What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-16 · 88 added, 121 removed, 281 unchanged (43% of the section changed)

3 unchanged sentences

This section of this Form 10-K generally discusses our financial condition and results of operations as of and for the years ended December 31, 2024 and 2023 and year-to-year comparisons between 2024 and 2023.

Discussions of our financial condition and results of operations as of and for the year ended December 31, 2021 and year-to-year comparisons between

2022 and 2021 that are not included in this Form 10-K can be found under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 18, 2022.

Discussions of our financial condition and results of operations as of and for the year ended December 31, 2022 and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 16, 2024.

Business Overview

34 unchanged sentences

Business Operations

In the second quarter of 2019, the Company entered into an alliance with Oben Holding Group S.A.

(“Oben”), a third-party producer of films for the flexible packaging industry.

On September 8, 2023, the Company entered into an agreement to exit its alliance with Oben.

The exit of the alliance provides a termination fee payable by Oben to AdvanSix in exchange for full transition of AdvanSix’s share of the alliance.

The Company recorded a gain of $11.4 million in the third quarter of 2023.

The gain represents management’s estimate of the value of the termination fee, which is calculated based upon a formula that takes into account a combination of historical and future performance, and is included as a component of Other non-operating (income) expense, net.

Approximately 60% of the termination fee is subject to change as it is based on an estimate of future performance.

This fee is payable in 3 installments, with the first installment of $4.4 million received in the fourth quarter of 2023.

Subsequent installments are expected to be paid in the third quarters of 2024 and 2025.

On September 21, 2023, the Company was notified by a licensee of certain legacy ammonium sulfate fertilizer technology assets operated at the licensee's fertilizer manufacturing facility that it intends to close its facility no later than August 2024.

As a result, the Company recognized a non-cash, pre-tax charge related to the assets located at the licensee's facility of approximately $4.5 million in the third quarter of 2023.

The charge is included as a component of Other non-operating (income) expense, net.

The remaining asset balance of $2.6 million, an amount equal to the cash-flows expected to be received through the end of the contract, will be depreciated through August 2024.

During the third quarter of 2023, the Company made a strategic decision to cease production of certain low-margin oximes products.

The Company incurred an approximately $2.4 million unfavorable impact to pre-tax income during the third quarter of 2023 primarily as a result of a non-cash write-down of the assets associated with these products.

In January 2024, as previously announced, the Company experienced a process-based operational disruption at its Frankford, Pennsylvania manufacturing site temporarily reducing phenol and acetone production at the facility, as well as production at its Hopewell and Chesterfield, Virginia facilities.

As a result of a delayed ramp to planned utilization rates, the Company is now anticipating a total unfavorable impact to pre-tax income in the first quarter 2024 of $23 to $27 million, comprised of the impact of lost sales and other additional costs including purchases of replacement product and incremental plant spend.

The unplanned interruption did not have a material impact on fourth quarter 2023 results.

Share Repurchase Authorization

On February 17, 2023, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company's common stock, which was in addition to the remaining capacity available under the previously approved share repurchase program.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of 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 repurchase program has no expiration date and may be modified, suspended or discontinued at any time.

Hopewell, VA Collective Bargaining Agreements

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

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

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

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

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

On September 29, 2023, the Company’s Hopewell North bargaining unit, represented by the United Steelworkers, ratified a new five-year labor agreement in advance of the prior agreement’s anticipated expiration date of October 4, 2023.

The ratified labor agreement affects approximately 130 workers at the Company’s manufacturing facility in Hopewell, Virginia.

Anti-Dumping Duty Petition - Ammonium Sulfate

In January 2017, the U.S.

Department of Commerce (“Commerce”) published its final affirmative determinations in the anti-dumping and countervailing duty investigations of imports of ammonium sulfate from the People's Republic of China (the "PRC"), and in March 2017, the International Trade Commission ("ITC") issued its final determinations of material injury by reason of dumped and subsidized imports from the PRC.

Effective March 9, 2017, Commerce imposed anti-dumping and countervailing duty orders and applicable duties on imports of ammonium sulfate from the PRC for a five-year period.

