UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2017 March 31, 2024
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 1-37774
 AdvanSix Inc.
(Exact name of registrant as specified in its charter)
AdvanSix Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware81-2525089
(State or Other Jurisdictionother jurisdiction of
Incorporationincorporation or Organization)organization)
(I.R.S. Employer Identification No.)
300 Kimball Drive, Suite 101, Parsippany, New Jersey07054
(Address of Principal Executive Offices)principal executive offices)(Zip Code)
(973) 526-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareASIXNew York Stock Exchange


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer oý
Accelerated filer o
Non-accelerated filer xo
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  Noý

The Registrant had 30,482,96626,818,944 shares of common stock, $0.01 par value, outstanding at November 1, 2017.April 26, 2024.



ADVANSIX INC.
FORM 10-Q
 
TABLE OF CONTENTS




Condensed Consolidated and Combined Statements of Operations for the Threethree months ended March 31, 2024 and Nine Months Ended September 30, 2017 and 2016 2023(unaudited)
Condensed Consolidated and Combined Statements of Comprehensive Income (Loss) for the Threethree months ended March 31, 2024 and Nine Months Ended September 30, 2017 and 20162023 (unaudited)





PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS
 
ADVANSIX INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
Three Months Ended
March 31,
20242023
Sales$336,829 $400,544 
Costs, expenses and other:
Costs of goods sold333,864 330,042 
Selling, general and administrative expenses23,593 25,114 
Interest expense, net2,699 1,267 
Other non-operating (income) expense, net90 (108)
Total costs, expenses and other360,246 356,315 
Income (loss) before taxes(23,417)44,229 
Income tax expense (benefit)(6,021)9,275 
Net Income (Loss)$(17,396)$34,954 
Earnings per common share
Basic$(0.65)$1.27 
Diluted$(0.65)$1.22 
Weighted average common shares outstanding
Basic26,878,660 27,601,784 
Diluted26,878,660 28,586,563 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Sales$366,660
 $323,953
 $1,104,805
 $932,201
Costs, expenses and other: 
  
    
Costs of goods sold309,629
 285,091
 923,268
 804,471
Selling, general and administrative expenses19,086
 11,695
 54,022
 33,949
Other non-operating expense (income), net2,133
 (635) 6,381
 (1,792)
 330,848
 296,151
 983,671
 836,628
        
Income before taxes35,812
 27,802
 121,134
 95,573
Income taxes14,538
 11,342
 46,803
 36,712
Net income$21,274

$16,460
 $74,331
 $58,861
Earnings per common share 
  
    
Basic$0.70
 $0.54
 $2.44
 $1.93
Diluted$0.68
 $0.54
 $2.40
 $1.93
Weighted average common shares outstanding 
  
    
Basic30,482,966
 30,482,966
 30,482,966
 30,482,966
Diluted31,159,710
 30,482,966
 31,013,606
 30,482,966
 


See accompanying notes to Condensed Consolidated and Combined Financial Statements.
3

ADVANSIX INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands)




 
Three Months Ended
March 31,
20242023
Net income (loss)$(17,396)$34,954 
Foreign exchange translation adjustment(15)(33)
Cash-flow hedges(150)
Other comprehensive income (loss), net of tax(8)(183)
Comprehensive income (loss)$(17,404)$34,771 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$21,274
 $16,460
 $74,331
 $58,861
Foreign exchange translation adjustment(12) (148) (15) 284
Commodity hedges
 (3,470) 
 (1,635)
Other comprehensive income (loss), net of tax(12) (3,618) (15) (1,351)
Comprehensive income$21,262
 $12,842
 $74,316
 $57,510


See accompanying notes to Condensed Consolidated and Combined Financial Statements.
4

ADVANSIX INC.
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share amounts)




September 30, 2017 December 31, 2016
March 31,
2024
March 31,
2024
December 31,
2023
ASSETS 
  
Current assets: 
  
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents$39,986
 $14,199
Accounts and other receivables – net152,511
 131,671
Inventories – net100,474
 128,978
Taxes receivable
Other current assets8,684
 7,690
Total current assets301,655
 282,538
Property, plant and equipment – net597,877
 575,375
Operating lease right-of-use assets
Goodwill15,005
 15,005
Intangible assets
Other assets35,105
 32,039
Total assets$949,642
 $904,957
   
LIABILITIES 
  
LIABILITIES
LIABILITIES
Current liabilities: 
  
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable$177,688
 $222,929
Accrued liabilities27,630
 25,396
Income taxes payable18
 86
Operating lease liabilities – short-term
Deferred income and customer advances801
 25,567
Current portion of long-term debt10,125
 
Total current liabilities
Total current liabilities
Total current liabilities216,262
 273,978
Deferred income taxes147,461
 114,200
Long-term debt254,995
 264,838
Operating lease liabilities – long-term
Line of credit – long-term
Postretirement benefit obligations
Postretirement benefit obligations
Postretirement benefit obligations25,372
 33,544
Other liabilities2,941
 3,035
Total liabilities647,031
 689,595
   
COMMITMENTS AND CONTINGENCIES (Note 8)

 

COMMITMENTS AND CONTINGENCIES (Note 9)
COMMITMENTS AND CONTINGENCIES (Note 9)
COMMITMENTS AND CONTINGENCIES (Note 9)
   
EQUITY 
  
Common stock, par value $0.01; 200,000,000 shares authorized and 30,482,966 shares issued and outstanding305
 305
Preferred stock, par value $0.01; 50,000,000 shares authorized and 0 shares issued and outstanding
 
Additional paid in capital255,709
 242,806
Retained earnings/(accumulated deficit)49,617
 (24,714)
Accumulated other comprehensive income (loss)(3,020) (3,035)
Total equity302,611
 215,362
Total liabilities and equity$949,642
 $904,957
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 200,000,000 shares authorized; 32,922,935 shares issued and 26,813,996 outstanding at March 31, 2024; 32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023
Common stock, par value $0.01; 200,000,000 shares authorized; 32,922,935 shares issued and 26,813,996 outstanding at March 31, 2024; 32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023
Common stock, par value $0.01; 200,000,000 shares authorized; 32,922,935 shares issued and 26,813,996 outstanding at March 31, 2024; 32,598,946 shares issued and 26,750,471 outstanding at December 31, 2023
Preferred stock, par value $0.01; 50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2024 and December 31, 2023
Treasury stock at par (6,108,939 shares at March 31, 2024; 5,848,475 shares at December 31, 2023)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
See accompanying notes to Condensed Consolidated and Combined Financial Statements.
5

ADVANSIX INC.
CONDENSED CONSOLIDATEDAND COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 



Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net income (loss)$(17,396)$34,954 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization19,102 17,845 
Loss on disposal of assets89 168 
Deferred income taxes1,108 (170)
Stock-based compensation2,211 2,013 
Amortization of deferred financing fees155 155 
Changes in assets and liabilities, net of business acquisitions:
Accounts and other receivables(5,818)14,007 
Inventories20,910 (9,133)
Taxes receivable1,426 8,748 
Accounts payable(52,995)(54,489)
Income taxes payable(7,098)1,101 
Accrued liabilities2,150 (8,408)
Deferred income and customer advances(4,392)(8,758)
Other assets and liabilities4,346 3,542 
Net cash provided by (used for) operating activities(36,202)1,575 
Cash flows from investing activities:
Expenditures for property, plant and equipment(35,388)(24,603)
Other investing activities(1,419)(1,003)
Net cash used for investing activities(36,807)(25,606)
Cash flows from financing activities:
Borrowings from line of credit184,500 78,000 
Payments of line of credit(109,500)(66,000)
Principal payments of finance leases(239)(231)
Dividend payments(4,290)(4,020)
Purchase of treasury stock(7,023)(13,499)
Issuance of common stock426 622 
Net cash provided by (used for) financing activities63,874 (5,128)
Net change in cash and cash equivalents(9,135)(29,159)
Cash and cash equivalents at beginning of period29,768 30,985 
Cash and cash equivalents at the end of period$20,633 $1,826 
Supplemental non-cash investing activities:
Capital expenditures included in accounts payable$13,442 $8,193 
Supplemental cash activities:
Cash paid for interest$2,594 $1,191 
Cash paid for income taxes$36 $91 
 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities: 
  
Net income$74,331
 $58,861
Adjustments to reconcile net income to net cash (used for) provided by operating activities:   
Depreciation and amortization35,524
 29,964
Loss on disposal of assets1,236
 1,246
Deferred income taxes40,478
 29,206
Stock based compensation5,686
 
Accretion of deferred financing fees444
 
Changes in assets and liabilities:   
Accounts and other receivables(20,825) (20,117)
Inventories28,504
 13,581
Accounts payable(33,893) (161)
Income taxes payable(68) 
Accrued liabilities2,234
 (9,690)
Deferred income and customer advances(24,766) (23,501)
Other assets and liabilities(10,414) (12,922)
Net cash provided by operating activities98,471
 66,467
    
Cash flows from investing activities: 
  
Expenditures for property, plant and equipment(67,206) (56,859)
Other investing activities(5,387) (461)
Net cash used for investing activities(72,593) (57,320)
    
Cash flows from financing activities: 
  
Proceeds from long term debt
 270,000
Payment of debt issuance costs
 (1,770)
Borrowings from revolving credit facility308,500
 40,000
Payments to revolving credit facility(308,500) 
Payment of revolving credit facility fees
 (1,016)
Distribution to Honeywell in connection with the Spin-Off
 (269,347)
Principal payments of capital leases(91) 
Net decrease in invested equity
 (9,050)
Net cash (used for) provided by financing activities(91)
28,817
    
Net increase in cash and cash equivalents25,787
 37,964
Cash and cash equivalents at beginning of period14,199
 
Cash and cash equivalents at the end of period$39,986

$37,964
    
Non-Cash Investing Activities: 
  
Capital expenditures included in accounts payable$17,228
 $19,935
    
Supplemental Disclosure of Cash Flow Information: 
  
Interest paid$7,976
 $
Income taxes paid$12,695
 $


See accompanying notes to Condensed Consolidated and Combined Financial Statements.
6

ADVANSIX INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands)


Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income (Loss)Total Equity
SharesAmount
Balance at December 31, 202332,598,946 $326 $138,046 $605,067 $(58)$(4,144)$739,237 
Net Income (Loss)— — — (17,396)— — (17,396)
Comprehensive income
Foreign exchange translation adjustments— — — — — (15)(15)
Cash-flow hedges— — — — — 
Other comprehensive income (loss), net of tax— — — — — (8)(8)
Issuance of common stock323,989 423 — — — 426 
Purchase of treasury stock (260,464 shares)— — (7,020)— (3)— (7,023)
Stock-based compensation— — 2,211 — — — 2,211 
Dividends— — 163 (4,453)— — (4,290)
Balance at March 31, 202432,922,935 $329 $133,823 $583,218 $(61)$(4,152)$713,157 

Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income (Loss)Total Equity
SharesAmount
Balance at December 31, 202231,977,593 $320 $174,585 $567,517 $(45)$(4,197)$738,180 
Net Income— — — 34,954 — — 34,954 
Comprehensive income
Foreign exchange translation adjustments— — — — — (33)(33)
Cash-flow hedges— — — — — (150)(150)
Other comprehensive income (loss), net of tax— — — — — (183)(183)
Issuance of common stock555,249 617 — — — 622 
Purchase of treasury stock (333,054 shares)— — (13,496)— (3)— (13,499)
Stock-based compensation— — 2,013 — — — 2,013 
Dividends— — 112 (4,132)— — (4,020)
Balance at March 31, 202332,532,842 $325 $163,831 $598,339 $(48)$(4,380)$758,067 





See accompanying notes to Condensed Consolidated Financial Statements.
7

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)







1. Organization, Operations and Basis of Presentation

Description of Business
 
AdvanSix Inc. (“AdvanSix”("AdvanSix," the "Company," "we" or the “Company”"our") is ana diversified chemistry company playing a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. Our reliable and sustainable supply of quality products emerges from the integrated manufacturervalue chain of Nylon 6, a polymer resin which is a synthetic material usedour five U.S.-based manufacturing facilities. AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates, guided by our customers to produce engineered plastics, fibers, filamentscore values of Safety, Integrity, Accountability and films that, in turn, are used in such end-products as automotive and electronic components, carpets, sports apparel, fishing nets and food and industrial packaging. As a result of our backward integration and the configuration of our manufacturing facilities, we also sell a variety of other products, all of which are produced as part of our Nylon 6 integrated manufacturing chain including caprolactam, ammonium sulfate fertilizers, acetone and other chemical intermediates. Each of our product lines represented the following approximate percentage of our sales:Respect.
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Nylon28% 29% 29% 29%
Caprolactam19% 16% 19% 16%
Ammonium Sulfate Fertilizers20% 22% 20% 24%
Chemical Intermediates33% 33% 32% 31%
Separation from Honeywell
On October 1, 2016, Honeywell International Inc. (“Honeywell”) completed the separation of AdvanSix. The separation was completed by Honeywell distributing all of the then outstanding shares of common stock of AdvanSix on October 1, 2016 (the “Distribution Date”) through a dividend in kind of AdvanSix common stock, par value $0.01, to holders of Honeywell common stock as of the close of business on the record date of September 16, 2016 who held their shares through the Distribution Date (the “Spin-Off”).
Each Honeywell stockholder who held their shares through the Distribution Date received one share of AdvanSix common stock for every 25 shares of Honeywell common stock held at the close of business on the record date of September 16, 2016. The separation was completed pursuant to a Separation and Distribution Agreement and other agreements with Honeywell related to the separation, including an Employee Matters Agreement, a Tax Matters Agreement, and Transition Services Agreement as well as Site Sharing and Services Agreements for Chesterfield, Colonial Heights and Pottsville. These agreements govern the relationship between AdvanSix and Honeywell following the separation and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided by Honeywell to AdvanSix and by AdvanSix to Honeywell.
On October 3, 2016, AdvanSix stock began “regular-way” trading on the New York Stock Exchange under the “ASIX” stock symbol.

Basis of Presentation
Unless the context otherwise requires, references in these Notes to Condensed Consolidated and Combined Financial Statements to “we,” “us,” “our,” “AdvanSix” and the “Company” refer to AdvanSix Inc. and its consolidated subsidiaries after giving effect to the Spin-Off. All significant intercompany balances and transactions have been eliminated.

The Condensed Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated and Combined Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of itsthe Company's financial position as of September 30, 2017,March 31, 2024, and its results of operations for the three and nine months ended September 30, 2017March 31, 2024 and 2016,2023 and cash flows for the ninethree months ended September 30, 2017March 31, 2024 and 2016.2023. The year-end Condensed Consolidated and
ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)


Combined Balance Sheet at December 31, 2016data was derived from audited annual financial statements but does not containinclude all of the footnote disclosures from the annual financial statements.required by U.S. GAAP. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
In preparing these Condensed Consolidated and Combined Financial Statements, the Company has evaluated events and2023 (the "2023 Form 10-K"). All intercompany transactions for potential recognition or disclosure through the date that the Condensed Consolidated and Combined Financial Statements were issued.have been eliminated.
 
Certain prior period amounts have been reclassified for consistency with the current period presentation.

We report our quarterly financial information using a calendar convention; prior to the Spin-Off, the first, second and third quarters were consistently reported as ending on March 31, June 30 and September 30 in the financial statements of Honeywell; subsequent to the Spin-Off we continued to follow that convention. It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice werehave generally not been significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three months ended March 31, 2024 and nine months ending September2023 were March 30, 20172024 and 2016 were September 30, 2017 and OctoberApril 1, 2016,2023, respectively.

Liabilities to creditors to whom we have issued checks that remained outstanding at September 30, 2017March 31, 2024 and December 31, 20162023 aggregated $6.4to $5.0 million and $12.5$2.9 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated and Combined Balance Sheets.


The Company's Board of Directors (the "Board") has authorized share repurchase programs to repurchase shares of the Company's common stock as follows:

Date of Authorization
Authorized Amount
 (millions)
Authorized Amount Remaining as of March 31, 2024
(millions)
May 4, 2018$75.0 $— 
February 22, 201975.0 — 
February 17, 202375.0 65.2 
     Totals$225.0 $65.2 

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions,
8

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)



legal and contractual requirements and other factors. The share repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of March 31, 2024, the Company has repurchased a total of 6,108,939 shares of common stock, including 999,111 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $189.0 million at a weighted average market price of $30.94 per share. As of March 31, 2024, $65.2 million remained available for share repurchases under the current authorization. During the period April 1, 2024 through April 26, 2024, the Company repurchased 2,865 shares covering tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $27.15, and no additional shares were repurchased under the currently authorized repurchase program.

2. Recent Accounting Pronouncements
 
Recent Accounting PronouncementsThe Company considers the applicability and impact of all Accounting Standards Updates (“ASU”ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

In March 2017,On December 13, 2023, the Financial Accounting Standards Board (“FASB”)FASB issued ASU 2017-07, Compensation – Retirement Benefits2023-09, Income Taxes (Topic 715), in order740): Improvements to improve the presentation of net periodic pension and postretirement costs. The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented.Income Tax Disclosures. The amendments in this ASU require that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that are equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendments also allow onlyrequire that the service cost componentCompany disclose the following (net of refunds received): (1) the amount of income taxes paid disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to be eligible for capitalization when applicable. Theor greater than 5 percent of total income taxes paid. Additionally, the amendments in this update eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or to make a statement that an estimate of the range cannot be made, and remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to income statement activity should be applied retrospectively whereas balance sheet activity should be applied prospectively. Forsubsidiaries and corporate joint ventures. The guidance is effective for public business entities the effective date for ASU 2017-07 is annual periods beginning after December 15, 2017, including interim periods within those annual periods.2024. Early adoption of the amendments in this update are permitted for annual financial statements that have not yet been issued. The Company is permitted withinevaluating the first interim period. Wepronouncement and does not expect adoption to adopt this guidance effective January 1, 2018 and nohave a material impact other than expense classification, on the Company’sCompany's consolidated financial position andor results of operations is expected upon adoption.operations.

In January 2017,November 2023, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other2023-07, Segment Reporting (Topic 350): Simplifying280). The amendments in this ASU require incremental disclosures about the TestCompany's reportable segments, but do not change the definition of a segment or the guidance for Goodwill Impairment, which simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under ASC 350. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based ondetermining reportable segments. The incremental disclosures should include (1) significant segment expenses that difference. The impairment charge will be limitedare regularly provided to the CODM and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of goodwill allocatedits composition, (3) profit or loss and assets currently required by Topic 280 in interim periods, (4) clarification if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to that reporting unit.allocate resources and (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendment eliminates the requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount (i.e., Step 2 of today’s goodwill impairment test). The standard will be applied prospectively andguidance is effective for annual and interim impairment tests performed in periodspublic entities with fiscal years beginning after December 15, 2019.2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.permitted. Additionally, public entities should apply the amendments retrospectively to all prior periods presented in the financial statements, unless impractical. The Company electedis evaluating the pronouncement and does not expect adoption to adopt ASU 2017-04 early beginning in January 2017 and there was nohave a material impact on the Company’sCompany's consolidated financial position andor results of operations upon adoption.operations.

In January 2017,
3. Revenues

Revenue Recognition

We serve approximately 400 customers annually in approximately 45 countries across a wide variety of industries. For each of the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifyingthree months ended March 31, 2024 and 2023, the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should beCompany's ten largest customers accounted for asapproximately 37% of total sales.

We typically sell to customers under master service agreements, with primarily one-year terms, or by purchase orders. We have historically experienced low customer turnover and have long-standing customer relationships, which span decades. Our largest
9

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)





acquisitions (or disposals)customer is Shaw Industries Group, Inc. (“Shaw”), a significant consumer of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill,caprolactam and consolidation. The new guidance requires an entityNylon 6 resin, to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If the threshold is not met, the entity evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. For public business entities, the effective date for ASU 2017-01 is annual periods beginning after December 15, 2017, including interim periods within those periods. The Company elected to adopt ASU 2017-01 early beginning in January 2017 and there was no impact on the Company’s consolidated financial position and results of operations upon adoption.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718), which simplifies certain aspects of share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires an entity to record all excess tax benefits / deficiencies as income tax expense / benefit in the income statement. The new guidance also allows an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. For public business entities, the effective date for ASU 2016-09 is annual periods beginning after December 15, 2016, including interim periods within those periods. The Company adopted this ASU effective January 1, 2017 and has elected to continue to accrue compensation cost for forfeitures based on the number of awards that are expected to vest. There was no impact on the Company’s consolidated financial position and results of operations upon adoption.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018 (early adoption is permitted). The new standard should be appliedwhom we sell under a modified retrospective approach. We are evaluating the impact of the new standard on the Company’s consolidated financial position and results of operations and related disclosures. Although we have not yet completed our assessment, adoption of this standard will have a significant impact on our Consolidated Balance Sheets.  However, we do not expect adoption of this standard to have a significant impact on the recognition, measurement or presentation of lease expenses within the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.  Information about our undiscounted future lease payments and the timing of those payments is provided under “Contractual Obligations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2016 Form 10-K.  We will adopt this standard effective January 1, 2019. 
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model eliminating industry-specific accounting rules. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. Since its issuance, the FASB has amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. The provisions of ASU 2014-09 will be effective for public business entities for interim and annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. The guidance may be adopted either by restating all years presented in the Company’s financial statements or by recording the impact of adoption as an adjustment to retained earnings at the beginning of the year of adoption. Duringlong-term agreement. For the three months ended September 30, 2017,March 31, 2024 and 2023, the Company continued its assessmentCompany's sales to Shaw were 9% and 10% of AdvanSixour total sales, respectively.

The Company's revenue streams by reviewing and documenting customer contractsproduct line, and related transaction support to determineapproximate percentage of total sales, for the impact on revenue recognition underthree months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
March 31,
20242023
Nylon$84,389 25%$99,372 25%
Caprolactam61,476 18%72,390 18%
Ammonium Sulfate85,263 25%114,218 28%
Chemical Intermediates105,701 32%114,564 29%
Total$336,829 100%$400,544 100%
The Company's revenues by geographic area, and related approximate percentage of total sales, for the new standard. three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
March 31,
20242023
United States$284,587 84%$320,926 80%
International52,242 16%79,618 20%
Total$336,829 100%$400,544 100%
Deferred Income and Customer Advances
The Company has made progress on redrafting its revenue recognition policies, assessingdefers revenues when cash payments are received in advance of our performance. Below is a roll-forward of Deferred income and customer advances for the redesign of internal controls, as well as evaluating the expanded disclosure requirements. three months ended March 31, 2024:
Opening balance January 1, 2024$15,678 
Additional cash advances393 
Less amounts recognized in revenues(4,785)
Ending balance March 31, 2024$11,286 
The Company plansexpects to adoptrecognize as revenue the standard effective January 1, 2018March 31, 2024 ending balance of Deferred income and the impact of adoption, if any, will be reflected as an adjustment to retained earnings at the beginning of thecustomer advances within one year of adoption. Based on the results of the assessment performed to date, the Company has preliminarily concluded that revenues from the Company's products are expected to remain substantially unchanged from the Company's current revenue recognition model. The Company will continue to assess the new standard and the potential impact on the Company’s consolidated financial position and results of operations and related disclosures upon adoption.or less.

4. Earnings Per Share
 
3. Related Party Transactions with Honeywell
Prior to consummationThe computation of basic and diluted earnings per share ("EPS") is based on Net income (loss) divided by the basic weighted average number of common shares outstanding and diluted weighted average number of common shares outstanding, respectively. The details of the Spin-Off,basic and diluted EPS calculations for the Condensed Consolidated and Combined Financial Statements have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Honeywell.
During the three and nine months ended September 30, 2016, AdvanSix was allocated $10,470March 31, 2024 and $31,877, respectively, of general corporate expenses incurred by Honeywell for certain services, such2023 were as legal, accounting, information technology, human resources, follows:
10

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)





Three Months Ended
March 31,
20242023
Basic
Net Income (Loss)$(17,396)$34,954 
Weighted average common shares outstanding26,878,660 27,601,784 
EPS – Basic$(0.65)$1.27 
Diluted
Dilutive effect of equity awards and other stock-based holdings— 984,779 
Weighted average common shares outstanding26,878,660 28,586,563 
EPS – Diluted$(0.65)$1.22 
other infrastructure support
Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and shared facilities, on behalfthe average market price of AdvanSix. These expenses were reflected within Costsour common stock for the period.

The diluted EPS calculations exclude the effect of goods sold and Selling, general and administrative expenses instock options when the Condensed Consolidated and Combined Statementsoptions’ assumed proceeds exceed the average market price of Operations.
Sales to Honeywellthe common shares during the period. The anti-dilutive common stock equivalents outstanding at the three and nine months ended September 30, 2016March 31, 2024 and 2023 were $3,274 and $5,955, respectively. Of these sales, $3,080 and $5,682, respectively, were sold to Honeywell at zero margin. Costs of goods sold to Honeywell during the three and nine months ended September 30, 2016 were $3,157 and $5,842, respectively. Purchases from Honeywell during the three and nine months ended September 30, 2016 were $1,041 and $3,299, respectively. The total net effect of the settlement of these inter-company transactions was reflected in the Condensed Consolidated and Combined Statements of Cash Flows as a financingfollows:
Three Months Ended
March 31,
20242023
Options and stock equivalents909,231 266,644 

Dividend activity identified as Invested equity.

When the Company was owned by Honeywell, a centralized approach was used for cash management and financing of operations. Prior to consummation of the Spin-Off, the Company’s cash was transferred to Honeywell daily and Honeywell funded the Company’s operating and investing activities as needed.
Subsequent to the Spin-Off on October 1, 2016, transactions with Honeywell were not considered related party transactions. Accordingly, no related party transactions with Honeywell were recorded for the three and nine months ended September 30, 2017.
4. Earnings Per Share
On October 1, 2016, the date of consummation of the Spin-Off, 30,482,966 shares of the Company’s Common Stock were distributed to Honeywell shareholders of record as of September 16, 2016. This share amount is being utilized for the calculation of basic earnings per share for all periods presented as no Common StockMarch 31, 2024 and 2023 was outstanding prior to the date of the Spin-Off. In October 2016, the Company issued 908,540 time-based restricted stock units in connection with the Spin-Off with vesting periods ranging from 18 to 42 months. These restricted stock units were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2016.
The details of the earnings per share calculations for the three and nine months ended September 30, 2017 and 2016 are as follows:
Three Months Ended
March 31,
20242023
Cash dividends declared per share$0.16 $0.145 
Aggregate dividends paid to shareholders$4,290 $4,020 

5. Accounts and Other Receivables Net
March 31,
2024
December 31,
2023
Accounts receivables$161,189 $155,267 
Other10,766 10,959 
Total accounts and other receivables171,955 166,226 
Less – allowance for doubtful accounts(759)(833)
Total accounts and other receivables – net$171,196 $165,393 

6. Inventories
11
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Basic 
  
  
  
Net Income$21,274
 $16,460
 $74,331
 $58,861
Weighted average common shares outstanding30,482,966
 30,482,966
 30,482,966
 30,482,966
EPS – Basic$0.70
 $0.54
 $2.44
 $1.93
Diluted 
  
  
  
Dilutive effect of unvested equity awards676,744
 
 530,640
 
Weighted average common shares outstanding31,159,710
 30,482,966
 31,013,606
 30,482,966
EPS – Diluted$0.68
 $0.54
 $2.40
 $1.93

On March 8, 2017, the Company granted equity awards representing 333,719 shares of common stock under the 2016 Stock Incentive Plan of AdvanSix Inc. and its Affiliates to Company employees consisting of 175,026 stock options, 89,896 performance stock units (at target) and 68,797 restricted stock units. These equity awards have a per share strike price or grant date fair value per share of $26.66 with vesting periods ranging from 12 to 36 months.

On June 1, 2017, the Company granted equity awards representing 28,856 shares of common stock under the 2016 Stock Incentive Plan of AdvanSix Inc. and its Affiliates to Company employees and the Company's Board of Directors consisting of restricted stock units. These equity awards have a grant date fair value per share of $29.25 with vesting periods ranging from 12 to 36 months.

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)





March 31,
2024
December 31,
2023
Raw materials$103,227 $159,240 
Work in progress58,620 54,936 
Finished goods60,893 61,891 
Spares and other32,232 30,931 
254,972 306,998 
Reduction to LIFO cost basis(64,051)(95,167)
Total inventories$190,921 $211,831 
Stock compensation expense related to
Substantially all outstanding equity awards is being ratably recognizedof the Company’s inventories at March 31, 2024 and December 31, 2023 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method. However, approximately 8% was valued at average cost using the first-in, first-out (“FIFO”) method at March 31, 2024.

