4Q19 Sales of $327 million, down 16% versus
prior year
4Q19 EPS loss of $0.08 - includes $25 million
pre-tax income impact of planned turnaround
4Q19 Cash Flow from Operations of $20 million,
down $26 million versus prior year
Continued strategic investments in high-return
growth and cost savings projects
Awarded 2020 Gold Rating for corporate social
responsibility from EcoVadis
AdvanSix (NYSE: ASIX) today announced its financial
results for the fourth quarter and full year ending December 31,
2019. Overall, the Company continued to execute its strategic
priorities in a challenging end market environment.
Fourth Quarter 2019
Results
- Sales down approximately 16% versus prior year, including
approximately 8% lower raw material pass-through pricing, 4%
unfavorable impact of market-based pricing, and 4% lower
volume
- Net Loss of ($2.1) million, a decrease of $22.9 million versus
the prior year
- EBITDA of $12.7 million, a decrease of $30.0 million versus the
prior year
- 4Q19 planned plant turnaround safely completed on time and on
budget - approximately $25 million unfavorable pre-tax income
impact
- Cash Flow from Operations of $19.8 million, a decrease of $25.8
million versus the prior year
- Capital Expenditures of $43.9 million, an increase of $7.4
million versus the prior year
- Free Cash Flow of ($24.1) million, a decrease of $33.2 million
versus the prior year
Summary fourth quarter 2019 financial results for the Company
are included below:
($ in Thousands, Except Earnings Per
Share)
4Q 2019
4Q 2018
Sales
$326,650
$386,634
Net Income (Loss)
(2,094)
20,761
Diluted Earnings (Loss) Per Share
($0.08)
$0.68
EBITDA (1)
12,749
42,762
EBITDA Margin % (1)
3.9%
11.1%
Cash Flow from Operations
19,849
45,650
Free Cash Flow (1)(2)
(24,087)
9,085
(1) See “Non-GAAP Measures” included in
this press release for non-GAAP reconciliations
(2) Net cash provided by operating
activities less capital expenditures
“The end market environment as we exited 2019 remained
challenging. Despite the global slowdown in demand, we continue to
benefit from our low-cost position and are focused on executing
against our strategic priorities including safe, stable and
sustainable operations, differentiated product growth and
disciplined capital allocation," said Erin Kane, president and CEO
of AdvanSix. "Last year saw several strategic investments for
AdvanSix that will position the company for long-term success. We
brought onstream our new natural gas boilers, created a strategic
alliance with Oben Group and closed down our Pottsville films
manufacturing, invested in relocating and upgrading our R&D
lab, led successful anti-dumping petitions against acetone imports,
and repurchased $62 million of shares during the year."
Sales of $326.7 million decreased approximately 16% versus the
prior year. Pricing overall decreased 12% versus the prior year,
including an 8% unfavorable impact from raw material pass-through
pricing following cost decreases in benzene and propylene (inputs
to cumene which is a key feedstock to our products). Market-based
pricing was unfavorable by approximately 4% compared to the prior
year reflecting challenging end market conditions in our nylon and
caprolactam product lines. Sales volume in the quarter decreased 4%
versus the prior year primarily due to unfavorable mix across our
nylon and ammonium sulfate product lines, and the planned plant
turnaround in the fourth quarter of 2019.
Sales by product line represented the following approximate
percentage of our total sales:
4Q 2019
4Q 2018
FY 2019
FY 2018
Nylon
25%
27%
27%
28%
Caprolactam
21%
21%
22%
19%
Ammonium Sulfate Fertilizers
23%
21%
23%
20%
Chemical Intermediates
31%
31%
28%
33%
EBITDA of $12.7 million in the quarter decreased $30.0 million
versus the prior year primarily due to the unfavorable impact of
planned plant turnarounds (approximately $25 million), the
unfavorable impact of market-based pricing driven by challenging
nylon industry dynamics, and lower volume, partially offset by
lower raw material costs including natural gas and sulfur and an
approximately $6 million charge to bad debt expense in the prior
year period. Fourth quarter 2019 results also include an
approximately $6 million unfavorable impact from increased raw
material and logistics costs related to the Philadelphia Energy
Solutions (PES) supplier plant disruption and shutdown.
