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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-11-01 · 86 added, 126 removed, 199 unchanged (52% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 16, 2024 (the “2023 Form 10-K”).

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

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Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

When used in this Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” and other variations or similar terminology and expressions identify forward-looking statements.

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and globally;

the potential effects of inflationary pressures, labor market shortages and supply chain issues;

instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of the political and policy uncertainties with the approaching U.S.

Presidential election, and the conflict between Russia and Ukraine, the conflict in Israel and Gaza and the possible expansion of such conflicts;

the potential effects of inflationary pressures, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions, changes in interest rates, labor market shortages and supply chain issues;

instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of new or proposed regulatory, trade or other policies of the U.S., and the conflict between Russia and Ukraine, the conflict in Israel and Gaza and related uncertainty in the surrounding region, and the possible expansion of such conflicts;

the effect of any of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.;

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

Our four key product lines are as follows:

Our key product lines are as follows:

• Nylon Solutions

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We internally polymerize caprolactam into Aegis® Nylon 6 Resins, and we also market and sell the caprolactam that is not consumed internally to customers who use it to manufacture polymer resins to produce fibers, compounds and other nylon products.

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of September 30, 2024.

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

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of March 31, 2025.

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

Ammonium sulfate fertilizer is derived from the integrated operations at the Hopewell manufacturing facility.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of September 30, 2024.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of March 31, 2025.

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

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

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

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

With the acquisition of U.S.

Amines Limited (“U.S.

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

We also manufacture sulfuric acid, ammonia and carbon dioxide as part of our integrated operations at Hopewell and occasionally sell any excess material not consumed internally to customers externally.

• Chemical Intermediates – We manufacture, market and sell a number of chemical intermediate products that are derived from the manufacturing processes within our integrated supply chain.

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

Other intermediate chemicals that we manufacture, market and sell include phenol, alpha-methylstyrene ("AMS"), cyclohexanone, oximes, cyclohexanol, and alkyl and specialty amines.

Additional end-products for intermediates include automotive components, and water treatment and pharmaceutical intermediates.

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

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Generally, Nylon 6 resin prices track the cyclicality of caprolactam prices, although prices set above the spread are achievable when nylon resin manufacturers, like AdvanSix, formulate and produce differentiated nylon resin products for current and new customer applications, such as our wire and cable and co-polymer offerings.

Global prices for ammonium sulfate fertilizer are influenced by several factors including the price of urea, which sets the nutrient value for nitrogen as it is the most widely used source of nitrogen-based fertilizer in the world.

Global prices for ammonium sulfate fertilizer are influenced by several factors including the price of urea, which is the most widely used source of nitrogen-based fertilizer in the world.

Other global factors driving ammonium sulfate fertilizer demand are general agriculture trends, including planted acres and the price of crops.

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Ammonium sulfate industry prices in the corn belt have declined approximately 10% from the second quarter to the third quarter, on average, since 2016.

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

Due to the ammonium sulfate fertilizer sales cycle, we

occasionally build up higher inventory balances because our production is continuous and not tied to seasonal demand for fertilizers.

Sales of most of our other products have generally been subject to minimal, or no, seasonality.

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Recent Developments

Business Operations

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

The Company expects an incremental approximately $17 million unfavorable impact to pre-tax income in the fourth quarter 2024, inclusive of $10 million related to fixed cost absorption and higher maintenance expense, and $7 million of lost sales.

The unplanned interruption did not have any impact on the third quarter 2024 financial results.

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, but will remain 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 of Directors has appointed Siddharth Manjeshwar as Senior Vice President and Chief Financial Officer to succeed Mr.

Succession of Chief Accounting Officer

As previously reported, effective as of March 17, 2025, Christopher Gramm was appointed to serve as the Company’s Vice President, Financial Planning and Analysis.

In connection with his new role, Mr.

Gramm stepped down as the Company’s Vice President, Controller and will no longer serve as the Company’s principal accounting officer.

Effective as of March 17, 2025, the Company’s Board of Directors appointed Rachael E.

Ryan as the Company’s Vice President, Controller and Chief Accounting 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") issued 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.

On March 7, 2025, Commerce determined that revocation of the anti-dumping orders would likely lead to continuation of recurrence of dumping.

