ASIX - Earnings call transcript Q2 2022

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Operator

Good day and welcome to the AdvanSix Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. please then question, your withdraw press two. star, To being note this is event Please recorded. like conference turn Kressel, would to I now the Investor and President Relations over Treasurer. of Adam to Please go ahead.

Adam Kressel

based Note quarter and today webcast, here the President included including elements see call are our in statements that are and earnings and that that and in reconciliations to morning on can CFO, With results Kane and are Good statements available our refer Erin Those those any We website and presentation. Vice today. light. materially Dave. of conference call. that best change we ask to non-GAAP world projected. presentation you, AdvanSix's Thank as differ at this consider the on and second contain Senior the we forward-looking XXXX actual view our could you business CEO, Michael earnings them me This elements you investors.advansix.com. release and of welcome press of our President Preston. forward-looking it from And

the updated uncertainties subsequent second identify annual our results quarter on and SEC share outlook further product principle and XX-K risks our filings, our the This SEC. report for will key affect we review addition, we our and as in In including performance with the our filings markets. morning, for that Form our in end financial of XXXX lines

end. questions your the for time at leave we'll Finally,

CEO with Kane. So the turn over President that, I'll Erin AdvanSix's call to and

Erin Kane

you Thanks interest us AdvanSix. and Adam joining for for continued Thank in and morning your everyone. good

half capping quarter AdvanSix release, As off our delivered you press in a first strong XXXX. second results of robust saw

a details financials on a before slide share Mike in covers few of the three Let highlights our moment. me

raw strength again, well term both commercial The costs as to on top cash The free as the shareholders. and and generated continued growth, Strong resilient, and us reinvestment offset business inflationary return fertilizer lower and XX% as our deliver increase material the includes earnings long healthy end quality announced of due inputs the business model to in well conditions, to results escalating as customer third to advantage second portfolio reflected million dividend of in-season driving sales cash logistics demand in this year disruptions, cash weather continued opportunities and as opportunistic of to diverse unfavorable challenges chain higher our of primarily strategies, demand. to quarter. and product meet enabled demand the over through our and our inflation, capitalize to reduction quarter quarterly than well a the underlying to repurchases results of supply reflects as volume, $XX A supports our This and our July, year. the share bottom quarter. of for navigate performance more execution flow sequentially quarter line

progressing Our well our integration to is value expected, additional adding US Amines of as also portfolio. very

We on and continue meaningful our initiatives make sustainability performance. to progress

inclusion commitment directors as announce at This proud by company recognized three organization to were was more integrated take We all equity, or which sustainability strategy. women to through our happening a diversity, our reinforces three-plus the AdvanSix you the it. this recognition with earlier of initiatives levels. with report, we will many soon that all to board. ongoing annual women around overall read publish And encourage on I XX-XX week, highlights and our a

global that time. a market and macro cost resiliency, Our competitive real in evolving provides diverse particularly is environment end exposure advantage

evolving favorable the into superior what operational Looking our strengthen enhancing to and agriculture are executing needs of deployment. capabilities this underlying our expect season. environment, capital in fertilizer innovation building on forward, America driving as planting North intermediates, and portfolio well fundamentals XXXX nitrogen we continued industry chemical demand we including control, healthy In and and highly nylon the our commercial as and customers, resiliency, is our focused meet and to performance for

our the outcomes our on ability business long build that, the in to remain term Mike focused best and to confident for significant and in it industry details. growth current are conditions We of shareholder turn sustainable value. to set earnings XXXX driving possible target over I'll in With discuss financial

