AdvanSix, Parsippany, N.J., reported a 44 percent uptick in third-quarter net income, to $7.9 million ($0.28 per diluted share) from the year-ago $5.5 million ($0.18 per share), though sales were off 16 percent, to $310.6 million from $368.6 million. EBITDA was $24.9 million, up from $20 million.
“The end market environment remains challenging as we saw a further slowdown in demand on a global basis through the third quarter” said Erin Kane, AdvanSix President and CEO. “Given our global low-cost position, we continue to benefit from our strong utilization rates and operating leverage in the face of slowing nylon demand, acetone oversupply conditions, and mixed fertilizer industry dynamics.
“We are planning conservatively in the near-term based on the challenging macro environment and are taking proactive measures to drive disciplined cost management, optimize working capital performance, and cash flow generation, while deploying capital prudently,” he added.
The company said overall market-based pricing was unfavorable by approximately 3 percent compared to year-ago levels, reflecting challenging end market conditions for acetone, nylon, and caprolactam, partially offset by improved ammonium sulfate performance. AS represented 20 percent of total third-quarter sales versus 19 percent for the year-ago quarter.
On AS, the company said there was a $13 million typical seasonal decline from the second to third quarter, with an unfavorable product mix with new season fill in the third quarter. It noted that domestic prices are typically strongest in the second quarter, with the third quarter characterized by higher exports of standard product.
Going forward, the company expects mixed AS fertilizer environment to continue through the 2019/20 planting season. However, it expects the AS price/mix to improve seasonally from the third to fourth quarter, with demand strengthening into the spring. It noted increased AS competitive pressure, and said it will be monitoring North American supply/demand and imports.
AdvanSix said the improved EBITDA was primarily due to the net favorable year-over-year impact of planned plant turnarounds ($25 million), partially offset by the unfavorable impact of market-based pricing, lower volume, and operational performance, including fixed cost absorption and unfavorable product mix, and an approximately $4 million unfavorable impact from an extended cumene supply following the Philadelphia Energy Solutions (PES) supplier fire.
“Our organization shows its resiliency by navigating through challenging end market conditions and external factors, with a focus to outperform on what we can control,” added Kane. “We recently completed our fourth-quarter planned plant turnaround on time and on budget, which will have an approximately $25 million unfavorable impact to pre-tax income in the fourth quarter. Despite a more uncertain macro environment, we continue to position the company for long-term performance by executing on our strategic priorities including safe, stable and sustainable operations, differentiated product growth and disciplined capital allocation.”
Nine-month net income was $43.4 million ($1.49 per share) on sales of $970.7 million, down from the year-ago $45.5 million ($1.46 per share) and $1.13 billion, respectively. EBITDA was $102.9 million, off from $103.7 million.