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

Philadelphia Energy Solutions’ Shut Down

The Company previously reported a business impact associated with the June 2019 fire that shut down the 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.

The Company has been actively pursuing the claim over several years, with a final omnibus settlement in January 2025 which resulted in insurance settlement proceeds of approximately $26 million in the first quarter of 2025.

The total aggregate insurance proceeds since the original claim submission are approximately $39 million.

Results of Operations

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Sales $ 377,791 $ 336,829

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Three Months Ended

September 30, 2024 Nine Months Ended

September 30, 2024

Volume 10.6% 2.6%

Price 12.7% 0.6%

Sales increased in the three months ended September 30, 2024 compared to the prior year period by $75.3 million (approximately 23%) due primarily to (i) increased volume (approximately 11%) primarily driven by higher sales of all product lines, particularly ammonium sulfate supported by sulfur nutrition demand, (ii) favorable raw material pass-through pricing (approximately 8%) as a result of a net cost increase in benzene and propylene (inputs to cumene which is a key feedstock to our products), and (iii) net favorable market-based pricing (approximately 5%) including continued strength in acetone, as well as ammonium sulfate as growers seeking to maximize crop yields continue to recognize the benefits of sulfur nutrition.

Sales increased in the nine months ended September 30, 2024 compared to the prior year period by $37.1 million (approximately 3%) due primarily to (i) increased volume (approximately 3%) primarily driven by higher sales of our nylon and ammonium sulfate product lines with strength in the second and third quarters more than offsetting lost sales resulting from the process-based operational disruption at the Frankford site in the first quarter, and (ii) net pricing (approximately 1%) reflecting favorable raw material pass-through pricing partially offset by lower market-based pricing.

March 31, 2025

Sales increased in the three months ended March 31, 2025 compared to the prior year period by $41.0 million (approximately 12%) due to (i) increased volume (approximately 7%) driven by improved performance following the prior year operational disruption at the Frankford manufacturing site and higher ammonium sulfate sales supported by our SUSTAIN (Sustainable U.S.

Sulfate to Accelerate Increased Nutrition) program and (ii) favorable pricing (approximately 5%), including continued strength in Plant Nutrients reflecting favorable North American ammonium sulfate supply and demand conditions.

Costs of Goods Sold

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Costs of goods sold $ 324,320 $ 333,864

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Gross Margin percentage 14.2% 0.9%

Costs of goods sold increased in the three months ended September 30, 2024 compared to the prior year period by $26.1 million (approximately 8%) due primarily to (i) increased prices of raw materials (approximately 8%) and (ii) i ncreased sales volume (approximately 7%), partially offset by the favorable timing of planned plant turnarounds year-over-year (approximately 8%).

Costs of goods sold increased in the nine months ended September 30, 2024 compared to the prior year period by $42.0 million (approximately 4%) due primarily to (i) increased sales volume (approximately 4%), (ii) the impact of lower production volumes (approximately 2%) primarily driven by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (iii) increased prices of raw materials (approximately 1%), partially offset by the favorable timing of the planned plant turnarounds year-over-year (approximately 2%).

Gross margin percentage increased in the three months ended September 30, 2024 compared to the prior year period (approximately 12%) due primarily to (i) favorable timing of the planned plant turnarounds year-over-year (approximately 6%), (ii) the impact of market-based pricing, net of raw material costs (approximately 4%), and (iii) higher sales volume (approximately 3%).

Gross margin percentage decreased in the nine months ended September 30, 2024 compared to the prior year period (approximately 1%) due primarily to (i) the net impact of lower production volumes (approximately 2%) driven primarily by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (ii) the impact of market-based pricing, net of raw material costs (approximately 1%), partially offset by the favorable timing of the planned plant turnarounds year-over-year (approximately 2%) and decreased plant costs (approximately 1%).

Costs of goods sold decreased in the three months ended March 31, 2025 compared to the prior year period by $9.5 million (approximately 3%) due primarily to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 8%) and (ii) decreased plant costs (approximately 6%) primarily driven by improved operational performance, partially offset by increased prices of raw materials, including natural gas and sulfur (approximately 6%) and increased sales volume (approximately 5%).

