What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-16 · 141 added, 188 removed, 975 unchanged (25% of the section changed)

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of AdvanSix Inc.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Quantitative Goodwill Impairment Assessment

As described in Note 2 to the consolidated financial statements, the Company’s goodwill balance was $56 million as of December 31, 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.

Management first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

As of March 31, 2023, based on the results of management’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, management changed the annual impairment assessment date to the last day of October close and performed an additional impairment assessment as of October 28, 2023.

Due to the share price and current market trend, management performed a quantitative impairment assessment as of October 28, 2023.

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

Fair value for the reporting unit is estimated by management 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 judgments and assumptions, including revenue growth rate, EBITDA margin, and weighted average cost of capital 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 principal considerations for our determination that performing procedures relating to the quantitative goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rate, EBITDA margin, and weighted average cost of capital rate used in the income approach;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Revenue Recognition – Transfer of Control

As described in Notes 2 and 3 to the consolidated financial statements, the Company recorded $1,518 million in sales for the year ended December 31, 2024 of which a significant portion has transfer of control to the customer through commercially acceptable shipping or destination point terms.

Sales of the Company’s products to customers are made under a purchase order, and in certain cases in accordance with the terms of a master services agreement.

Management considers the performance obligation satisfied at the point in time when control of the product is transferred to the customer, which is indicated by shipment of the product and transfer of title and risk of loss to the customer.

Transfer of control to the customer occurs through various modes of shipment, including trucks, railcars, and vessels, and follows a variety of commercially acceptable shipping or destination point terms pursuant to the arrangement with the customer.

The principal considerations for our determination that performing procedures relating to revenue recognition – transfer of control is a critical audit matter are a high degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence relating to the determination of the point in time when control of the product was transferred to the customer and thus revenue was recognized.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting unit;

(ii) evaluating the appropriateness of the income approach;

(iii) testing the completeness and accuracy of underlying data used in the income approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rate, EBITDA margin, and weighted average cost of capital rate.

Evaluating management’s assumptions related to the revenue growth rate and EBITDA margin involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluating (i) the appropriateness of the income approach and (ii) the reasonableness of the weighted average cost of capital rate assumption.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the point in time when control of the product was transferred to the customer.

These procedures also included, among others (i) testing sales transactions based on comparing data points such as invoice amount, invoice date, shipment date, price, and quantity;

(ii) for a sample of data points, testing the completeness and accuracy of the data points used by management by obtaining and inspecting source documents, such as master sales agreements, purchase orders, invoices, proof of shipment and subsequent cash receipts;

and (iii) for a sample of sales transactions before and subsequent to December 31, 2024, testing when control of the product was transferred to the customer by obtaining and inspecting source documents, such as purchase orders and proof of shipment.

/s/ PricewaterhouseCoopers LLP

Florham Park, New Jersey

Florham Park, NJ

February 21, 2025

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Retained earnings 631,541 605,067

Accumulated other comprehensive loss ( 4,144 ) ( 4,197 )

Accumulated other comprehensive income (loss) 5,970 ( 4,144 )

Total stockholders' equity 774,650 739,237

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Payments of line of credit ( 381,000 ) ( 382,000 ) ( 454,500 )

Payment of line of credit facility fees — — ( 2,442 )

Principal payments of finance leases ( 1,011 ) ( 938 ) ( 926 )

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Net change in cash and cash equivalents ( 10,204 ) ( 1,217 ) 15,885

Cash and cash equivalents at beginning of year 30,985 15,100 10,606

Cash and cash equivalents at the end of year $ 29,768 $ 30,985 $ 15,100

Cash and cash equivalents at beginning of period 29,768 30,985 15,100

Cash and cash equivalents at the end of period $ 19,564 $ 29,768 $ 30,985

Supplemental non-cash investing activities:

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(Dollars in thousands)

Retained Earnings (Accumulated

Retained Earnings

Treasury Stock Accumulated

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Foreign exchange translation adjustments — — — — — ( 109 ) ( 109 )

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

Pension obligation adjustments — — — — — 10,223 10,223

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Level 3 Unobservable inputs for the asset or liability

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.

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

These investments are measured at fair value using the net asset value per share practical expedient.

Investments valued using the net asset value method (NAV) (or its equivalent) practical expedient are excluded from the fair value hierarchy disclosure.

The Company’s Consolidated Balance Sheets include Cash and cash equivalents, Accounts receivable and Accounts payable all of which are recorded at amounts which approximate fair value.

The Company also has assets that are required to be recorded at fair value on a non-recurring basis.

