What changed in this filing

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Item 1. Business

2024-02-16 compared with 2023-02-17 · 126 added, 111 removed, 300 unchanged (44% of the section changed)

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AdvanSix Inc.

plays a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics.

is a diversified chemistry company playing a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics.

Our reliable and sustainable supply of quality products emerges from the integrated value chain of our five U.S.-based manufacturing facilities.

AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, chemical intermediates and plant nutrients, guided by our core values of Safety, Integrity, Accountability and Respect.

AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates, guided by our core values of Safety, Integrity, Accountability and Respect.

Our four key product lines are as follows :

• Nylon – Nylon 6 is a polymer resin, which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electric components, packaging, including food packaging, and other industrial applications including wire and cable.

We sell our Nylon 6 resin globally, primarily under the Aegis® brand name.

In addition, our Nylon 6 resin is used to produce nylon films through our Oben Alliance which we sell to our customers primarily under the Capran® brand name.

• Nylon Solutions

◦ Nylon – We sell our Nylon 6 resin globally, primarily under the Aegis® brand name.

Nylon 6 is a polymer resin which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electric components, sports apparel, food packaging and other industrial applications.

◦ Caprolactam – Caprolactam is the key monomer used in the production of Nylon 6 resin.

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 manufacturing facility is one of the world’s largest single-site producers of caprolactam as of December 31, 2023.

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

Amines Limited (“U.S.

Amines”) in 2022.

Most significant is acetone which is used by our customers in the production of adhesives, paints, coatings, solvents, herbicides and engineered plastic resins.

Other intermediate chemicals that we manufacture, market and sell include phenol, alkyl and specialty amines including monoisopropylamine, dipropylamine, and monoallylamine, alpha-methylstyrene (“AMS”), cyclohexanone, oximes (methyl ethyl ketoxime, acetaldehyde oxime and 2-pentanone oxime), cyclohexanol, sulfuric acid, ammonia and carbon dioxide.

• Ammonium Sulfate – Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients, as an herbicide adjuvant for crop protection, and in several industrial applications.

Ammonium sulfate fertilizer is derived from the caprolactam manufacturing process.

• Ammonium Sulfate – Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients.

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 December 31, 2023.

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

• 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.

Most significant is acetone which is used by our customers in the production of adhesives, paints, coatings, solvents, herbicides and engineered plastic resins.

Other intermediate chemicals that we manufacture, market and sell include phenol, alpha-methylstyrene ("AMS"), cyclohexanone, 2-pentanone oxime, cyclohexanol, sulfuric acid, ammonia and carbon dioxide.

With the acquisition of U.S.

Amines Limited ("U.S.

Amines"), we also produce alkyl and specialty amines serving high-value end markets such as agrochemicals and pharmaceuticals.

Each of these product lines represented the following approximate percentage of total sales:

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Caprolactam 19% 16% 19%

Chemical Intermediates 26% 32% 32%

Ammonium Sulfate 29% 33% 24%

Chemical Intermediates 29% 26% 32%

100% 100% 100%

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We use cumene, a chemical compound produced from benzene and propylene, to manufacture phenol, acetone and AMS at our Frankford, Pennsylvania plant.

The majority of the phenol we manufacture is further processed at our Hopewell facility through an integrated series of unit operations, which also consume natural gas and sulfur, to produce caprolactam and ammonium sulfate.

In 2023, approximately 55% of the caprolactam we produced at our facility in Hopewell, Virginia was shipped to our facility in Chesterfield, Virginia where it was polymerized into Aegis® Nylon 6 resins.

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Our logistics infrastructure enables a reliable intra-plant supply chain and consistent and timely delivery to our customers.

In addition, we strive to understand the product applications and end-markets into which our products are sold, which helps us upgrade the quality, chemical properties and packaging of our products in ways which

enable us to attract price premiums and greater demand.

In February 2022, we successfully completed our second acquisition with the U.S.

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First, we are vertically integrated into several key feedstock materials necessary to produce caprolactam, particularly phenol, ammonia and oleum/sulfuric acid, which we believe is a unique advantage in our industry.

Our integration contributes to higher operating margins by lowering raw material transportation, handling and storage costs.

It also allows us to remain flexible, while optimizing sales from our diverse portfolio of products.

Our integration allows us to remain flexible, while optimizing sales from our diverse portfolio of products.

