(Mark One)
|
|
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
AdvanSix Inc.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
|
|
81-2525089
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
300 Kimball Drive, Suite 101, Parsippany, New Jersey
|
|
07054
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
ý
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
|
|
Emerging growth company
o
|
|
||
|
|
|
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||
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||
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||
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||
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||
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
$
|
400,459
|
|
|
$
|
361,441
|
|
|
$
|
759,697
|
|
|
$
|
738,145
|
|
Costs, expenses and other:
|
|
|
|
|
|
|
|
|
|
||||||
Costs of goods sold
|
342,958
|
|
|
299,298
|
|
|
664,278
|
|
|
613,193
|
|
||||
Selling, general and administrative expenses
|
17,919
|
|
|
18,095
|
|
|
37,132
|
|
|
34,865
|
|
||||
Other non-operating expense (income), net
|
1,582
|
|
|
2,965
|
|
|
5,128
|
|
|
4,763
|
|
||||
|
362,459
|
|
|
320,358
|
|
|
706,538
|
|
|
652,821
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before taxes
|
38,000
|
|
|
41,083
|
|
|
53,159
|
|
|
85,324
|
|
||||
Income taxes
|
9,590
|
|
|
15,317
|
|
|
13,156
|
|
|
32,265
|
|
||||
Net income
|
$
|
28,410
|
|
|
$
|
25,766
|
|
|
$
|
40,003
|
|
|
$
|
53,059
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.93
|
|
|
$
|
0.85
|
|
|
$
|
1.31
|
|
|
$
|
1.74
|
|
Diluted
|
$
|
0.91
|
|
|
$
|
0.83
|
|
|
$
|
1.28
|
|
|
$
|
1.71
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
30,481,627
|
|
|
30,482,966
|
|
|
30,485,095
|
|
|
30,482,966
|
|
||||
Diluted
|
31,305,168
|
|
|
30,986,854
|
|
|
31,294,323
|
|
|
30,977,472
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
28,410
|
|
|
$
|
25,766
|
|
|
$
|
40,003
|
|
|
$
|
53,059
|
|
Foreign exchange translation adjustment
|
(17
|
)
|
|
(1
|
)
|
|
(18
|
)
|
|
(3
|
)
|
||||
Pension obligation adjustments
|
—
|
|
|
—
|
|
|
410
|
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
(17
|
)
|
|
(1
|
)
|
|
392
|
|
|
(3
|
)
|
||||
Comprehensive income
|
$
|
28,393
|
|
|
$
|
25,765
|
|
|
$
|
40,395
|
|
|
$
|
53,056
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
40,003
|
|
|
$
|
53,059
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,913
|
|
|
22,959
|
|
||
Loss on disposal of assets
|
1,336
|
|
|
1,189
|
|
||
Deferred income taxes
|
6,845
|
|
|
20,500
|
|
||
Stock based compensation
|
4,880
|
|
|
3,619
|
|
||
Accretion of deferred financing fees
|
1,589
|
|
|
296
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts and other receivables
|
43,913
|
|
|
(7,945
|
)
|
||
Inventories
|
7,079
|
|
|
(2,509
|
)
|
||
Accounts payable
|
(33,442
|
)
|
|
(14,157
|
)
|
||
Income taxes payable
|
3,257
|
|
|
4,949
|
|
||
Accrued liabilities
|
(6,805
|
)
|
|
(227
|
)
|
||
Deferred income and customer advances
|
(14,769
|
)
|
|
(23,982
|
)
|
||
Other assets and liabilities
|
(2,578
|
)
|
|
3,041
|
|
||
Net cash provided by operating activities
|
77,221
|
|
|
60,792
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for property, plant and equipment
|
(53,423
|
)
|
|
(47,785
|
)
|
||
Other investing activities
|
(1,254
|
)
|
|
(4,062
|
)
|
||
Net cash used for investing activities
|
(54,677
|
)
|
|
(51,847
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Payment of long-term debt
|
(266,625
|
)
|
|
—
|
|
||
