What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 90 added, 54 removed, 367 unchanged (28% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Sales $ 427,940 $ 583,736 $ 828,484 $ 1,062,809

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income $ 32,728 $ 65,157 $ 67,682 $ 128,230

37 unchanged sentences

200,000,000 shares authorized;

32,532,842 shares issued and 27,668,715 outstanding at March 31, 2023;

32,577,862 shares issued and 27,302,873 outstanding at June 30, 2023;

31,977,593 shares issued and 27,446,520 outstanding at December 31, 2022

Preferred stock, par value $ 0.01 ;

50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2023 and December 31, 2022

Treasury stock at par ( 4,864,127 shares at March 31, 2023;

50,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2023 and December 31, 2022

Treasury stock at par ( 5,274,989 shares at June 30, 2023;

4,531,073 shares at December 31, 2022)

9 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

27 unchanged sentences

Issuance of common stock 745 1,032

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

Net cash used for financing activities ( 11,100 ) ( 5,400 )

Net change in cash and cash equivalents ( 20,449 ) 2,197

17 unchanged sentences

Cash-flow hedges — — — — — ( 150 ) ( 150 )

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 183 ) ( 183 )

5 unchanged sentences

Balance at March 31, 2023 32,532,842 325 163,831 598,339 ( 48 ) ( 4,380 ) 758,067

Net Income — — — 32,728 — — 32,728

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 125 ) ( 125 )

Cash-flow hedges — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 125 ) ( 125 )

Issuance of common stock 45,020 1 122 — — — 123

Purchase of treasury stock ( 410,862 shares)

— — ( 14,881 ) — ( 5 ) — ( 14,886 )

Stock-based compensation — — 2,436 — — — 2,436

Dividends — — 198 ( 4,182 ) — — ( 3,984 )

Balance at June 30, 2023 32,577,862 $ 326 $ 151,706 $ 626,885 $ ( 53 ) $ ( 4,505 ) $ 774,359

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

5 unchanged sentences

Cash-flow hedges — — — — — 512 512

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 569 569

5 unchanged sentences

Balance at March 31, 2022 31,900,305 319 193,321 470,759 ( 38 ) ( 5,970 ) 658,391

Net Income — — — 65,157 — — 65,157

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 35 ) ( 35 )

Cash-flow hedges — — — — — 295 295

Other comprehensive income (loss), net of tax — — — — — 260 260

Issuance of common stock 61,651 1 317 — — — 318

Purchase of treasury stock ( 87,251 shares)

— — ( 3,406 ) — ( 1 ) — ( 3,407 )

Stock-based compensation — — 2,005 — — — 2,005

Dividends — — 155 ( 3,670 ) — — ( 3,515 )

Balance at June 30, 2022 31,961,956 $ 320 $ 192,392 $ 532,246 $ ( 39 ) $ ( 5,710 ) $ 719,209

See accompanying notes to Condensed Consolidated Financial Statements.

13 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 March 31, 2023, and its results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022.

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, 2023, and its results of operations for the three and six months ended June 30, 2023 and 2022 and cash flows for the six months ended June 30, 2023 and 2022.

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

6 unchanged sentences

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, 2023 and 2022 were April 1, 2023 and April 2, 2022, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at March 31, 2023 and December 31, 2022 aggregated to $ 5.2 million and $ 9.0 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, 2023 and 2022 were July 1, 2023 and July 2, 2022, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2023 and December 31, 2022 aggregated to $ 3.7 million and $ 9.0 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

The Company's Board of Directors (the "Board") has authorized share repurchase programs to repurchase shares of the Company's common stock as follows:

Date of Authorization Authorized Amount

Authorized Amount Remaining as of March 31, 2023

Authorized Amount Remaining as of June 30, 2023

May 4, 2018 $ 75.0 $ —

10 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 March 31, 2023, the Company has repurchased a total of 4,864,127 shares of common stock, including 841,354 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 149.6 million at a weighted average market price of $ 30.75 per share.

As of March 31, 2023, $ 100.2 million remained available for share repurchases under the current authorization.

During the period April 1, 2023 through April 28, 2023, the Company repurchased an additional 105,573 shares at a weighted average market price of $ 38.95 per share primarily under the current authorized repurchase program.

As of June 30, 2023, the Company has repurchased a total of 5,274,989 shares of common stock, including 849,265 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 164.4 million at a weighted average market price of $ 31.17 per share.

As of June 30, 2023, $ 85.6 million remained available for share repurchases under the current authorization.

During the period July 1, 2023 through July 28, 2023, the Company repurchased an additional 94,715 shares at a weighted average market price of $ 36.45 per share primarily under the current authorized repurchase program.

Recent Accounting Pronouncements

11 unchanged sentences

Revenue Recognition

We serve approximately 450 customers annually in more than 40 countries across a wide variety of industries.