Second, we operate one of the world’s largest single-site caprolactam and ammonium sulfate production facilities, which is a competitive advantage in our globally, fragmented industry.

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Finally, our long-term customer relationships and contracts enable us to maintain high plant utilization rates, which, along with our size and scale, serves to retain and attract customers who prioritize security of supply.

Diverse Revenue Sources from the Sale of Fertilizer, Acetone and Other Chemical Intermediates.

Diverse Revenue Sources from the Sale of Ammonium Sulfate Fertilizer, Acetone and Other Chemical Intermediates.

Due to our specific chemical manufacturing processes, vertical integration and scale, we produce ammonium sulfate fertilizer, acetone and a wide range of other chemical intermediates that enable us to diversify our revenue sources.

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For many decades, we have employed agronomists to educate growers and retailers in the Americas on the yield value of using ammonium sulfate fertilizer on key crops including corn, wheat, coffee, sugar, cotton and rice.

We have initiated a program to educate growers and retailers on the yield benefit of ammonium sulfate fertilizer on soybeans and to generate on-farm research results that support this crop management practice.

Traditionally grown as a less resource intensive alternative to corn, we see soybeans as a potential growth area for nitrogen and sulfur fertilizers as researchers continue to better understand the yield increases that growers can realize by fertilizing soybean crops with these two nutrients.

We have also diversified and optimized our ammonium sulfate-based offerings to include a spray-grade adjuvant to support crop protection, as well as other specialty fertilizers and products for industrial use.

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Sales of acetone in 2023 were approximately $203 million and represented 13% of our total sales.

In addition to fertilizer and acetone, other products from our manufacturing process include high-purity phenol, AMS, cyclohexanone, oximes, cyclohexanol, sulfuric acid, ammonia and carbon dioxide.

In addition to ammonium sulfate and acetone, other products from our manufacturing process include high-purity phenol, AMS, cyclohexanone, oximes, cyclohexanol, sulfuric acid, ammonia and carbon dioxide.

The diversity of our sales portfolio helps to mitigate, to some extent, the cyclicality in our end-markets.

Currently, we not only have leading positions across these diverse product lines but are also aligned to several favorable macro trends that are supporting growth across the portfolio including urbanization and aging infrastructure, digital transformation, global food production and resource scarcity, and a shift to green and performance chemicals.

In addition, our recent acquisition of U.S.

Amines enables further diversification into agrochemical intermediates, water treatment and pharmaceuticals.

In addition, our acquisition of U.S.

Amines in 2022 enables further diversification into agrochemical intermediates, water treatment and pharmaceuticals.

Global Reach.

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Our R&D team has expanded our capabilities to test and scale production of copolymer Nylon 6/66 resin, which is used in food packaging films and other applications.

Our agronomists provide the latest scientific information on the importance of sulfur nutrition for crops and

how to optimize the benefits of ammonium sulfate fertilizer to our global customers through a variety of channels including webinars, technical training sessions for retailers and direct grower meetings.

Our agronomists provide the latest scientific information on the importance of sulfur nutrition for crops and how to optimize the benefits of ammonium sulfate fertilizer to our global customers through a variety of channels including webinars, technical training sessions for retailers and direct grower meetings.

Further, members of our technical marketing team, representing each of our major product lines, present at various industry events and conferences to demonstrate our breadth of product offerings and capabilities.

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We leverage our R&D investments, customer intimacy and knowledge of product applications to develop new resin products to better serve our customers and increase the value of our resin products portfolio.

We are focused on working with customers to solve their needs with respect to sustainability and have received commercial orders for our 100% Post-Industrial Recycled resins and films.

We are focused on working with customers to solve their needs with respect to sustainability and have commercialized our 100% Post-Industrial Recycled resins and films.

Our R&D team works with existing and potential customers to understand end-use applications, build application development capabilities and protect the value proposition of our new products.

In addition, as a result of recent efforts and enhancements in crystallizer technology and operations, we are now producing a high-quality granular grade ammonium sulfate to meet the growing demand of our customers.

In addition, as a result of recent efforts and enhancements in crystallizer technology and operations, we are now producing a high-quality granular grade ammonium sulfate at greater conversion levels to meet the growing demand of our customers.

Strong Capital Stewardship.