These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate the asset should be evaluated for impairment.

Goodwill and indefinite lived intangible assets must be evaluated at least annually.

Derivative Financial Instruments – We minimize our risks from interest and foreign currency exchange rate fluctuations through our normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

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At December 31, 2024 and 2023, we had no contracts with notional amounts related to forward commodity agreements.

Credit and Market Risk Management – 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 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 December 31, 2024 and 2023.

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.

Inventories – Substantially all of the Company's inventories are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

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

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 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.

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.

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Variable consideration is estimated for future volume rebates and early pay discounts on certain products and product returns.

Variable consideration is estimated for future volume rebates and early pay discounts on certain products and product

The Company records variable consideration as an adjustment to the sale transaction price.

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Revenue is then recognized and the customer advance is relieved upon title transfer of ammonium sulfate.

Trade Receivables and Allowance for Doubtful Accounts – Trade accounts receivables are recorded at the invoiced amount as a result of transactions with customers.

AdvanSix maintains allowances for doubtful accounts for estimated losses based on a customer’s inability to make required payments.

Trade Receivables and Allowance for Credit Losses – Trade accounts receivables are recorded at the invoiced amount as a result of transactions with customers.

AdvanSix maintains allowances for credit losses for estimated losses based on a customer’s inability to make required payments.

AdvanSix estimates anticipated losses from doubtful accounts based on days past due, as measured from the contractual due date and historical collection history and incorporates changes in economic conditions that may not be reflected in historical trends such as customers in bankruptcy, liquidation or reorganization.

Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible.

Receivables are written-off against the allowance for credit losses when they are determined uncollectible.

Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, success of outside collection agencies activity, solvency of customer and any bankruptcy proceedings.

The Company adopted ASU 2016-13 effective January 1, 2020, using a modified retrospective approach, which did not have a material impact on the Company's consolidated financial position or results of operations upon adoption.

Research and Development – AdvanSix conducts research and development (“R&D”) activities, which consist primarily of the development of new products and product applications consisting primarily of labor costs and depreciation and maintenance costs.

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Forfeitures are estimated at the time of grant to recognize expense for those awards that are expected to vest and are based on our historical forfeiture rates.

holder would have received had the shares underlying the RSUs and PSUs been distributed at the time that such dividend was paid.

Dividend Equivalents – If a dividend is authorized by the Board for stockholders of common stock, holders of unvested RSUs and unvested PSUs will have their accounts credited with dividend equivalents in the form and in an amount equal to the dividend that the holder would have received had the shares underlying the RSUs and PSUs been distributed at the time that such dividend was paid.

Dividend equivalents are subject to the same vesting, forfeiture, performance and payment restrictions as the respective equity award for which it is attributable.

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Finance leases are included as a component of Property, plant and equipment – net, Accounts payable and Other liabilities in our Consolidated Balance Sheets.

The Company adopted ASU 2016-02, Leases (Topic 842) effective January 1, 2019 and has elected the following practical expedients available in Topic 842:

Upon adoption of ASU 2016-02, Leases (Topic 842), the Company elected the following practical expedients available in Topic 842:

• the package of three expedients which allows the Company to not re-assess (i) whether any expired or existing contracts are, or contain, leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or existing leases;

• the short-term lease practical expedient, which allows the Company to exclude leases with an initial term of 12 months or less ("short-term leases") from recognition in the unaudited Consolidated Balance Sheets;

• the short-term lease practical expedient, which allows the Company to exclude leases with an initial term of 12 months or less ("short-term leases") from recognition in the Consolidated Balance Sheets;

• the bifurcation of lease and non-lease components practical expedients, which did not require the Company to bifurcate lease and non-lease components for real estate leases;

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Reclassifications – Certain prior period amounts have been reclassified for consistency with the current period presentation.

All reclassified amounts have been immaterial.

Recent Accounting Pronouncements – The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”).

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 November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendments in this ASU require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments require that at each interim and annual reporting period and entity will:

(1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)-(e), (2) include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as other disaggregation requirements (3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and (4) disclose the total amount of selling expense and, in annual reporting periods, an entity's definition of selling expense.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to any or all prior periods presented in the financial statements.

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.

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

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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.

Early adoption of the amendments in this update is 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.

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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.

The Company adopted ASU 2023-07 effective December 31, 2024, which did not have any impact on the Company's consolidated financial position or results of operations upon adoption.

In September 2022, the FASB issued ASU No.

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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.

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.

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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 August 5, 2020, the FASB issued ASU No.

2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40).

