What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 71 added, 203 removed, 296 unchanged (48% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Sales $ 336,829 $ 400,544

19 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) $ ( 17,396 ) $ 34,954

7 unchanged sentences

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

September 30,

2024 December 31,

15 unchanged sentences

Accrued liabilities 46,771 44,086

Income taxes payable 935 8,033

Operating lease liabilities – short-term 28,358 32,053

11 unchanged sentences

200,000,000 shares authorized;

32,597,015 shares issued and 27,055,067 outstanding at September 30, 2023;

32,922,935 shares issued and 26,813,996 outstanding at March 31, 2024;

32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023

Preferred stock, par value $ 0.01 ;

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

Treasury stock at par ( 5,541,948 shares at September 30, 2023;

50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2024 and December 31, 2023

Treasury stock at par ( 6,108,939 shares at March 31, 2024;

5,848,475 shares at December 31, 2023)

9 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income $ 59,705 $ 138,262

Net income (loss) $ ( 17,396 ) $ 34,954

Adjustments to reconcile net income to net cash provided by operating activities:

4 unchanged sentences

Amortization of deferred financing fees 155 155

Operational asset adjustments ( 4,472 ) —

Changes in assets and liabilities, net of business acquisitions:

3 unchanged sentences

Accounts payable ( 52,995 ) ( 54,489 )

Income taxes payable ( 7,098 ) 1,101

Accrued liabilities 2,150 ( 8,408 )

1 unchanged sentence

Other assets and liabilities 4,346 3,542

Net cash provided by operating activities 57,381 203,987

Net cash provided by (used for) operating activities ( 36,202 ) 1,575

Cash flows from investing activities:

Expenditures for property, plant and equipment ( 35,388 ) ( 24,603 )

Acquisition of businesses — ( 97,456 )

Other investing activities ( 1,419 ) ( 1,003 )

7 unchanged sentences

Issuance of common stock 426 622

Net cash (used for) provided by financing activities 5,173 ( 34,340 )

Net cash provided by (used for) financing activities 63,874 ( 5,128 )

Net change in cash and cash equivalents ( 9,135 ) ( 29,159 )

13 unchanged sentences

Balance at December 31, 2023 32,598,946 $ 326 $ 138,046 $ 605,067 $ ( 58 ) $ ( 4,144 ) $ 739,237

Net Income — — — 34,954 — — 34,954

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 33 ) ( 33 )

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

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

Issuance of common stock 555,249 5 617 — — — 622

Purchase of treasury stock ( 333,054 shares)

— — ( 13,496 ) — ( 3 ) — ( 13,499 )

Stock-based compensation — — 2,013 — — — 2,013

Dividends — — 112 ( 4,132 ) — — ( 4,020 )

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

Net Income (Loss) — — — ( 17,396 ) — — ( 17,396 )

8 unchanged sentences

Dividends — — 163 ( 4,453 ) — — ( 4,290 )

Balance at September 30, 2023 32,597,015 $ 326 $ 143,965 $ 614,557 $ ( 55 ) $ ( 4,308 ) $ 754,485

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)

Balance at March 31, 2024 32,922,935 $ 329 $ 133,823 $ 583,218 $ ( 61 ) $ ( 4,152 ) $ 713,157

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Equity

12 unchanged sentences

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

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

Net Income — — — 10,032 — — 10,032

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 32 ) ( 32 )

Cash-flow hedges — — — — — 57 57

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 25 25

Issuance of common stock 510 — 14 — — — 14

Purchase of treasury stock ( 362,609 shares)

— — ( 13,169 ) — ( 3 ) — ( 13,172 )

Stock-based compensation — — 2,220 — — — 2,220

Dividends — — 171 ( 4,222 ) — — ( 4,051 )

Balance at September 30, 2022 31,962,466 $ 320 $ 181,628 $ 538,056 $ ( 42 ) $ ( 5,685 ) $ 714,277

See accompanying notes to Condensed Consolidated Financial Statements.

7 unchanged sentences

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.

Basis of Presentation

3 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 September 30, 2023, and its results of operations for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 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 March 31, 2024, and its results of operations for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023.

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 and nine months ended September 30, 2023 and 2022 were September 30, 2023 and October 1, 2022, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at September 30, 2023 and December 31, 2022 aggregated to $ 5.0 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 was party to three transactions during the third quarter of 2023:

(i) exit from its alliance with Oben Holding Group S.A.

resulting in a pre-tax gain of approximately $ 11.4 million, (ii) notification from a licensee of certain legacy ammonium sulfate technology assets operated at the licensee’s fertilizer manufacturing facility, that it intends to close its facility no later than August 2024, resulting in a non-cash, pre-tax charge of approximately $ 4.5 million and (iii) a strategic decision to exit production of certain low-margin oximes products resulting in a non-cash, pre-tax charge of approximately $ 2.4 million.