The anti-dumping and countervailing duty orders are subject to annual administrative reviews, if requested, which may change the level of duties applicable to imports in future periods.

In February 2022, Commerce and the ITC initiated five-year reviews of the anti-dumping and countervailing duty orders to determine whether to extend the orders for another five years.

In June 2022, Commerce issued its final determination that revocation of the orders would likely lead to continuation or recurrence of dumping and subsidies.

In January 2023, the ITC made affirmative determinations that revocation of the orders would likely lead to continuation or recurrence of material injury.

As a result of Commerce’s and ITC’s determinations, the orders will be extended for another five years.

In October 2024, additional required maintenance at our Hopewell, Virginia manufacturing site resulted in a delayed ramp to full operating rates following our multi-site planned plant turnaround.

The Company recognized an incremental approximately $17 million unfavorable impact to pre-tax income in the fourth quarter 2024, inclusive of fixed cost absorption and higher maintenance expense, and lost sales.

In January 2024, the Company experienced a process-based operational disruption at its Frankford, Pennsylvania manufacturing site temporarily reducing phenol and acetone production at the facility, as well as production at its Hopewell and Chesterfield, Virginia facilities.

As a result of a delayed ramp to targeted utilization rates, the Company recognized an unfavorable impact to pre-tax income in the first quarter 2024 of approximately $27 million, comprised of the impact of lost sales and other additional costs including purchases of replacement product and incremental plant spend.

The Company returned to targeted utilization rates at its Frankford, Pennsylvania manufacturing site, as well as across its value chain, prior to the end of the first quarter of 2024.

Chesterfield, VA Collective Bargaining Agreement

On May 9, 2024, the Company’s Chesterfield bargaining unit, represented by the Teamsters Local 592, ratified a new five-year labor agreement in advance of the prior agreement’s expiration date of May 14, 2024.

The ratified labor agreement affected approximately 160 workers at the Company’s manufacturing facility in Chesterfield, Virginia.

Succession of Senior Vice President and Chief Financial Officer

Michael Preston retired as the Company's Senior Vice President and Chief Financial Officer, effective as of October 1, 2024 and remained at the Company through year-end 2024 to help facilitate the transition of his responsibilities to his successor.

Effective as of October 1, 2024, the Board appointed Siddharth Manjeshwar as Senior Vice President and Chief Financial Officer to succeed Mr.

Anti-Dumping Duty Petition - Acetone

On November 4, 2024, the U.S.

Department of Commerce ("Commerce") initiated the first five-year review of the anti-dumping orders on imports of acetone from Belgium, Singapore, South Africa, South Korea, and Spain.

On November 1, 2024, the U.S.

International Trade Commission ("ITC") initiated its notice of initiation of its five-year review of the orders.

The anti-dumping orders and applicable duties will continue for another five-year period if Commerce finds that revocation of the orders is likely to lead to continuation or recurrence of dumping and if the ITC finds that revocation is likely to lead to continuation or recurrence of material injury to the U.S.

domestic industry.

On December 26, 2024, Commerce notified the ITC that it would conduct an expedited review and issue its results no later than March 4, 2025.

On February 4, 2025, the ITC voted to conduct a full review and is expected to issue its results in the fourth quarter of 2025.

The anti-dumping duties will continue to apply during the pending review.

Philadelphia Energy Solutions’ Shut Down

The Company has assessed the business impact of the June 2019 fire that shut down Philadelphia Energy Solutions’ (“PES”) refinery in Philadelphia, Pennsylvania.

The Company previously reported a business impact associated with the June 2019 fire that shut down Philadelphia Energy Solutions’ (“PES”) refinery in Philadelphia, Pennsylvania.

PES was one of multiple suppliers to the Company of cumene, a feedstock material used to produce phenol, acetone and other chemical intermediates.

As of December 31, 2023, the Company has incurred an approximately $66 million unfavorable impact to pre-tax income since the refinery shut down in 2019 and submitted a business interruption insurance claim.