For the three months ended March 31, 2023 and 2022, the Company's ten largest customers accounted for approximately 37 % of total sales during both periods.

We serve approximately 400 customers annually in approximately 40 countries across a wide variety of industries.

For the three months ended June 30, 2023 and 2022, the Company's ten largest customers accounted for approximately 41 % and 40 % of total sales, respectively.

For each of the six months ended June 30, 2023 and 2022, the Company's ten largest customers accounted for approximately 38 % of total sales during both periods.

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 March 31, 2023 and 2022, the Company's sales to Shaw were 10 % and 9 % of our total sales, respectively.

The Company's revenue by product line, and related approximate percentage of total sales, for the three months ended March 31, 2023 and 2022 were as follows:

For each of the three and six months ended June 30, 2023 and 2022, the Company's sales to Shaw were 10 % of our total sales.

The Company's revenue by product line, and related approximate percentage of total sales, for the three and six months ended June 30, 2023 and 2022 were as follows:

ADVANSIX INC.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Nylon $ 92,953 22 % $ 132,105 23 % $ 192,325 23 % $ 250,715 23 %

3 unchanged sentences

Total $ 427,940 100 % $ 583,736 100 % $ 828,484 100 % $ 1,062,809 100 %

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three months ended March 31, 2023 and 2022 were as follows:

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

United States $ 367,608 86 % $ 494,155 85 % $ 688,534 83 % $ 897,174 84 %

3 unchanged sentences

The Company defers revenues when cash payments are received in advance of our performance.

Below is a roll-forward of Deferred income and customer advances for the three months ended March 31, 2023:

Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2023:

Opening balance January 1, 2023 $ 34,430

1 unchanged sentence

Less amounts recognized in revenues ( 37,975 )

Ending balance March 31, 2023 $ 25,672

The Company expects to recognize as revenue the March 31, 2023 ending balance of Deferred income and customer advances within one year or less.

Ending balance June 30, 2023 $ 2,333

The Company expects to recognize as revenue the June 30, 2023 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 outstanding and diluted weighted average number of common shares outstanding, respectively.

The details of the basic and diluted EPS calculations for the three months ended March 31, 2023 and 2022 were as follows:

The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income $ 32,728 $ 65,157 $ 67,682 $ 128,230

9 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 months ended March 31, 2023 and 2022 were as follows:

The anti-dilutive common stock equivalents outstanding at the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Options and stock equivalents 503,354 121,794 404,009 121,055

Dividend activity for the three months ended March 31, 2023 and 2022 was as follows:

Dividend activity for the three and six months ended June 30, 2023 and 2022 was as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Cash dividends declared per share $ 0.145 $ 0.125 $ 0.290 $ 0.250

15 unchanged sentences

Total inventories $ 225,986 $ 215,502

Substantially all of the Company’s inventories at March 31, 2023 and December 31, 2022 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

However, approximately 5 % was valued at average cost using the first-in, first-out (“FIFO”) method at March 31, 2023.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 77.4 million and $ 58.2 million at March 31, 2023 and December 31, 2022, respectively.

Substantially all of the Company’s inventories at June 30, 2023 and December 31, 2022 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

However, approximately 7 % was valued at average cost using the first-in, first-out (“FIFO”) method at June 30, 2023.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 67.2 million and $ 58.2 million at June 30, 2023 and December 31, 2022, respectively.

We determine if an arrangement is a lease at inception.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Finance lease cost:

5 unchanged sentences

Total lease cost $ 13,342 $ 11,762 $ 25,857 $ 23,704

As of March 31, 2023, we have additional operating and finance leases that have not yet commenced for approximately $ 0.2 million and approximately $ 0.3 million, respectively.

These leases will commence during 2023 with lease terms of up to 7 years.

As of June 30, 2023, we have additional operating leases that have not yet commenced for approximately $ 1.0 million.

These leases will commence during the second half of 2023 with lease terms of up to 7 years.

Goodwill and Intangible Assets

1 unchanged sentence

Customer relationships and trade-names are amortized on a straight-line basis over their expected useful lives of 15 to 20 years and 5 years, respectively.

There was no change in the carrying amount of goodwill for the three months ended March 31, 2023.

There was no change in the carrying amount of goodwill for the six months ended June 30, 2023.

Finite-Lived Intangible Assets

Intangible assets subject to amortization were as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value

3 unchanged sentences

Total $ 56,371 $ ( 8,654 ) $ 47,717 $ 56,371 $ ( 7,129 ) $ 49,242

For the three months ended March 31, 2023 and March 31, 2022, the Company recorded amortization expense on intangible assets of $ 0.8 million and $ 0.4 million, respectively.

For each of the three months ended June 30, 2023 and June 30, 2022, the Company recorded amortization expense on intangible assets of $ 0.8 million.