Earnings per share decreased $0.76 versus the prior year to a
loss of ($0.08) in the quarter driven by the factors discussed
above.
Cash flow from operations of $19.8 million in the quarter
decreased $25.8 million versus the prior year primarily due to
lower net income. Capital expenditures of $43.9 million in the
quarter increased $7.4 million versus the prior year primarily due
to the continued execution of high-return growth and cost savings
projects and an increase in maintenance capital expenditures
associated with the timing of 2020 planned plant turnarounds.
Full Year 2019 Results
- Sales down 14.4% versus prior year, including 9.7% lower raw
material pass-through pricing, 3.6% lower volume, and 1.1%
unfavorable impact of market-based pricing
- Net Income of $41.3 million, a decrease of $24.9 million versus
the prior year
- EBITDA of $115.6 million, a decrease of $30.9 million versus
the prior year
- Cash Flow from Operations of $120.4 million, a decrease of
$53.0 million versus the prior year
- Capital Expenditures of $150.3 million, an increase of $41.1
million versus the prior year
- Free Cash Flow of ($29.9) million, a decrease of $94.1 million
versus the prior year
- Repurchased 2,298,407 shares for approximately $62 million
Summary full year 2019 financial results for the Company are
included below:
($ in Thousands, Except Earnings Per
Share)
FY 2019
FY 2018
Sales
$1,297,393
$1,514,984
Net Income
41,347
66,244
Diluted Earnings Per Share
$1.43
$2.14
EBITDA (1)
115,628
146,493
EBITDA Margin % (1)
8.9%
9.7%
Cash Flow from Operations
120,385
173,385
Free Cash Flow (1)(2)
(29,937)
64,170
(1) See “Non-GAAP Measures” included in
this press release for non-GAAP reconciliations
(2) Net cash provided by operating
activities less capital expenditures
Outlook
- Expect challenging nylon industry conditions to continue in
near-term
- Expect mixed ammonium sulfate fertilizer environment to
continue through 2020 planting season
- Expect acetone industry pricing to stabilize with improved
supply and demand balance
- Continue to expect an unfavorable impact to pre-tax income, as
a result of PES supplier disruption and shutdown, of $10 to $15
million in 2020, an increase of $0 to $5 million versus 2019
- Expect Capital Expenditures to be $90 to $100 million in 2020,
a decrease of $50 to $60 million versus 2019
- Continue to expect pre-tax income impact of planned plant
turnarounds to be $33 to $38 million in 2020 versus approximately
$35 million in 2019
"We continue to plan conservatively in the near term. Our key
levers to drive the best possible outcomes and long-term value
creation have not changed despite operating in what has been a more
broadly challenging global demand environment for our product
lines. We are positioning the Company for long-term performance
through improved operational efficiency, enhancement of our growth
capabilities, and smart and disciplined investments in the business
to drive higher returns,” added Kane.
Conference Call
Information
AdvanSix will discuss its results during its investor conference
call today starting at 9:00 a.m. ET. To participate on the
conference call, dial (334) 323-0501 (domestic) or (800) 353-6461
(international) approximately 10 minutes before the 9:00 a.m. ET
start, and tell the operator that you are dialing in for AdvanSix’s
fourth quarter 2019 earnings call. The live webcast of the investor
call as well as related presentation materials can be accessed at
http://investors.advansix.com. Investors can hear a replay of the
conference call from 12 noon ET on February 21 until 12 noon ET on
February 28 by dialing (719) 457-0820 (domestic) or (888) 203-1112
(international). The access code is 8690781.