During 2023, the Company entered into a settlement with one of its insurers and continues to pursue the claim with the other insurers, which is ongoing.

The Company has been actively pursuing the claim over several years, with $5.3 million in insurance settlement proceeds during the fourth quarter of 2024 and a final omnibus settlement in January 2025 which will result in insurance settlement proceeds of approximately $26 million in the first quarter of 2025.

the proceeds received in the first quarter of 2025, total aggregate insurance proceeds since the original claim submission are approximately $39 million.

Consolidated Results of Operations for the Years Ended December 31, 2024, 2023 and 2022

11 unchanged sentences

2024 compared with 2023

Sales decreased in 2023 compared to 2022 by $412.0 million (approximately 21%) due to (i) net unfavorable market-based pricing (approximately 17%) primarily reflecting reduced ammonium sulfate pricing amid lower raw material input costs and a more stable global nitrogen fertilizer supply environment, as well as lower nylon pricing due to unfavorable supply and demand conditions and (ii) unfavorable raw material pass-through pricing (approximately 5%) as a result of a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products).

This was partially offset by the acquisition of U.S.

Amines (approximately 1%).

Sales decreased in 2024 compared to 2023 by $16.0 million (approximately 1%) due to (i) decreased volume (approximately 2%) primarily driven by lost sales resulting from the operational disruptions at the Frankford and Hopewell manufacturing sites partially offset by net pricing (approximately 1%).

Cost of Goods Sold

4 unchanged sentences

2024 compared with 2023

Costs of goods sold decreased in 2023 compared to 2022 by $262.6 million (approximately 16%) due primarily to decreased prices of raw materials including natural gas, sulfur, benzene and propylene (inputs to cumene which is a key feedstock to our products) (approximately 17%) partially offset by the impact of the U.S.

Amines acquisition (approximately 1%).

Gross margin percentage decreased by approximately 5% in 2023 compared to 2022 due primarily to the net impact of lower market pricing and formula-based raw material pass-through pricing (approximately 5%).

Costs of goods sold remained flat in 2024 compared to 2023 due primarily to (i) increased prices of raw materials (approximately 2%) and (ii) increased plant costs (approximately 1%) primarily driven by the operational disruptions at the Frankford, Pennsylvania and Hopewell, Virginia manufacturing sites, mitigated by decreased sales volume (approximately 2%).

Gross margin percentage decreased by approximately 1% in 2024 compared to 2023 due primarily to the impact of market-based pricing, net of raw material costs and increased plant costs, primarily driven by the operational disruptions at the Frankford, Pennsylvania and Hopewell, Virginia manufacturing sites.

Selling, General and Administrative Expenses

3 unchanged sentences

2024 compared with 2023

Selling, general and administrative expenses increased in 2023 compared to 2022 by $7.8 million, or approximately 9%, due primarily to increased functional support costs including upgrades to our enterprise resource planning system, costs associated with pursuing the business interruption insurance claim in connection with the June 2019 shutdown of cumene supplier, Philadelphia Energy Solutions, and a cash recovery in 2022 of a previously written off receivable.

These increases were partially offset by lower incentive-based compensation costs.

Selling, general and administrative expenses decreased in 2024 compared to 2023 by $1.5 million, or approximately 2%, due primarily to moderated functional support costs and legal spend, partially offset by increased enterprise resource planning system expense.

Interest Expense, Net

2 unchanged sentences

2024 compared with 2023

Interest expense, net, increased in 2023 compared to 2022 by $4.7 million, or approximately 169%, due primarily to higher interest rates.

Interest expense, net, increased in 2024 compared to 2023 by $3.8 million, or approximately 51%, due primarily to higher debt balances.

Other Non-operating (Income) Expense, Net

2 unchanged sentences

2024 compared with 2023

Other non-operating income, net, increased in 2023 compared to 2022 by $5.3 million, or approximately 289%, due primarily to the exit from its alliance with Oben (approximately $11.4 million) offset by (i) the exit from a licensing agreement of certain legacy ammonium sulfate technology assets operated at the licensee's fertilizer manufacturing facility, that it intends to close its facilities no later than August 2024 (approximately $4.5 million) and (ii) the exit of production from certain low-margin oximes products.