For the six months ended June 30, 2023 and June 30, 2022, the Company recorded amortization expense on intangible assets of $ 1.5 million and $ 1.2 million, respectively.

Commitments and Contingencies

13 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 $ 9.3 million and $ 19.2 million for the three months ended March 31, 2023 and 2022, respectively, resulting in an effective tax rate of 21.0 % and 23.3 %, respectively.

The provision for income taxes was $ 10.6 million and $ 20.0 million for the three months ended June 30, 2023 and 2022, respectively, resulting in an effective tax rate of 24.4 % and 23.5 %, respectively.

The provision for income taxes was $ 19.8 million and $ 39.1 million for the six months ended June 30, 2023 and 2022, respectively, resulting in an effective tax rate of 22.7 % and 23.4 %, respectively.

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 effective tax rate for the three months ended March 31, 2023 approximated the U.S.

The Company’s effective tax rate for the three and six months ended June 30, 2023 and 2022 differed from the U.S.

federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, offset by tax credits and the foreign-derived intangible income deduction which generally decrease the tax rate.

Additionally, a current period discrete tax adjustment was recorded relating to the vesting of equity compensation that resulted in a 2.3 % decrease to the Company's quarterly effective tax rate.

The Company's effective tax rate for the three months ended March 31, 2022 differed from the U.S.

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

Additionally, discrete tax adjustments recorded in the first half of 2023 relating to the vesting of equity compensation and changes in state tax legislation resulted in a net 0.6 % increase to the quarterly effective tax rate and a net 0.9 % decrease to the year-to-date effective tax rate.

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

32 unchanged sentences

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, 2023 or December 31, 2022.

The Company did not have any customers with significant concentrations of trade accounts receivable – net at June 30, 2023 or December 31, 2022.

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.

4 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 March 31, 2023 and 2022, we had no financial contracts related to forward commodity agreements.

At June 30, 2023 and 2022, we had no financial contracts related to forward commodity agreements.

Interest Rate Risk Management – The Company had entered into one interest rate swap agreement for a total notional amount of $ 50 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings.

7 unchanged sentences

Asset (Liability) Derivatives

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value

5 unchanged sentences

Fair value adjustment ( 197 )

Gain (Loss) on derivative instruments included in Accumulated other comprehensive loss at March 31, 2023 $ —

At March 31, 2023, the Company expects no reclassifications of net gains or losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months as the interest rate swap agreement matured on February 21, 2023.

Gain (Loss) on derivative instruments included in Accumulated other comprehensive loss at June 30, 2023 $ —

At June 30, 2023, the Company expects no reclassifications of net gains or losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months as the interest rate swap agreement matured on February 21, 2023.

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

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Interest Rate Contracts $ — $ ( 131 ) $ — $ ( 119 )

7 unchanged sentences

AdvanSix’s responsibility is limited to making payments to the intermediary based upon payment terms negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date.

The Company’s payment terms with suppliers are consistent,

The Company’s payment terms with suppliers are consistent, regardless of whether a vendor participates in the supply chain finance program or not.

All related agreements are terminable by either party upon at least 30 days’ notice.

The total amount due to the financial intermediaries to settle supplier invoices under the supplier finance programs was approximately $ 14 million and approximately $ 17 million as of June 30, 2023 and December 31, 2022, respectively.

These amounts outstanding are included in Accounts payable .

ADVANSIX INC.

1 unchanged sentence

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

regardless of whether a vendor participates in the supply chain finance program or not.

All related agreements are terminable by either party upon at least 30 days’ notice.

The total amount due to the financial intermediaries to settle supplier invoices under the supplier finance programs was approximately $ 12 million and approximately $ 17 million as of March 31, 2023 and December 31, 2022, respectively.

These amounts outstanding are included in Accounts payable .

Subsequent Events

As announced on May 5, 2023, the Board declared a quarterly cash dividend of $ 0.145 per share on the Company's common stock, payable on May 30, 2023 to stockholders of record as of the close of business on May 16, 2023.

On April 7, 2023, the Company issued a press release announcing that a labor strike had been initiated by the Hopewell South bargaining unit, consisting of the International Chemical Workers Union Council/the United Food and Commercial Workers, Local 591-C, the International Brotherhood of Electrical Workers, Local 666, the International Association of Machinists and Aerospace Workers, Local No.

10, and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry, Local 851, affecting approximately 340 workers at the Company's manufacturing facility in Hopewell, Virginia.

The Company has robust contingency measures in place and is well prepared to support safe, stable and sustainable operations during this period.

While AdvanSix continues to operate, we do not currently have an estimate of timing for completion of negotiations with the Hopewell South bargaining unit.

The strike is not expected to have a material impact on the Company's financial condition.

As announced on August 4, 2023, the Board declared a quarterly cash dividend of $ 0.160 per share on the Company's common stock, payable on August 29, 2023 to stockholders of record as of the close of business on August 15, 2023.

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