What changed in this filing

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Item 1. Financial Statements

2024-08-02 compared with 2024-05-03 · 101 added, 63 removed, 304 unchanged (35% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Sales $ 453,479 $ 427,940 $ 790,308 $ 828,484

5 unchanged sentences

Total costs, expenses and other 401,407 384,657 761,653 740,973

Income (loss) before taxes ( 23,417 ) 44,229

Income tax expense (benefit) ( 6,021 ) 9,275

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

Income before taxes 52,072 43,283 28,655 87,511

Income tax expense 13,145 10,555 7,124 19,829

Net income $ 38,927 $ 32,728 $ 21,531 $ 67,682

Earnings per common share

6 unchanged sentences

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Three Months Ended

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

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 38,927 $ 32,728 $ 21,531 $ 67,682

Foreign exchange translation adjustment ( 27 ) ( 125 ) ( 42 ) ( 158 )

Cash-flow hedges — — 7 ( 150 )

Other comprehensive income (loss), net of tax ( 8 ) ( 183 )

Comprehensive income (loss) $ ( 17,404 ) $ 34,771

Other comprehensive loss, net of tax ( 27 ) ( 125 ) ( 35 ) ( 308 )

Comprehensive income $ 38,900 $ 32,603 $ 21,496 $ 67,374

See accompanying notes to Condensed Consolidated Financial Statements.

33 unchanged sentences

200,000,000 shares authorized;

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

32,959,588 shares issued and 26,709,407 outstanding at June 30, 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 March 31, 2024 and December 31, 2023

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

50,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023

Treasury stock at par ( 6,250,181 shares at June 30, 2024;

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

9 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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

Net income $ 21,531 $ 67,682

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

4 unchanged sentences

Amortization of deferred financing fees 309 309

Operational asset adjustments 1,200 —

Changes in assets and liabilities, net of business acquisitions:

7 unchanged sentences

Other assets and liabilities ( 6,889 ) ( 11,192 )

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

Net cash provided by operating activities 13,998 36,579

Cash flows from investing activities:

25 unchanged sentences

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

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

Net loss — — — ( 17,396 ) — — ( 17,396 )

Comprehensive income

1 unchanged sentence

Cash-flow hedges — — — — — 7 7

Other comprehensive income (loss), net of tax — — — — — ( 8 ) ( 8 )

Other comprehensive loss, net of tax — — — — — ( 8 ) ( 8 )

Issuance of common stock 323,989 3 423 — — — 426

4 unchanged sentences

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

Net income — — — 38,927 — — 38,927

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 27 ) ( 27 )

Other comprehensive loss, net of tax — — — — — ( 27 ) ( 27 )

Issuance of common stock 36,653 1 — — — — 1

Purchase of treasury stock ( 141,242 shares)

— — ( 3,360 ) — ( 2 ) — ( 3,362 )

Stock-based compensation — — 2,193 — — — 2,193

Dividends — — 130 ( 4,422 ) — — ( 4,292 )

Balance at June 30, 2024 32,959,588 $ 330 $ 132,786 $ 617,723 $ ( 63 ) $ ( 4,179 ) $ 746,597

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)

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

5 unchanged sentences

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

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

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

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

4 unchanged sentences

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

Net income — — — 32,728 — — 32,728

Comprehensive income

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

Other comprehensive 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

See accompanying notes to Condensed Consolidated Financial Statements.

13 unchanged sentences

GAAP for complete financial statements.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 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.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2024, and its results of operations for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 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 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.

Our actual closing dates for the three and six months ended June 30, 2024 and 2023 were June 29, 2024 and July 1, 2023, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2024 and December 31, 2023 aggregated to $ 3.4 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:

Date of Authorization Authorized Amount

Authorized Amount Remaining as of March 31, 2024

Authorized Amount Remaining as of June 30, 2024

May 4, 2018 $ 75.0 $ —

10 unchanged sentences

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

As of March 31, 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.

As of June 30, 2024, the Company has repurchased a total of 6,250,181 shares of common stock, including 1,004,725 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 192.4 million at a weighted average market price of $ 30.78 per share.

As of June 30, 2024, $ 62.0 million remained available for share repurchases under the current authorization.

During the period July 1, 2024 through July 26, 2024, 1,933 additional shares were repurchased for tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $ 21.64 , and no additional shares were repurchased under the currently authorized repurchase program.

Recent Accounting Pronouncements

12 unchanged sentences

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 incremental disclosures should include (1) significant segment expenses that are regularly provided to the chief operating decision maker ("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.

4 unchanged sentences

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

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.

We have historically experienced low customer turnover and have long-standing customer relationships, which span decades.

For the three months ended June 30, 2024 and 2023, the Company's ten largest customers accounted for approximately 39 % and 40 % of total sales, respectively.

For each of the six months ended June 30, 2024 and 2023, the Company's ten largest customers accounted for approximately 38 % of total sales.

ADVANSIX INC.

