AdvanSix's Q3 Earnings Take A Hit; CEO Cites 'Unfavorable Global Industry Supply And Demand Conditions'

AdvanSix Inc ASIX reported a third-quarter FY23 sales decline of 32.6% Y/Y to $322.91 million, missing the consensus of $367.90 million.

The sales decline was due to a 24% unfavorable impact of market-based pricing, 8% lower raw material pass-through pricing, and 1% lower volume.

Adjusted EPS was $(0.36), down from $0.43 a year ago, missing the consensus of $(0.03).

Adjusted EBITDA declined to $7.32 million from $33.31 million a year ago, with margin contracting to 2.3% from 7% the prior year. 

Operating cash flow declined to $20.8 million from $58.93 million a year ago. Free cash flow was negative $(4.33) million.

Dividend: ASIX declared a quarterly cash dividend of $0.16 per share, payable on Nov. 28, 2023, to stockholders of record as of the close of business on Nov. 14, 2023.

The company returned $14 million of cash to shareholders through repurchases.

"In the third quarter, AdvanSix navigated continued challenging market conditions in Nylon Solutions while executing its larger planned multi-plant turnaround for the year. 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," said Erin Kane, president and CEO of AdvanSix. "The nylon environment has been pressured by unfavorable global industry supply and demand conditions for several quarters and has approached trough industry spreads."

FY23 Outlook: The company expects capital expenditures guidance at $115 million, reflecting increased spend due to critical infrastructure, other maintenance, and growth and cost savings projects.

ASIX expects nylon industry margins to remain at prior trough levels through year-end; Anticipate continued higher Nylon Solutions exports in the near-term.

The company expects balanced supply and demand conditions for North American acetone to continue; it anticipates North American ammonium sulfate seasonality to drive Q3 domestic pricing decline Q/Q.

Price Action: ASIX shares were down 8.6% to $25.64 at the time of publication Friday.

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