raw material pass-through pricing (approximately 4%) as a result of net cost increases in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) the acquisition of U.S.

Amines (approximately 3%), partially offset by decreased sales volume (approximately 18%) driven primarily by lower production due to an extended multi-site third quarter 2022 plant turnaround and delayed ramp to full production rates at our manufacturing sites.

Sales increased in the nine months ended September 30, 2022 compared to the prior year period by $281.0 million (approximately 22%) due primarily to (i) net favorable market-based pricing (approximately 23%) reflecting strength in our ammonium sulfate and nylon product lines partially offset by lower pricing in chemical intermediates (primarily acetone), (ii) favorable raw material pass-through pricing (approximately 5%) as a result of net cost increases in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) the acquisition of U.S.

Amines (approximately 3%), partially offset by decreased sales volume (approximately 9%) driven primarily by unfavorable weather conditions resulting in a reduction of in-season fertilizer demand during the second quarter of 2022 and lower production during the third quarter of 2022, as discussed above.

Costs of Goods Sold

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

Gross Margin percentage 7.3% 18.0% 15.9% 17.4%

Costs of goods sold increased in the three months ended June 30, 2022 compared to the prior year period by $120.0 million (approximately 34%) due primarily to (i) increased prices of raw materials (approximately 23%), (ii) an increase in plant spend, particularly utilities, driven primarily by natural gas prices (approximately 4%), (iii) the impact of the U.S.

Amines acquisition (approximately 5%) and the impact of non-raw material inflation (approximately 2%) primarily on transportation costs.

Costs of goods sold increased in the six months ended June 30, 2022 compared to the prior year period by $177.7 million (approximately 26%) due primarily to (i) increased prices of raw materials (approximately 21%), (ii) the impact of the U.S.

Amines acquisition (approximately 4%), (iii) an increase in plant spend, particularly utilities, driven primarily by natural gas prices (approximately 3%) and (iv) the impact of non-raw material inflation (approximately 2%) primarily on transportation costs.

The noted increase was partially offset by lower sales volumes (approximately 2%) across all product lines as discussed above, and an unfavorable non-cash LIFO inventory reserve adjustment in the prior year period (approximately 1%).

Gross margin percentage decreased slightly in the three months ended June 30, 2022 compared to the prior year period due primarily to (i) higher plant spend (approximately 2%), (ii) lower sales volume (approximately 2%) and the impact of non-raw material inflation (approximately 1%), mostly offset by the net impact of formula-based pass-through pricing and increased market pricing (approximately 5%).

Gross margin percentage increased by approximately 3% in the six months ended June 30, 2022 compared to the prior year period due primarily to (i) the net impact of formula-based pass-through pricing and increased market pricing (approximately 6%) and (ii) an unfavorable non-cash LIFO inventory reserve adjustment in the prior year period (approximately 1%) partially offset by (i) higher plant spend (approximately 2%), (ii) lower sales volume as discussed above (approximately 1%) and (iii) the impact of non-raw material inflation (approximately 1%).

Costs of goods sold increased in the three months ended September 30, 2022 compared to the prior year period by $77.5 million (approximately 21%) due primarily to (i) increased prices of raw materials (approximately 14%), (ii) increased spend associated with the planned multi-site plant turnaround (approximately 10%), (iii) the impact of the U.S.

Amines acquisition (approximately 4%) and (iv) increased plant spend, particularly natural gas utility costs (approximately 4%).

The noted increase was partially offset by lower sales volume (approximately 12%), as discussed above.

Costs of goods sold increased in the nine months ended September 30, 2022 compared to the prior year period by $255.2 million (approximately 25%) due primarily to (i) increased prices of raw materials (approximately 19%), (ii) the impact of the U.S.

Amines acquisition (approximately 4%), (iii) an increase in plant spend, particularly natural gas utility costs (approximately 3%) and (iv) increased spending from the planned multi-site turnaround (approximately 3%).

The noted increase was partially offset by lower sales volumes (approximately 6%), as discussed above.

Gross margin percentage decreased in the three months ended September 30, 2022 compared to the prior year period by approximately 11% due primarily to (i) higher plant spend primarily due to the multi-site plant turnaround and natural gas utility costs (approximately 11%) and (ii) lower sales volume (approximately 5%).

These increases were partially offset by the impact of increased pricing, net of raw material cost escalations (approximately 6%), across the ammonium sulfate, caprolactam and nylon product lines.

