AdvanSix reported a fourth-quarter loss of $5.1 million on sales of $382.2 million, down from year-ago net income of $33.6 million and sales of $404.1 million. Adjusted EBITDA dropped to $15.1 million from $66.6 million.
“Our healthy balance sheet helped to support our performance through challenging market conditions, particularly in Nylon Solutions, while maintaining organic investments and return of cash to our shareholders,” said Erin Kane, President and CEO. “Core to our long-term strategy is accelerating growth in the most profitable areas of our portfolio, continuous improvement to strengthen the underlying earnings power of the business, and sustaining our cost-advantaged business model.”
AdvanSix said market-based pricing during the quarter was unfavorable by 22% compared to the prior year, primarily reflecting reduced ammonium sulfate pricing and lower raw material input costs and a more stable global nitrogen supply environment, as well as lower nylon pricing due to unfavorable supply and demand conditions.
Sales volume increased approximately 16% during the quarter, primarily driven by higher export shipments of ammonium sulfate and nylon. Raw material pass-through pricing was favorable by 1% as a result of a net cost increase in benzene and propylene, both inputs to cumene, which is a key feedstock for some of its products.
Full-year net income was $54.6 million on sales of $1.53 billion, down from the year-ago $171.9 million and $1.95 billion, respectively. Adjusted EBITDA was $153.6 million, down from $308.5 million. Full-year ammonium sulfate sales were $440.9 million, or 29% of the company’s total sales, versus $629 million or 33% for 2022.
Going forward, the company anticipates strong ammonium sulfate seasonal demand supported by continued favorable underlying agriculture industry fundamentals. It expects first-half year-over-year pricing declines amid a lower nitrogen pricing environment.
AdvanSix expects to incur a $23-$27 million impact to first-quarter pre-tax income as a result of the process-based operational disruption at its Frankford, Pa., manufacturing site (GM Jan. 19, p. 1) and a delayed ramp-up to planned utilization rates. This is up from the $18-$23 million assessment the company gave in January. At the time, AdvanSix told Green Markets that ammonium sulfate production at Hopewell, Va., was also impacted, but the company was taking actions to ensure it had adequate supply for the upcoming spring season.
AdvanSix expects 2024 planned maintenance to have a pre-tax impact of $38-$43 million versus $30 million in 2023. It said maintenance will be staggered across unit operations to maintain output.
AdvanSix reported a 2024 Capex of $140-$150 million, reflecting increased spend to address critical enterprise risk mitigation and growth projects, including the company’s SUSTAIN program (GM May 5, 2023), which is a multi-year investment targeting expansion of granular ammonium sulfate production predominately through increased conversion by about 200,000 st/y. The company is targeting 65% conversion in 2024 and up to 75% in 2027.
“While the previously disclosed operational disruption at our Frankford, Pa. manufacturing site is impacting our first-quarter results, our teams have been focused on stabilization of phenol production, which is enabling us to ramp up our Hopewell and Chesterfield manufacturing facilities to our targeted utilization rates,” Kane said.
“We thank our customers, partners, and AdvanSix teammates for their collaboration and agility to mitigate the value chain impact of this event,” she added. “Our focus remains on performing in the current set of industry dynamics and executing levers in our control, including remaining disciplined on cost and optimizing working capital. Our outlook reflects a continued investment in our long-term potential through both our SUSTAIN program’s planned expansion in granular ammonium sulfate production and increased infrastructure spend in 2024 to mitigate enterprise risk.”