AdvanSix reported a 44% drop in first-quarter net income, to $35 million on sales of $400.5 million, compared with the year-ago record quarter’s $63.1 million and $480 million, respectively. Adjusted EBITDA was $65.4 million, down from $103.2 million.
“As a diversified chemistry company, our first quarter performance reflects the resilience of our business model and our team’s ability and commitment to perform through various economic and industry conditions,” said Erin Kane, AdvanSix President and CEO. “We delivered solid earnings results in the current macro environment and against a record first quarter in the prior year period.”
“Our performance was achieved in an environment that saw nitrogen fertilizer pricing reset amid lower energy costs and improved supply,” she added. “While down from last year’s peak levels, ammonium sulfate value pricing remains robust and we continue to be well positioned to serve our key plant nutrients customers as the season progresses. While headwinds in consumer durables and building and construction end markets persist across portions of our nylon and chemical intermediates portfolio, North American acetone supply and demand continues to be balanced supporting our performance. With confidence in the health of our balance sheet, we continued to deploy a significant amount of capital through increased capital expenditures and $18 million of cash returned to shareholders in the form of share repurchases and dividends.”
The company said sales volume decreased approximately 9%, driven by cautious buying behavior for ammonium sulfate ahead of the start of the domestic planting season as a result of significant pricing declines year-over-year. Market-based pricing was unfavorable by 6% compared to the prior year primarily reflecting lower ammonium sulfate pricing. AS represented 28% of total sales for the quarter versus the year-ago 32%.
The company also cited soft end market demand, particularly in consumer durables and building and construction impacting portions of its nylon and chemical intermediates product lines.
AdvanSix expects strong underlying agriculture and fertilizer industry fundamentals to continue through the domestic planting season. It anticipates improvement in second-quarter AS domestic sales volume in a lower nitrogen and raw material pricing environment.