What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-05 · 74 added, 58 removed, 253 unchanged (34% of the section changed)

19 unchanged sentences

risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise;

the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and geopolitical conflicts and related events;

price fluctuations, cost increases and supply of raw materials;

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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 March 31, 2023.

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of June 30, 2023.

• 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 March 31, 2023.

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, 2023.

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

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

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

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

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

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

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

Our differentiated Nylon 6 products, such as our wire and cable and co-polymer offerings, are typically valued at a higher level than commodity resin products.

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

Most significant is acetone, the price of which is influenced by its own supply and demand dynamics but can also be influenced by the underlying move in propylene input costs.

We continue to invest in and grow our differentiated product offerings in high-purity applications and high-value intermediates including our newly acquired U.S.

Our differentiated product offerings include high-purity applications and high-value intermediates including our U.S.

Amines portfolio as well as our oximes-based EZ-Blox™ anti-skinning agent used in paints and Nadone® cyclohexanone, which is a solvent used in various high-value applications.

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

Other global factors driving ammonium sulfate fertilizer demand

are general agriculture trends, including planted acres and the price of crops.

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

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

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

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

We also directly supply packaged ammonium sulfate to customers, primarily in North and South America, and

diversified and optimized our offerings to include spray-grade adjuvants to support crop protection, as well as other specialty fertilizers and products for industrial use.

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

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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.

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

On May 8, 2023, the Company announced that the Hopewell South bargaining unit voted to ratify a new five-year collective bargaining agreement and that Hopewell South employees would return to work on May 10, 2023.

The strike did not have a material impact on the Company's results of operations.

During 2023, the Company has declared dividends as follows:

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5/5/2023 5/16/2023 5/30/2023 $0.145

2/17/2023 3/3/2023 3/17/2023 $0.145

Results of Operations

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

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

2 unchanged sentences

Three Months Ended

March 31, 2023

June 30, 2023 Six Months Ended

June 30, 2023

Volume (1.5)% (4.6)%

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Acquisition —% 1.1%

Sales decreased in the three months ended March 31, 2023 compared to the prior year period by $78.5 million (approximately 16%) due primarily to (i) decreased sales volume (approximately 9%) driven primarily by soft end market demand, (ii) net unfavorable market-based pricing (approximately 6%) reflecting lower pricing across our ammonium sulfate and nylon product lines, and (iii) lower raw material pass-through pricing (approximately 4%) as a result of net cost decreases in benzene and propylene (inputs to cumene which is a key feedstock to our products), partially offset by the acquisition of U.S.

(26.7)% (22.0)%

Sales decreased in the three months ended June 30, 2023 compared to the prior year period by $155.8 million (approximately 27%) due to (i) net unfavorable market-based pricing (approximately 19%) primarily reflecting lower pricing across our ammonium sulfate and nylon product lines, (ii) lower raw material pass-through pricing (approximately 6%) as a result of a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) a decrease in sales volume (approximately 2%).

Sales decreased in the six months ended June 30, 2023 compared to the prior year period by $234.3 million (approximately 22%) due to (i) net unfavorable market-based pricing (approximately 13%) primarily reflecting lower pricing across our ammonium sulfate and nylon product lines, (ii) unfavorable raw material pass-through pricing (approximately 6%) as a result of a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (iii) decreased sales volume (approximately 5%) largely driven by chemical intermediates, partially offset by the acquisition of U.S.

Amines (approximately 1%).

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Costs of goods sold $ 360,017 $ 476,835 $ 690,059 $ 852,482

1 unchanged sentence

Gross Margin percentage 15.9% 18.3% 16.7% 19.8%

Costs of goods sold decreased in the three months ended March 31, 2023 compared to the prior year period by $45.6 million (approximately 12%) due primarily to decreased prices of raw materials (approximately 12%) and lower sales volume (approximately 7%), including the impact of lower production, partially offset by an increase in plant spend related to additional maintenance and operational enhancements (approximately 4%) and the impact of the U.S.