About AdvanSix
AdvanSix is a leading manufacturer of Nylon 6, a polymer resin
which is a synthetic material used by our customers to produce
fibers, filaments, engineered plastics and films that, in turn, are
used in such end-products as carpets, automotive and electronic
components, sports apparel, food packaging and other industrial
applications. As a result of our backward integration and the
configuration of our manufacturing facilities, we also sell
caprolactam, ammonium sulfate fertilizer, acetone and other
intermediate chemicals, all of which are produced as part of our
integrated manufacturing value chain. More information on AdvanSix
can be found at http://www.advansix.com.
Forward Looking Statements
This release contains certain statements that may be deemed
“forward-looking statements” within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical fact, that address activities,
events or developments that our management intends, expects,
projects, believes or anticipates will or may occur in the future
are forward-looking statements. Forward-looking statements may be
identified by words like "expect," "anticipate," "estimate,"
“outlook”, "project," "strategy," "intend," "plan," "target,"
"goal," "may," "will," "should" and "believe" or other variations
or similar terminology. Although we believe forward-looking
statements are based upon reasonable assumptions, such statements
involve known and unknown risks, uncertainties and other factors,
many of which are beyond our control and difficult to predict,
which may cause the actual results or performance of the Company to
be materially different from any future results or performance
expressed or implied by such forward-looking statements. Such risks
and uncertainties include, but are not limited to: the impact of
scheduled turnarounds and significant unplanned downtime and
interruptions of production or logistics operations as a result of
mechanical issues or other unanticipated events such as fires,
severe weather conditions, and natural disasters; price
fluctuations and supply of raw materials; our operations and growth
projects requiring substantial capital; general economic and
financial conditions in the U.S. and globally; growth rates and
cyclicality of the industries we serve including global changes in
supply and demand; risks associated with our indebtedness including
with respect to restrictive covenants; failure to develop and
commercialize new products or technologies; loss of significant
customer relationships; adverse trade and tax policies; extensive
environmental, health and safety laws that apply to our operations;
hazards associated with chemical manufacturing, storage and
transportation; litigation associated with chemical manufacturing
and our business operations generally; inability to acquire and
integrate businesses, assets, products or technologies; protection
of our intellectual property and proprietary information; prolonged
work stoppages as a result of labor difficulties; cybersecurity and
data privacy incidents; failure to maintain effective internal
controls; disruptions in transportation and logistics; our
inability to achieve some or all of the anticipated benefits of our
spin-off including uncertainty regarding qualification for expected
tax treatment; fluctuations in our stock price; and changes in laws
or regulations applicable to our business. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this release. Such forward-looking
statements are not guarantees of future performance, and actual
results, developments and business decisions may differ from those
envisaged by such forward-looking statements. We identify the
principal risks and uncertainties that affect our performance in
our filings with the Securities and Exchange Commission, including
our Annual Report on Form 10-K for the year ended December 31,
2018.
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures
intended to supplement, not to act as substitutes for, comparable
GAAP measures. Reconciliations of non-GAAP financial measures to
GAAP financial measures are provided in this press release.
Investors are urged to consider carefully the comparable GAAP
measures and the reconciliations to those measures provided.
Non-GAAP measures in this press release may be calculated in a way
that is not comparable to similarly-titled measures reported by
other companies.
AdvanSix Inc.