Other non-operating income, net, decreased in 2024 compared to 2023 by $9.2 million, or approximately (128)%, due primarily to (i) the absence of prior year events, such as the exit from the Oben Holding Group S.A.

alliance, a licensee of certain legacy ammonium sulfate fertilizer technology assets closing its facility, and the exit of production from certain low-margin oximes products (approximately $4.5 million) and (ii) the reduction of the Company's anticipated receivable related to the gain on the termination fee recorded upon the exit from the Oben Holding Group S.A.

alliance (approximately $1.2 million).

Income Tax Expense

1 unchanged sentence

Income tax expense $ 1,426 $ 14,600 $ 53,905

Effective tax rate 21.1 % 23.9 % 24.5 %

Effective income tax rate 3.1 % 21.1 % 23.9 %

Generally, the Company's effective income tax rate is increased relative to the U.S.

statutory rate of 21% due to state taxes and executive compensation limitations, which are generally offset by research tax credits, excess tax benefits of equity compensation and the foreign derived intangible income deduction.

The Company's effective income tax rate for 2024 was significantly less than the U.S.

Federal statutory rate of 21% due to approximately $9.7 million in income tax benefits associated with prior year refund claims, specifically related to Internal Revenue Code (IRC) Section 45Q tax credits generated in the 2018 and 2019 tax periods.

IRC Section 45Q allows taxpayers to receive a tax credit for carbon capture and utilization at its facilities.

For certain utilization projects, the 45Q tax credit requires approval by the Internal Revenue Service (IRS) of a life-cycle assessment ("LCA") prior to claiming the tax credits.

The Company received approval for its 2018 LCA in November 2024 which enables the Company to claim credits for the 2018 and 2019 years.

The Company continues to pursue credits for the periods subsequent to 2019.

The 45Q tax credits for 2018 and 2019 have been recorded as a reduction in the Company's Income taxes payable account.

Additionally, in 2024 the Company recorded 2023 return to provision adjustments which resulted in a 2.1% increase in its current year effective income tax rate.

These adjustments primarily relate to a reduction in the income tax benefits associated with the research tax credit and the foreign derived intangible income deduction as reported on the Company's 2023 income tax return as compared to amounts recorded in its 2023 Income tax expense.

The Company's effective income tax rate for 2023 approximated the U.S.

1 unchanged sentence

Increases to the effective income tax rate, due primarily to state taxes and executive compensation limitations, were materially offset by research tax credits, excess tax benefits of equity compensation and the foreign-derived intangible income deduction.

The Company's effective income tax rate for 2022 and 2021 was higher compared to the U.S.

The Company's effective income tax rate for 2022 was higher compared to the U.S.

Federal statutory rate of 21% due primarily to state taxes and executive compensation deduction limitations partially offset by research tax credits and the foreign-derived intangible income deduction.

4 unchanged sentences

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 of operations, and this provision of the law does not currently 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 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 of operations, and this provision of the law has an immaterial 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.

The Company also continues to monitor any new tax legislation that would result in a material impact on its financial statements, in particular as a result of the new U.S.

presidential administration and U.S.

As of December 31, 2024 and 2023, there were no unrecognized tax benefits recorded by the Company.

8 unchanged sentences

The following tables set forth the non-GAAP financial measures of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Earnings Per Share.

Adjusted EBITDA is defined as Net income before Interest, Income taxes, Depreciation and amortization, Non-cash stock-based compensation, Non-recurring, unusual or extraordinary expenses, Non-cash amortization from acquisitions and one-time merger and acquisition costs.

Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by Sales.

11 unchanged sentences

Non-cash stock-based compensation 7,854 8,313 10,279

Non-recurring, unusual or extraordinary income* (4,472) — —

Non-recurring, unusual or extraordinary (income) expense* 1,200 (4,472) —

Non-cash amortization from acquisitions 2,126 2,126 1,815

Non-recurring M&A costs — — 277

Benefit from income taxes relating to reconciling items (661) (1,996) (1,798)

Adjusted Net Income (non-GAAP) 59,929 182,261 149,703

Income tax benefit relating to reconciling items (2,011) (661) (1,996)

Adjusted Net income (loss) (non-GAAP) 53,318 59,929 182,261

Interest expense, net 11,311 7,485 2,781

4 unchanged sentences

Adjusted EBITDA Margin** (non-GAAP) 9.4% 10.0% 15.9%

* Includes a pre-tax gain of approximately $11.4 million related to the Company's exit from the Oben alliance, the unfavorable impact to pre-tax income of approximately $4.5 million associated with a licensee of certain legacy ammonium sulfate fertilizer technology assets closing its facility, and the unfavorable impact to pre-tax income of approximately $2.4 million from the exit of certain low-margin oximes products.

* 2024 includes a pre-tax loss of approximately $1.2 million from the reduction of the Company's anticipated receivable related to the gain on the termination fee recorded upon the exit from the Oben Holding Group S.A.

alliance during the third quarter of 2023.

During 2023, there were several transactions including the Company's exit from the Oben Holding Group S.A.

alliance, a licensee exit of legacy technology and the Company's exit of certain low-margin oximes products that resulted in a $4.5 million net pre-tax loss.

**Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales

13 unchanged sentences

Liquidity and Capital Resources

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below and in the risk factors previously disclosed in in Item 1A, Risk Factors.

Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of

our short-term funding requirements for the next twelve months and beyond.

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized during 2024, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below and in the risk factors previously disclosed in in Item 1A, Risk Factors.

principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements for the next twelve months and beyond.

Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand.

6 unchanged sentences

On a recurring basis, our primary future cash needs will be centered on operating activities, working capital, capital expenditures, dividends and liquidity reflecting disciplined capital deployment.

Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity, as well as comply with HSE regulations.

While various macroeconomic conditions have created and could continue to create volatility in funding markets, we believe that our future cash from operations, together with cash on hand and our access to credit and capital markets, will provide adequate resources to fund our expected operating and financing needs and obligations.

Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity and comply with health, safety and environmental ("HSE") regulations.

We believe that our future cash from operations, cash on hand and available capacity under our credit agreement, as well as our access to credit and capital markets, will provide adequate resources to fund our expected operating and financing needs and obligations.

Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in Item 1A, Risk Factors, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

1 unchanged sentence

The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt.

Capital expenditures were approximately $107 million in 2023 compared to $89 million in 2022, reflecting increased spend due to replacement maintenance, growth and cost savings projects and enterprise programs.

We assumed from Honeywell all HSE liabilities and compliance obligations related to the past and future operations of our current business as of the spin-off, as well as all HSE liabilities associated with our three current manufacturing locations assumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past.

Capital expenditures were approximately $134 million in 2024 compared to $107 million in 2023, reflecting planned increased spend on replacement maintenance and enterprise programs.

We assumed from Honeywell International Inc.

("Honeywell") all HSE liabilities and compliance obligations related to the past and future operations of our current business as of the spin-off, as well as all HSE liabilities associated with three manufacturing locations assumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past.

Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses.

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 and results of operations.

We expect that our primary cash requirements for 2024 will be to fund costs associated with ongoing operations, capital expenditures and amounts related to contractual obligations.

We expect that our primary cash requirements for 2025 will be to fund costs associated with ongoing operations, capital expenditures and amounts related to other contractual obligations.

See below under “Capital Expenditures” for more information regarding our capital expenditures in 2024, 2023 and 2022 and anticipated capital expenditures for 2025.

10 unchanged sentences

The Company made cash contributions to the defined contribution plan of $6.8 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively.

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

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

Date of Authorization Authorized Amount

10 unchanged sentences

As of December 31, 2024, $62.0 million remained available for repurchase under the currently authorized repurchase program.

During the period from January 1, 2024 through February 2, 2024, the Company repurchased an additional 64,678 shares at a weighted average market price of $26.39 per share under the currently authorized repurchase program.

During the period from January 1, 2025 through January 31, 2025, 6,269 additional shares were repurchased for tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $28.35 and no additional shares were repurchased under the currently authorized repurchase program.

At December 31, 2024, 2023 and 2022, the Company did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K or financing activities with special-purpose entities.

The Company has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

The Company commenced the declaration of dividends on September 28, 2021 and has since declared and paid a dividend on a quarterly basis.

The Company commenced the declaration of dividends on September 28, 2021.

The Company increased its quarterly dividend by 10% ($0.145 to $0.160) and 16% ($0.125 to $0.145) during the third quarter of 2023 and 2022, respectively.

Dividends paid during 2023 and announced on the date of this filing are as follows:

Dividends paid during 2024 and the dividend announced on the date of this filing are as follows:

Date of Announcement Date of Record Date Payable Dividend per Share Total Approximate Dividend Amount ($M)

8 unchanged sentences

Credit Agreement

On September 30, 2016, the Company as the borrower, entered into a Credit Agreement with Bank of America, as administrative agent (the "Original Credit Agreement"), which was amended on February 21, 2018 pursuant to Amendment No.

1 to the Original

Credit Agreement (the "First Amended and Restated Credit Agreement"), and further amended on February 19, 2020 pursuant to, Amendment No.

2 to the First Amended and Restated Credit Agreement (after giving effect to the Second Amendment, the “Second Amended and Restated Credit Agreement”).

Agreement"), and further amended on February 19, 2020 (the "Second Amended and Restated Credit Agreement").

The Second Amended and Restated Credit Agreement had a five-year term with a scheduled maturity date of February 21, 2023.

On October 27, 2021, the Company completed a refinancing of the Second Amended and Restated Credit Agreement by entering into a new Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

On October 27, 2021, the Company completed a refinancing of the Second Amended and Restated Credit Agreement by entering into a new Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a new senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

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

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

5 unchanged sentences

The Company is also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.15% to 0.35% per annum depending on the Company’s Consolidated Leverage Ratio.

In conjunction with the cessation of LIBOR, as of July 1, 2023, the applicable margin under the Credit Agreement was 0.25% for base rate loans and 1.25% for Adjusted Term SOFR loans and the applicable commitment fee rate was 0.15% per annum.

Substantially all tangible and intangible assets of the Company and its domestic subsidiaries are pledged as collateral to secure the obligations under the Credit Agreement.

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets.

The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00 or less for the fiscal quarter ended December 31, 2021, through and including the fiscal quarter ending September 30, 2023 and (ii) 3.75 to 1.00 or less for each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility.

16 unchanged sentences

2024 compared with 2023

Net cash provided by operating activities decreased by $156.1 million for the year ended December 31, 2023 versus the prior year due primarily to (i) a $117.3 million decrease in net income and (ii) a $63.1 million unfavorable impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) year-over-year, with a $14.7 million unfavorable cash impact for the year ended December 31, 2023 compared to a $48.3 million favorable cash impact in the prior year period due primarily to the timing of payments, the unfavorable impact of customer advances and favorable inventory fluctuation, and (iii) a $25.6 million unfavorable impact from Deferred income taxes.

These net unfavorable impacts were partially offset by (i) a $20.5 million favorable cash impact from Other assets and liabilities driven primarily by a reduction in the net pension liability due to contributions to the defined benefit pension plan in the prior year, and (ii) the favorable cash impact of $17.7 million and $17.2 million from Taxes payable and Taxes receivable, respectively, driven by the timing of income tax payments.

Cash used for investing activities decreased by $78.4 million for the year ended December 31, 2023 versus the prior year period due primarily to cash paid for the acquisition of U.S.

Amines for approximately $97.5 million during the year ended December 31, 2022, compared to no acquisitions made during the year ended December 31, 2023 partially offset by an increase in cash paid for capital expenditures of approximately $17.9 million driven by an increase in replacement maintenance, growth and cost savings projects, and enterprise programs.

Net cash provided by operating activities increased by $17.9 million for the year ended December 31, 2024 versus the prior year due primarily to (i) a $23.8 million favorable impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) year-over-year, with a $9.1 million favorable cash impact for the year ended December 31, 2024 compared to a $14.7 million unfavorable cash impact in the prior year period due primarily to the timing of payments and the favorable impact of customer advances, (ii) a $10.7 million favorable cash impact from Other assets and liabilities driven primarily by a change from net a pension liability to a net pension asset and an increase in prepaid expenses versus the prior year and (iii) an $8.0 million favorable cash impact from Accrued liabilities due to timing of payments.

These net favorable impacts were partially offset by (i) the unfavorable cash impact of $15.0 million and $7.4 million from Taxes payable and Taxes receivable, respectively, driven by the timing of income tax payments and (ii) a $10.5 million decrease in net income.

Cash used for investing activities increased by $32.0 million for the year ended December 31, 2024 versus the prior year period due primarily to higher cash payments for capital expenditures of approximately $26.3 million during the current year period primarily reflecting planned increased spend on replacement maintenance and enterprise programs.

Cash used for financing activities decreased by $5.2 million for the year ended December 31, 2024 versus the prior year due to net borrowings on the credit facility of $25.0 million for the year ended December 31, 2024 compared to net payments of $55.0 million during the prior year.

These net borrowings were partially offset by payments for share repurchases of $46.2 million and cash paid for dividends of approximately $16.7 million during the year ended December 31, 2023 compared to $33.7 million and $15.1 million during the prior year period, respectively.

These net borrowings were partially offset by payments for share repurchases of $10.4 million and cash paid for dividends of approximately $17.1 million during the year ended December 31, 2024 compared to $46.2 million and $16.7 million during the prior year periods, respectively.

Capital Expenditures

5 unchanged sentences

Purchases of property, plant and equipment $ 133,722 $ 107,377 $ 89,449

Capital expenditures increased $17.9 million from 2022 to 2023 reflecting increased spend due to replacement maintenance, growth and cost savings projects, and enterprise programs.

Capital expenditures increased $26.3 million from 2023 to 2024 reflecting planned increased spend on replacement maintenance and enterprise programs.

Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity and comply with HSE regulations.

For 2024, we expect our total capital expenditures to be approximately $140 million to $150 million reflecting increased spend to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S.

Sulfate To Accelerate Increased Nutrition) program.

For 2025, we expect our total capital expenditures to be approximately $140 million to $160 million reflecting the planned progression of growth projects including our SUSTAIN (Sustainable U.S.

Sulfate To Accelerate Increased Nutrition) program, and refined execution timing to address critical enterprise risk mitigation.

Critical Accounting Policies and Estimates (Dollars in thousands, unless otherwise noted)

1 unchanged sentence

Summary of Significant Accounting Policies" to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Management believes that the application of these

policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company’s operating results and financial condition.

Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company’s operating results and financial condition.

The preparation of our Consolidated Financial Statements in conformity with U.S.

9 unchanged sentences

Goodwill – The Company had goodwill of $56.2 million at December 31, 2024 and 2023.

Goodwill is subject to impairment testing annually and has historically been tested as of March 31, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.

Goodwill is subject to impairment testing annually on the last day of our October close, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.

Management first assesses qualitative factors as described in ASC 350 to determine whether it is necessary to perform the quantitative goodwill impairment test.

Potential impairment is identified by comparing the fair value of a reporting unit to the carrying value, including goodwill.

The Company completed its annual goodwill impairment test as of March 31, 2023 and, based on the results of the Company's assessment of qualitative factors, it was determined that it was not necessary to perform the quantitative goodwill impairment test.

Beginning in the fourth quarter of 2023, and for subsequent annual periods thereafter, the Company voluntarily changed the annual impairment assessment date to the last day of our October close, and thus performed an additional impairment test during 2023 as of October 28, 2023.

We believe this measurement date, which represents a change in the method of applying an accounting principle, better aligns with the timing of our strategic business planning process and financial forecasts, which are key components of the annual impairment tests and are typically completed in the fourth quarter of our fiscal year.

Based on share price and current market trend, the Company determined it would not qualify for a qualitative analysis and thus performed a quantitative analysis.

If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and the carrying amount, not to exceed the associated carrying value of goodwill.

Fair value for the reporting unit was determined based on a combination of the discounted future cash flow model (income approach) and the application of current market multiples for comparable publicly-traded companies (market approach).

Under the income approach, the fair value of the reporting unit is estimated based on the discounted present value of the projected future cash flows.

Management's cash flow projections for the reporting unit included significant judgements and assumptions, including revenue growth rate, EBITDA margin and weighted average cost of capital ("WACC") rate.

Under the market approach, management uses selected financial information of publicly-traded companies that compare to the reporting unit to derive a market-based multiple.

The Company completed its annual goodwill impairment test as of October 28, 2023 and, based on the results of the Company's assessment, it concluded that the estimated fair value of the reporting unit was in excess of its carrying value resulting in no impairment.

Although management believes its estimate of fair value is reasonable, it is dependent on numerous economic and business assumptions and reflects management’s best estimates at a particular point in time.

Changes in the factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized.

If future financial performance falls below the Company's expectations including prolonged unfavorable economic conditions, or there are negative revisions to significant assumptions, or if the Company's market capitalization declines, and if such a decline becomes indicative that the fair value of our reporting unit has declined below its carrying value, the Company may need to record a material, non-cash goodwill impairment charge in a future period.

We performed a sensitivity analysis around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair value.

Based on the sensitivity analysis performed for the reporting unit, a 50 basis point increase in the WACC or a 50 basis point decrease in the long-term growth rate, without any other changes to the valuation, would not result in the carrying value of the reporting unit being greater than the fair value.

The Company completed its annual goodwill impairment test as of October 26, 2024 and, based on the results of the Company's assessment of qualitative factors, it was determined that it was not necessary to perform the quantitative goodwill impairment test.

Finite-Lived Intangible Assets – Other intangible assets with determinable lives consist of customer relationships, trademarks, patents and other intangibles and are amortized over their estimated useful lives, ranging from 5 to 20 years.

As described in "Note 18.

Acquisitions" to the consolidated financial statements included in Item 8 of this Form 10-K, in February 2022, the Company acquired U.S.

Amines Limited ("U.S.

Amines") for a purchase price of approximately $97 million, net of cash acquired.

The acquisition

included intangible assets of $34 million consisting primarily of customer relationships, which reflects the value of the benefit derived from incremental revenue and related cash flows that are a direct result of the customer relationships in the amount of approximately $33 million.

The fair value for the customer relationships intangible asset was determined by management using the multi-period excess earnings method.

Management applied significant judgments and assumptions in determining the fair value of the customer relationships including gross margin rates, the discount rate, and customer attrition rate.

Revenue Recognition – The Company recognizes revenue upon the transfer of control of goods or services to customers at amounts that reflect the consideration expected to be received.

21 unchanged sentences

We use actuarial methods and assumptions in the valuation of defined benefit obligations and the determination of net periodic pension income or expense.

Differences between actual and expected results or changes in the value of defined benefit obligations and fair value of plan assets, if any, are not recognized in earnings as they occur but rather systematically over subsequent periods when net actuarial gains or losses are in excess of 10% of the greater of the fair value of plan assets or the plan’s projected benefit obligation.

over subsequent periods when net actuarial gains or losses are in excess of 10% of the greater of the fair value of plan assets or the plan’s projected benefit obligation.

A 25 basis point increase in the discount rate would result in a decrease of approximately $0.4 million to the net periodic benefit cost for 2025, while a 25 basis point decrease in the discount rate would result in an increase of approximately $0.5 million to the net periodic benefit cost for 2025.

3 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted.

A valuation allowance is provided when it is more likely than not that a portion or all

of a deferred tax asset will not be realized.

A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.

15 unchanged sentences

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 7. Management’s Discussion and Analysis