Borrowings from line of credit
|
261,000
|
|
|
276,000
|
|
||
Payments of line of credit
|
(51,000
|
)
|
|
(276,000
|
)
|
||
Payment of line of credit fees
|
(1,362
|
)
|
|
—
|
|
||
Principal payments under capital lease
|
(162
|
)
|
|
(70
|
)
|
||
Purchase of treasury shares
|
(3,113
|
)
|
|
—
|
|
||
Net cash used for financing activities
|
(61,262
|
)
|
|
(70
|
)
|
||
|
|
|
|
||||
Net change in cash and cash equivalents
|
(38,718
|
)
|
|
8,875
|
|
||
Cash and cash equivalents at beginning of period
|
55,432
|
|
|
14,199
|
|
||
Cash and cash equivalents at the end of period
|
$
|
16,714
|
|
|
$
|
23,074
|
|
|
|
|
|
||||
Supplemental non-cash investing activities:
|
|
|
|
|
|
||
Capital expenditures included in accounts payable
|
$
|
7,704
|
|
|
$
|
16,980
|
|
|
|
|
|
||||
Supplemental cash investing activities:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
3,204
|
|
|
$
|
5,244
|
|
Cash paid for income taxes
|
$
|
2,240
|
|
|
$
|
6,671
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Nylon
|
27%
|
|
29%
|
|
28%
|
|
29%
|
Caprolactam
|
19%
|
|
18%
|
|
18%
|
|
19%
|
Ammonium Sulfate Fertilizers
|
21%
|
|
21%
|
|
20%
|
|
20%
|
Chemical Intermediates
|
33%
|
|
32%
|
|
34%
|
|
32%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
United States
|
$
|
342,497
|
|
|
$
|
299,537
|
|
|
$
|
640,145
|
|
|
$
|
600,035
|
|
International
|
57,962
|
|
|
61,904
|
|
|
119,552
|
|
|
138,110
|
|
||||
Total
|
$
|
400,459
|
|
|
$
|
361,441
|
|
|
$
|
759,697
|
|
|
$
|
738,145
|
|
Opening balance January 1, 2018
|
$
|
17,194
|
|
Additional cash advances
|
2,107
|
|
|
Less amounts recognized in revenues
|
(16,876
|
)
|
|
Ending balance June 30, 2018
|
$
|
2,425
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Income
|
$
|
28,410
|
|
|
$
|
25,766
|
|
|
$
|
40,003
|
|
|
$
|
53,059
|
|
Weighted average common shares outstanding
|
30,481,627
|
|
|
30,482,966
|
|
|
30,485,095
|
|
|
30,482,966
|
|
||||
EPS – Basic
|
$
|
0.93
|
|
|
$
|
0.85
|
|
|
$
|
1.31
|
|
|
$
|
1.74
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of unvested equity awards and other stock-based holdings
|
823,541
|
|
|
503,888
|
|
|
809,228
|
|
|
494,506
|
|
||||
Weighted average common shares outstanding
|
31,305,168
|
|
|
30,986,854
|
|
|
31,294,323
|
|
|
30,977,472
|
|
||||
EPS – Diluted
|
$
|
0.91
|
|
|
$
|
0.83
|
|
|
$
|
1.28
|
|
|
$
|
1.71
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accounts receivables
|
$
|
155,185
|
|
|
$
|
188,477
|
|
Other
|
2,235
|
|
|
8,936
|
|
||
Total accounts and other receivables
|
157,420
|
|
|
197,413
|
|
||
Less – allowance for doubtful accounts
|
(1,696
|
)
|
|
(1,410
|
)
|
||
Total accounts and other receivables – net
|
$
|
155,724
|
|
|
$
|
196,003
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
50,151
|
|
|
$
|
48,502
|
|
Work in progress
|
43,269
|
|
|
50,511
|
|
||
Finished goods
|
32,816
|
|
|
35,430
|
|
||
Spares and other
|
24,364
|
|
|
23,091
|
|
||
|
150,600
|
|
|
157,534
|
|
||
Reduction to LIFO cost basis
|
(28,471
|
)
|
|
(28,326
|
)
|
||
Total inventories – net
|
$
|
122,129
|
|
|
$
|
129,208
|
|
Total term loan outstanding
|
$
|
—
|
|
Amounts outstanding under the Revolving Credit Facility
|
210,000
|
|
|
Total outstanding indebtedness
|
210,000
|
|
|
Less: Line of credit – short-term
|
(18,300
|
)
|
|
Line of credit – long-term
|
$
|
191,700
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service costs
|
$
|
2,001
|
|
|
$
|
1,908
|
|
|
$
|
4,003
|
|
|
$
|
3,816
|
|
Interest costs
|
469
|
|
|
333
|
|
|
938
|
|
|
666
|
|
||||