Costs of goods sold decreased in the three months ended June 30, 2023 compared to the prior year period by $116.8 million (approximately 24%) due to (i) decreased prices of raw materials (approximately 22%) and (ii) decrease in sales volume (approximately 2%).

Costs of goods sold decreased in the six months ended June 30, 2023 compared to the prior year period by $162.4 million (approximately 19%) due to (i) decreased prices of raw materials (approximately 17%) and (ii) lower sales volume (approximately 4%), partially offset by increased plant costs (approximately 2%) and the impact of the U.S.

Amines acquisition (approximately 1%).

Gross margin percentage decreased in the three months ended March 31, 2023 compared to the prior year period by approximately 4% due primarily to (i) lower sales volume including the impact of lower production (approximately 2%) and (ii) increased plant spend related to additional maintenance and operational enhancements (approximately 3%), partially offset by the impact of market-based pricing, net of raw material costs (approximately 1%).

Gross margin percentage decreased in the three months ended June 30, 2023 compared to the prior year period (approximately 2%) due primarily to the impact of market-based pricing, net of raw material costs (approximately 4%) partially offset by (i) the net impact of lower sales volume and changes in sales mix, including higher domestic plant nutrients' sales (approximately 1%) and (ii) lower planned plant turnaround expenses (approximately 1%).

Gross margin percentage decreased in the six months ended June 30, 2023 compared to the prior year period (approximately 3%) due primarily to (i) increased plant spend (approximately 2%) and (ii) the impact of market-based pricing, net of raw material costs (approximately 1%).

Selling, General and Administrative Expenses

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Selling, general and administrative expenses $ 24,011 $ 20,841 $ 49,126 $ 42,051

Percentage of Sales 5.6% 3.6% 5.9% 4.0%

Selling, general and administrative expenses increased by $3.9 million in the three months ended March 31, 2023 compared to the prior year period due primarily to upgrades to our enterprise resource planning systems and other functional support costs.

Selling, general and administrative expenses increased by $3.2 million in the three months ended June 30, 2023 compared to the prior year period due primarily to upgrades to our enterprise resource planning systems and other functional support costs, and a reduction in bad debt expense in the prior year period associated with a cash collection of a previously reserved customer receivable.

Selling, general and administrative expenses increased by $7.1 million in the six months ended June 30, 2023 compared to the prior year period due primarily to increased functional support costs including upgrades to our enterprise resource planning system, and a reduction in bad debt expense in the prior year period associated with a cash collection of a previously reserved customer receivable partially offset by lower incentive-based compensation costs.

Income Tax Expense

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Income tax expense $ 10,555 $ 19,962 $ 19,829 $ 39,145

Effective tax rate 24.4% 23.5% 22.7% 23.4%

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.

The Company's effective tax rate for the three months ended March 31, 2023 was lower than the prior year period due primarily to the vesting of equity compensation that resulted in a 2.3% decrease to the Company's quarterly effective tax rate in the current period.

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.

The Company's effective tax rate for the three months ended June 30, 2023 was higher than the prior year period due primarily to state tax legislation changes enacted in the current period that resulted in a 0.7% increase to the Company's quarterly effective tax rate.

The Company's effective tax rate for the six months ended June 30, 2023 was lower than the prior year period due primarily to the vesting of equity compensation that resulted in a 1.3% decrease to the Company's effective tax rate in the current year.

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

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The impact of any excise tax imposed on the Company for share repurchases is generally accounted for as an equity transaction with no consequences to the Company's results in operations, and this provision of the law is not expected to have a material impact on the Company's financial condition.

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 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 continues to evaluate these energy credit provisions of the law in relation to our sustainability and environmental, social and governance initiatives.

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

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

As a result of the factors described above, Net income was $35.0 million for the three months ended March 31, 2023 as compared to $63.1 million in the corresponding prior year period.