Gross margin percentage increased in the three months ended March 31, 2025 compared to the prior year period (approximately 13%) due primarily to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 7%), (ii) decreased plant costs (approximately 5%) primarily driven by improved operational performance and (iii) increased sales volume (approximately 3%), partially offset by the impact of market-based pricing, net of raw material costs (approximately 1%).

Selling, General and Administrative Expenses

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Selling, general and administrative expenses $ 23,409 $ 23,593

Percentage of Sales 6.2% 7.0%

Selling, general and administrative expenses increased by $2.7 million in the three months ended September 30, 2024 compared to the prior year period due primarily to increased incentive-based compensation expense and enterprise resource planning system expense partially offset by moderated functional support costs.

Selling, general and administrative expenses increased by $1.6 million in the nine months ended September 30, 2024 compared to the prior year period due to increased incentive-based compensation expense and enterprise resource planning system expense partially offset by lower bad debt expense and moderated functional support costs.

Selling, general and administrative expenses decreased slightly in the three months ended March 31, 2025 compared to the prior year period.

Income Tax Expense

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Income tax expense (benefit) $ 5,585 $ (6,021)

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

The Company’s effective tax rate for the three and nine months ended September 30, 2024 and 2023 differed from the U.S.

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

In 2024, the Company recorded discrete tax adjustments related to the vesting of equity compensation, changes to state tax legislation, and return to provision adjustments related to the filing of the Company's 2023 U.S.

federal income tax return which resulted in a net 3.3% increase to the quarterly effective tax rate and a net 1.5% increase to the year-to-date effective tax rate.

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

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

The Company's effective tax rate for the three months ended September 30, 2024 was higher than the prior year period due primarily to the Loss before taxes recorded in the prior year period and a related reduction in the foreign-derived intangible income benefit that collectively reduced the 2023 quarterly rate by approximately 6%.

The Company's effective tax rate for the nine months ended September 30, 2024 was higher than the prior year period due primarily to the impacts of discrete adjustments in each respective period, which represented a net increase in the quarterly rate of approximately 3.1% as compared to the prior year period.

This increase in the effective tax rate was attributable to the return to provision adjustments related to the filing of the Company's U.S.

federal income tax returns and a reduction in the benefit associated with vesting of equity compensation, net of a decrease in effective tax rate associated with state legislation enacted during the period ended September 30, 2024.

The Company’s effective tax rate for the three months ended March 31, 2025 differed from the U.S.

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

Additionally, discrete tax adjustments recorded in the quarter related to Internal Revenue Code (IRC) Section 45Q tax credits of $1.8 million, offset slightly by state tax legislation changes had a net 5.8% decrease on the rate.

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

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

The Company’s effective tax rate for the three months ended March 31, 2025 was lower than the prior year period due primarily to the impact of the IRC Section 45Q tax credits recorded in the current year.

The Company continues to monitor any potential new tax legislation that could result in a material impact on its financial statements including the U.S.

House of Representatives approval of the fiscal year 2025 budget resolution on April 10, 2025.

This approval clears the way for substantive action by House and Senate Republicans to advance legislation that would potentially address expiring Tax Cuts and Jobs Act provisions and incorporate other tax proposals.

Net Income (Loss)

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income (loss) $ 23,344 $ (17,396)

As a result of the factors described above, Net income (loss) was $22.3 million for the three months ended September 30, 2024 as compared to $(8.0) million in the corresponding prior year period.

As a result of the factors described above, Net income was $43.8 million for the nine months ended September 30, 2024 as compared to $59.7 million in the corresponding prior year period.

As a result of the factors described above, Net income (loss) was $23.3 million for the three months ended March 31, 2025 as compared to $(17.4) million in the corresponding prior year period.

Non-GAAP Measures

(Dollars in thousands, unless otherwise noted)

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

The following tables set forth the non-GAAP financial measures of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net income and Adjusted EPS.

