AdvanSix posted a first-quarter loss of $17.4 million on sales of $336.8 million, down from the year-ago net income of $35 million and $400.5 million, respectively, citing an operational disruption at its Frankford, Pa., manufacturing plant (GM Jan. 19, p. 1). Adjusted EBITDA was only $595,000 versus the year-ago $65.4 million.
“I would like to once again thank our customers, partners, and teammates for their collaboration throughout the first quarter to mitigate value chain impact as we navigated the operational disruption at our Frankford manufacturing site,” said President and CEO Erin Kane.
“The total unfavorable impact to pre-tax income in the first quarter was approximately $27 million comprised of the impact of lost sales and other additional costs, including purchases of replacement product and incremental plant spend,” she added. “We are currently operating at targeted utilization rates across our integrated value chain and are well positioned to serve our key customers, particularly in Plant Nutrients as the domestic planting season progresses and in our acetone portfolio amid a tight global supply and demand environment.”
AdvanSix said first-quarter market-based pricing was unfavorable by 9% compared to the prior year primarily reflecting reduced ammonium sulfate pricing amid 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 decreased approximately 7% primarily driven by lost sales resulting from the first quarter operational disruption. Raw material pass-through pricing was approximately flat.
First-quarter ammonium sulfate sales were $85.3 million, representing 25% of total company sales, versus the year-ago $114.2 million, or 28%. AdvanSix expects second-quarter ammonium sulfate sequential pricing improvement amid continued sulfur demand growth and tight North American supply followed by the typical ammonium sulfate seasonal impact in the third quarter.
The company anticipates about a 70% ammonium sulfate granular conversion by the end of 2024 through its SUSTAIN (Sustainable US Sulfate to Accelerate Increased Nutrition) program. SUSTAIN is a multi-year series of capital investments focused on the planned expansion of granular ammonium sulfate production.
“As we look forward into the second quarter and beyond, there are a number of tailwinds at our back including strengthening fertilizer pricing, a continued tight global acetone supply and demand environment, an anticipated modest improvement in nylon industry spreads, and a return to expected robust plant utilization rates,” Kane said. “With our proven ability to manage through various cycles, we remain highly focused on executing all levers in our control while driving progress on our long-term potential.”
Kane noted the company’s recent certification to the International Sustainability and Carbon Certification (ISCC) PLUS standard for three of its manufacturing sites, helping customers transform and meet their own sustainability goals. She added that the company received its third consecutive Platinum rating by EcoVadis and strong ratings by CDP for water security and climate change.