AdvanSix posted a third-quarter loss of $7.98 million, down from the year-ago net income of $10 million, citing a challenging Nylon Solutions market and a major planned turnaround. No turnarounds are planned for the fourth quarter.
Third-quarter sales were off 33%, to $322.9 million from $479.8 million, while adjusted EBITDA slipped to $7.32 million from $33.3 million.
“In the third quarter, AdvanSix navigated continued challenging market conditions in Nylon Solutions while executing its larger planned multi-plant turnaround for the year,” said Erin Kane, President and CEO. “These factors overshadowed resilient performance within our acetone portfolio and solid results from our plant nutrients business in the seasonally slowest quarter of the year and amid lower nitrogen nutrient values and raw material input costs.”
Going forward, the company said it expects favorable underlying agriculture industry fundamentals to continue. AdvanSix said the Plant Nutrients segment is a market leader and continues to support overall company performance.
Under its Sustainable US Sulfate to Accelerate Increased Nutrition (SUSTAIN) program, AdvanSix is spending $75 million in capital expenditures to expand granular ammonium sulfate production (GM May 5, p. 1). In addition, it said it is progressing on a USDA grant to partner with farmers on innovative domestic fertilizer production.
Company-wide, AdvanSix said market-based pricing was unfavorable by 24% 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. Ammonium sulfate sales of $84.6 million reflected 26% of company sales, down from the year-ago $131.7 million, or 28%.
AdvanSix was also impacted by lower nylon pricing due to unfavorable supply and demand conditions. It said raw material pass-through pricing was unfavorable by 8% as a result of a net cost decrease in benzene and propylene. It said sales volume decreased 1%.
Kane said the nylon environment has been pressured by unfavorable global industry supply and demand conditions for several quarters and has approached trough industry spreads.
“We have a demonstrated playbook to navigate these dynamics, while maintaining our focus on smart, disciplined investments, and the healthy balance sheet we have established supports our ability to weather this environment as reflected in our ongoing repurchases and an increased dividend,” she said.
“To drive long-term, sustainable performance, we are focusing our resources and efforts around higher value components of our portfolio,” Kane continued. “Simplification reduces complexity to ensure our investments and resources are aligned with supporting our customers’ success in areas of highest impact. Of note, we are accelerating profitable growth through our SUSTAIN program’s planned expansion in granular ammonium sulfate production. We’re committed to driving best possible outcomes in the current set of industry dynamics and executing levers in our control, including remaining disciplined on cost and optimizing working capital to create shareholder value.”
AdvanSix declared a quarterly cash dividend of $0.16 per share on its common stock, payable on Nov. 28 to stockholders of record at close of business on Nov. 14.
AdvanSix reported nine-month net income of $59.7 million on sales of $1.15 billion, down from the year-ago $138.3 million and $1.54 billion, respectively. Adjusted EBITDA was $138.5 million, down from $241.9 million.