Gross margin percentage decreased by approximately 2% in the nine months ended September 30, 2022 compared to the prior year period due primarily to (i) higher plant spend due to the multi-site plant turnaround and higher natural gas utility costs (approximately 4%), (ii) lower sales volume as discussed above (approximately 2%) and (iii) the impact of non-raw material inflation (approximately 2%).

These increases were partially offset by the impact of increased pricing (approximately 6%), net of raw material costs driven primarily by the ammonium sulfate and nylon product lines.

Selling, General and Administrative Expenses

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Percentage of Sales 4.8% 4.7% 4.2% 4.9%

Selling, general and administrative expenses decreased by $0.8 million in the three months ended June 30, 2022 compared to the prior year period due primarily to (i) decreased stock-based compensation costs and (ii) a reduction in bad debt expense associated with a cash collection of a previously reserved customer receivable partially offset by increased functional support costs.

Selling, general and administrative expenses increased by $1.1 million in the six months ended June 30, 2022 compared to the prior period due primarily to increased functional support costs partially offset by a reduction in bad debt expense associated with a cash collection of a previously reserved customer receivable.

Selling, general and administrative expenses increased by $1.9 million in the three months ended September 30, 2022 compared to the prior year period due primarily to increased functional support costs partially offset by decreased incentive-based compensation expense.

Selling, general and administrative expenses increased by $3.0 million in the nine months ended September 30, 2022 compared to the prior period due primarily to increased functional support costs partially offset by (i) decreased incentive-based compensation costs and (ii) a reduction in bad debt expense associated with a cash collection of a previously reserved customer receivable.

Income Tax Expense

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

The refund was received in the first quarter of 2021.

The Company’s effective tax rate for the three and six months ended June 30, 2022 and 2021 was higher compared to the U.S.

The Company’s effective tax rate for the three and nine months ended September 30, 2022 and 2021 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 and the deduction for foreign-derived intangible income.

The Company’s effective tax rate for the three and six months ended June 30, 2022 was slightly lower than the prior year periods due primarily to a state rate change recorded as a discrete tax adjustment in the second quarter of 2021.

The Company’s effective tax rate for the three months ended September 30, 2022 was lower than the prior year period due primarily to the lower Income before taxes recorded in the third quarter of 2022 compared to the third quarter of 2021 and therefore the tax adjustments in this quarter had a greater impact on the effective tax rate than the prior year period.

In February 2022, the Company acquired the stock of U.S.

Under purchase accounting rules, a net deferred tax liability of approximately $12.2 million was recorded in the first quarter related to the adjustment of the acquired assets and liabilities to fair value.

There was a $0.1 million reduction in the net deferred tax liability recorded in the second quarter.

Amines Limited.

Under purchase accounting rules, during the first and second quarter of 2022, a net deferred tax liability of approximately $12.1 million was recorded related to the adjustment of the acquired assets and liabilities to fair value.

In the third quarter, the Company recorded a measurement period adjustment which resulted in a $2.0 million reduction to the net deferred tax liability with a corresponding reduction to Goodwill acquired.

See Note 13 "Acquisitions" for further details.

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.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law.

This legislation includes significant changes relating to tax, climate change, energy and health care.

Among other provisions, the IRA introduces a book minimum tax assessed on financial statement income of certain large corporations and an excise tax on share repurchases.

The Company does not anticipate these provisions will have a material impact on our results of operations or financial condition, when effective.

The IRA also includes significant extensions, expansions and enhancements related to climate and energy tax credits designed to encourage investment in the adoption and expansion of renewable and alternative energy sources.

The Company is evaluating these provisions of the law.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 10,032 $ 43,942 $ 138,262 $ 116,204

As a result of the factors described above, Net income was $65.2 million and $128.2 million for the three and six months ended June 30, 2022 as compared to $44.1 million and $72.3 million in the corresponding prior year period.

As a result of the factors described above, Net income was $10.0 million and $138.3 million for the three and nine months ended September 30, 2022 as compared to $43.9 million and $116.2 million in the corresponding prior year period.

Non-GAAP Measures

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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(Dollars in thousands, unless otherwise noted)

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in our 2021 Form 10-K.

Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements.

cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities as well as the prices of our raw materials and general economic and industry trends, as well as customer demand, which in the second quarter of 2020, was materially impacted by the circumstances surrounding COVID-19.

Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term

funding requirements.

Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities as well as the prices of our raw materials and general economic and industry trends, as well as customer demand, which in the second quarter of 2020, was materially impacted by the circumstances surrounding COVID-19.

The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy.

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We believe that our future cash from operations, together with cash on hand and our access to credit and capital markets, will provide adequate resources to fund our expected operating and financing needs and obligations.

Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in our 2021 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

As of the end of the second quarter of 2022, the Company had approximately $17.3 million of cash on hand with approximately $352 million of additional capacity available under the revolving credit facility.

Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in Item 1A of Part I of our 2021 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

As of the end of the third quarter of 2022, the Company had approximately $24.7 million of cash on hand with approximately $364 million of additional capacity available under the revolving credit facility.

The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt.

Capital expenditures are expected to be approximately $95 million to $105 million in 2022 compared to $57 million in 2021, reflecting the timing of maintenance and HSE spend.

Capital expenditures are expected to be approximately $95 million in 2022 compared to $57 million in 2021, reflecting the timing of maintenance and HSE spend.

The Company filed a Federal net operating loss (NOL) carryback claim under the CARES Act in July 2020 which generated a refund of previously paid taxes in the amount of $12.3 million received in the first quarter of 2021.

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We expect that our primary cash requirements for the remainder of 2022 will be to fund costs associated with ongoing operations, capital expenditures, and amounts related to other contractual obligations.

The Company made cash contributions to the defined benefit pension plan of $10 million during the six months ended June 30, 2022 with no contributions made in the first quarter of 2022 and $10 million in the second quarter of 2022.

The Company currently plans to make pension plan contributions during 2022 sufficient to satisfy funding requirements under the AdvanSix Retirement Earnings Plan in an aggregate amount of $15 million to $20 million.

The Company made cash contributions to the defined benefit pension plan of $15 million during the nine months ended September 30, 2022 with no contributions made in the first quarter of 2022, $10 million in the second quarter of 2022 and $5 million in the third quarter of 2022.

We anticipate making contributions in future years sufficient to satisfy pension funding requirements, if any, in those periods.

1 unchanged sentence

On February 22, 2019, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company’s common stock, which was in addition to the remaining capacity available under the May 2018 share repurchase program.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act.

The size and timing of these repurchases will depend on pricing, market and

economic conditions, legal and contractual requirements and other factors.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to

qualify under Rule 10b5-1 of the Exchange Act.

The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors.

The repurchase program has no expiration date and may be modified, suspended or discontinued at any time.

As of June 30, 2022, the Company has repurchased a total of 3,884,263 shares of common stock, including 592,972 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $112.8 million at a weighted average market price of $29.04 per share.

As of June 30, 2022, $51.8 million remained available for share repurchases under the current authorization.

During the period from July 1, 2022 through July 29, 2022, we repurchased an additional 70,554 shares at a weighted average market price of $35.30 per share under the currently authorized repurchase program.

As of June 30, 2022, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the Company's 2021 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

As of September 30, 2022, the Company has repurchased a total of 4,246,872 shares of common stock, including 592,976 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $125.9 million at a weighted average market price of $29.66 per share.

As of September 30, 2022, $38.6 million remained available for share repurchases under the current authorization.

During the period from October 1, 2022 through October 28, 2022, we repurchased an additional 148,700 shares at a weighted average market price of $33.36 per share under the currently authorized repurchase program.

As of September 30, 2022, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the Company's 2021 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

The Company has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

6 unchanged sentences

2/18/2022 3/1/2022 3/15/2022 $0.125 $ 3.5 million

9/28/2021 11/9/2021 11/23/2021 $0.125 $ 3.5 million

The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board.

10 unchanged sentences

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.

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 0.25% to 1.25% or the sum of a Eurodollar rate 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).

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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.

We were in compliance with all of our covenants at June 30, 2022 and through the date of the filing of this Form 10-Q.

We were in compliance with all of our covenants at September 30, 2022 and through the date of the filing of this Form 10-Q.

The situation surrounding COVID-19 remains fluid and unpredictable, and the potential for a material impact on the Company increases if social and economic restrictions are reinstituted or if related economic impacts such as supply chain issues, labor market volatility and inflationary pressures persist.

2 unchanged sentences

As of December 31, 2021, we had a balance of $135 million under the Revolving Credit Facility.