Michael Preston

from Amines everyone. lower by year. last year, doubled commercial primarily as capital. CapEx as higher primarily well. prior next highlight supply net million due offset of good XX% the of higher year to from added following as a approximately was partially where to we contributed XXXX timing and the maintenance was cash cost year. of changes million, Erin. a the $XXX compared and Sales of And the This XX% up by working spend, $XXX resin of lesser by on in pricing Adjusted Adjusted in intermediates morning, million material prior million lower Thanks year year. am of pricing driven on totaled four, nylon $XX fertilizer XX% strong roughly versus significant through I'll approximately key approximately year by I'll of financial acquisition driven US per was unfavorable year output, earnings slide. growth. pass-through in-season favorable of prior chemical was results. Sales earnings raw sales and a we X% sales Cash share benzene demand appropriately. nylon reduction Pricing pricing our X% $X.XX and income expected. favorable driving based of prior reflecting X% million, production extent, weather, the $XX and product impact year. increased finally, intermediates variances driven primarily and expected. the by second free flow primarily The comprised year of EBITDA XX% million year. ammonium reached in walk increase XX% the roughly $XX compared cash execution every of now lines. the And approximately chemical to $X volume versus flow quarter, operations net To slide increased supported sulfate top I of flow growth, decreased an to Overall, up nearly to line limiting the increase acetone, market

five. to turn slide let's Now,

year pricing. price few strong and natural million ammonium Here, variable of drivers raw ag the North reflecting ability we key highlight to and our our sharp over year. its again margin to our value once well underlying input year adjusted tight gas well, drove the basis benzene as were Caprolactam in continued healthy, as supply commercial drivers, costs. positive of above sulfur environment, capture continued as was a second over America. trend performance over quarter year $XX we industry reflecting beyond as drive over the over and year, while a net sulfate key year particularly performance in a Pricing over EBITDA on up execution demand nylon in higher strong Tracking materials benefit increase remained

were primarily favorable due impact from year. by quarter, continued prices, intermediates historically an saw gas we transportation in utilities acetone costs. to and non XXXX, turnarounds $X million over the moderation increased chemical Plant plant higher on high of benefit $XX also the primarily increase we to spend, material natural roughly In reflected level in unfavorable a inflation, driven Lastly, compared spreads as raw year propylene approximately expected. a in over million second an seen quarter

reduction Lastly, Amines year SG&A and volume the items costs. million in acquisition the other prior the $XX a volume were sales in quarter. partially offset and versus unfavorable US by approximately Lowered the from was contribution

Now, let's turn slide. to next the

timing of partially $XX the accounts payable. as drivers increase working of which and The this million purchases. higher Accounts the do of On third price of from well half linearity in and significant would our free by from capital, roughly use of offset expect represented some highlighted over reflects and flow million materials, the $XX roughly partially in second income reverse roughly of free of was of quality XXXX the raw last flow cash as receivable, Working yield XX%, page capital of favorable impact the months, flow model of higher is that to left We earnings increase offset taxes of six, amount benefit payable that side highlight the cash timing once in the in by XX cash net primarily the which of by reflected an the income quarter, business the we've approximately reflecting our quarter sales. I due payments. delivers. cash [indiscernible] generation source the $XX of supported changes a to again, generation, the healthy million payable accounts cash approximately was quarter. total,

our right capital the XXXX. side of On depicted deployment we've the since page,

down were EBITDA ratio on we navigated XXXX supporting through COVID in our driving level, highly in significant net a our leverage one. the XXXX, debt cash debt we to debt and environment pay and managing As and below focused

We $XX deployment return the and increased have of dividends net capital of Amines price of purchase share ramped rate the in of up XXXX, including $XX an million business, $XX approximately million $X and our on acquisition for run to million estimated of repurchases in investments organic roughly US million an roughly shareholders cash paid. to

of increase XXth. cents Erin XX.X announced shares repurchased an quarterly And share mentioned August As in July. earlier, we payable XX% our million on $X.X a we to per dividend in additional

environment. current as healthy it's balance ever been, Our a as in the sheet positive is

execute core continue balance and-. to we enhancer discipline is strategies believe our a and that We value strategy allocation capital to a