As a result of the factors described above, Net income was $32.7 million and $67.7 million for the three and six months ended June 30, 2023 as compared to $65.2 million and $128.2 million in the corresponding prior year period.

Non-GAAP Measures

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

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

Non-cash stock-based compensation 2,436 2,005 4,449 5,379

Non-recurring, unusual or extraordinary expenses — —

Non-cash amortization from acquisitions 532 551 1,064 752

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

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

11 unchanged sentences

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, including the ongoing labor strike initiated by the Hopewell South bargain unit, as well as the prices of our raw materials, general economic and industry trends and customer demand.

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, the prices of our raw materials, general economic and industry trends and customer demand.

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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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 2022 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 first quarter of 2023, the Company had approximately $1.8 million of cash on hand with approximately $372 million of additional capacity available under the revolving credit facility.

As of the end of the second quarter of 2023, the Company had approximately $10.5 million of cash on hand with approximately $359 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 $110 million to $120 million in 2023 compared to $89 million in 2022, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

Capital expenditures are expected to be approximately $110 million to $120 million in 2023 compared to $89 million in 2022, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

We assumed from Honeywell International Inc.

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We expect that our primary cash requirements for 2023 will be to fund costs associated with ongoing operations, capital expenditures, and amounts related to other contractual obligations.

The Company made no cash contributions to the defined benefit pension plan during the three months ended March 31, 2023.

The Company plans to make cash contributions of between nil to $5 million in 2023 and additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

The Company made no cash contributions to the defined benefit pension plan during the six months ended June 30, 2023.

The Company expects cash contributions of up to $5 million in 2023 and additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

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 $ —

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

As of March 31, 2023, the Company has repurchased a total of 4,864,127 shares of common stock life-to-date, 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 from April 1, 2023 through April 28, 2023, we repurchased an additional 105,573 shares at a weighted average market price of $38.95 per share primarily under the currently authorized repurchase program.

As of March 31, 2023, 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 2022 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 June 30, 2023, the Company has repurchased a total of 5,274,989 shares of common stock life-to-date, 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 from July 1, 2023 through July 28, 2023, we repurchased an additional 94,715 shares at a weighted average market price of $36.45 per share primarily under the currently authorized repurchase program.

As of June 30, 2023, 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 2022 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.

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

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

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

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On October 27, 2021, the Company completed a refinancing of the Second Amended and Restated Credit Agreement 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”).

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

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

Borrowings under the Revolving Credit Facility are subject to customary borrowing conditions.

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

1 unchanged sentence

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 0.25% 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).

With the cessation of LIBOR on June 30, 2023 and subject to the First Amendment to the Credit Agreement, dated as of June 27, 2023, the Eurodollar Rate was replaced with the Adjusted Term SOFR as an alternative benchmark rate for purposes of the Credit Agreement.

The transition was effective July 1, 2023.

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 an Adjusted Term SOFR 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).

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 was 0.375% for base rate loans and 1.375% for Eurodollar loans and the applicable commitment fee rate was 0.175% per annum.

The Revolving Credit Facility also contains certain administrative provisions regarding alternative rates of interest for LIBOR, as applicable.

As of June 30, 2023, the applicable margin under the Credit Agreement was 0.25% for base rate loans and 1.25% for Adjusted Term SOFR loans and the applicable commitment fee rate was 0.15% 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.

affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets.

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.

We were in compliance with all of our covenants at March 31, 2023 and through the date of the filing of this Form 10-Q.

We were in compliance with all of our covenants at June 30, 2023 and through the date of the filing of this Form 10-Q.

We had a borrowed balance of $115 million under the Revolving Credit Facility at December 31, 2022.

We borrowed an incremental net amount of $12 million during the three months ended March 31, 2023, bringing the balance under the Revolving Credit Facility to $127 million, and available credit for use of approximately $372 million as of March 31, 2023.