Consolidated Balance
Sheets
(Unaudited)
(Dollars in thousands, except
share and per share amounts)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
7,050
$
9,808
Accounts and other receivables – net
106,660
160,266
Inventories – net
171,710
137,182
Other current assets
5,117
3,807
Total current assets
290,537
311,063
Property, plant and equipment – net
755,881
672,210
Operating lease right-of-use assets
135,985
—
Goodwill
15,005
15,005
Other assets
38,561
36,348
Total assets
$
1,235,969
$
1,034,626
LIABILITIES
Current liabilities:
Accounts payable
$
205,911
$
231,720
Accrued liabilities
28,114
30,448
Operating lease liabilities –
short-term
38,005
—
Deferred income and customer advances
19,696
22,556
Total current liabilities
291,726
284,724
Deferred income taxes
110,071
103,783
Operating lease liabilities –
long-term
98,347
—
Line of credit – long-term
297,000
200,000
Postretirement benefit obligations
32,410
21,080
Other liabilities
5,537
4,701
Total liabilities
835,091
614,288
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 200,000,000
shares authorized; 31,423,898 shares issued and 27,914,777
outstanding at December 31, 2019; 30,555,715 shares issued and
29,345,001 outstanding at December 31, 2018
314
306
Preferred stock, par value $0.01;
50,000,000 shares authorized; 0 shares issued and outstanding at
December 31, 2019 and 2018
—
—
Treasury stock at par (3,509,121 shares at
December 31, 2019; 1,210,714 shares at December 31, 2018)
(35)
(12)
Additional paid-in capital
180,884
234,699
Retained earnings
229,166
187,819
Accumulated other comprehensive loss
(9,451)
(2,474)
Total stockholders' equity
400,878
420,338
Total liabilities and stockholders'
equity
$
1,235,969
$
1,034,626
AdvanSix Inc.
Consolidated Statements of
Operations
(Unaudited)
(Dollars in thousands, except
share and per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2019
2018
2019
2018
Sales
$
326,650
$
386,634
$
1,297,393
$
1,514,984
Costs, expenses and other:
Costs of goods sold
311,790
332,785
1,161,921
1,340,497
Selling, general and administrative
expenses
16,692
26,035
75,375
81,224
Other non-operating expense, net
1,878
914
6,749
7,495
Total costs, expenses and other
330,360
359,734
1,244,045
1,429,216
Income (loss) before taxes
(3,710)
26,900
53,348
85,768
Income tax expense (benefit)
(1,616)
6,139
12,001
19,524
Net income (loss)
$
(2,094)
$
20,761
$
41,347
$
66,244
Earnings (loss) per common share
Basic
$
(0.08)
$
0.70
$
1.47
$
2.20
Diluted
$
(0.08)
$
0.68
$
1.43
$
2.14
Weighted average common shares
outstanding
Basic
27,913,171
29,567,228
28,122,288
30,172,050
Diluted
27,913,171
30,350,892
28,898,836
30,978,291
AdvanSix Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2019
2018
2019
2018
Cash flows from operating
activities:
Net income (loss)
$
(2,094)
$
20,761
$
41,347
$
66,244
Adjustments to reconcile net income to net
cash (used for) provided by operating activities:
Depreciation and amortization
14,732
14,328
56,826
53,233
Loss on disposal of assets
223
432
5,190
1,992
Deferred income taxes
(707)
742
8,442
9,558
Stock based compensation
774
2,625
8,349
10,131
Accretion of deferred financing fees
107
106
427
1,802
Restructuring charges
(1,603)
—
11,020
—
Changes in assets and liabilities:
Accounts and other receivables
2,540
(11,166)
53,676
35,712
Inventories
(8,828)
(22,156)
(35,567)
(7,974)
Accounts payable
(7,489)
12,955
(20,333)
2,280
Accrued liabilities
(91)
3,592
(4,561)
(6,111)
Deferred income and customer advances
17,748
20,261
(2,860)
5,362
Other assets and liabilities
4,537
3,170
(1,571)
1,156
Net cash provided by operating
activities
19,849
45,650
120,385
173,385
Cash flows from investing
activities:
Expenditures for property, plant and
equipment
(43,936)
(36,565)
(150,322)
(109,215)
Other investing activities
(600)
(1,320)
(2,803)
(2,976)
Net cash used for investing activities
(44,536)
(37,885)
(153,125)
(112,191)
Cash flows from financing
activities:
Payments of long-term debt
—
—
—
(266,625)
Borrowings from line of credit
102,500
60,500
419,250
345,000
Payments of line of credit
(71,500)
(60,500)
(322,250)
(145,000)
Payment of line of credit facility
fees
—
1
—
(1,361)
Principal payments of finance leases
(183)
(83)
(4,839)
(308)
Purchase of treasury stock
(9,129)
(18,081)
(62,196)
(38,524)
Issuance of common stock
1
—
17
—
Net cash provided by (used for) financing
activities
21,689
(18,163)
29,982
(106,818)
Net change in cash and cash
equivalents
(2,998)
(10,398)
(2,758)
(45,624)
Cash and cash equivalents at beginning of
year
10,048
20,206
9,808
55,432
Cash and cash equivalents at the end of
year
$
7,050
$
9,808
$
7,050
$
9,808
Supplemental non-cash investing
activities:
Capital expenditures included in accounts
payable
$
21,594
$
27,258
AdvanSix Inc.