Erin Kane

a consistent The fare reflected has seen sequentially, Starting spread with have composite have snug to XXXX better key markets In rise, pricing Europe. with chart outperforming modestly cost the American have of year-over-year resilient supported we in market producer the the what line our second rates. current construction to perspective, several quarter improve with primarily here, in North spreads the America, marginal Asia first nylon, input end we has raw seen relative seen in where on industry slowed conditions. global by remained economics. From with and North energy quarters, the of the on supply interest price seen participate, lines. an benchmarks basis. in in we past market rise dynamics Residential remain including this demand to relatively and largely as global the steep America the environment each cost and North continuing spreads quarter which product led Discuss curve we've in

has particularly packaging portfolio We However, carpet this engineered consumer recovery plastics where demand, seen is nylonX remains demand in and continues a We've to more resins strong an engineering sensitive presence. plastic for commercial know steady. also resins.

While monitoring lines regional on of areas consumer we for slow to balance durable goods. remain demand down like expect in are healthy, we

underlying the a second energy in higher values elevated Moving sulfate, fundamentals ag input alongside quarter to nutrient strong basis. ammonium significantly drove on costs year-over-year

restrictions by XXXX industry weeks, this over raw Underlying in-season agricultural fundamentals imports economics. higher industry demand supply although and nutrients to low and experience likely for year availability Overall supported crop move steepening which season. heading nitrogen farmer ratios, US. shared overall in material previously, did recent high, ratios, some support the remain favorable of macro constraints the to Despite as underlying lower well crop and a to product and upcoming the remain input acres nitrogen most globally higher much in tight stocks-to-use due we remained for planting Other remain plant on weather, export declines as heightened regions. items, Key prices, this term, the fertilizer has led duties we robust constraining in among stocks-to-use historically season in As near compressed costs is which continued further other Europe. curve limitations year include uncertainty planted fertilizer the in continued China. need into prices, various cost supply supply from historically support season, of positive across

industry going So seasonal continued in And declined improves sequentially we market, roughly robust refinery Pricing reflective of propylene quarter Industry which the XXXX. realized year-over-year third lastly, to buyer acetone fundamental navigate acetone the of in second pricing in significantly demand. demand is expected. forward as the on cost reset small and the of basis a medium supply while chemical a one through over grade and intermediates. North America, on turning balancing here prices fertilizer into domestic overall, continued support

history. have to demand Despite at when of the the balance and As refinery a remains downtime This remained the pricing downstream with start XXXX relative decline, and resilient. year-over-year grade at time impacting lower. has levels last currently value been its you of supply in unplanned supply may the highest the second into costs minimal amid tight trended levels recall, chain. Imports pricing healthy propylene year at the comes have planned US acetone US demand continued and across quarter reach

for which healthy and electronics, acetone, markets continue full among Beyond a end and we to customers product construction, and set continue building pharmaceuticals intermediate of coatings, agrochemicals, auto to diverse across paints serves portfolio, our solvents, expect demand others.

eight. slide to turn Let's

Our XXXX to consistent we outlook for remainder previously. of largely what remains have the shared

on macro We exposure. to diverse XXXX chemical year remain target to year-over-year earnings and end is continue industry Despite XXXX and planting growth strength expect what by in XXXX, business integrated and intermediates top the healthy favorable significant supported into continue outstanding demand our uncertainty, product year season. agricultural our of those to expected do some lines, underlying the was full an market across we fundamentals model the for nylon of

discussed earnings we've accretion. the business previously quarter. and the key relative We are to are into the sequential integrating performance considerations to items one our deliver to deal as two the second our Amines portfolio that year expected There quarter, in third expect also efficiently US

ammonium both and mix our sales and the quarterly seasonality, America. and First, length South season product fertilizer geographical timing based growing considerations does experience on sulfate in of North reflecting the sales

is new and proceeds July a period season which through typically June. The into the the North peak quarter crops. runs reminder, fertilizer key As begins season for sequentially America in following the for third sale planting applications from spring, the

the the then half. typical application American typically demand ammonium and first As a of this into second North in decline crop a particularly granular through of higher product and year pattern, the valued pricing, result half for strongest are for the spring sulfate

