AdvanSix Q2 Earnings Beat Consensus Despite Weak Fundamentals

AdvanSix Inc ASIX reported a Q2 FY23 sales decline of 27% Y/Y to $427.94 million, beating the consensus of $418.67 million.

The sales decline was due to a 2% lower volume, a 19% unfavorable impact of market-based pricing, and a 6% lower raw material pass-through pricing.

Adjusted EPS was $1.25, down from $2.30 a year ago, beating the consensus of $1.11.

Adjusted EBITDA declined to $65.8 million from $105.4 million a year ago, with margin contracting to 15.4% from 18.1% the prior year. 

Operating cash flow declined to $35.0 million from $95.9 million a year ago. Free cash flow was $15.7 million.

Dividend: ASIX declared a quarterly cash dividend of $0.16 per share, up 10% Q/Q, payable on August 29, 2023, to stockholders of record as on August 15, 2023.

Repurchase: The company repurchased shares worth $14.9 million in the quarter.

FY23 Outlook: The company reaffirms capital expenditures guidance at $110 million - $120 million in 2023, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

The company anticipates North American ammonium sulfate seasonality to drive Q3 domestic pricing decline Q/Q.

ASIX projects continued balanced supply and demand conditions for North American acetone and continued unfavorable supply and demand conditions across nylon and other chemical intermediates on weakness in consumer durables and building and construction end markets.

Price Action: ASIX shares are trading lower by 0.96% at $39.00 on the last check Friday.