The amendments in the ASU remove certain separation models for convertible debt instruments and convertible preferred stock that require the separation of a convertible debt instrument into a debt component and an equity or derivative component.

Therefore, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital.

This will result in more convertible debt instruments being accounted for as a single liability measured at its amortized cost and more convertible preferred stock being accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The ASU also amends the derivative scope exception guidance for contracts in an entity’s own equity.

The amendments remove three settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

The guidance is effective for public business entities for fiscal years, and interim terms within those fiscal years, beginning after December 15, 2021.

Early adoption of the amendments in this update is permitted, but no earlier than fiscal years, including interim periods within those fiscal years, beginning after December 15, 2020.

The Company adopted ASU 2020-06 effective January 1, 2022, which did not have any impact on the Company's consolidated financial position or results of operations upon adoption.

We serve approximately 400 customers annually in approximately 50 countries and across a wide variety of industries.

AdvanSix serves around 400 customers annually, primarily in the United States, spanning a wide variety of industries worldwide.

For 2024, 2023 and 2022, the Company's ten largest customers accounted for approximately 38 %, 39 % and 39 % of total sales, respectively.

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Caprolactam 276,303 18 % 298,375 20 % 319,863 16 %

Ammonium Sulfate 440,915 29 % 629,021 33 % 401,092 24 %

Plant Nutrients* 458,152 30 % 477,929 31 % 657,984 34 %

Chemical Intermediates* 434,601 29 % 400,663 26 % 482,552 25 %

$ 1,517,557 100 % $ 1,533,599 100 % $ 1,945,640 100 %

* The Company transferred certain products between its Chemical Intermediates product line and its Plant Nutrients product line to align more closely with its current sales structure.

Historical information has been reclassified to reflect these changes for all periods presented in the Consolidated Financial Statements.

Total revenue amounts were not impacted for either period.

The Company’s revenues by geographic area, and related approximate percentage of total sales for 2024, 2023 and 2022 were as follows:

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Research and other tax credits ( 2.7 ) % ( 1.3 ) % ( 0.3 ) %

Energy credits ( 21.4 ) % — % — %

Prior year return to provision adjustments 2.1 % ( 0.4 ) % — %

Foreign derived intangible income deduction ( 1.3 ) % ( 0.9 ) % ( 0.7 ) %

— % 0.1 % 0.1 %

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.

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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.

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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 does not currently have a material impact on the Company's financial condition.

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 Pillar Two Global Anti-Base Erosion rules issued by t he Organization for Economic Co-operation and Development ("OECD"), a global policy forum, introduced a global minimum tax of 15% which would apply to multinational groups with consolidated financial statement revenue in excess of EUR 750 million.

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.

The Pillar Two Global Anti-Base Erosion rules issued by the Organization for Economic Co-operation and Development ("OECD"), a global policy forum, introduced a global minimum tax of 15% which would apply to multinational groups with consolidated financial statement revenue in excess of EUR 750 million.

Nearly all OECD member jurisdictions have agreed in principle to adopt these provisions and numerous jurisdictions, including jurisdictions where the Company operates, have enacted these rules effective January 1, 2024.

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The Company is subject to taxation in the United States and various states and foreign jurisdictions.

The company closed its federal tax examination for periods 2017 through 2019 in January 2023.

There are no current material tax examinations by state or foreign tax authorities;

The Company has been notified that a federal tax examination for periods 2018 and 2019 will commence, and tax periods 2021 through 2024 remain open under the statute of limitations and are subject to examination by the tax authorities.

There are no current state or foreign tax examinations;

however, tax years 2020 through 2024 generally remain open under the statute of limitations and are subject to examination by the tax authorities.

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Operating lease asset ( 36,822 ) ( 22,981 )

Pension obligation ( 421 ) —

Other ( 2,580 ) ( 3,630 )

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We believe that the state NOL carryforward and other deferred tax assets are more likely than not to be realized and we have no t recorded a valuation allowance against the deferred tax assets.

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

Under purchase accounting rules, a net deferred tax liability of approximately $ 10.1 million was recorded in the period related to the adjustment of the acquired assets and liabilities to fair value.

See “Note 18.

Acquisitions" for further details.

As of December 31, 2023 and 2022, there was a $ 6.6 million and $ 4.2 million Deferred tax asset, respectively noted in the table above as Capitalization of research expenses.

This relates to a provision within the Tax Cuts and Jobs Act, which requires, for tax purposes, the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021.

There continues to be potential legislation surrounding this provision in the law that we monitor.

On January 31, 2024, the U.S.

House of Representatives approved a tax bill, which among other provisions, aims to reinstate 100% bonus depreciation for property placed in service in 2023 and through 2025 and to allow taxpayers to expense domestic research costs retroactively back to 2022 and prospectively through tax years beginning before 2026.

Enactment remains uncertain and the Company continues to monitor the ongoing developments in the proposed legislation.

The Company's accounting policy is to record the tax impacts of Global intangible low-taxed income as a period cost.

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Total accounts and other receivables 146,255 166,226

Less – allowance for doubtful accounts

Less – allowance for credit losses

( 582 ) ( 833 )

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$ 145,673 $ 165,393

The roll-forward of allowance for doubtful accounts are summarized in the table below:

The roll-forward of allowance for credit losses are summarized in the table below:

Charged / (Credited) to

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$ 212,386 $ 211,831

Substantially all of the Company’s inventories at December 31, 2023 and December 31, 2022 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method.

Substantially all of the Company’s inventories at December 31, 2024 and December 31, 2023 are valued at the lower of cost or market using the LIFO method.

However, approximately 7 % was valued at average cost using the first-in, first-out (“FIFO”) method at December 31, 2024.

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We use the implicit rate when readily determinable.

The operating lease ROU asset also includes any lease pre-payments made and excludes lease

The operating lease ROU asset also includes any lease pre-payments made and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease and, when it is reasonably certain that such an option will be exercised, it is included in the determination of the corresponding assets and liabilities.

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The Company has entered into agreements to lease transportation equipment, storage facilities, office space, dock access and other equipment.

The operating leases have initial terms of up to 20 years with some containing renewal options subject to customary conditions.

The operating leases have initial terms of up to 20 years with some containing renewal options subject to customary

The term and length of the various agreements, as well as the timing of any renewals, will impact the ROU asset calculation and related liability.

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Years Ended December 31,

2024 2023 2022

Finance lease cost:

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Total $ 153,893 $ 2,446

As of December 31, 2023, we have additional operating leases that have not yet commenced for approximately $ 114.2 million.

These leases will commence during 2023 with lease terms of up to 7 years.

As of December 31, 2024, we have no additional operating or finance leases that have not yet commenced.

Long-term Debt and Credit Agreement

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Credit Agreement

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”).

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 (the "First Amended and Restated Credit 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.

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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.

We were in compliance with all of our covenants at December 31, 2023 and through the date of the filing of this Annual Report on Form 10-K.

We were in compliance with all of our covenants at December 31, 2024.

Postretirement Benefit Obligations

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The Company may also provide an additional discretionary retirement savings contribution which is at the sole discretion of the Company.

The Company made contributions to the defined contribution plan of $ 6,028 , $ 5,920 and $ 5,874 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company made contributions to the defined contribution plan of $ 6.8 million, $ 6.0 million and $ 5.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Defined Benefit Pension Plan

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Company Contributions

— 20,000 17,530

Fair value of plan assets at December 31,

89,039 86,084 77,362

Under-Funded status of plan

Under (Over)-Funded status of plan

$ ( 1,751 ) $ 7,186 $ 2,812

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Accrued pension liabilities-noncurrent (2)

Pension asset-noncurrent (3)

( 1,751 ) — —

Total pension liabilities recognized

Total pension liabilities (assets) recognized

$ ( 1,751 ) $ 7,186 $ 2,812

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(2) Included in postretirement benefit obligations on Balance Sheet

(3) Included in other assets on Balance Sheet

Pension amount recognized in accumulated other comprehensive loss (income) associated with the Company's pension plan are as follows for:

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Total $ — $ — $ 20,000

The Company expects to make pension plan contributions during 2024 sufficient to satisfy pension funding requirements of nil to $ 5.0 million as well as evaluate contributions in future years sufficient to satisfy pension funding requirements in those periods.

The Company expects to make pension plan contributions during 2025 sufficient to satisfy pension funding requirements of up to $ 1.0 million, if any, as well as evaluate contributions in future years sufficient to satisfy pension funding requirements in those periods.

The pension plan assets are invested through a master trust fund.

The strategic asset allocation for the trust fund is selected by the Company's Investment Committee reflecting the results of comprehensive asset and liability modeling.

The Investment Committee establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk.

The Investment Committee

establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk.

The target asset allocation percent for the Company's pension plan assets is summarized as follows:

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Fixed income / real estate / other securities 33 % 33 %

Alternative Equity 20 % — %

Total Pension Assets 100 % 100 %

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These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy.

Fair Value Measurements