Non-GAAP Measures
(Dollars in thousands)
Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2019
2018
2019
2018
Net cash provided by operating
activities
$
19,849
$
45,650
$
120,385
$
173,385
Expenditures for property, plant and
equipment
(43,936)
(36,565)
(150,322)
(109,215)
Free cash flow (1)
$
(24,087)
$
9,085
$
(29,937)
$
64,170
(1) Free cash flow is a non-GAAP measure
defined as Net cash provided by operating activities less
Expenditures for property, plant and equipment
The Company believes that this metric is useful to investors and
management as a measure to evaluate our ability to generate cash
flow from business operations and the impact that this cash flow
has on our liquidity.
Reconciliation of Net Income
to EBITDA
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2019
2018
2019
2018
Net income (loss)
$
(2,094)
$
20,761
$
41,347
$
66,244
Interest expense, net
1,727
1,534
5,454
7,492
Income tax expense (benefit)
(1,616)
6,139
12,001
19,524
Depreciation and amortization
14,732
14,328
56,826
53,233
EBITDA (2)
$
12,749
$
42,762
$
115,628
$
146,493
One-time Pottsville restructuring charges
(3)
(1,603)
—
11,020
—
EBITDA excluding one-time Pottsville
restructuring charges
$
11,146
$
42,762
$
126,648
$
146,493
Sales
$
326,650
$
386,634
$
1,297,393
$
1,514,984
EBITDA margin (4)
3.9%
11.1%
8.9%
9.7%
EBITDA margin excluding one-time
Pottsville restructuring charges
3.4%
11.1%
9.8%
9.7%
(2) EBITDA is a non-GAAP measure defined
as Net Income before Interest, Income Taxes, Depreciation and
Amortization
(3) One-time Pottsville restructuring charges reflect the closure
of the Company's Pottsville, Pennsylvania films plant
(4) EBITDA margin is defined as EBITDA
divided by Sales
The Company believes the non-GAAP financial measures presented
in this release provide meaningful supplemental information as they
are used by the Company’s management to evaluate the Company’s
operating performance, enhance a reader’s understanding of the
financial performance of the Company, and facilitate a better
comparison among fiscal periods and performance relative to its
competitors, as these non-GAAP measures exclude items that are not
considered core to the Company’s operations.
AdvanSix Inc.
Appendix
(Pre-tax income impact,
Dollars in millions)
Planned
Plant Turnaround Schedule (5)
1Q
2Q
3Q
4Q
FY
2017
—
~$10
~$4
~$20
~$34
2018
~$2
~$10
~$30
—
~$42
2019
—
~$5
~$5
~$25
~$35
2020E
~$5
$25-$30
—
~$3
$33-$38
(5) Primarily reflects the impact of fixed
cost absorption, maintenance expense, and the purchase of
feedstocks which are normally manufactured by the Company
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200221005100/en/
Media Debra Lewis (973) 526-1767
debra.lewis@advansix.com
Investors Adam Kressel (973) 526-1700
adam.kressel@advansix.com
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