During the six months ended June 30, 2022, we borrowed an incremental net amount of $12 million to bring the balance under the Revolving Credit Facility to $147 million as of June 30, 2022.

As of June 30, 2022, $352 million was available for use out of the total of $500 million under the Revolving Credit Facility.

During the nine months ended September 30, 2022, the Company's incremental borrowings equaled the incremental payments maintaining the balance under the Revolving Credit Facility at $135 million as of September 30, 2022.

As of September 30, 2022, approximately $364 million was available for use out of the total of $500 million under the Revolving Credit Facility.

We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Cash Flow Summary

Six Months Ended

Nine Months Ended

September 30,

Cash provided by (used for):

3 unchanged sentences

Net change in cash and cash equivalents $ 9,594 $ (3,367)

Cash provided by operating activities increased by $36.0 million for the six months ended June 30, 2022 versus the prior year period due primarily to a $56.0 million increase in net income and a $16.8 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) year-over-year with a $11.9 million favorable cash impact from working capital for the six months ended June 30, 2022 compared to a $5.0 million unfavorable cash impact in the prior year period, which included a $12.3 million cash tax refund.

These net favorable impacts for the six months ended June 30, 2022 were partially offset by a $13.4 million unfavorable cash

impact from Accrued liabilities driven by the timing of payments, a $9.7 million unfavorable cash impact from Income taxes payable, a $5.3 million unfavorable impact from Deferred taxes and a $9.6 million unfavorable impact from Other assets and liabilities compared to the prior year period driven primarily by a reduction in the net pension liability due to cash contributions to the defined benefit pension plan.

Cash used for investing activities increased by $103.0 million for the six months ended June 30, 2022 versus the prior year period due primarily to cash paid for the acquisition of U.S.

Cash provided by operating activities increased by $18.5 million for the nine months ended September 30, 2022 versus the prior year period due primarily to a $55.5 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) year-over-year with a $50.7 million favorable cash impact from working capital for the nine months ended September 30, 2022 compared to a $4.9 million

unfavorable cash impact in the prior year period and a $22.1 million increase in net income.

These net favorable impacts for the nine months ended September 30, 2022 were partially offset by (i) a $25.9 million unfavorable cash impact from Taxes receivable (including a $12.3 million cash tax refund received in the first quarter of 2021), (ii) a $14.1 million unfavorable cash impact from Accrued liabilities driven by the timing of payments, (iii) a $9.7 million unfavorable cash impact from Income taxes payable and (iv) a $9.2 million unfavorable impact from Other assets and liabilities compared to the prior year period driven primarily by a reduction in the net pension liability due to cash contributions to the defined benefit pension plan.

Cash used for investing activities increased by $112.1 million for the nine months ended September 30, 2022 versus the prior year period due primarily to cash paid for the acquisition of U.S.

Amines for approximately $97 million compared to cash paid of approximately $9.5 million for the acquisition of Commonwealth Industrial Services, and increased cash payments for capital expenditures of approximately $23.5 million reflecting timing of project execution.

Cash provided by financing activities increased by $75.5 million for the six months ended June 30, 2022 versus the prior year period due primarily to net borrowings of $11.5 million for the six months ended June 30, 2022 compared to net repayments of $80.0 million during the prior year period partially offset by payments for share repurchases of $9.8 million and cash paid for dividends of approximately $7.0 million as described above.

Cash used for financing activities decreased by $106.6 million for the nine months ended September 30, 2022 versus the prior year period as incremental borrowings equaled the incremental payments during the nine months ended September 30, 2022 compared to net repayments of $140.0 million during the prior year period partially offset by payments for share repurchases of $23.0 million and cash paid for dividends of approximately $11.1 million as described above.

Capital Expenditures

2 unchanged sentences

The following table summarizes ongoing and expansion capital expenditures:

Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2022

Capital expenditures in Accounts payable at December 31, 2021

Purchases of property, plant and equipment 68,472

Capital expenditures in Accounts payable at June 30, 2022

Capital expenditures in Accounts payable at September 30, 2022

Cash paid for capital expenditures $ 61,010

For 2022, we expect our total capital expenditures to be approximately $95 million to $105 million compared to $57 million in 2021, reflecting the timing of maintenance and HSE spend.

For 2022, we expect our total capital expenditures to be approximately $95 million compared to $57 million in 2021, reflecting the timing of maintenance and HSE spend.

Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity and comply with HSE regulations.

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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 2. Management’s Discussion and Analysis