Each of these transactions, totaling a net pre-tax gain of approximately $ 4.5 million, was recorded during the third quarter of 2023 and included as a component of Other non-operating (income) expense, net on the Condensed Consolidated Statements of Operations and a non-cash transaction on the Condensed Consolidated Statements of Cash Flows.

Our actual closing dates for the three months ended March 31, 2024 and 2023 were March 30, 2024 and April 1, 2023, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at March 31, 2024 and December 31, 2023 aggregated to $ 5.0 million and $ 2.9 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:

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Date of Authorization Authorized Amount

Authorized Amount Remaining as of September 30, 2023

Authorized Amount Remaining as of March 31, 2024

May 4, 2018 $ 75.0 $ —

3 unchanged sentences

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act.

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

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

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

legal and contractual requirements and other factors.

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

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 September 30, 2023, the Company has repurchased a total of 5,541,948 shares of common stock, including 854,340 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 173.6 million at a weighted average market price of $ 31.33 per share.

As of September 30, 2023, $ 76.6 million remained available for share repurchases under the current authorization.

During the period October 1, 2023 through October 27, 2023, the Company repurchased an additional 101,387 shares at a weighted average market price of $ 29.07 per share primarily under the current authorized repurchase program.

As of March 31, 2024, the Company has repurchased a total of 6,108,939 shares of common stock, including 999,111 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 189.0 million at a weighted average market price of $ 30.94 per share.

As of March 31, 2024, $ 65.2 million remained available for share repurchases under the current authorization.

During the period April 1, 2024 through April 26, 2024, the Company repurchased 2,865 shares covering tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $ 27.15 , and no additional shares were repurchased under the currently authorized repurchase program.

Recent Accounting Pronouncements

1 unchanged sentence

ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

In September 2022, the FASB issued ASU No.

2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient quantitative and qualitative information about its supplier finance programs to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude.

On a retrospective basis, for each annual reporting period, an entity should disclose the key terms of the program, including a description of the payment terms, assets pledged as security or other forms of guarantees, the confirmed amount outstanding that remains unpaid, a description of where the obligations are presented in the balance sheet and a roll-forward of those obligations confirmed as well as the amount of obligations subsequently paid.

In each interim reporting period, an entity should disclose the amount of confirmed obligations outstanding.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption of the amendments in this update is permitted.

The Company adopted ASU 2022-04, effective January 1, 2023, which did not have a material impact on the Company's consolidated financial position or results of operations upon adoption.

On December 13, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The amendments in this ASU require that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that are equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate.

The amendments also require that the Company disclose the following (net of refunds received):

(1) the amount of income taxes paid disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid.

Additionally, the amendments in this update eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or to make a statement that an estimate of the range cannot be made, and remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures.

The guidance is effective for public business entities for annual periods beginning after December 15, 2024.

Early adoption of the amendments in this update are permitted for annual financial statements that have not yet been issued.

The Company is evaluating the pronouncement and does not expect adoption to have a material impact on the Company's consolidated financial position or results of operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).

The amendments in this ASU require incremental disclosures about the Company's reportable segments, but do not change the definition of a segment or the guidance for determining reportable segments.

The incremental disclosures should include (1) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition, (3) profit or loss and assets currently required by Topic 280 in interim periods, (4) clarification if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources and (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The guidance is effective for public entities with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Additionally, public entities should apply the amendments retrospectively to all prior periods presented in the financial statements, unless impractical.

The Company is evaluating the pronouncement and does not expect adoption to have a material impact on the Company's consolidated financial position or results of operations.

Revenue Recognition

We serve approximately 400 customers annually in approximately 45 countries across a wide variety of industries.

For the three months ended September 30, 2023 and 2022, the Company's ten largest customers accounted for approximately 41 % and 43 % of total sales, respectively.

For the nine months ended September 30, 2023 and 2022, the Company's ten largest customers accounted for approximately 39 % and 39 % of total sales, respectively.

For each of the three months ended March 31, 2024 and 2023, the Company's ten largest customers accounted for approximately 37 % of total sales.

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

5 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 September 30, 2023 and 2022, the Company's sales to Shaw were 12 % and 16 % of our total sales, respectively.

For the nine months ended September 30, 2023 and 2022, the Company's sales to Shaw were 11 % and 12 % of our total sales, respectively.