Expected return on plan assets
|
(287
|
)
|
|
(76
|
)
|
|
(575
|
)
|
|
(152
|
)
|
||||
Net periodic benefit cost
|
$
|
2,183
|
|
|
$
|
2,165
|
|
|
$
|
4,366
|
|
|
$
|
4,330
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Sales
|
$400,459
|
|
$361,441
|
|
$759,697
|
|
$738,145
|
% change compared with prior year period
|
10.8%
|
|
|
|
2.9%
|
|
|
|
Three Months Ended
June 30, 2018 |
|
Six Months Ended
June 30, 2018
|
Volume
|
4.0%
|
|
(1.9)%
|
Price
|
6.8%
|
|
4.8%
|
|
10.8%
|
|
2.9%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Costs of goods sold
|
$342,958
|
|
$299,298
|
|
$664,278
|
|
$613,193
|
% change compared with prior year period
|
14.6%
|
|
|
|
8.3%
|
|
|
Gross Margin percentage
|
14.4%
|
|
17.2%
|
|
12.6%
|
|
16.9%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Selling, general and administrative expenses
|
$17,919
|
|
$18,095
|
|
$37,132
|
|
$34,865
|
Percent of sales
|
4.5%
|
|
5.0%
|
|
4.9%
|
|
4.7%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Tax expense
|
$9,590
|
|
$15,317
|
|
$13,156
|
|
$32,265
|
Effective tax rate
|
25.2%
|
|
37.3%
|
|
24.7%
|
|
37.8%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
|
$28,410
|
|
$25,766
|
|
$40,003
|
|
$53,059
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
28,410
|
|
|
$
|
25,766
|
|
|
$
|
40,003
|
|
|
$
|
53,059
|
|
Interest expense, net
|
1,598
|
|
|
1,873
|
|
|
4,688
|
|
|
3,412
|
|
||||
Income taxes
|
9,590
|
|
|
15,317
|
|
|
13,156
|
|
|
32,265
|
|
||||
Depreciation and amortization
|
13,371
|
|
|
11,663
|
|
|
25,913
|
|
|
22,959
|
|
||||
EBITDA (non-GAAP)
|
$
|
52,969
|
|
|
$
|
54,619
|
|
|
$
|
83,760
|
|
|
$
|
111,695
|
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
400,459
|
|
|
$
|
361,441
|
|
|
$
|
759,697
|
|
|
$
|
738,145
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA Margin (non-GAAP)
|
13.2%
|
|
15.1%
|
|
11.0%
|
|
15.1%
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash provided by (used for):
|
|
|
|
|
|
||
Operating activities
|
$
|
77,221
|
|
|
$
|
60,792
|
|
Investing activities
|
(54,677
|
)
|
|
(51,847
|
)
|
||
Financing activities
|
(61,262
|
)
|
|
(70
|
)
|
||
Net change in cash and cash equivalents
|
$
|
(38,718
|
)
|
|
$
|
8,875
|
|
|
Six Months Ended
June 30, 2018
|
||
Capital expenditures in Accounts payable at December 31, 2017
|
$
|
25,222
|
|
Purchases of property, plant and equipment
|
35,905
|
|
|
Less: Capital expenditures in Accounts payable at June 30, 2018
|
(7,704
|
)
|
|
Cash paid for capital expenditures
|
$
|
53,423
|
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plan
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
|
||||||
April 1 - April 30
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
May 1 - May 31
|
—
|
|
—
|
|
—
|
|
75,000,000
|
|
||
June 1 - June 30
|
70,107
|
|
39.10
|
|
70,107
|
|
72,258,879
|
|
||
Total
|
70,107
|
|
$
|
39.10
|
|
70,107
|
|
$
|
72,258,879
|
|
Exhibit
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
ADVANSIX INC.
|
||
|
|
||
Date: August 3, 2018
|
By:
|
|
/s/ Michael Preston
|
|
|
|
Michael Preston
|
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AdvanSix Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Erin N. Kane
|
|
|
Erin N. Kane
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AdvanSix Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Michael Preston
|
|
|
Michael Preston
|
|
|
Chief Financial Officer
|
|
|
/s/ Erin N. Kane
|
|
Erin N. Kane
|
|
President and Chief Executive Officer
|
|
/s/ Michael Preston
|
|
Michael Preston
|
|
Chief Financial Officer
|