1 unchanged sentence

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

customer is Shaw Industries Group, Inc.

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

We have historically experienced low customer turnover and have long-standing customer relationships, which span decades.

Our largest customer is Shaw Industries Group, Inc.

(“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement.

For the three months ended March 31, 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:

For the three months ended June 30, 2024 and 2023 the Company's sales to Shaw were 9 % and 10 % of our total sales, respectively.

For the six months ended June 30, 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 and six months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Nylon $ 103,217 23 % $ 92,953 22 % $ 187,606 24 % $ 192,325 23 %

3 unchanged sentences

Total $ 453,479 100 % $ 427,940 100 % $ 790,308 100 % $ 828,484 100 %

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:

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three and six months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

United States $ 401,859 89 % $ 367,608 86 % $ 686,447 87 % $ 688,534 83 %

3 unchanged sentences

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

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

Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2024:

Opening balance January 1, 2024 $ 15,678

1 unchanged sentence

Less amounts recognized in revenues ( 14,923 )

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.

Ending balance June 30, 2024 $ 1,148

The Company expects to recognize as revenue the June 30, 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 months ended March 31, 2024 and 2023 were as follows:

The computation of basic and diluted earnings per share ("EPS") is based on Net income divided by the basic weighted average number of common shares outstanding and diluted weighted average number of common shares outstanding, respectively.

The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2024 and 2023 were as follows:

ADVANSIX INC.

2 unchanged sentences

Three Months Ended

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

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 38,927 $ 32,728 $ 21,531 $ 67,682

Weighted average common shares outstanding 26,839,429 27,494,555 26,859,044 27,547,874

5 unchanged sentences

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

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

The anti-dilutive common stock equivalents outstanding at the three and six months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Options and stock equivalents 1,057,349 503,354 1,127,661 404,009

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

Dividend activity for the three and six months ended June 30, 2024 and 2023 was as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Cash dividends declared per share $ 0.16 $ 0.145 $ 0.32 $ 0.29

18 unchanged sentences

Total inventories $ 175,827 $ 211,831

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.

Substantially all of the Company’s inventories at June 30, 2024 and December 31, 2023 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

However, approximately 11 % was valued at average cost using the first-in, first-out (“FIFO”) method at June 30, 2024.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 65.7 million and $ 65.3 million at June 30, 2024 and December 31, 2023, respectively.

We determine if an arrangement is a lease at inception.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Finance lease cost:

5 unchanged sentences

Total lease cost $ 12,241 $ 13,342 $ 25,402 $ 25,857

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.

As of June 30, 2024, we have additional operating leases that have not yet commenced for approximately $ 99.2 million.

These leases are expected to commence during the second half of 2024 and in 2025 with lease terms of up to 6 Years.

Goodwill and Intangible Assets

1 unchanged sentence

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

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

There was no change in the carrying amount of goodwill for the six months ended June 30, 2024.

Finite-Lived Intangible Assets

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 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 $ ( 11,703 ) $ 44,668 $ 56,371 $ ( 10,178 ) $ 46,193

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.

For each of the three months ended June 30, 2024 and June 30, 2023, the Company recorded amortization expense on intangible assets of $ 0.8 million.

For each of the six months ended June 30, 2024 and June 30, 2023, the Company recorded amortization expense on intangible assets of $ 1.5 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 ($ 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.

The provision for income taxes was $ 13.1 million and $ 10.6 million for the three months ended June 30, 2024 and 2023, respectively, resulting in an effective tax rate of 25.2 % and 24.4 %, respectively.

The provision for income taxes was $ 7.1 million and $ 19.8 million for the six months ended June 30, 2024 and 2023, respectively, resulting in an effective tax rate of 24.9 % and 22.7 %, 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 six months ended June 30, 2024 was higher than the U.S.

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

The Company’s effective tax rate for the three and six months ended June 30, 2023 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 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

Additionally, discrete tax adjustments recorded in the first

ADVANSIX INC.

1 unchanged sentence

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

half of 2023 relating to the vesting of equity compensation and changes in state tax legislation resulted in a net 0.9 % decrease to the year-to-date effective tax rate.

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.

7 unchanged sentences

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 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.

In accordance with ASC 815, the Company designated the interest rate swap as a cash flow hedge of floating-rate borrowings.

The interest rate swap converted the Company’s interest rate payments on the first $ 50 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate.

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.

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 $ 13 million as of March 31, 2024 and approximately $ 17 million as of December 31, 2023.

The total amount due to the financial intermediaries to settle supplier invoices under the supplier finance programs was approximately $ 14 million as of June 30, 2024 and approximately $ 17 million as of December 31, 2023.

These amounts outstanding are included in Accounts payable .

Subsequent Events

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.

As announced on August 2, 2024, the Board declared a quarterly cash dividend of $ 0.16 per share on the Company's common stock, payable on August 27, 2024 to stockholders of record as of the close of business on August 13, 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