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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income (loss) $ 23,344 $ (17,396)

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Non-recurring M&A costs — —

Income tax expense (benefit) relating to reconciling items (367) 776 (1,594) (157)

Income tax benefit relating to reconciling items (430) (465)

Adjusted Net income (loss) (non-GAAP) 25,424 (15,118)

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Adjusted EBITDA Margin* (non-GAAP) 13.7% 0.2%

* 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 exit from the Oben Holding Group S.A.

alliance, licensee exit of legacy technology and 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

The following is a reconciliation between the non-GAAP financial measures of Adjusted Earnings Per Share to its most directly comparable U.S.

The following is a reconciliation between the non-GAAP financial measures of Adjusted EPS to its most directly comparable U.S.

GAAP financial measure:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income (loss) $ 23,344 $ (17,396)

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(Dollars in thousands, unless otherwise noted)

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the third quarter of 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, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2023 Form 10-K.

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.

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the first quarter of 2025, 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, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K.

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.

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.

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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 of Part I of our 2024 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

As of the end of the third quarter of 2024, the Company had approximately $17.3 million of cash on hand with approximately $284 million of additional capacity available under the revolving credit facility.

As of the end of the first quarter of 2025, the Company had approximately $8.3 million of cash on hand with approximately $284 million of additional capacity available under the revolving credit facility.

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 are expected to be approximately $135 million to $140 million in 2024 compared to $107 million in 2023, reflecting refined execution timing

to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S.

Sulfate to Accelerate Increased Nutrition) program.

Capital expenditures are expected to be approximately $145 million to $155 million in 2025 compared to $134 million in 2024, reflecting the planned progression of our SUSTAIN growth program, and refined execution timing to address critical enterprise risk mitigation.

We assumed from Honeywell International Inc.

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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.

The Company made no cash contributions to the defined benefit pension plan during the nine months ended September 30, 2024 and does not expect to make cash contributions during the fourth quarter of 2024.

Additional contributions may be made in future years sufficient to satisfy pension funding requirements in those periods.

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

Date of Authorization Authorized Amount

Authorized Amount Remaining as of September 30, 2024

May 4, 2018 $ 75.0 $ —

February 22, 2019 75.0 —

February 17, 2023 75.0 62.0

Totals $ 225.0 $ 62.0

The Company made no cash contributions to the defined benefit pension plan during the three months ended March 31, 2025 as there were no funding requirements for the period.

Additional contributions may be made in future periods sufficient to satisfy pension funding requirements in those periods or on a discretionary basis.

On February 17, 2023, the Company's Board of Directors (the "Board") authorized a share repurchase program to repurchase shares of the Company's common stock.

As of March 31, 2025, the Company has repurchased a total of 6,305,561 shares of common stock life-to-date, including 1,060,105 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $193.9 million at a weighted average market price of $30.75 per share.

As of March 31, 2025, approximately $62.0 million remained available for share repurchases under the currently authorized repurchase program.

During the period April 1, 2025 through April 25, 2025, 2,538 additional shares were repurchased for tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $20.05 and no additional shares were repurchased under the currently authorized 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.

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

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

As of September 30, 2024, the Company has repurchased a total of 6,252,129 shares of common stock life-to-date, including 1,006,673 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $192.4 million at a weighted average market price of $30.78 per share.

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

During the period October 1, 2024 through October 25, 2024, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

As of September 30, 2024, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the Company's 2023 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

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

As of March 31, 2025, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the Company's 2024 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

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.

Dividends announced during 2024 are as follows:

Dividends paid during 2025 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)

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2/21/2025 3/10/2025 3/24/2025 $0.16 $4.3

5/3/2024 5/14/2024 5/28/2024 $0.16 $4.3

2/16/2024 3/4/2024 3/18/2024 $0.16 $4.3

The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board.

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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 new senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

On October 27, 2021, the Company entered into a 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”).

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

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The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

With the cessation of LIBOR on June 30, 2023 and subject to the First Amendment to the Credit Agreement, dated as of June 27, 2023, the Eurodollar Rate was replaced with the Adjusted Term SOFR as an alternative benchmark rate for purposes of the Credit Agreement.

The transition was effective July 1, 2023.

Borrowings under the Credit Agreement bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.25% to 1.25% or the sum of an Adjusted Term SOFR rate plus a margin ranging from 1.25% to 2.25%, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement).

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 Company's 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 ending 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).

