AdvanSix reported second-quarter net income of $32.7 million on sales of $427.9 million, down from the year-ago record of $65.2 million and $583.7 million, respectively. Adjusted EBITDA was $65.8 million, off from $105.4 million.
“AdvanSix successfully delivered solid earnings and cash flow results in the second quarter against a record prior year,” said Erin Kane, President and CEO of AdvanSix. “We captured strong in-season demand for plant nutrients in a significantly lower nitrogen and raw material environment, navigated a nylon pricing environment pressured by industry supply and demand conditions including increased low-priced imports, while North American acetone supply and demand continued to be balanced.”
Quarterly cash dividends were increased by 10%, to $0.16 per share. The company repurchased 410,862 shares during the quarter at $14.9 million.
Kane told analysts that the company is assessing increased nylon exports from China into an already soft market, with a possible trade case as an option.
Second-quarter market-based pricing was unfavorable by 19% compared to the prior year, with the company citing lower nutrient values that reduced ammonium sulfate pricing, as well as lower nylon pricing. AdvanSix said significantly lower ammonium sulfate prices were only partially offset by lower input costs, such as sulfur and natural gas.
Overall, raw material pass-through pricing was unfavorable by 6% following a net cost decrease in benzene and propylene. Sales volume decreased approximately 2%, driven by soft end-market demand impacting portions of nylon and chemical intermediate lines, which was partially offset by higher domestic ammonium sulfate volume to meet strong in-season customer demand.
Ammonium sulfate continued as the company’s sales leader with sales of $138.9 million, representing 32% of total company sales of $427.9 million. However, the percentage was down from the year-ago 35%, or $205.9 million and $583.7 million, respectively.
Going forward, AdvanSix expects favorable underlying agriculture industry fundaments to continue and noted that it is typical to see North American ammonium sulfate seasonality to drive a third-quarter sequential domestic pricing decline.
“While we anticipate the impacts of ammonium sulfate seasonality and soft end-market demand overall, we remain well-positioned to offer near, medium and long-term value for our shareholders supported by the structural improvements made to the underlying earnings power of this business,” Kane said.
The company reiterated its plans to increase granular ammonium sulfate production (GM May 5, p. 1).
“We are highly focused on the execution of our upcoming third-quarter planned plant turnaround to support safe, stable, and sustainable operations at higher utilization rates relative to our industry,” Kane added. The cost estimate for the turnaround is $25-$30 million, which is less than the year-ago turnaround expense of $44 million. Calendar 2023 turnaround expenses are put at $28-$33 million versus 2022’s $50 million.
Six-month net income was $67.7 million on sales of $828.5 million, down from the year-ago $128.2 million and $1.06 billion, respectively. Adjusted EBITDA was $131.1 million, down from $208.6 million.