We have developed and are executing against a multi-year pipeline of high-return growth and cost savings capital projects.

We have developed and are executing against a disciplined framework for capital deployment that balances return of cash to shareholders with long-term investment to improve the through-cycle profitability of the business.

We are focused on improving our return on invested capital and remain committed to delivering strong and sustainable total shareholder return over the long-term.

Our target base capital expenditures are approximately $75 million per year on average between maintenance and health, safety and environmental capital to sustain the business.

We have and will continue to flex this level of spend, as needed or required, to address critical enterprise risk mitigation, regulatory compliance and sustainability programs.

We will continue to evaluate and execute high-return growth and cost savings capital projects.

These efforts target improvement in production rate, cost, quality and yield.

We are focused on improving our return on invested capital and remain disciplined in our approach as we support long-term shareholder value.

On an ongoing basis we evaluate options to return cash to shareholders while also pursuing a highly-selective acquisition and alliance strategy to supplement our organic sales by broadening our customer base, developing our technology and product portfolios, expanding our geographic reach and enhancing our cash flow profile and margin stability.

In 2021, we completed our first acquisition of certain assets of Commonwealth Industrial Services, Inc.

and we initiated a structural return of cash in the form of a quarterly dividend reflecting confidence in our cash flow generation.

We continued to mature and enhance our capital deployment in 2022 with the acquisition of U.S.

Amines, an increase in capital expenditures, and return of cash to shareholders through share repurchases and an increase of our quarterly dividend.

As an example, we are accelerating profitable growth through our multi-year SUSTAIN (Sustainable U.S.

Sulfate To Accelerate Increased Nutrition) program's planned expansion in granular ammonium sulfate production.

We continue to pursue a highly-selective acquisition and alliance strategy to supplement our organic sales by broadening our customer base, developing our technology and product portfolios, and enhancing our cash flow profile and margin stability.

On an ongoing basis we evaluate options to return cash to shareholders including significant remaining capacity under our current share repurchase authorization.

We initiated our competitive quarterly dividend in 2021 and increased it by 16% in 2022 and another 10% in 2023.

The timing, declaration, amount and payment of dividends to stockholders, if any, will be within the sole discretion of our Board of Directors (the "Board").

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Nylon Solutions.

Global demand for Nylon 6 resin spans a variety of end-uses such as textiles, engineered plastics, industrial filament, food and industrial films, and carpet.

Nylon is sold globally as a polymer resin that is drawn into fiber for textiles and carpet and into filament for industrial applications:

compounded for engineering plastics largely for automotive end-use;

and extruded into film for food and

industrial packaging applications.

During 2023, approximately seven million metric tons of Nylon 6 resin were produced and consumed globally, with China containing approximately 60% of total global Nylon 6 production capacity and Western Europe and North America combined for approximately 15%.

Overall utilization of global production capacity was approximately 55% to 65%.

The market growth typically tracks global GDP growth over the long-term but varies by end-use.

Generally, prices for Nylon 6 resin and caprolactam reflect supply and demand in the marketplace as well as the value of the basic raw materials used in the production of caprolactam, consisting primarily of benzene and, depending on the manufacturing process utilized, natural gas and sulfur.

Generally, prices for Nylon 6 resin and caprolactam reflect supply and demand trends in the marketplace as well as the value of the basic raw materials used in the production of caprolactam, consisting primarily of benzene and, depending on the manufacturing process utilized, natural gas and sulfur.

The global prices for nylon resin typically track a spread over the price of caprolactam, which in turn tracks as a spread over benzene because the key feedstock materials for caprolactam, phenol or cyclohexane, are derived from benzene.

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

Generally, Nylon 6 resin prices track the cyclicality of caprolactam prices, although prices set above the 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.

Carpet is the largest end-use for Nylon 6 in North America and has seen stable to declining demand growth in recent years reflecting shifts in consumer preferences to hard flooring versus soft and the previous substitution to lower-cost polyester.

The housing sector had seen an improving trend in recent years, however, residential construction markets slowed in 2022 reflecting the rise in interest rates.

Nylon 6 has a stronger presence in commercial carpet applications, including hospitality and office, where the material is preferred for its durability and performance characteristics.

We have seen some recovery in commercial construction growth, which had lagged residential in recent years.

