AdvanSix Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ADVANSIX INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except share and per share amounts) Three Months Ended March 31, 2025 2024 Sales $ 377,791 $ 336,829 Costs, expenses and other: Costs of goods sold 324,320 333,864 Selling, general and administrative expenses 23,409 23,593 Interest expense, net 1,541 2,699 Other non-operating (income) expense, net ( 408 ) 90 Total costs, expenses and other 348,862 360,246 Income (loss) before taxes 28,929 ( 23,417 ) Income tax expense (benefit) 5,585 ( 6,021 ) Net income (loss) $ 23,344 $ ( 17,396 ) Earnings per common share Basic $ 0.87 $ ( 0.65 ) Diluted $ 0.86 $ ( 0.65 ) Weighted average common shares outstanding Basic 26,838,146 26,878,660 Diluted 27,289,144 26,878,660 See accompanying notes to Condensed Consolidated Financial Statements. 3 ADVANSIX INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2025 2024 Net income (loss) $ 23,344 $ ( 17,396 ) Foreign exchange translation adjustment 11 ( 15 ) Cash-flow hedges 7 7 Other comprehensive income (loss), net of tax 18 ( 8 ) Comprehensive income (loss) $ 23,362 $ ( 17,404 ) See accompanying notes to Condensed Consolidated Financial Statements. 4 ADVANSIX INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except share and per share amounts) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 8,344 $ 19,564 Accounts and other receivables – net 179,336 145,673 Inventories – net 222,857 212,386 Taxes receivable 55 503 Other current assets 7,590 8,990 Total current assets 418,182 387,116 Property, plant and equipment – net 926,006 917,858 Operating lease right-of-use assets 144,844 153,438 Goodwill 56,192 56,192 Intangible assets 42,382 43,144 Other assets 38,368 37,172 Total assets $ 1,625,974 $ 1,594,920 LIABILITIES Current liabilities: Accounts payable $ 238,906 $ 228,761 Accrued liabilities 42,775 47,264 Income taxes payable 2,590 1,047 Operating lease liabilities – short-term 40,093 42,493 Deferred income and customer advances 26,582 37,538 Total current liabilities 350,946 357,103 Deferred income taxes 149,346 145,299 Operating lease liabilities – long-term 105,437 111,400 Line of credit – long-term 215,000 195,000 Other liabilities 10,877 11,468 Total liabilities 831,606 820,270 COMMITMENTS AND CONTINGENCIES (Note 9) STOCKHOLDERS' EQUITY Common stock, par value $ 0.01 ; 200,000,000 shares authorized; 33,113,379 shares issued and 26,807,818 outstanding at March 31, 2025; 32,989,165 shares issued and 26,737,036 outstanding at December 31, 2024 331 330 Preferred stock, par value $ 0.01 ; 50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2025 and December 31, 2024 — — Treasury stock at par ( 6,305,561 shares at March 31, 2025; 6,252,129 shares at December 31, 2024) ( 63 ) ( 63 ) Additional paid-in capital 137,677 136,872 Retained earnings 650,435 631,541 Accumulated other comprehensive income 5,988 5,970 Total stockholders' equity 794,368 774,650 Total liabilities and stockholders' equity $ 1,625,974 $ 1,594,920 See accompanying notes to Condensed Consolidated Financial Statements. 5 ADVANSIX INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 23,344 $ ( 17,396 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 19,178 19,102 (Gain) loss on disposal of assets ( 210 ) 89 Deferred income taxes 4,054 1,108 Stock-based compensation 1,978 2,211 Amortization of deferred financing fees 155 155 Changes in assets and liabilities, net of business acquisitions: Accounts and other receivables ( 33,652 ) ( 5,818 ) Inventories ( 10,471 ) 20,910 Taxes receivable 448 1,426 Accounts payable 19,362 ( 52,995 ) Income taxes payable 1,543 ( 7,098 ) Accrued liabilities ( 4,949 ) 2,150 Deferred income and customer advances ( 10,956 ) ( 4,392 ) Other assets and liabilities 1,619 4,346 Net cash provided by (used for) operating activities 11,443 ( 36,202 ) Cash flows from investing activities: Expenditures for property, plant and equipment ( 34,062 ) ( 35,388 ) Other investing activities ( 2,732 ) ( 1,419 ) Net cash used for investing activities ( 36,794 ) ( 36,807 ) Cash flows from financing activities: Borrowings from line of credit 118,500 184,500 Repayments of line of credit ( 98,500 ) ( 109,500 ) Principal payments of finance leases ( 247 ) ( 239 ) Dividend payments ( 4,290 ) ( 4,290 ) Purchase of treasury stock ( 1,486 ) ( 7,023 ) Issuance of common stock 154 426 Net cash provided by financing activities 14,131 63,874 Net change in cash and cash equivalents ( 11,220 ) ( 9,135 ) Cash and cash equivalents at beginning of period 19,564 29,768 Cash and cash equivalents at the end of period $ 8,344 $ 20,633 Supplemental non-cash investing activities: Capital expenditures included in accounts payable $ 14,605 $ 13,442 Supplemental cash activities: Cash paid for interest $ 584 $ 2,594 Cash paid for income taxes $ — $ 36 See accompanying notes to Condensed Consolidated Financial Statements. 6 ADVANSIX INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Dollars in thousands) Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Equity Shares Amount Balance at December 31, 2024 32,989,165 $ 330 $ 136,872 $ 631,541 $ ( 63 ) $ 5,970 $ 774,650 Net income — — — 23,344 — — 23,344 Comprehensive income Foreign exchange translation adjustments — — — — — 11 11 Cash-flow hedges — — — — — 7 7 Other comprehensive income, net of tax — — — — — 18 18 Issuance of common stock 124,214 1 153 — — — 154 Purchase of treasury stock ( 53,432 shares) — — ( 1,486 ) — — — ( 1,486 ) Stock-based compensation — — 1,978 — — — 1,978 Dividends — — 160 ( 4,450 ) — — ( 4,290 ) Balance at March 31, 2025 33,113,379 $ 331 $ 137,677 $ 650,435 $ ( 63 ) $ 5,988 $ 794,368 Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Equity Shares Amount Balance at December 31, 2023 32,598,946 $ 326 $ 138,046 $ 605,067 $ ( 58 ) $ ( 4,144 ) $ 739,237 Net loss — — — ( 17,396 ) — — ( 17,396 ) Comprehensive income Foreign exchange translation adjustments — — — — — ( 15 ) ( 15 ) Cash-flow hedges — — — — — 7 7 Other comprehensive loss, net of tax — — — — — ( 8 ) ( 8 ) Issuance of common stock 323,989 3 423 — — — 426 Purchase of treasury stock ( 260,464 shares) — — ( 7,020 ) — ( 3 ) — ( 7,023 ) Stock-based compensation — — 2,211 — — — 2,211 Dividends — — 163 ( 4,453 ) — — ( 4,290 ) Balance at March 31, 2024 32,922,935 $ 329 $ 133,823 $ 583,218 $ ( 61 ) $ ( 4,152 ) $ 713,157 See accompanying notes to Condensed Consolidated Financial Statements. 7 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) 1. Organization, Operations and Basis of Presentation Description of Business AdvanSix Inc. ("AdvanSix," the "Company," "we" or "our") is a diversified chemistry company playing a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. Our reliable and sustainable supply of quality products emerges from the integrated value chain of our five U.S.-based manufacturing facilities. AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates, guided by our core values of Safety, Integrity, Accountability and Respect. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 2025, and its results of operations for the three months ended March 31, 2025 and 2024 and cash flows for the three months ended March 31, 2025 and 2024. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). All intercompany transactions have been eliminated. Certain prior period amounts have been reclassified for consistency with the current period presentation. It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice have generally not been significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three months ended March 31, 2025 and 2024 were March 29, 2025 and March 30, 2024, respectively. Liabilities to creditors to whom we have issued checks that remained outstanding at March 31, 2025 and December 31, 2024 aggregated to $ 4.5 million and $ 7.3 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets. 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. The Company actively pursued a business interruption claim and reached 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. The business interruption insurance proceeds received were primarily related to the recovery of increased raw material and logistics costs. The proceeds have been recognized as a reduction to Cost of Goods Sold on the Condensed Consolidated Statements of Operations in the periods in which they were received. 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, 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 current authorization. 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. 8 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The 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. 2. Recent Accounting Pronouncements 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 an entity will: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) 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. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that are equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendments also require that the Company disclose the following (net of refunds received): (1) the amount of income taxes paid disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid. Additionally, the amendments in this update eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or to make a statement that an estimate of the range cannot be made, and remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. This pronouncement is effective for annual periods beginning after December 31, 2024 and the required disclosures will be adopted in the Company's annual report on Form 10-K for the year ended December 31, 2025. 3. Revenues Revenue Recognition AdvanSix serves around 400 customers annually, primarily in the United States, spanning a wide variety of industries worldwide. For the three months ended March 31, 2025 and 2024, the Company's ten largest customers accounted for approximately 38 % and 37 % of total sales, respectively. We typically sell to customers under master service agreements, with primarily one-year terms, or by purchase orders. We have historically experienced low customer turnover and have long-standing customer relationships, which span decades. Our largest customer is Shaw Industries Group, Inc. (“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement. For the three months ended March 31, 2025 and 2024, the Company's sales to Shaw were 10 % and 9 % of our total sales, respectively. 9 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) The Company's revenue by product line, and related approximate percentage of total sales, for the three months ended March 31, 2025 and 2024 were as follows: Three Months Ended March 31, 2025 2024* Nylon $ 88,369 23 % $ 84,389 25 % Caprolactam 67,432 18 % 61,476 18 % Plant Nutrients 128,240 34 % 94,696 28 % Chemical Intermediates 93,750 25 % 96,268 29 % Total $ 377,791 100 % $ 336,829 100 % * 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 the three months ended March 31, 2025 and 2024 were as follows: Three Months Ended March 31, 2025 2024 United States $ 320,447 85 % $ 284,587 84 % International 57,344 15 % 52,242 16 % Total $ 377,791 100 % $ 336,829 100 % Deferred Income and Customer Advances The Company defers revenues when cash payments are received in advance of our performance. Below is a roll-forward of Deferred income and customer advances for the three months ended March 31, 2025: Opening balance January 1, 2025 $ 37,538 Additional cash advances — Less amounts recognized in revenues ( 10,956 ) Ending balance March 31, 2025 $ 26,582 The Company expects to recognize as revenue the March 31, 2025 ending balance of Deferred income and customer advances within one year or less. 4. Earnings Per Share The computation of basic and diluted earnings per share ("EPS") is based on Net income (loss) divided by the basic weighted average number of common shares outstanding and diluted weighted average number of common shares outstanding, respectively. The details of the basic and diluted EPS calculations for the three months ended March 31, 2025 and 2024 were as follows: 10 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) Three Months Ended March 31, 2025 2024 Basic Net income (loss) $ 23,344 $ ( 17,396 ) Weighted average common shares outstanding 26,838,146 26,878,660 EPS – Basic $ 0.87 $ ( 0.65 ) Diluted Dilutive effect of equity awards and other stock-based holdings 450,998 — Weighted average common shares outstanding 27,289,144 26,878,660 EPS – Diluted $ 0.86 $ ( 0.65 ) Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the period. The diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. The anti-dilutive common stock equivalents outstanding at the three months ended March 31, 2025 and 2024 were as follows: Three Months Ended March 31, 2025 2024 Options and stock equivalents 684,374 909,231 Dividend activity for the three months ended March 31, 2025 and 2024 was as follows: Three Months Ended March 31, 2025 2024 Cash dividends declared per share $ 0.16 $ 0.16 Aggregate dividends paid to shareholders $ 4,290 $ 4,290 5. Accounts and Other Receivables – Net March 31, 2025 December 31, 2024 Accounts receivables $ 175,589 $ 141,273 Other 3,928 4,982 Total accounts and other receivables 179,517 146,255 Less – allowance for doubtful accounts ( 181 ) ( 582 ) Total accounts and other receivables – net $ 179,336 $ 145,673 11 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) 6. Inventories March 31, 2025 December 31, 2024 Raw materials $ 116,098 $ 99,320 Work in progress 71,966 71,175 Finished goods 82,589 73,994 Spares and other 32,332 31,948 302,985 276,437 Reduction to LIFO cost basis ( 80,128 ) ( 64,051 ) Total inventories $ 222,857 $ 212,386 Substantially all of the Company’s inventories at March 31, 2025 and December 31, 2024 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method. However, approximately 6 % was valued at average cost using the first-in, first-out (“FIFO”) method at March 31, 2025. The excess of replacement cost over the carrying value of total inventories subject to LIFO was $ 82.3 million and $ 57.5 million at March 31, 2025 and December 31, 2024, respectively. 7. Leases We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets ("ROU"), Operating lease liabilities – short-term, and Operating lease liabilities – long-term in our Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment – net, Accounts payable, and Other liabilities in our Condensed Consolidated Balance Sheets. The components of lease expense were as follows: Three Months Ended March 31, 2025 2024 Finance lease cost: Amortization of right-of-use asset $ 254 $ 243 Interest on lease liabilities 41 38 Total finance lease cost 295 281 Operating lease cost 13,078 12,252 Short-term lease cost 796 1,193 Total lease cost $ 14,169 $ 13,726 As of March 31, 2025, we have no additional operating or finance leases that have not yet commenced. 8. Goodwill and Intangible Assets Intangible assets with finite lives acquired through a business combination are recorded at fair value, less accumulated amortization. Customer relationships and trade-names are amortized on a straight-line basis over their expected useful lives of 15 to 20 years and 5 years, respectively. Goodwill There was no change in the carrying amount of goodwill for the three months ended March 31, 2025. Finite-Lived Intangible Assets Intangible assets subject to amortization were as follows: 12 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) March 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 36,820 $ ( 6,142 ) $ 30,678 $ 36,820 $ ( 5,666 ) $ 31,154 Licenses 18,451 ( 7,150 ) 11,301 18,451 ( 6,919 ) 11,532 Trade names 1,100 ( 697 ) 403 1,100 ( 642 ) 458 Total $ 56,371 $ ( 13,989 ) $ 42,382 $ 56,371 $ ( 13,227 ) $ 43,144 For each of the three months ended March 31, 2025 and March 31, 2024, the Company recorded amortization expense on intangible assets of $ 0.8 million. 9. Commitments and Contingencies The Company is subject to a number of lawsuits, investigations and disputes, some of which may involve substantial amounts claimed, arising out of the conduct of the Company or other third-parties in the normal and ordinary course of business. A liability is recognized for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses, based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts. Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters. Considering the Company’s past experience and existing accruals, the Company does not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on the Company’s consolidated financial position or results of operations. Potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company’s consolidated results of operations, balance sheet and/or operating cash flows in the periods recognized or paid. We assumed from Honeywell International Inc. ("Honeywell") all health, safety and environmental (“HSE”) liabilities and compliance obligations related to the past and future operations of our current business, as well as all HSE liabilities associated with our three manufacturing locations and the other locations used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations. 10. Income Taxes The provision (benefit) for income taxes was $ 5.6 million and ($ 6.0 million) for the three months ended March 31, 2025 and 2024, respectively, resulting in an effective tax rate of 19.3 % and 25.7 %, respectively. 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 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. 13 ADVANSIX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts and as otherwise noted) 11. Supplier Finance Programs The Company has entered into a supply chain finance program with a financial intermediary providing participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. AdvanSix’s responsibility is limited to making payments to the intermediary based upon payment terms negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. The Company’s payment terms with suppliers are consistent, regardless of whether a vendor participates in the supply chain finance program or not. All related agreements are terminable by either party upon at least 30 days’ notice. The total amount due to the financial intermediaries to settle supplier invoices under all of its supplier finance programs was approximately $ 13 million as of March 31, 2025 and approximately $ 19 million as of December 31, 2024. These amounts outstanding are included in Accounts payable . Note 12. Segment Related Information The Company has concluded that it is a single operating segment and a single reportable segment: chemical manufacturing. Its larger manufacturing sites are vertically integrated and leverage cross-plant resources, including centralized supply chain and procurement functions. This production process uses one key raw material, cumene, as the input to products produced for sale through the sales channels and end markets the Company serves. Production rates and output volumes are managed across locations to align with the Company’s overall operating plan. Additionally, the Company’s operating results, which are evaluated regularly to make decisions about resource allocation and performance assessment by the chief operating decision maker ("CODM"), our CEO and President, are on a consolidated basis. The chemical manufacturing segment derives its revenues by innovating and delivering essential products in the industries of nylon solutions, plant nutrients, and chemical intermediates to its customers in a wide variety of end markets and applications, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. The CODM’s performance assessment and resource allocation for the chemical manufacturing segment is based on net income which is also reported on the income statement as net income, the measure of segment assets which is also reported on the balance sheet as total assets, and capital expenditures which is also reported in management’s discussion and analysis. The CODM uses net income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions or to pay dividends. The CODM also uses net income to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation. Lastly, the CODM uses capital expenditures to estimate the cash-generating potential and cash requirements of the segment. Significant expense information reviewed by the CODM was as follows (in thousands): Three Months Ended March 31, 2025 2024 Revenue $ 377,791 $ 336,829 Less: Variable cost of goods sold * 152,903 171,440 Plant costs 121,853 116,431 Freight and distribution costs 47,403 43,299 Selling, general, and administrative expense 23,409 23,593 Other segment items ** 8,879 ( 539 ) Segment net income $ 23,344 $ ( 17,395 ) *Variable costs of goods sold includes the raw material costs associated with volumes sold during the period as well as insurance settlement proceeds. **Other segment items include research and development expense, interest income and expense, capitalized interest, other non-operating expense, and income tax expense. 13. Subsequent Events As announced on May 2, 2025, the Board declared a quarterly cash dividend of $ 0.16 per share on the Company's common stock, payable on May 27, 2025 to stockholders of record as of the close of business on May 13, 2025. 14