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 3.75 to 1.00 or less (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 September 30, 2024 and through the date of the filing of this Form 10-Q.

We were in compliance with all of our covenants at March 31, 2025 and through the date of the filing of this Form 10-Q.

We had a borrowed balance of $195 million under the Revolving Credit Facility at December 31, 2024.

We borrowed an incremental net amount of $45 million during the nine months ended September 30, 2024, bringing the balance under the Revolving Credit Facility to $215 million, and available credit for use of approximately $284 million as of September 30, 2024.

We borrowed an incremental net amount of $20 million during the three months ended March 31, 2025, bringing the balance under the Revolving Credit Facility to $215 million, and available credit for use of approximately $284 million as of March 31, 2025.

We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Cash Flow Summary

Nine Months Ended

September 30,

Three Months Ended

Cash provided by (used for):

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Net change in cash and cash equivalents $ (11,220) $ (9,135)

Cash provided by operating activities increased by $13.9 million for the nine months ended September 30, 2024 versus the prior year period due primarily to (i) an $18.8 million favorable cash impact from accrued liabilities due primarily to the timing of payments and accruals during the nine months ended September 30, 2024 related to incentive-based compensation and other accrued liabilities compared to the prior year period and (ii) a $9.7 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with a $44.4 million unfavorable cash impact from working capital for the nine months ended September 30, 2024 compared to a $54.0 million unfavorable cash impact in the prior year period due primarily to the favorable impact of Deferred income and customer advances, Inventory and Accounts payable partially offset by Accounts and other receivables.

These net favorable impacts were partially offset by a $15.9 million decrease in Net income.

Cash used for investing activities increased by $34.0 million for the nine months ended September 30, 2024 versus the prior year period due primarily to higher cash payments for capital expenditures of approximately $30.3 million during the current year period primarily reflecting increased spend on replacement maintenance and enterprise programs.

Cash provided by financing activities increased by $16.5 million for the nine months ended September 30, 2024 versus the prior year period due primarily to net borrowings of $45.0 million during the nine months ended September 30, 2024 compared to net borrowings of $55.0 million during the prior year period, partially offset by payments for share repurchases of $10.4 million during the nine months ended September 30, 2024 compared to $37.7 million during the prior year period.

Cash provided by operating activities increased by $47.6 million for the three months ended March 31, 2025 versus the prior year period due primarily to (i) a $40.7 million increase in net income, (ii) the favorable cash impact of $7.7 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax payments and (iii) a $6.6 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with a $35.7 million unfavorable cash impact from working capital for the three months ended March 31, 2025 compared to a $42.3 million unfavorable cash impact in the prior year period due primarily to the favorable impact of Accounts payable partially offset by Inventory, Accounts and other receivables and Deferred income and customer advances.

These net favorable impacts were partially offset by a $7.1 million unfavorable cash impact from accrued liabilities due primarily to the timing of payments and accruals during the three months ended March 31, 2025 related to other accrued liabilities compared to the prior year period.

Cash used for investing activities was approximately flat for the three months ended March 31, 2025 versus the prior year period for capital expenditures and other enterprise programs.

Cash provided by financing activities decreased by $49.7 million for the three months ended March 31, 2025 versus the prior year period due primarily to net borrowings of $20.0 million during the three months ended March 31, 2025 compared to net borrowings of $75.0 million during the prior year period, partially offset by payments for share repurchases of $1.5 million during the three months ended March 31, 2025 compared to $7.0 million during the prior year period.

Cash paid for dividends was relatively unchanged year-over-year.

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The following table summarizes ongoing and expansion capital expenditures:

Nine Months Ended

September 30, 2024

Three Months Ended

March 31, 2025

Capital expenditures in Accounts payable at December 31, 2024

Purchases of property, plant and equipment 25,022

Capital expenditures in Accounts payable at September 30, 2024

Capital expenditures in Accounts payable at March 31, 2025

Cash paid for capital expenditures $ 34,062

For 2024, we expect our total capital expenditures to be approximately $135 million to $140 million compared to $107 million in 2023, reflecting refined execution timing 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 $145 million to $155 million as discussed above.

Critical Accounting Policies and Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis