Analysts Call Attention: AdvanSix (NYSE: ASIX)

AdvanSix (NYSE: ASIX) recently stated its fiscal results for the 3rd-quarter ending September 30, 2k19. Overall, the Company generated higher earnings as compared to the prior year while executing its planned priorities in a challenging macro environment.

3rd-Quarter 2k19 Highlights

  • Sales down about 16.00 percent as compared to previous year, counting about 11.00 percent lower raw material pass-through pricing, 3.0 percent unfavorable impact of market-based pricing, and 2.0 percent lower volume
  • Net Income of $7.90M, a boost of $2.40M as compared to the previous year
  • EBITDA of $24.90M, a boost of $5.00M as compared to the previous year
  • The EBITDA margin of 8.0 percent, up 260 bps as compared to the previous year
  • Cash Flow from Operations of $33.20M, a decline of $17.30M as compared to the previous year
  • Capital Expenditures of $35.20M, a boost of $16.00M as compared to the previous year
  • Free Cash Flow of ($2.00)M, a decline of $33.30M as compared to the previous year
  • Repurchased 534,049 shares for about $13.00M

EBITDA of $24.90M in the quarter turned up $5.00M as compared to the prior year mainly because of the net favourable year-over-year impact of planned plant turnarounds (about $25.00M), partially offset by the unfavourable impact of market-based pricing, lower volume and operational performance, counting fixed cost absorption and unfavourable product mix, and an about $4.00M unfavourable impact from an extended cumene supply chain following the Philadelphia Energy Solutions (PES) supplier fire.

Earnings for each share of $0.280 turned up 56.00 percent as compared to the previous year driven by the factors talked about above and a lower share count driven by continued repurchases. The lower share count contributed about $0.020 benefit as compared to the previous year.

Cash flow from operations of $33.20M in the quarter reduced $17.30M as compared to the prior year mainly because of the unfavorable impact of changes in working capital. Capital expenditures of $35.20M in the quarter turned up $16.00M as compared to the previous year mainly because of higher planned turnaround maintenance spend and a boost in high-return growth and cost savings projects.

Outlook

  • Targeting strong nylon plant utilization rates despite further global demand softness
  • Expect mixed ammonium sulfate fertilizer environment to continue through 2k19/2k20 planting season
  • Expect acetone anti-dumping duties to be finalized by 1Q20
  • Expect an unfavorable impact to pre-tax income, as a result of PES supplier fire, of $8.00 to $10.00M in 2k19 (about $4.00M in 3Q19, $4.00 to $6.00M in 4Q19) and $10.00 to $15.00M in 2k20
  • Capital Expenditures tracking to about $150.00M for the full year 2k19; Expect Capital Expenditures to be $90.00 to $110.00M in 2k20
  • Expect pre-tax income impact of planned plant turnarounds to be $33.00 to $38.00M in 2k20 (as compared to about $35.00M in 2k19)