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

Carpet is the largest end-use for Nylon 6 in North America and has seen stable to declining demand growth for a number of years reflecting shifts in consumer preferences to hard flooring versus soft and the previous substitution to lower-cost polyester.

The housing sector had seen an improving trend in recent years, however, residential construction markets have slowed through 2023 reflecting the rise in interest rates.

While Nylon 6 has a stronger presence in commercial carpet applications, including hospitality and office, where the material is preferred for its durability and performance characteristics, growth in both residential and commercial markets are challenged.

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

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However, buyers have explored using Nylon 6 as a substitute for other resins where applications allow, based on the need for reliable, secure long-term supply and performance needs.

Plant Nutrients.

Ammonium sulfate fertilizer products are primarily sold in North and South America.

Ammonium sulfate is used as a fertilizer providing the key nutrients of sulfur and nitrogen for major agricultural crops globally such as corn, wheat, coffee, sugar, cotton and rice.

As of December 31, 2023, ammonium sulfate fertilizer accounts for approximately 6% of the global market for nitrogen fertilizer and over 40% of the global market for sulfur fertilizer.

Global prices for ammonium sulfate 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 the price of crops.

Strong underlying agriculture fundamentals coupled with elevated global energy input costs and tighter nitrogen fertilizer supply and demand dynamics drove significantly higher nutrient values through most of 2021 and 2022.

Nitrogen fertilizer pricing declined through 2023 amid lower energy costs and increases in global supply availability, however, remain favorable relative to historical levels.

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 than other fertilizers.

We produce a high-quality granular grade of ammonium sulfate to meet the growing demand of our customers.

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

Chemical Intermediates.

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Acetone and phenol represent approximately 46% and 10%, respectively, of our chemical intermediates sales.

Acetone global demand totals approximately six million metric tons with the U.S.

representing approximately 20% of the global market.

Major end-uses for acetone are methyl methacrylate, polycarbonate, epoxy resins, ketones and solvents used widely in automotive and construction, as well as agrochemicals.

Polycarbonate and epoxy resins are the largest global end-use for phenol, followed by phenolic resins which are used in construction products, such as wood resins.

Industry operating rates for phenol and acetone production have fallen in 2022 and 2023 as global demand drivers have been reduced and are estimated to be less than 70% both globally and in the U.S.

consumer demand.

Prices for acetone are influenced by its own supply and demand dynamics but can also be influenced by the underlying move in propylene input costs.

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declined through 2020 and 2021, creating more favorable supply and demand conditions for the product and improved pricing.

Generally, industry operating rates in 2022 declined with a reduction in global downstream demand.

During 2022 supply and demand of acetone was balanced in the U.S.

Generally, industry operating rates in 2022 and 2023 declined further with a reduction in global downstream demand.

During 2022 and 2023, supply and demand of acetone was balanced in the U.S.

with lower imports along with falling input propylene raw material costs, supporting favorable acetone industry margins.

We also saw strong demand for Alpha-methyl styrene ("AMS") as a result of lower global production output.

Supply and demand conditions for the remaining intermediates began to soften in the latter part of 2022 in line with overall weaker demand and reduced industry output.

Plant Nutrients.

Ammonium sulfate fertilizer products are primarily sold in North and South America.

Ammonium sulfate is used as a fertilizer providing the key nutrients of sulfur and nitrogen for major agricultural crops globally such as corn, wheat, coffee, sugar, cotton and rice.

As of December 31, 2022, ammonium sulfate fertilizer accounts for approximately 6% of the global market for nitrogen fertilizer and over 40% of the global market for sulfur fertilizer.

Global prices for ammonium sulfate 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 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 than other fertilizers.

We produce a high-quality granular grade of ammonium sulfate to meet the growing demand of our customers.

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.

Competition across our product offerings is based on a variety of factors including price, reliability of supply, product innovation, and quality.

Other competitive factors include breadth of product line, R&D efforts and technical and managerial capability.

We also saw strong demand for AMS as a result of lower global production output.

Supply and demand conditions for the remaining intermediates began to soften in the latter part of 2022 and have continued to remain weak through 2023 to be in line with overall weaker demand and reduced industry output.

Competition across our product offerings is based on a variety of factors including price, reliability of supply, quality, product innovation, breadth of product line, R&D efforts and technical and managerial capability.

While the competitive position of our individual products varies, we believe we are a significant competitor in each major product class.