The excess of replacement cost over the vesting periodcarrying value of each typetotal inventories subject to LIFO was $62.2 million and $65.3 million at March 31, 2024 and December 31, 2023, respectively.

7. Leases

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets ("ROU"), Operating lease liabilities – short-term, and Operating lease liabilities – long-term in our Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment – net, Accounts payable, and Other liabilities in our Condensed Consolidated Balance Sheets.

The components of equity awardlease expense were as follows:
Three Months Ended
March 31,
20242023
Finance lease cost:
Amortization of right-of-use asset$243 $221 
Interest on lease liabilities38 18 
Total finance lease cost281 239 
Operating lease cost12,252 11,356 
Short-term lease cost1,193 1,026 
Total lease cost$13,726 $12,621 

As of March 31, 2024, we have additional operating and finance leases that have not yet commenced for approximately $126.7 million and approximately $0.4 million. These leases will commence during 2024 with vesting periods ranging from 12lease terms of up to 42 months based7 years.

8. Goodwill and Intangible Assets

Intangible assets with finite lives acquired through a business combination are recorded at fair value, less accumulated amortization. Customer relationships and trade-names are amortized on grant date fair value. Stock compensation expense aggregated $2,067a straight-line basis over their expected useful lives of 15 to 20 years and $5,6865 years, respectively.

Goodwill

There was no change in the carrying amount of goodwill for the three and nine months ended September 30, 2017.March 31, 2024.


Finite-Lived Intangible Assets

Intangible assets subject to amortization were as follows:
12

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)





March 31, 2024December 31, 2023
Gross Carrying AmountAccumulated AmortizationNet Book ValueGross Carrying AmountAccumulated AmortizationNet Book Value
Customer relationships$36,820 $(4,236)$32,584 $36,820 $(3,760)$33,060 
Licenses18,451 (6,227)12,224 18,451 (5,996)12,455 
Trade names1,100 (477)623 1,100 (422)678 
Total$56,371 $(10,940)$45,431 $56,371 $(10,178)$46,193 
5. Accounts and Other Receivables Net
 September 30, 2017 December 31, 2016
Accounts receivables$151,318
 $119,475
Other1,816
 15,407
Total accounts and other receivables153,134
 134,882
Less – allowance for doubtful accounts(623) (3,211)
Total accounts and other receivables – net$152,511
 $131,671
The increase in Accounts receivable at September 30, 2017 versus December 31, 2016 was due to significantly higher sales during the third quarterFor each of 2017 versus the fourth quarter of 2016 which was impacted by the Company's plant turnaround activities. The increase in accounts receivable at September 30, 2017 was partially offset by higher accounts receivable collections related to a trade receivables discount arrangement with a third party financial institution which enhances liquidity and enables the Company to efficiently manage its working capital needs.

6. Inventories
 September 30, 2017 December 31, 2016
Raw materials$39,313
 $68,900
Work in progress36,801
 47,759
Finished goods32,946
 19,069
Spares and other24,118
 23,129
 133,178
 158,857
Reduction to LIFO cost basis(32,704) (29,879)
Total inventories$100,474
 $128,978
The decrease in total inventories as of September 30, 2017 compared to December 31, 2016 is due primarily to lower levels of raw materials driven primarily by cumene delivery delays resulting from hurricane impacts on logistics as well as higher than normal levels of cumene inventory at December 31, 2016. The decrease was partially offset by a buildup of finished goods inventory compared to December 31, 2016 following fourth quarter 2016 plant outages. The overall lower levels of inventories at September 30, 2017 resulted in a change in the LIFO cost basis reserve of $4.4 million (unfavorable pretax income impact) during the three months ended September 30, 2017.March 31, 2024 and March 31, 2023, the Company recorded amortization expense on intangible assets of $0.8 million.


7. Postretirement Benefit Cost
The components of net periodic benefit cost of the Company’s pension plan are as follows:
 Three Months Ended
September 30,
 Nine Months Ended September 30,
 2017 2016 2017 2016
Service costs$1,908
 $
 $5,724
 $
Interest costs333
 
 999
 
Expected return on plan assets(76) 
 (228) 
Other (1)

 1,717
 
 5,151
Net periodic benefit cost$2,165
 $1,717
 $6,495
 $5,151
(1)Prior to the Spin-Off, certain of our employees participated in a defined benefit pension plan (“Shared Plan”) sponsored by Honeywell which included participants of other Honeywell subsidiaries and operations. Net periodic benefit cost related to participation in the Shared Plan was $1.7 million and $5.2 million for the three and nine months ended September 30, 2016, respectively.

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)


The Company made contributions during 2017 sufficient to satisfy pension funding requirements under the AdvanSix Retirement Earnings Plan in an aggregate amount of approximately $17.0 million and will make additional contributions in future years sufficient to satisfy pension funding requirements in those periods. The Company made contributions of $2.2 million in the first quarter of 2017, $1.6 million in the second quarter of 2017, $11.1 million in the third quarter of 2017 and $2.0 million in October 2017. 
The pension plan assets are invested through a master trust fund. The strategic asset allocation for the trust fund is selected by the Company's Investment Committee reflecting the results of comprehensive asset and liability modeling. The Investment Committee establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk.
The approximate target asset allocation for the Company's pension plan assets is summarized as follows:
September 30, 2017
Cash and cash equivalents2%
US and non-US equity securities65%
Fixed income / other securities33%
Total Pension Assets100%
Fixed income and other securities include investment grade securities covering the Treasury, agency, asset-backed, mortgage-backed and credit sectors of the U.S. Bond Market, as well as listed real estate companies and real estate investment trusts located in both developed and emerging markets.

8.9. Commitments and Contingencies
 
The Company is subject to a number of lawsuits, investigations and disputes, (somesome of which may involve substantial amounts claimed)claimed, arising out of the conduct of the Company or other third partiesthird-parties in the normal and ordinary course of business, including matters relating to commercial transactions.business. A liability is recognized for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses, (taking into consideration any insurance recoveries), based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts.

 
Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters. Considering the Company’s past experience and existing accruals, the Company does not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on the Company’s consolidated financial position or results of operations or cash flows.operations. Potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company’s consolidated results of operations, balance sheet and/or operating cash flows in the periods recognized or paid.

We assumed from Honeywell International Inc. ("Honeywell") all health, safety and environmental (“HSE”) liabilities and compliance obligations related to the past and future operations of our current business as of the spin-off, as well as all HSE liabilities associated with ourthe three current manufacturing locations and the other locationsassumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to behave a material for 2017.adverse effect on the Company's consolidated financial position or results of operations.


9.10. Income Taxes

The (benefit) provision for income taxes was ($6.0 million) and $9.3 million for the three months ended March 31, 2024 and 2023, respectively, resulting in an effective tax rate of 25.7% and 21.0%, respectively.

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (Loss) before taxes for the period.period in addition to recording any tax effects of discrete items for the quarter. The provision for income taxes was $14.5 million and $11.3 millionCompany’s effective tax rate for the three months ended March 31, 2024 was higher than the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations, partially offset by tax credits. The Company’s effective tax rate for the three months ended March 31, 2023 approximated the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, offset by tax credits and the foreign-derived intangible income deduction which generally decrease the tax rate. Additionally, a discrete tax adjustment was recorded in the first quarter of 2023 related to the vesting of equity compensation that resulted in a 2.3% decrease to the Company's quarterly effective tax rate.

11. Fair Value Measurements

13

ADVANSIX INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and as otherwise noted)





Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
ended September 30, 2017
The pension plan assets are invested in collective investment trust funds. These investments are measured at fair value using the net asset value per share as a practical expedient. Investments valued using the net asset value method (NAV) (or its equivalent) practical expedient are excluded from the fair value hierarchy disclosure.

The Company’s Condensed Consolidated Balance Sheets also include Cash and 2016, respectively. cash equivalents, Accounts receivable and Accounts payable all of which are recorded at amounts which approximate fair value.

The provisionCompany also has assets that are required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including a decrease in estimated future cash flows) that indicate the asset should be evaluated for income taxesimpairment which could result in such assets being measured at fair value. Goodwill must be evaluated at least annually. Our annual evaluation occurred on October 28, 2023 and we concluded that an impairment for goodwill did not occur.

12. Derivative and Hedging Instruments

The Company had entered into an interest rate swap agreement for a total notional amount of $50 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings. The interest rate swap had a fair value of zero at inception and was $46.8effective July 31, 2019 and matured on February 21, 2023. In accordance with ASC 815, the Company designated the interest rate swap as a cash flow hedge of floating-rate borrowings. The interest rate swap converted the Company’s interest rate payments on the first $50 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate. The interest rate swap involved the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the interest rate swap without an exchange of the underlying principal amount. At March 31, 2024, the Company had no derivatives designated as hedging instruments under ASC 815 and $36.7 millionhad no fair value adjustments related to cash flow hedging for the nine months ended September 30, 2017 and 2016, respectively.

During the three months ended September 30, 2017,March 31, 2024.

13. Supplier Finance Programs

The Company has entered into a supply chain finance program with a financial intermediary providing participating suppliers the Company adjusted its deferred tax assets and liabilitiesoption to account for changesbe paid by the intermediary earlier than the original invoice due date. AdvanSix’s responsibility is limited to making payments to the Septemberintermediary based upon payment terms negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. The Company’s payment terms with suppliers are consistent, regardless of whether a vendor participates in the supply chain finance program or not. All related agreements are terminable by either party upon at least 30 2016 deferred tax balances relateddays’ notice.

The total amount due to the separation from Honeywell. The changes were attributablefinancial intermediaries to settle supplier invoices under the completionsupplier finance programs was approximately $13 million as of Honeywell’s 2016 income tax returnMarch 31, 2024 and related returnapproximately $17 million as of December 31, 2023. These amounts outstanding are included in Accounts payable.