We borrowed an incremental net amount of $25 million during the six months ended June 30, 2023, bringing the balance under the Revolving Credit Facility to $140 million, and available credit for use of approximately $359 million as of June 30, 2023.

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

Cash Flow Summary

Three Months Ended

Six Months Ended

Cash provided by (used for):

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

Cash provided by operating activities decreased by $47.6 million for the three months ended March 31, 2023 versus the prior year period due primarily to a $28.1 million decrease in net income and a $36.6 million unfavorable 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 $57.3 million unfavorable cash impact from working capital for the three months ended March 31, 2023 compared to a $20.7 million unfavorable cash impact in the prior year period.

This was partially offset by (i) a $8.7 million favorable cash impact from Taxes receivable, (ii) a $5.1 million favorable cash impact from Other assets and liabilities primarily related to the timing of payments and (iii) a $3.3 million favorable cash impact primarily from lower short-term incentive payments during the three months ended March 31, 2023 compared to the prior year period.

Cash used for investing activities decreased by $94.3 million for the three months ended March 31, 2023 versus the prior year period due primarily to cash paid for the acquisition of U.S.

Amines for approximately $98.6 million during the prior year period, and increased cash payments for capital expenditures of approximately $3.6 million during the prior year period due primarily to increased spend for critical infrastructure, other maintenance, and growth and cost savings projects.

Cash used for financing activities increased by $80.1 million for the three months ended March 31, 2023 versus the prior year period due primarily to net borrowings of $12.0 million during the three months ended March 31, 2023 compared to net borrowings of $85.0 million during the prior year period partially offset by payments for share repurchases of $13.5 million and cash paid for dividends of approximately $4.0 million during the three months ended March 31, 2023 compared to $7.0 million and $3.5 million during the prior year period, respectively.

Cash provided by operating activities decreased by $108.5 million for the six months ended June 30, 2023 versus the prior year period due primarily to (i) a $69.8 million unfavorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) year-over-year largely driven by changes occurring during the six months ended June 30, 2023 and (ii) a $60.5 million decrease in net income.

This was partially offset by (i) an $8.6 million favorable cash impact from Other assets and liabilities driven primarily by a reduction in the net pension liability due to previous year cash contributions to the defined benefit pension plan, (ii) an $8.3 million favorable cash impact from Taxes receivable and (iii) a $3.1 million favorable cash impact from accrued liabilities primarily due to lower short-term incentive payments during the six months ended June 30, 2023 compared to the prior year period.

Cash used for investing activities decreased by $91.5 million for the six months ended June 30, 2023 versus the prior year period due primarily to cash paid for the acquisition of U.S.

Amines for approximately $97.5 million during the prior year period, and increased cash payments for capital expenditures of approximately $5.1 million during the current year period due primarily to increased spend for critical infrastructure, other maintenance, and growth and cost savings projects.

Cash used for financing activities increased by $5.7 million for the six months ended June 30, 2023 versus the prior year period due primarily to payments for share repurchases of $28.4 million and cash paid for dividends of approximately $8.0 million during the six months ended June 30, 2023 compared to $10.4 million and $7.0 million during the prior year period, respectively, partially offset by net borrowings of $25.0 million during the six months ended June 30, 2023 compared to net borrowings of $11.5 million during the prior year period.

Capital Expenditures

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The following table summarizes ongoing and expansion capital expenditures:

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Capital expenditures in Accounts payable at December 31, 2022

Purchases of property, plant and equipment 38,847

Capital expenditures in Accounts payable at March 31, 2023

Capital expenditures in Accounts payable at June 30, 2023

Cash paid for capital expenditures $ 43,894

For 2023, we expect our total capital expenditures to be approximately $110 million to $120 million to compared to $89 million in 2022, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

For 2023, we expect our total capital expenditures to be approximately $110 million to $120 million compared to $89 million in 2022, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

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