AdvanSix competes with integrated manufacturers, such as Highsun Group Holdings Ltd., BASF Corporation, Sinopec Limited, DOMO Chemicals GmbH, LANXESS AG and UBE Corporation.

Generally, we compete in global, fragmented markets against competitors with both global operations as well as those operating only within specific geographic regions.

AdvanSix competes with integrated manufacturers, such as Highsun Group Holdings Ltd., BASF Corporation, Sinopec Limited, DOMO Chemicals GmbH, Envalior and UBE Corporation.

We also compete with synthetic manufacturers of ammonium sulfate, such as Pasadena Commodities International and Nutrien Ltd.;

and stand-alone phenol and acetone producers, such as INEOS Phenol and Altivia.

A number of our products are sold in markets with many competitors, some of whom have substantial financial resources and significant technological capabilities.

Additionally, our competitors include companies with global operations as well as

those operating only within specific geographic regions.

Amines business, the key alkyl amines U.S.

based competitor is Eastman Chemical Company.

Amines business, the key alkyl amines U.S.-based competitor is Eastman Chemical Company.

Product Overview

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We sell our Nylon 6 resin globally, primarily under the Aegis® brand name.

In addition, our Nylon 6 resin is used to produce nylon films through our Oben alliance which we sell to our customers under the Capran® brand name.

In 2023, our Nylon products generated $357 million of sales.

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In 2023, 2022 and 2021, caprolactam sales were 19%, 16% and 19% of our total sales, respectively.

Ammonium Sulfate

Ammonium sulfate fertilizer is produced simultaneously with caprolactam as part of our integrated manufacturing process at our Hopewell plant.

We manufacture this product in a ratio of approximately four pounds of ammonium sulfate to one pound of caprolactam.

Our co-product competitors typically produce approximately two pounds or less of ammonium sulfate for each pound of caprolactam.

We currently target conversion of approximately 65% of the ammonium sulfate we produce into higher-value granular form and anticipate ongoing increases as we implement our SUSTAIN (Sustainable U.S.

Sulfate to Accelerate Increased Nutrition) program.

We sell ammonium sulfate under the brand name Sulf-N®, and in 2023, our ammonium sulfate products generated $441 million of sales.

In 2023, 2022 and 2021, ammonium sulfate sales were 29%, 33% and 24% of our total sales, respectively.

Chemical Intermediates

We produce and sell chemical intermediates to a range of customers for use in many different types of end-products.

In 2022, our chemical intermediates generated $512 million of sales, of which $349 million, or 68%, came from sales of acetone, phenol and cyclohexanone, and $163 million, or 32%, came from sales of our other chemical intermediates, including a range of alkyl and specialty amines.

We manufacture, market and sell chemical intermediates to a range of customers for use in many different types of end-products.

In 2023, chemical intermediates generated $438 million of sales, of which $297 million, or 68%, came from sales of acetone, phenol and cyclohexanone, and $141 million, or 32%, came from sales of our other chemical intermediates.

In 2023, 2022 and 2021, sales of chemical intermediates were 29%, 26% and 32% of our total sales, respectively.

The phenol we produce at our Frankford plant is a key chemical intermediate used in our caprolactam manufacturing process.

Approximately 88% of the phenol we produce is used in production of caprolactam and other chemical intermediates at Hopewell, and approximately 12% of our phenol is sold to customers for use in their product applications such as phenolic resins, epoxies and Bisphenol A.

All our acetone is sold to customers for use in end-products such as adhesives, paints, coatings, solvents, herbicides and engineered plastic resins.

The majority of the phenol we produce is used in production of caprolactam and other chemical intermediates at Hopewell.

Any remaining phenol is sold to customers for use in their product applications such as phenolic resins, epoxies and Bisphenol A.

All our acetone is sold to customers for use in products such as methyl methacrylate, polycarbonate, epoxy resins, ketones and solvents used widely in automotive and construction, as well as agrochemicals.

Acetone is typically used by our customers as a key raw material in the production of a variety of other chemicals which are then used in the applications listed above.

We also produce and sell cyclohexanone, AMS, oximes and cyclohexanol.

We use some of these products in our manufacturing process and sell some to customers for use in end-products such as resins, inks, paints, coatings and agricultural chemical intermediates and electronic components.