14. Subsequent Events

As announced on May 3, 2024, the Board declared a quarterly cash dividend of $0.160 per share on the Company's common stock, payable on May 28, 2024 to provision adjustment. The current period adjustment resulted in a $7.2 million decrease in Deferred income taxes and an increase in Additional paid in capital.stockholders of record as of the close of business on May 14, 2024.

14




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated and Combined Financial Statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 20162023 filed with the SECSecurities and Exchange Commission (“SEC”) on March 6, 2017February 16, 2024 (the “2016“2023 Form 10-K”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors that can affect our performance in both the near- and long-term, including those incorporated by reference in Item 1A of Part II of this Report,Form 10-Q as such factors may be revised or supplemented in subsequent filings with the SEC, as well as those discussed in the section entitled “Note Regarding Forward-Looking Statements” below.
 
Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this ReportForm 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Report,Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” “will,” “estimate,” “expect,” “intend” and other variations or similar terminology and expressions identify forward-looking statements. SuchAlthough we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: general economic and financial conditions in the U.S. and globally; the potential effects of inflationary pressures, labor market shortages and supply chain issues; instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of the conflict between Russia and Ukraine, the conflict in Israel and Gaza and the possible expansion of such conflicts; the effect of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the beliefsU.S.; our ability to sell and provide our goods and services; the ability of management, as well as assumptions made by,our customers to pay for our products; any closures of our and information currently availableour customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks, data privacy incidents and disruptions to our management. Actualtechnology infrastructure; risks associated with operating with a reduced workforce; risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise; the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and, geopolitical conflicts and related events; price fluctuations, cost increases and supply of raw materials; our operations and growth projects requiring substantial capital; growth rates and cyclicality of the industries we serve including global changes in supply and demand; failure to develop and commercialize new products or technologies; loss of significant customer relationships; adverse trade and tax policies; extensive environmental, health and safety laws that apply to our operations; hazards associated with chemical manufacturing, storage and transportation; litigation associated with chemical manufacturing and our business operations generally; inability to acquire and integrate businesses, assets, products or technologies; protection of our intellectual property and proprietary information; prolonged work stoppages as a result of labor difficulties or otherwise; failure to maintain effective internal controls; our ability to declare and pay quarterly cash dividends and the amounts and timing of any future dividends; our ability to repurchase our common stock and the amount and timing of any future repurchases; disruptions in supply chain, transportation and logistics; potential for uncertainty regarding qualification for tax treatment of our spin-off; fluctuations in our stock price; and changes in laws or regulations applicable to our business. Forward-looking statements are not guarantees of future performance and actual results could differ materially from those contemplated by the forward-looking statements as a result of certaina number of risks, uncertainties and other factors including those noted above and those detailed in Item 1A of Part I and elsewhere in our filings2023 Form 10-K, and subsequent reports filed with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph. We do not undertake to update or revise any of our forward-looking statements.

Business Overview

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AdvanSix is a diversified chemistry company playing a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. Our reliable and sustainable supply of quality products emerges from the integrated value chain of our five U.S.-based manufacturing facilities. AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates, guided by our core values of Safety, Integrity, Accountability and Respect. Our four key product lines are as follows: 

Nylon Solutions
Nylon – We produce and sell our Nylon 6 resin globally, primarily under the Aegis® brand name. Nylon 6 is a polymer resin which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electric components, sports apparel, food packaging and other industrial applications.

Caprolactam – Caprolactam is the key monomer used in the production of Nylon 6 resin. We internally polymerize caprolactam into Aegis® Nylon 6 Resins, and we also market and sell the caprolactam that is not consumed internally to customers who use it to manufacture polymer resins to produce fibers, compounds and other nylon products. Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of March 31, 2024.

Ammonium Sulfate – Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients. Ammonium sulfate fertilizer is derived from the integrated operations at the Hopewell manufacturing facility. Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of March 31, 2024. We market and sell ammonium sulfate primarily to North American and South American distributors, farm cooperatives and retailers to fertilize crops.

Chemical Intermediates – We manufacture, market and sell a number of other chemical intermediate products that are derived from the manufacturing processes within our integrated supply chain. Most significant is acetone which is used by our customers in the production of adhesives, paints, coatings, solvents, herbicides and engineered plastic resins. Other intermediate chemicals that we manufacture, market and sell include phenol, alpha-methylstyrene (“AMS”), cyclohexanone, 2-pentanone oxime, cyclohexanol, sulfuric acid, ammonia and carbon dioxide. With the acquisition of U.S. Amines Limited (“U.S. Amines”), we now produce alkyl and specialty amines serving high-value end markets such as agrochemicals and pharmaceuticals.

Global demand for Nylon 6 resin spans a variety of end-uses such as textiles, engineered plastics, industrial filament, food and industrial films, and carpet. The market growth typically tracks global GDP growth over the long-term but varies by end-use. We produce and sell caprolactam as a commodity productsproduct and also produce and sell our Nylon 6 resin as both a specializedcommoditized and differentiated resin product. The production of these products is capital intensive, requiring ongoing investments in improving plant reliability, expanding production capacity and achieving higher quality. Our results of operations are primarily driven by production volume and the spread between the sales prices of our products and the costs of the underlying raw materials built into the market-based and value-based pricing models for most of our sales.models. The global prices for nylon resin typically track a spread over the price of caprolactam, which in turn tracks as a spread over benzene because the key feedstock materials for caprolactam, phenol or cyclohexane, are ultimately derived from benzene. This price spread has historically experienced cyclicality as a result of global changes in supply and demand. Generally, Nylon 6 resin prices track the cyclicality of caprolactam prices, although prices set above the spread are achievable when nylon resin manufacturers, like AdvanSix, are able to formulate and produce specializeddifferentiated nylon resin products. Our specialized Nylon 6 products are typically valued at a higher level than commodity resin products.for current and new customer applications, such as our wire and cable and co-polymer offerings.


In recent years, nylon and caprolactam prices have experienced a cyclical period of downturn as the global market has experienced large increases in supply without a commensurate increase in demand. Most of this supply increase has been built by new Chinese manufacturers, resulting in margin compression for Nylon 6 resin and caprolactam in recent years to historic lows. Over the last year, capacity reductions by our competitors have occurred in North America and Europe improving supply/demand fundamentals in North America with continued dynamic conditions globally. We believe that, in addition to a potential recovery that has historically followed periods of oversupply and declining prices, Nylon 6 end-market growth will continue to generally track global GDP with certain applications growing at faster rates including engineered plastics and packaging. Additionally, one of our strategies is to continue developing specialty nylon and copolymer products that we believe will obtain higher margins.
Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key crop nutrients. Global prices for ammonium sulfate fertilizer are influenced by several factors including the price of urea, which sets the nutrient value for nitrogen as it is the most widely used source of nitrogen-based fertilizer in the world. A secondaryOther global price driver forfactors driving ammonium sulfate fertilizer isdemand are general agriculture trends, including planted acres and the price of future deliveriescrops. Our ammonium sulfate product is positioned with the added value proposition of sulfur nutrition to increase yields of key crops. In addition, due to its nutrient density, the typical ammonium sulfate product delivers pound for pound the most readily available sulfur and nitrogen to crops including corn, wheatas compared to other fertilizers. We also directly supply packaged ammonium sulfate to customers, primarily in North and coffee, which are impacted by general trends in the agricultural industry. We expect agriculture fundamentalsSouth America, and have diversified and optimized our offerings to remain challenging through the 2017/2018 planting season.include spray-grade adjuvants to support crop protection, as well as other specialty fertilizers and products for industrial use.

We produce ammonium sulfate fertilizer continuously throughout the year as part of our manufacturing process, but quarterly sales experience quarterly cyclicalityfluctuate reflecting both geographical and product sales mix considerations based on the timing and length of the growing seasons in North and South America. North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest during second quarter fertilizer application and then typically decline seasonally with new season fill in the third quarter. Ammonium sulfate industry prices in the corn belt have declined approximately 10% from
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the second quarter to the third quarter, on average, since 2016. Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous and not tied to seasonal demand for fertilizers. Sales of most of our other products have generally been subject to minimal, or no, seasonality.

We also manufacture, market and sell a number of chemical intermediate products that are derived from the manufacturing processes within our integrated supply chain. Most significant is acetone, the price of which is influenced by its own supply and demand dynamics but can also be influenced by the underlying move in propylene input costs. Our differentiated product offerings include high-purity applications and high-value intermediates including our U.S. Amines portfolio as well as our oximes-based EZ-Blox™ anti-skinning agent used in paints and Nadone® cyclohexanone, which is a solvent used in various high-value applications.

We seek to run our production facilities on a nearly continuous basis for maximum efficiency andas several of our intermediate products are key feedstock materials for other products in our integrated manufacturing chain. WeWhile our integration, scale and range of product offerings make us one of the most efficient manufacturers in our industry, these attributes also expose us to increased risk associated with material disruptions at any one of our production facilities or logistics operations which could impact the overall manufacturing supply chain. Further, although we believe that our sources of supply for our raw materials, including cumene, natural gas and sulfur, are generally robust, it is difficult to predict the impact that shortages, increased costs and related supply chain logistics considerations may have in the future. In order to mitigate the risk of unplanned interruptions, we schedule several planned outagesplant turnarounds each year to conduct routine and major maintenance across our facilities, which are referred to as plant turnarounds. While we


may experience unplanned interruptions from time to time, we seek to mitigate the risk through regularly scheduled maintenance both for major and minor repairs at all of our production facilities. We also utilize maintenance excellence and mechanical integrity programs, and maintain appropriatetargeted buffer inventory of intermediate chemicals necessary for our manufacturing process, and co-producer swap arrangements, which are intended to mitigate the extent of any production losses as a result of planned and unplanned downtime. While our integrateddowntime; however, the mitigation of all or part of any such production impact cannot be assured.

Recent Developments

Business Operations

In January 2024, the Company experienced a process-based operational disruption at its Frankford, Pennsylvania manufacturing scalesite temporarily reducing phenol and acetone production at the quantityfacility, as well as production at its Hopewell and rangeChesterfield, Virginia facilities. As a result of our product offerings make us onea delayed ramp to targeted utilization rates, the Company recognized an unfavorable impact to pre-tax income in the first quarter 2024 of approximately $27 million, comprised of the most efficient manufacturers in our industry, we are also exposedimpact of lost sales and other additional costs including purchases of replacement product and incremental plant spend. The Company returned to increased risk associated with unplanned downtime or material disruptionstargeted utilization rates at any one of our production facilities which could impact our supplyits Frankford, Pennsylvania manufacturing site, as well as across its value chain, prior to downstream plants in our manufacturing process.quarter end.


Results of Operations
(Dollars in thousands, unless otherwise noted)
 
Sales
Three Months Ended
March 31,
20242023
Sales$336,829 $400,544 
% change compared with prior year period(15.9)%
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Sales$366,660 $323,953 $1,104,805 $932,201
% change compared with prior year period13.2%   18.5% 

The change in sales compared to the prior year period is attributable to the following:
Three Months Ended
March 31, 2024
Volume(6.7)%
Price(9.0)%
(15.7)%
 Three Months Ended
September 30, 2017
 Nine Months Ended
September 30, 2017
Volume4.9% 4.1%
Price8.3% 14.4%
 13.2% 18.5%

Sales increaseddecreased in the three months ended September 30, 2017March 31, 2024 compared to the prior year period by $42.7$63.7 million (approximately 13.2%16%) due to (i) net unfavorable market-based pricing (approximately 9%) primarily to higher sales prices (approximately 8.3%) and volume increases (approximately 4.9%) of caprolactam, chemical intermediates, andreflecting reduced ammonium sulfate offset partially bypricing amid lower raw material input costs and a more stable global nitrogen supply environment, as well as lower nylon volume. Sales prices increasedpricing due primarily to (i) higher prices of the raw materials used to manufacture caprolactam, nylonunfavorable supply and chemical intermediates impacting formula-based pass-through pricing (approximately 4.2% favorable impact), particularly benzene and propylene (inputs to cumene which is a key feedstock material for our products),demand conditions, and (ii) market-based pricing duea decrease in sales volume (approximately 7%) primarily to increases in nylon and caprolactam pricing offset partiallydriven by lower prices of ammonium sulfate (approximately 4.1% favorable impact).lost sales resulting from the first quarter operational disruption.

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Sales increased in the nine months ended September 30, 2017 compared to the prior year period by $172.6 million or approximately 18.5% due primarily to higher sales prices (approximately 14.4%) and volume increases (approximately 4.1%) of ammonium sulfate, chemical intermediates and caprolactam offset partially by volume decreases of nylon. Sales prices increased due primarily to (i) higher prices of the raw materials used to manufacture caprolactam, nylon and chemical intermediates impacting formula-based pass-through pricing (approximately 10.5% favorable impact), particularly benzene and propylene, and (ii) market-based pricing due primarily to increases in nylon, caprolactam and chemical intermediates pricing offset partially by lower prices of ammonium sulfate (approximately 3.9% favorable impact).

Costs of Goods Sold
Three Months Ended
March 31,
20242023
Costs of goods sold$333,864 $330,042 
% change compared with prior year period1.2%
Gross Margin percentage0.9%17.6%
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Costs of goods sold$309,629 $285,091 $923,268 $804,471
% change compared with prior year period8.6%   14.8%  
Gross Margin percentage15.6% 12.0% 16.4% 13.7%

Costs of goods sold increased in the three months ended September 30, 2017March 31, 2024 compared to the prior year period by $24.5$3.8 million or approximately 8.6%(approximately 1%) due to the net impact of lower production volumes and incremental costs primarily to higherdriven by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site (approximately 4%), partially offset by decreased prices of raw materials (approximately 5.7%), particularly benzene and propylene (inputs to cumene which is a key feedstock material for our products) and higher sales volumes (approximately 1.8%3%).




Gross margin percentage increased by approximately 3.6%decreased in the three months ended September 30, 2017March 31, 2024 compared to the prior year period (approximately 17%) due primarily to (i) the net impact of lower sales volume and changes in sales mix (approximately 7%) as well as lower production volumes and incremental costs (approximately 4%), both which were driven primarily by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (ii) the impact of market-based pricing, net of raw material costs (approximately 6%).

Selling, General and Administrative Expenses
Three Months Ended
March 31,
20242023
Selling, general and administrative expenses$23,593 $25,114 
Percentage of Sales7.0%6.3%

Selling, general and administrative expenses decreased by $1.5 million in the three months ended March 31, 2024 compared to the prior year period due primarily to higher sales prices net of rising raw materials costs (approximately 2.1%) and increased sales volumes (approximately 2.1%).lower functional support costs.


Costs of goods sold increased in the nine months ended September 30, 2017 compared to the prior year period by $118.8 million or approximately 14.8% due primarily to higher prices of raw materials (approximately 13.4%), particularly benzene and propylene, and a one-time prior year benefit related to the termination of a long-term supply agreement in the three months ended March 31, 2016 (approximately 2.0% unfavorable).

Gross margin percentage increased by approximately 2.7% in the nine months ended September 30, 2017 compared to the prior year period due primarily to higher sales and production volumes on a year-over-year basis (approximately 3.7%) offset partially by the termination of a long-term supply agreement in the three months ended March 31, 2016 (approximately 1.4%).

Selling, General and Administrative Expenses
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Selling, general and administrative expenses$19,086 $11,695 $54,022 $33,949
Percent of sales5.2% 3.6% 4.9% 3.6%
Selling, general and administrative expenses increased by $7.4 million and $20.1 million in the three and nine months ended September 30, 2017, respectively compared to the corresponding prior year periods due primarily to higher stand-alone costs incurred since the Spin-Off on October 1, 2016. These stand-alone costs are related primarily to workforce and other infrastructure and shared facilities including costs for transition services provided by Honeywell which were partially offset by the elimination of costs allocated in the prior year to the Company from Honeywell on the basis of sales. The incremental one-time and ongoing stand-alone costs to operate our business as an independent public company remain in line with the Company’s expectations as previously disclosed in our Form 10 filed with the SEC and are expected to exceed the historical allocations of expenses from Honeywell. 

Income Tax Expense
Three Months Ended
March 31,
20242023
Income tax expense (benefit)$(6,021)$9,275 
Effective tax rate25.7%21.0%
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Tax expense$14,538 $11,342 $46,803 $36,712
Effective tax rate40.6% 40.8% 38.6% 38.4%

The Company’s effective tax rate for the three and nine months ended September 30, 2017March 31, 2024 was higher compared tothan the U.S. federal statutory rate, due primarily to the impacts of state taxes and changes in the Company's domestic manufacturing deduction. 

executive compensation deduction limitations, partially offset by tax credits. The Company’s effective tax rate for the three and nine months ended September 30, 2017 were comparableMarch 31, 2023 approximated the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, offset by tax credits and the foreign-derived intangible income deduction which generally decrease the tax rate. Additionally, a discrete tax adjustment was recorded in the first quarter of 2023 related to the vesting of equity compensation that resulted in a 2.3% decrease to the Company's quarterly effective tax ratesrate.

The Company's effective tax rate for the three months ended March 31, 2024 was higher than the prior year period due primarily to the larger impact of equity compensation vestings in the same prior year periods.period versus the current year period. Additionally, the Company is not currently anticipating a benefit in 2024 related to the foreign-derived intangible income deduction.


On January 31, 2024, the U.S. House of Representatives approved a tax bill, which among other provisions, aims to reinstate 100% bonus depreciation for property placed in service after December 31, 2022 until January 1, 2026 and to allow taxpayers to expense domestic research costs retroactively back to 2022 and prospectively through tax years beginning before 2026. Enactment remains highly uncertain, but the Company continues to monitor for ongoing developments in the proposed legislation.
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Net Income
Three Months Ended
March 31,
20242023
Net Income (Loss)$(17,396)$34,954 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$21,274 $16,460 $74,331 $58,861

As a result of the factors described above, net incomeNet Income (Loss) was $21.3 million and $74.3($17.4) million for the three and nine months ended September 30, 2017, respectively,March 31, 2024 as compared to $16.5 million and $58.9$35.0 million in the corresponding prior year period.





Non-GAAP Measures
(Dollars in thousands, unless otherwise noted)

The following tables set forth the non-GAAP financial measures of Adjusted EBITDA, andAdjusted EBITDA Margin, Adjusted Net Income (Loss) and EBITDA and EBITDA Margin excluding the prior year one-time benefit described below.Adjusted Earnings Per Share. Adjusted EBITDA is defined as Net income (loss) before Interest, Income taxes, Depreciation and amortization.amortization, Non-cash stock-based compensation, Non-recurring, unusual or extraordinary expenses, Non-cash amortization from acquisitions and One-time merger and acquisition costs. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by Sales. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they are used by the Company’s management to evaluate the Company’s operating performance, enhance a reader’s understanding of the financial performance of the Company, and facilitate a better comparison among fiscal periods and performance relative to its competitors, as the non-GAAP measures exclude items that aremanagement believes do not considered core toreflect the Company’s ongoing operations.

These non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with U.S. GAAP. Non-GAAP financial measures should be read only in conjunction with the comparable U.S. GAAP financial measures. The Company's non-GAAP measures may not be comparable to other companies' non-GAAP measures.

The following is a reconciliation between the non-GAAP financial measures of Adjusted Net Income (Loss), Adjusted EBITDA and Adjusted EBITDA Margin and EBITDA and EBITDA Margin excluding the prior year one-time benefit to their most directly comparable U.S. GAAP financial measure:
Three Months Ended
March 31,
20242023
Net Income (Loss)$(17,396)$34,954 
Non-cash stock-based compensation2,211 2,013 
Non-recurring, unusual or extraordinary income— — 
Non-cash amortization from acquisitions532 532 
Non-recurring M&A costs— — 
Benefit from income taxes relating to reconciling items(465)(435)
Adjusted Net Income (Loss) (non-GAAP)(15,118)37,064 
Interest expense, net2,699 1,267 
Income tax expense (benefit) - Adjusted(5,556)9,710 
Depreciation and amortization - Adjusted18,570 17,313 
Adjusted EBITDA (non-GAAP)$595 $65,354 
Sales$336,829 $400,544 
Adjusted EBITDA Margin* (non-GAAP)0.2%16.3%

* Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales

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 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$21,274
 $16,460
 $74,331
 $58,861
Interest expense (income)1,961
 
 5,373
 
Income taxes14,538
 11,342
 46,803
 36,712
Depreciation and amortization12,565
 10,307
 35,524
 29,964
EBITDA (non-GAAP)50,338
 38,109
 162,031

125,537
Prior year one-time benefit (1)

 
 
 15,500
EBITDA excluding prior year one-time benefit (non-GAAP)$50,338
 $38,109
 $162,031
 $110,037
        
Sales$366,660
 $323,953
 $1,104,805
 $932,201
        
EBITDA Margin (non-GAAP)13.7% 11.8% 14.7% 13.5%
        
EBITDA Margin excluding prior year one-time benefit (non-GAAP)13.7% 11.8% 14.7% 11.8%
The following is a reconciliation between the non-GAAP financial measures of Adjusted Earnings Per Share to its most directly comparable U.S. GAAP financial measure:

(1)Prior year one-time benefit reflects the $15.5 million one-time benefit in the first quarter of 2016 related to the termination of a long-term supply agreement.

Three Months Ended
March 31,
20242023
Net Income (Loss)$(17,396)$34,954 
Adjusted Net Income (Loss) (non-GAAP)(15,118)37,064 
Weighted-average number of common shares outstanding - basic26,878,660 27,601,784 
Dilutive effect of equity awards and other stock-based holdings— 984,779 
Weighted-average number of common shares outstanding - diluted26,878,660 28,586,563 
EPS - Basic$(0.65)$1.27 
EPS - Diluted$(0.65)$1.22 
Adjusted EPS - Basic (non-GAAP)$(0.56)$1.34 
Adjusted EPS - Diluted (non-GAAP)$(0.56)$1.30 

Liquidity and Capital Resources
(Dollars in thousands, unless otherwise noted)

Liquidity

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the first quarter of 2024, will provide adequate funds to support our current annualshort-term operating and longer termobjectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors as previously disclosed in Item 1A of Part I of our 20162023 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements. Our operating cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as well asunplanned downtime, material disruptions at our production facilities, the prices of our raw materials, and general economic and industry trends.trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize asupply chain financing and trade receivables discount arrangementarrangements with a third partythird-party financial institutioninstitutions which enhancesoptimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enablesenable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.




On a recurring basis, our primary future cash needs will be centered on operating activities, working capital, capital expenditures, including high return growthdividends and cost savingsliquidity reflecting disciplined capital deployment. Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity and comply with health, safety and environmental compliance costs, employee benefit obligations, interest payments, debt repayment and strategic acquisitions.("HSE") regulations. We believe that our future cash from operations, together withcash on hand and available capacity under our credit agreement, as well as our access to funds on hand and credit and capital markets, will provide adequate resources to fund our expected operating and financing needs.needs and obligations. Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in Item 1A of Part I of our 20162023 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

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As of the end of the first quarter of 2024, the Company had approximately $20.6 million of cash on hand with approximately $254 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to be approximately $140 million to $150 million in 2024 compared to $107 million in 2023, reflecting increased spend due to replacement maintenance, growth and cost savings projects and enterprise programs.

We assumed from Honeywell International Inc. ("Honeywell") all health, safety and environmental (“HSE”)HSE liabilities and compliance obligations related to the past and future operations of our current business as of the spin-off, as well as all HSE liabilities associated with ourthe three current manufacturing locations and the other locationsassumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations.

We expect that our primary cash requirements for 2024 will be material for 2017.to fund costs associated with ongoing operations, capital expenditures, and amounts related to other contractual obligations.

The Company made no cash contributions to the defined benefit pension plan during 2017 sufficientthe three months ended March 31, 2024. The Company expects aggregate cash contributions of $0 to satisfy pension funding requirements under the AdvanSix Retirement Earnings Plan$5 million in the aggregate amount of approximately $17 million 2024 and will make additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

The Company's Board of Directors (the "Board") has authorized share repurchase programs to repurchase shares of the Company's common stock as follows:

Date of Authorization
Authorized Amount
 (millions)
Authorized Amount Remaining as of March 31, 2024
(millions)
May 4, 2018$75.0 $— 
February 22, 201975.0 — 
February 17, 202375.0 65.2 
     Totals$225.0 $65.2 

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The share repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of March 31, 2024, the Company has repurchased a total of 6,108,939 shares of common stock life-to-date, including 999,111 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $189.0 million at a weighted average market price of $30.94 per share. As of March 31, 2024, $65.2 million remained available for share repurchases under the current authorization. During the period from April 1, 2024 through April 26, 2024, the Company repurchased 2,865 shares covering tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $27.15, and no additional shares were repurchased under the currently authorized repurchase program.

As of March 31, 2024, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the Company's 2023 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity"). The Company made contributionshas not guaranteed any debt or commitments of $2.2 million in first quarterother entities or entered into any options on non-financial assets.

Dividends

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The Company commenced the declaration of 2017, $1.6 million individends on September 28, 2021.

Dividends announced during 2024 are as follows:

Date of AnnouncementDate of RecordDate PayableDividend per ShareTotal Approximate Dividend Amount ($M)
5/3/20245/14/20245/28/2024$0.160$4.3
2/16/20243/4/20243/18/2024$0.160$4.3

The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the second quarterdiscretion of 2017, $11.1 million in third quarterour Board. Holders of 2017shares of our common stock will be entitled to receive dividends when, and $2.0 million in October 2017.
We expectif, declared by our Board at its discretion out of funds legally available for that purpose, subject to the terms of our indebtedness, the preferential rights of any preferred stock that may be outstanding, legal requirements, regulatory constraints, industry practice and other factors that our primary cash requirements for the remainder of 2017 will be to fund costs associated with ongoing operations including planned plant outages and capital expenditures.Board deems relevant.

Credit Agreement
 
On September 30, 2016, the Company as the borrower, entered into a Credit Agreement with Bank of America, as administrative agent (the "Original Credit Agreement"), which was amended on February 21, 2018 pursuant to Amendment No. 1 to the Original Credit Agreement (the "First Amended and Restated Credit Agreement"), and further amended on February 19, 2020 pursuant to Amendment No. 2 to the First Amended and Restated Credit Agreement (after giving effect to the Second Amendment, the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement had a five-year term with a scheduled maturity date of February 21, 2023.

On October 27, 2021, the Company completed a refinancing of the Second Amended and Restated Credit Agreement by entering into a new Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a new senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

Borrowings under the Revolving Credit Facility are subject to customary borrowing conditions.

The Revolving Credit Facility has a scheduled maturity date of October 27, 2026. The Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans. The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

With the cessation of LIBOR on June 30, 2023 and subject to the First Amendment to the Credit Agreement, dated as of June 27, 2023, the Eurodollar Rate was replaced with the Adjusted Term SOFR as an alternative benchmark rate for purposes of the Credit Agreement. The transition was effective July 1, 2023. Borrowings under the Credit Agreement we incurred indebtednessbear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.25% to 1.25% or the sum of an Adjusted Term SOFR rate plus a margin ranging from 1.25% to 2.25%, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the aggregate principalCredit Agreement). The Company is also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.15% to 0.35% per annum depending on the Company’s Consolidated Leverage Ratio. In conjunction with the cessation of LIBOR, as of July 1, 2023, the applicable margin under the Credit Agreement was 0.25% for base rate loans and 1.25% for Adjusted Term SOFR loans and the applicable commitment fee rate was 0.15% per annum.

Substantially all tangible and intangible assets of the Company and its domestic subsidiaries are pledged as collateral to secure the Company's obligations under the Credit Agreement.

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as
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defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00 or less for the fiscal quarter ending December 31, 2021, through and including the fiscal quarter ending September 30, 2023 and (ii) 3.75 to 1.00 or less for each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. We were in compliance with all of our covenants at March 31, 2024 and through the date of the filing of this Form 10-Q.

We had a borrowed balance of $170 million under the Revolving Credit Facility at December 31, 2023. We borrowed an incremental net amount of $75 million during the three months ended March 31, 2024, bringing the balance under the Revolving Credit Facility to $245 million, and available credit for use of approximately $270.0$254 million in the formas of a term loan, the net proceeds of which were distributed to Honeywell substantially concurrent with the consummation of the Spin-Off, and we also entered into a $155.0 million revolving credit facility to fund our working capital and other cash needs. For information regarding our Credit Agreement, refer to “Note 9-Long-term Debt and Credit Agreement” to the Consolidated and Combined Financial Statements in Item 8 of our 2016 Form 10-K. Going forward, cashMarch 31, 2024. We expect that Cash provided by operating activities will be needed to fund future interest payments on the Company's outstanding indebtedness.


Under the terms of the Credit Agreement, we are subject to restrictive covenants that limit our ability, among other things, to incur additional indebtedness, pay dividends or make other distributions, and consolidate, merge, sell or otherwise dispose of assets, as well as financial covenants that require us to maintain interest coverage and leverage ratios at levels specified in the Credit Agreement. These covenants may limit how we conduct our business, and in the event of certain defaults, our repayment obligations may be accelerated. We were in compliance with all of our covenants at September 30, 2017. As of September 30, 2017, $152.9 million of the total credit facility of $425.0 million is available to be drawn under the Credit Agreement.

During the three months ended September 30, 2017, we borrowed $32.5 million in the aggregate from our revolving credit facility for our working capital and other cash needs and these borrowings were fully repaid by September 30, 2017. During the nine months ended September 30, 2017, we borrowed $308.5 million in the aggregate from our revolving credit facility for our working capital and other cash needs and these borrowings were fully repaid by September 30, 2017.

Cash Flow Summary
Nine Months Ended
September 30,
2017 2016
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Cash provided by (used for): 
  
Operating activities
Operating activities
Operating activities$98,471
 $66,467
Investing activities(72,593) (57,320)
Financing activities(91) 28,817
Net increase in cash and cash equivalents$25,787
 $37,964
Net change in cash and cash equivalents



Cash provided by operating activities increaseddecreased by $32.0$37.8 million for the ninethree months ended September 30, 2017March 31, 2024 versus the prior year period due primarily to (i) a $15.5$52.4 million increasedecrease in Netnet income versuspartially offset by a $16.1 million cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with a $42.3 million unfavorable cash impact from working capital for the three months ended March 31, 2024 compared to a $58.4 million unfavorable cash impact in the prior year periodperiod. The favorable cash change in working capital was primarily due to significantly higher salesthe favorable impact of inventory partially offset by Accounts and other receivables. Accrued liabilities were also a source of cash of $10.6 million year-over-year.

Cash used for investing activities increased by $11.2 million for the ninethree months ended September 2017, (ii) a $14.9 million larger decrease in Inventory during the nine months ended September 30, 2017March 31, 2024 versus the prior year period due primarily to cash payments for capital expenditures of approximately $10.8 million during the timing of cumene purchases, (iii) a $11.9 million increase in Accrued liabilitiescurrent year period reflecting increased spend due to replacement maintenance, growth and cost savings projects and enterprise programs.

Cash provided by financing activities increased by $69.0 million for the timing of payments during the ninethree months ended September 30, 2017 versus the same period last year and (iv) a $11.3 million increase in deferred income taxesMarch 31, 2024 versus the prior year period due primarily to lower cash tax payments relative to the income tax provision.  This activity was offset partially by a net $33.8borrowings of $75.0 million unfavorable cash impact from Accounts payable due primarily to the timing of payments during the ninethree months ended September 30, 2017 versus the prior year period.
Cash used for investing activities increased by $15.3March 31, 2024 compared to net borrowings of $12.0 million for the nine months ended September 30, 2017 versusduring the prior year period, due primarily to an increase inpartially offset by payments for share repurchases of $7.0 million and cash paid for capital expendituresdividends of $10.3 million.
Cash from financing activities decreased by $28.9approximately $4.3 million forduring the ninethree months ended September 30, 2017 versus the prior year period. Cash provided by operating activities was sufficientMarch 31, 2024 compared to repay all current period borrowings under the revolving credit facility whereas revolver borrowings from$13.5 million and $4.0 million during the prior year period, were not repaid and remained outstanding during that period.respectively.

Capital Expenditures
(Dollars in thousands, unless otherwise noted)
 
Our operations are capital intensive, requiring ongoing investments that have consisted, and are expected to continue to consist, primarily of capital expenditures required to maintain and improve equipment reliability, expand production capacity,output, further improve mix, yield throughput, and cost position, and comply with environmental and safety regulations.


The following table summarizes ongoing and expansion capital expenditures:
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 Nine Months Ended
September 30, 2017
Capital expenditures in Accounts payable at December 31, 2016$28,485
Purchases of property, plant and equipment55,949
Capital expenditures in Accounts payable at September 30, 2017(17,228)
Cash paid for capital expenditures$67,206
Three Months Ended
March 31, 2024
Capital expenditures in Accounts payable at December 31, 2023$22,660 
Purchases of property, plant and equipment26,170 
Less: Capital expenditures in Accounts payable at March 31, 2024(13,442)
Cash paid for capital expenditures$35,388 

For the full year 2017,2024, we expect the Company’sour total capital expenditures to be approximately $90 million.$140 million to $150 million compared to $107 million in 2023, reflecting increased spend to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program.

Critical Accounting Policies and Estimates
 
The preparation of our Condensed Consolidated and Combined Financial Statements in accordance with U.S. GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. We consider these accounting policies to be critical to the understanding of our Condensed Consolidated and Combined Financial Statements. For a full description of our critical accounting policies, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2016our 2023 Form 10-K. While there have been no material changes to our critical accounting policies, or the methodologies or assumptions we apply under them, we continue to monitor such methodologies and assumptions.

Off-Balance Sheet Arrangements and Contractual Obligations
As of September 30, 2017, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any material changes in commitments or contractual obligations other than those detailed in our 2016 Form 10-K. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
Recent Accounting Pronouncements
 
See “Note 22. Recent Accounting Pronouncements” to the Condensed Consolidated and Combined Financial Statements included in Part I,I. Item 1 of this Form 10-Q.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Interest Rate Risk
 
Our exposure to risk based on changes in interest rates during the three-month period ended March 31, 2024 relates primarily to ourthe Revolving Credit Agreement. We have not used derivative financial instruments in our investment portfolio.Facility. The Revolving Credit AgreementFacility bears interest at floating rates. For variable rate debt, interest rate changes generally do not affect the fair market value of such debt assuming all other factors remain constant but do impact future earnings and cash flows. Accordingly, we may be exposed to interest rate risk on borrowings under the Credit Agreement.

Based on current borrowing levels at March 31, 2024, a 25 basis25-basis point fluctuation in interest rates for the ninethree months ended September 30, 2017March 31, 2024 would resulthave resulted in an increase or decrease to our interest expense of approximately $0.5$0.6 million.


See “Note 12. Derivative and Hedging Instruments” to the Condensed Consolidated Financial Statements, included in Part I. Item 1 of this Form 10-Q, for a discussion relating to credit and market, commodity price and interest rate risk.

ITEM 4. CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
The Company maintains a system of disclosure controls and procedures designed to giveprovide reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
 
Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud have been, or will be, detected.
 
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Our Chief Executive Officer and Chief Financial Officer, with the assistance of other members of our management, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at a reasonable assurance level as of March 31, 2024, the end of the period covered by this quarterly report.
 
Changes in Internal Control over Financial Reporting

Management has not identified any change in the Company’sCompany's internal control over financial reporting that occurred during the quarter ended September 30, 2017March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.



PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS

The United States Environmental Protection Agency (“EPA”) and the Company entered into an Administrative Compliance Order on Consent in February 2023 and a second Administrative Compliance Order on Consent in February 2024 in connection with alleged violations involving the Company’s risk management program at its manufacturing facility in Hopewell, Virginia. The Company is currently implementing an EPA-approved work plan to improve its risk management program at Hopewell in connection with the orders. The Company and EPA also entered into an Administrative Compliance Order on Consent in February 2024 connection with alleged violations involving the Company’s stormwater and other discharges. These EPA allegations may potentially subject the Company to penalties. Although the outcome of these matters cannot be predicted with certainty, we do not believe that it will have a material adverse effect on our consolidated financial position, results of operations or operating cash flows.

From time to time, we are involved in litigation relating to claims arising outoutside of the ordinary course of our business operations. We are not a party to, and, to our knowledge, there are not threats of anyno pending claims or actions against us, the ultimate disposition of which wouldcould be expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity.operating cash flows.



ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors as previously disclosed in Item 1A of Part I of the Company’s 20162023 Form 10-K. 10-K, which are hereby incorporated by reference.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 4, 2018, the Company announced that the Board authorized a share repurchase program of up to $75 million of the Company’s common stock. On February 22, 2019, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company's common stock, which was in addition to the remaining capacity authorized under the May 2018 share repurchase program. On February 17, 2023, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company's common stock, which was in addition to the remaining capacity available under the previously approved share repurchase program. Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The repurchase program has no expiration date and may be modified, suspended or discontinued at any time.

The below table sets forth the repurchases of Company common stock, by month, for the quarter ended March 31, 2024. During the quarter ended March 31, 2024, 115,693 shares were purchased under our share repurchase program and 144,771 shares were withheld to cover tax withholding obligations in connection with the vesting of equity awards.

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ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced PlanApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
January 202457,028 $26.43 57,028 $66,702,294 
February 2024(1)203,436 27.10 58,665 65,167,589 
March 2024— — — 65,167,589 
Total260,464 $26.95 115,693 
(1) Total number of shares purchased includes 144,771 shares covering tax withholding obligations in connection with the vesting of equity awards

During the period April 1, 2024 through April 26, 2024, the Company repurchased 2,865 shares covering tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $27.15, and no additional shares were repurchased under the currently authorized repurchase program.

ITEM 5. OTHER INFORMATION

Insider Rule 10b5-1 Trading Plans

On March 13, 2024, Christopher Gramm, the Company’s Vice President and Controller, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plan provides for the sale of 14,000 shares and 10,374 stock options. Mr. Gramm’s plan will expire on June 18, 2025.
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ITEM 6. EXHIBITS

ExhibitDescription
3.1
3.2
10.1
31.1
31.2
32.1
32.2
101.INSInline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)

†    Indicates management contract or compensatory plan.

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ADVANSIX INC.
Date: November 7, 2017May 3, 2024By:/s/ Michael Preston
Michael Preston
Senior Vice President and Chief Financial Officer



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