Robust sales, earnings and cash flow – strong execution in dynamic environment
Sales of $446 million, up 58% versus prior year driven by price and volume improvement
Earnings Per Share of $1.51, up $1.53 versus prior year
Cash Flow from Operations of $76 million, up $41 million versus prior year
AdvanSix (NYSE: ASIX) today announced its financial results for the third quarter ending September 30, 2021. Overall, the Company generated robust sales, earnings and cash flow in the quarter reflecting strong execution amid improving end market demand and tight industry supply conditions.
Third Quarter 2021 Summary
- Sales up approximately 58% versus prior year driven by 28% favorable impact of market-based pricing, 22% higher raw material pass-through pricing and 8% higher volume
- Net Income of $43.9 million, an increase of $44.6 million versus the prior year
- EBITDA of $75.2 million, an increase of $59.4 million versus the prior year
- EBITDA Margin of 16.8%, an increase of 1120 bps versus the prior year
- Cash Flow from Operations of $76.5 million, an increase of $41.0 million versus the prior year
- Capital Expenditures of $13.0 million, a decrease of $3.0 million versus the prior year
- Free Cash Flow of $63.5 million, an increase of $43.9 million versus the prior year
- Announced the initiation of a $0.125 per share quarterly dividend payable November 23, 2021
“We continued to execute well in the third quarter while supporting our customers to successfully navigate the current set of industry dynamics,” said Erin Kane, president and CEO of AdvanSix. “Our performance was supported by strong pricing and volume improvement including continued contributions from differentiated products amid favorable end market conditions and tight industry supply. Our earnings results were above the high-end of the outlook we provided at our September 28th Investor Day driven primarily by better-than-expected pricing, net of raw material costs, as well as the timing of ammonium sulfate sales.”
Summary third quarter 2021 financial results for the Company are included below:
Sales of $446.5 million increased approximately 58% versus the prior year. Raw material pass-through pricing was favorable by 22% following a net cost increase in benzene and propylene (inputs to cumene which is a key feedstock to our products). Market-based pricing was favorable by 28% compared to the prior year driven by higher pricing across each of our product lines. Sales volume in the quarter increased approximately 8% driven primarily by improved end market demand across our ammonium sulfate, nylon and caprolactam product lines.
Sales by product line and approximate percentage of total sales are included below:
EBITDA of $75.2 million in the quarter increased $59.4 million versus the prior year primarily due to higher market-based pricing, net of increased raw material costs, and the net approximately $20 million favorable impact of planned plant turnarounds year-over-year. 3Q 2021 EBITDA included approximately $2 million favorable impact of additional insurance proceeds related to the 2019 shutdown of cumene supplier Philadelphia Energy Solutions (PES).
Earnings per share of $1.51 increased $1.53 versus the prior year driven primarily by the factors discussed above.
Cash flow from operations of $76.5 million in the quarter increased $41.0 million versus the prior year primarily due to higher net income and the favorable impact of changes in working capital. Capital expenditures of $13.0 million in the quarter decreased $3.0 million versus the prior year reflecting capital process efficiencies and timing of project execution.
Dividend
As announced on September 28, 2021, the company’s Board of Directors declared a quarterly cash dividend of $0.125 per share on the company’s common stock, payable on November 23, 2021 to stockholders of record as of the close of business on November 9, 2021.
Credit Agreement
On October 27, 2021, the Company completed a refinancing of its existing credit facility by entering into a new 5-year, $500 million revolving credit facility providing increased liquidity and flexibility at lower borrowing costs reflecting strong business performance and more favorable credit market conditions.
Outlook
- Expect steady North America nylon demand amid favorable end market conditions and tight industry supply
- Expect robust agricultural industry fundamentals to continue through 2022 planting season
- Expect strong demand for chemical intermediates to continue; Expect continued balancing of North America acetone supply and demand
- Expect Capital Expenditures to be approximately $63 million in 2021; Continue to expect $95 to $105 million in 2022 reflecting scope of planned plant turnarounds and timing of project execution
- Expect pre-tax income impact of planned plant turnarounds to be approximately $30 million in 2021
“The outlook for our business remains favorable. We are building off a strong foundation with leading positions across our key product lines aligned to a diverse and growing set of end uses and applications. Our enhanced capital allocation strategy, including the recent initiation of a quarterly dividend, is creating further shareholder value over the long-term. We’ve demonstrated our ability to successfully perform through all market conditions and expand our earnings base and are even more excited about the opportunities that lie ahead for AdvanSix,” concluded 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 (844) 855-9494 (domestic) or (412) 858-4602 (international) approximately 10 minutes before the 9:00 a.m. ET start, and tell the operator that you are dialing in for AdvanSix’s third quarter 2021 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 October 29 until 12 noon ET on November 5 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international). The access code is 10160663.
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