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

For the three months ended March 31, 2024 and 2023, the Company's sales to Shaw were 9 % and 10 % 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, 2024 and 2023 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Nylon $ 84,389 25 % $ 99,372 25 %

Caprolactam 61,476 18 % 72,390 18 %

Chemical Intermediates 83,460 26 % 115,268 24 % 298,333 26 % 409,568 27 %

Ammonium Sulfate 85,263 25 % 114,218 28 %

Chemical Intermediates 105,701 32 % 114,564 29 %

Total $ 336,829 100 % $ 400,544 100 %

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

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

United States $ 284,587 84 % $ 320,926 80 %

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 nine months ended September 30, 2023:

Below is a roll-forward of Deferred income and customer advances for the three months ended March 31, 2024:

Opening balance January 1, 2024 $ 15,678

1 unchanged sentence

Less amounts recognized in revenues ( 4,785 )

Ending balance September 30, 2023 $ 2,415

The Company expects to recognize as revenue the September 30, 2023 ending balance of Deferred income and customer advances within one year or less.

Ending balance March 31, 2024 $ 11,286

The Company expects to recognize as revenue the March 31, 2024 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 (loss) 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 and nine months ended September 30, 2023 and 2022 were as follows:

The details of the basic and diluted EPS calculations for the three months ended March 31, 2024 and 2023 were as follows:

ADVANSIX INC.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net Income (Loss) $ ( 17,396 ) $ 34,954

6 unchanged sentences

The diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period.

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

The anti-dilutive common stock equivalents outstanding at the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Options and stock equivalents 909,231 266,644

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

Dividend activity for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cash dividends declared per share $ 0.16 $ 0.145

1 unchanged sentence

Accounts and Other Receivables – Net

September 30,

2024 December 31,

7 unchanged sentences

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

September 30,

2024 December 31,

6 unchanged sentences

Total inventories $ 190,921 $ 211,831

Substantially all of the Company’s inventories at September 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 9 % was valued at average cost using the first-in, first-out (“FIFO”) method at September 30, 2023.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 61.4 million and $ 58.2 million at September 30, 2023 and December 31, 2022, respectively.

Substantially all of the Company’s inventories at March 31, 2024 and December 31, 2023 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

However, approximately 8 % was valued at average cost using the first-in, first-out (“FIFO”) method at March 31, 2024.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 62.2 million and $ 65.3 million at March 31, 2024 and December 31, 2023, respectively.

We determine if an arrangement is a lease at inception.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Finance lease cost:

5 unchanged sentences

Total lease cost $ 13,726 $ 12,621

As of September 30, 2023, we have additional operating leases that have not yet commenced for approximately $ 1.4 million.

These leases will commence during December 2023 and January 2024 with lease terms of up to 7 years.

As of March 31, 2024, we have additional operating and finance leases that have not yet commenced for approximately $ 126.7 million and approximately $ 0.4 million.

These leases will commence during 2024 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 nine months ended September 30, 2023.

There was no change in the carrying amount of goodwill for the three months ended March 31, 2024.

Finite-Lived Intangible Assets

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

3 unchanged sentences

Total $ 56,371 $ ( 10,940 ) $ 45,431 $ 56,371 $ ( 10,178 ) $ 46,193

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

For the nine months ended September 30, 2023 and September 30, 2022, the Company recorded amortization expense on intangible assets of $ 2.3 million and $ 2.0 million, respectively.

For each of the three months ended March 31, 2024 and March 31, 2023, the Company recorded amortization expense on intangible assets of $ 0.8 million.

Commitments and Contingencies

9 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 (benefit) provision for income taxes was ($ 2.1 million) and $ 2.7 million for the three months ended September 30, 2023 and 2022, respectively, resulting in an effective tax rate of 20.7 % and 21.4 %, respectively.

The provision for income taxes was $ 17.8 million and $ 41.9 million for the nine months ended September 30, 2023 and 2022, respectively, resulting in an effective tax rate of 22.9 % and 23.2 %, 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 and nine months ended September 30, 2023 and 2022 differed from the U.S.

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

Additionally for 2023, discrete tax adjustments relating to the vesting of equity compensation, changes in state tax legislation and return to provision adjustments related to the filing of the Company's 2022 U.S.

federal income tax return resulted in a net 4.4 % increase to the quarterly effective tax rate and a net 1.6 % decrease to the year-to-date effective tax rate.

The (benefit) provision for income taxes was ($ 6.0 million) and $ 9.3 million for the three months ended March 31, 2024 and 2023, respectively, resulting in an effective tax rate of 25.7 % and 21.0 %, respectively.

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (Loss) before taxes for the period in addition to recording any tax effects of discrete items for the quarter.

The Company’s effective tax rate for the three months ended March 31, 2024 was higher than the U.S.

federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations, partially offset by tax credits.

The Company’s effective tax rate for the three months ended March 31, 2023 approximated 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 discrete tax adjustment was recorded in the first quarter of 2023 related to the vesting of equity compensation that resulted in a 2.3 % decrease to the Company's quarterly effective tax rate.