We also produce and sell AMS, cyclohexanone, oximes and cyclohexanol to customers for use in end-products such as resins, inks, paints, coatings and electronic components.

The majority of cyclohexanone we produce is used in our caprolactam manufacturing process with the remainder sold to customers.

As a result of the U.S.

Amines acquisition during the first quarter of 2022, we also produce and sell alkyl and specialty amines which are used in agrochemical intermediates, water treatment and pharmaceutical applications.

Ammonium Sulfate

Ammonium sulfate fertilizer is produced simultaneously with caprolactam as part of our integrated manufacturing process at our Hopewell plant.

We manufacture this product in a ratio of approximately four pounds of ammonium sulfate to one pound of caprolactam.

Our competitors typically produce approximately two pounds or less of ammonium sulfate for each pound of caprolactam.

We are targeting conversion of approximately 65% of the ammonium sulfate we produce in higher-value granular form.

We sell ammonium sulfate under the brand name Sulf-N®, and in 2022, our ammonium sulfate products generated $629 million of sales.

In 2022, 2021 and 2020, ammonium sulfate sales were 33%, 24% and 25% of our total sales, respectively.

Raw Materials

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We sell caprolactam and Nylon 6 resin to Shaw under a long-term agreement.

Sales to Shaw were 12% of our total sales for the year ended December 31, 2022, 12% for the year ended December 31, 2021 and 14% for the year ended December 31, 2020.

Sales to Shaw were 11% of our total sales for the year ended December 31, 2023, and 12% for the years ended December 31, 2022 and 2021.

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

We have historically experienced low customer turnover.

We produce ammonium sulfate fertilizer continuously throughout the year as part of our manufacturing process, but quarterly sales fluctuate based on the timing and length of the growing seasons in North and South America.

North America ammonium sulfate prices are typically strongest during second quarter fertilizer application and then typically decline seasonally with new season fill in the third quarter.

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

North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest during second quarter fertilizer application and then typically decline seasonally with new season fill in the third quarter.

Ammonium sulfate industry prices in the U.S.

corn belt have declined approximately 10% from the second quarter to the third quarter, on average, since 2016.

Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous and not tied to seasonal demand for fertilizers.

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We believe success in our industry is driven not only by operational excellence and cost position but also through technological strength and innovation.

Our R&D activities focus on improving our chemical manufacturing processes to increase efficiency, capacity and productivity, lower production and operating costs, and innovate and develop new product applications.

Our R&D activities are regularly prioritized and funded with a stage gate approach with a primary emphasis on improving our chemical manufacturing processes to increase efficiency, capacity and productivity, lower production and operating costs, and innovating and developing new product applications.

We benefit from numerous patents and trademarks that we own.

We sell our Nylon 6 resin under the Aegis® brand name, our nylon films under the Capran® brand name and our ammonium sulfate fertilizer under the Sulf-N® brand name.

We sell our Nylon 6 resin under the Aegis® brand name and our ammonium sulfate fertilizer under the Sulf-N® brand name.

Chemical intermediates are sold under the brand names of Nadone®, Naxol® and EZ-Blox®.

We also benefit from technology covered by trade secrets, including know-how and other proprietary information relating to many of our products, processes and technologies.

We do not consider any individual patent, trademark or licensing or distribution rights related to a specific process or product to be of material importance in relation to our overall business.

We do not consider any individual patent, trademark or

licensing or distribution rights related to a specific process or product to be of material importance in relation to our overall business.

In our judgment, our intellectual property rights are adequate for the conduct of our business.

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Summary of Significant Accounting Policies” to the audited Consolidated Financial Statements included in this Form 10-K.

We continuously seek to improve our health, safety and environmental performance.

We continuously seek to improve our health, safety and environmental ("HSE") performance.

We have expended funds to comply with environmental laws and regulations and expect to continue to do so.

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As a result, we are required to comply with numerous regulations administered by the Department of Homeland Security, including the development and implementation of compliant security procedures and protocols.

Additionally, sales of certain of our products such as acetone and amines, which may implicate List II or other considerations under the Drug Enforcement Act.

Additionally, sales of certain of our products, such as acetone and amines, may implicate List II or other considerations under the Drug Enforcement Act.

Such classifications subject us to further compliance audits by the relevant federal and state agencies and place ongoing restrictions on our sales activities.

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As noted in their respective charters:

• Our Health, Safety, and Environmental Committee oversees policies and programs relating to health, safety, and environmental (HSE), matters including process safety, HSE management systems and compliance with HSE regulations and compliance.

• Our Health, Safety, and Environmental Committee oversees policies and programs relating to HSE matters, including process safety, HSE management systems and compliance with HSE regulations and compliance.

• Our Nominating and Governance Committee annually evaluates the effectiveness of our corporate governance framework and corporate social responsibility policies, goals and programs, including oversight of sustainability matters, community engagement and government affairs, as well as such other matters regarding the Company's role as a responsible corporate citizen.

• Our Audit Committee exercises oversight of enterprise risk assessments and risk management including with respect to current and emerging labor and human capital management risks and seeks to mitigate exposure to those risks.

• Our Compensation and Leadership Development Committee is responsible for oversight of the performance, development and retention of management necessary to support the growth and success of the Company.

• Our Compensation and Leadership Development Committee is responsible for oversight of the performance, development and retention of senior and executive management necessary to support the growth and success of the Company.

Health and Safety

At AdvanSix, safety is our number one core value — we “Live Safety” in all we do.

“Live Safety” is an interdependent concept meaning that employees care not only for their own safety, but for the safety of their teammates and communities in which we operate.

“Live Safety” is an interdependent concept meaning that employees care not only for their own safety, but for the safety of their teammates and the communities in which we operate.

AdvanSix is a Responsible Care® company with a focus on personal and process safety and advancing as a sustainable enterprise.

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AdvanSix has demonstrated its commitment to the Responsible Care® Guiding Principles, which encourage ethical leadership, product safety, a culture which reduces and manages process safety risk, reduction of pollution and waste, and continuous improvement in environmental, health, safety and security performance.

As an organization, we maintain a relentless focus on continuous improvement and our expectation is zero injuries for employees and contractors.

As an organization, we maintain a relentless focus on continuous improvement and our vision is zero injuries for employees and contractors.

Our CARE program — Courage to Act, Respond and Engage — was launched in 2019 and inspires us to Live Safety in all we do.

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At AdvanSix, we strive for an inclusive work environment that fosters respect for all our coworkers, customers, suppliers and business partners.

We value the diversity reflected in the various backgrounds, experiences, and ideas of our employees, contractors, and other stakeholders.

We value the diversity reflected in the various backgrounds, experiences, and ideas of our directors, employees, contractors, and other stakeholders.

Our Equity, Diversity and Inclusion purpose statement reflects our journey to be our customers' trusted partner for Advantaged Chemistries by caring, innovating and advancing together.

To achieve that togetherness, we strive to represent the communities in which we operate, celebrate our differences, inspire belonging, and be tenacious in our pursuit of bringing out the best in people both individually and collectively.

Our Code of Conduct outlines our commitment to provide employees a workplace that is free from discrimination or harassment (specifically related to gender, race, disability, ethnicity, nationality, religion and sexual orientation) or personal behavior not conducive to a productive work climate.

We believe it is important that each employee feels a sense of belonging and valued as part of the organizational culture we are cultivating, and we feel it is important that each employee sees diverse representation across our AdvanSix team.

We believe it is important that each employee feels a sense of belonging and is valued as part of the organizational culture we are cultivating, and we feel it is important that each employee sees diverse representation across our AdvanSix team.

AdvanSix joined hundreds of companies in signing the CEO Action for Diversity and Inclusion pledge in 2019, which centers around three main commitments:

to have complex discussions about diversity and inclusion, implement and expand upon unconscious bias education and share diversity and inclusion practices.

We supported this commitment through 2022 as we engaged in honest and transparent conversations with our employees.

to have complex discussions about diversity and inclusion, to implement and expand upon unconscious bias education and to share diversity and inclusion practices.

We supported this pledge through 2023 as we engaged in honest and transparent conversations with our employees.

During 2023, we progressed a number of key actions to advance equity, diversity and inclusion within the organization including focus group discussions, review of our talent pipeline and overall development programs.

Notably, we continued our program of mandating a diverse candidate slate with the goal to increase our organization’s workforce diversity and improve outreach in the local communities where we operate.

In addition, we created a program in 2022 for inclusive leadership, ensuring our leaders understand

and have the tools to create an inclusive environment where all can thrive.

Our second inclusive leadership cohort kicked off a full year of experiential learning in 2023.

We held our third annual Days of Understanding at two of our largest manufacturing facilities throughout the summer months to encourage active engagement by leadership with all employees to listen to their experiences and gather feedback for improvement.

AdvanSix also seeks to improve gender equality in the manufacturing industry, starting with supporting science, technology, engineering and math (STEM) education and work in related fields.

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At a national level, AdvanSix participates as a patron level supporter of the American Institute of Chemical Engineers’ ("AIChE") “Doing a World of Good” initiative that actively supports five high priority pillars within the chemical engineering field that align closely with sustainability and ESG principles including equity, diversity and inclusion.

In addition, AdvanSix has supported and participated in the Future of STEM Scholars Initiative ("FOSSI"), a national, industry-wide program which provides scholarships to students pursuing STEM degrees at Historically Black Colleges and Universities ("HBCUs") and connections to internships, leadership development and mentoring opportunities.

During 2022, we welcomed our second class of FOSSI scholars all of whom are in attendance at HBCUs doubling our previous year's number of scholars to ten.

During 2022, we progressed a number of key actions to advance equity, diversity and inclusion within the organization including focus group discussions, review of our talent pipeline and overall development programs.

In addition, we created a program for inclusive leadership, ensuring our leaders understand and have the tools to create an inclusive environment where all can thrive.

We held our second annual Days of Understanding at our largest manufacturing facility throughout the month of June to encourage active engagement by leadership with all employees to listen to their experiences and gather feedback for improvement.

Our senior leadership team was comprised of approximately 45% women in 2022, including our Chief Executive Officer, Chief Human Resources Officer, Chief Information Officer and Vice President, Nylon Solutions Business Director.

Four directors of our nine-member Board are women, and two directors of our nine-member Board are ethnically diverse.

In addition, AdvanSix supports the Future of STEM Scholars Initiative ("FOSSI"), a national, industry-wide program which provides scholarships to students pursuing STEM degrees at Historically Black Colleges and Universities ("HBCUs") and connections to internships, leadership development and mentoring opportunities.

During 2023, we welcomed our third class of FOSSI scholars all of whom are in attendance at HBCUs, increasing our total number of scholars to thirteen.

Our senior leadership team was comprised of approximately 50% women in 2023, including our Chief Executive Officer, Chief Human Resources Officer, Chief Information Officer, Vice President Chemical Intermediates, Emerging Chemistries and Vice President, Nylon Solutions Business Director.

Four directors of our eight-member Board are women, and two directors of our eight-member Board are ethnically diverse.

Employee Development

AdvanSix seeks to attract the best talent from a diverse range of sources in order to meet the needs of our business now and in the future.

We have established strong relationships with community colleges, universities, professional associations and industry groups with a focus on technical positions and development in order to attract talent including by utilizing co-op, internship programs and university relations as a talent pipeline.

We have emphasized investing in our talent and focusing on developing our people to incorporate opportunities for advancement based on experiential learning and development.

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• Functional competencies that are position specific and used to inform job progression.

We support the continued development of our employees through semi-annual performance and development reviews, including annual enterprise-wide talent development assessments.

We conduct safety and environmental training modules for new employees as part of Health, Safety and Environmental ("HSE") orientation, along with job-specific training aligned to roles.

We have instituted an initiative to empower our First Line Supervisors ("FLS") to be HSE leaders within our organization including serving as decision makers and chief communicators on shift, while developing, coaching and mentoring their shift teammates.

On an annual basis, senior leadership recognizes the FLS who demonstrates excellence with this initiative with an FLS of the Year Award.

We support the continued development of our employees through semi-annual performance and development reviews, including annual enterprise-wide talent development assessments to ensure leadership development and succession planning.

We conduct safety and environmental training for new employees as part of HSE orientation, along with job-specific training aligned to roles.

Our hands-on coaching and development initiative focused on our front-line teammates is designed to support safe, stable and sustainable operations, providing our operational workforce with the right tools and processes to execute their work efficiently while enabling streamlined decision making to best serve our customers.

A highly trained and engaged workforce is essential for AdvanSix to be our customers’ trusted partner, and those partnerships are built by delivering best-in-class experiences that result in satisfied customers and support shareholder return.

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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-K

Item 1. Business