AdvanSix Reports Mixed Q1 Results Hit By Lower Volume & Unfavorable Pricing

AdvanSix Inc ASIX reported a first-quarter FY23 sales decline of 16.4% year-over-year to $400.54 million, missing the consensus of $411.23 million.
The sales decline was driven by a 9% lower volume, a 6% unfavorable impact of market-based pricing, and a 4% lower raw material pass-through pricing, partially offset by a 3% contribution from acquisitions.
Adjusted EPS was $1.30, down from $2.26 in 1Q22, beating the consensus of $1.00.
The management states that while headwinds in consumer durables and building and construction end markets persist across portions of the nylon and chemical intermediates portfolio, North American acetone supply and demand continue to be balanced, supporting the company's performance.
AdvanSix's net cash provided by operating activities for the quarter declined to $1.57 million from $49.16 million a year ago. Free cash flow was $(23.03) million.
Adjusted EBITDA was $65.35 million (-36.7% Y/Y), and the margin contracted by 522 bps to 16.3%. The decrease is attributable to lower sales and production volume, higher plant spending, and unfavorable market-based pricing, net of raw material costs.
Dividend: ASIX declared a quarterly cash dividend of $0.145 per share, payable on May 30, 2023, to stockholders of record as of the close of business on May 16, 2023.
The company repurchased 333,054 shares for ~$13.5 million in 1Q23.
"We are announcing today our intention to invest in expanding our granular ammonium sulfate production by approximately 200,000 tons per year. We believe that this investment will have meaningful impact in helping to nourish the world and is a win-win for our customers and our growth and sustainability initiatives," commented Erin Kane, president and CEO.
FY23 Outlook: The company continues to expect capital expenditures of $110 million - $120 million in 2023, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.
Price Action: ASIX shares closed lower by 3.63% at $35.05 on Thursday.

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