Fair Value Measurements

ADVANSIX INC.

1 unchanged sentence

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

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

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

Among other provisions, the IRA introduces a corporate alternative minimum tax (CAMT) on adjusted financial statement income of certain large corporations and a 1% excise tax on share repurchases.

The Company is not currently subject to the CAMT which became effective for tax years beginning after December 31, 2022.

The 1% excise tax is generally applicable to publicly traded corporations for the net value of certain stock that the corporation repurchases during the year and is also effective for tax years beginning after December 31, 2022.

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

Fair Value Measurements

Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

In July 2019, the Company entered into an interest rate swap transaction related to its credit agreement.

The interest rate swap, considered a Level 2 liability, expired February 21, 2023.

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

5 unchanged sentences

Goodwill must be evaluated at least annually.

Our annual evaluation occurred on March 31, 2023 and we concluded that an impairment for goodwill did no t occur.

Our annual evaluation occurred on October 28, 2023 and we concluded that an impairment for goodwill did no t occur.

Derivative and Hedging Instruments

The specific credit and market, commodity price and interest rate risks to which the Company is exposed in connection with its ongoing business operations are described below.

This discussion includes an explanation of any hedging instrument and interest rate swap agreement, used to manage the Company’s interest rate risk associated with a fixed and floating-rate borrowing.

For cash flow hedges, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in Other comprehensive income.

Those amounts are reclassified to earnings in the same income statement line item that is used to present the earnings effect of the hedged item when the hedged item affects earnings.

Credit and Market Risk – Financial instruments, including derivatives, expose the Company to counterparty credit risk for non-performance and to market risk related to changes in commodity prices, interest rates and foreign currency exchange rates.

The Company manages its exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk.

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

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

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

The terms and conditions of credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

The Company did not have any customers with significant concentrations of trade accounts receivable – net at September 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.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

We primarily mitigate our exposure to commodity price risk by using long-term, formula-based price contracts with our suppliers and formula-based price agreements with customers.

Our customer agreements provide for price adjustments based on relevant market indices and raw material prices and generally do not include take-or-pay terms.

We may also enter into forward commodity contracts with third-parties designated as hedges of anticipated purchases of several commodities.

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 September 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.

The Company had entered into an 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.

The interest rate swap had a fair value of zero at inception and was effective July 31, 2019 and matured on February 21, 2023.

2 unchanged sentences

The interest rate swap involved the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the interest rate swap without an exchange of the underlying principal amount.

Asset (Liability) Derivatives

September 30, 2023 December 31, 2022

Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value

Derivatives designated as hedging instruments under ASC 815:

Interest Rate Contracts Accounts and other receivables, net $ — Accounts and other receivables, net $ 197

Total Derivatives $ — $ 197

The following table summarizes adjustments related to cash flow hedge included in Cash-flow hedges, in the Condensed Consolidated Statements of Comprehensive Income:

September 30,

Gain on derivative instruments included in Accumulated other comprehensive loss at December 31, 2022 $ 197

Fair value adjustment ( 197 )

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

At September 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:

Amount of (Gain) Loss Recognized in Earnings

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Interest Rate Contracts $ — $ ( 256 ) $ — $ ( 375 )

Total Derivatives $ — $ ( 256 ) $ — $ ( 375 )

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Amines, a leading North American producer of alkyl and specialty amines serving high-value end markets such as agrochemicals and pharmaceuticals for a purchase price of approximately $ 97.5 million, net of cash acquired.

In January 2021, the Company acquired certain assets associated with ammonium sulfate packaging, warehousing and logistics services in Virginia from Commonwealth Industrial Services, Inc.

("CIS") for approximately $ 9.5 million.

At March 31, 2024, the Company had no derivatives designated as hedging instruments under ASC 815 and had no fair value adjustments related to cash flow hedging for the three months ended March 31, 2024.

Supplier Finance Programs

3 unchanged sentences

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 $ 17 million as of September 30, 2023 and December 31, 2022.

The total amount due to the financial intermediaries to settle supplier invoices under the supplier finance programs was approximately $ 13 million as of March 31, 2024 and approximately $ 17 million as of December 31, 2023.

These amounts outstanding are included in Accounts payable .

Subsequent Events

As announced on November 3, 2023, the Board declared a quarterly cash dividend of $ 0.160 per share on the Company's common stock, payable on November 28, 2023 to stockholders of record as of the close of business on November 14, 2023.

As announced on May 3, 2024, the Board declared a quarterly cash dividend of $ 0.160 per share on the Company's common stock, payable on May 28, 2024 to stockholders of record as of the close of business on May 14, 2024.

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