have in $XX second. the average prior relative sequential the years, to $XX we historically, seen we've million million in quarter, higher consideration a COGS As shared on of third to

dynamics, to impact historical However, we end in demand XXXX, the the anticipate given above seasonality higher of the be and pricing range. environment the

is income impact consideration to plant-plant we've turnarounds. shared previously pre-tax second the that The expected from

of and a $XX for to quarter Operationally, continue our continue scheduled performance business. XXXX and $XX improved of million experience while in focus rates, the expect in larger and we sustainable the million that returns for which to utilization variability higher the less $XX third safe, of to million Hopewell on range stable, million roughly We our $XX with turnarounds turn drives customer driving total

to in equipment And be as year, year our XXXX, unit of nearly the lastly, rate we tax fully $XX to spend our XXXX, to full second defined and projects expect an to effective approximately to million run continue operations status. turnaround expect during half activities. contributions million in of range the to execute For pension we our XX% $XXX million our of anticipate CapEx approximately benefit for bring to rate range $XX be million the with in our install and this $XX within $XX increase cash the funded which now compared will in the be to year to plan million we

thesis, number our attractive short, and of factors business wrap long to investment compelling for robust AdvanSix to and shareholders that a up We are returns slide and before there performance the nine the Q supporting turn to and term. believe over Let's and offers A. medium, moving a

of integrated unique chain by our inherent First, advantages. provides and supported value our assets model business competitive combination

versus Our location practice for here technology value the US, economics we scale business. make our intermediates, buy diversify and and in and chemistries ultimately provide key significant the

lag. as And XX% index a we raw or little in our As where passed to with competitive is are contracts contractually of on business formula strong customers materials reminder, globally, a industry position. are through steepened cost changes in curve approximately very based

leading our diverse The market to and second core is portfolio product aligned factor applications.

generation With for of position significantly will purity challenges. customer drive differentiate security will with supply, our also intermediates, strength to than of underpin as with have There is production today. prescriptive efficiently market food land. a to and all world the require capabilities possible to nutrients and as use global produce to crop execution business a have and quality. and play. This burial we of higher chips continuing our our our And a best-in-class spoilage more solve need need develop expand, and on focus chemical digital electronics where strong transformation growth around arable continue global increased we demand While is the to amount us, globally we use power And to solvents annually strive packaging provide to waste of substantially high to to in translating within with costs into profitability. the earnings our food do sustainably we scale for address to population comes delivery through channels nylon this recycled future to position, and

asset and purity are over revenue, Our now applications, intermediates, annual Discipline mix. twice investments and we that at with continue in And cost. high accrue in on rates benefits value in $XX yield, margins, improving and to nylon savings high growing differentiated and supporting also projects and product high sales on our business enhanced continue GDP margins profitability. focused base based of focus to our cost return average is current plus million our growth long term growth differentiated rate, pipeline $XXX million evaluate throughput quality, and portfolio that

and Lastly, enhanced and optionality framework prudent to allocation value current earlier maintain for environment. our Mike leverage provides the levels our balance further will creation. capital in discussed we continue healthy sheet, upside

our cash to accretive for dividend repurchases. targeting the alongside of providing announcement today's return are opportunities We also reflecting with a M&A confidence, increase growth stepped up share shareholders bolt-on synergies and opportunistic we've and of

all Adam, to Q sustainable expectations then A. for to AdvanSix's that, move our performance. together, and support long So continue let's term put strategies With

Adam Kressel

Dave, line you for open the Erin. Thanks, questions? please can

Operator

Instructions]. [Operator

question. comes The go with Anderson Please with question from Vincent your ahead first Stifel.

Vincent Anderson

to higher effectively quarter priced the into this just given sales benzene? read to capro anything off nylon there both growth again Is relative morning. they're Good and

Erin Kane

highlight to in top pricing that pass-through the input continue regional I to was to negotiated on the value-based with line do again from top capture read benefit probably pricing. costs nothing pricing. nylon certainly to and growth would more formulaic, the into keen we and aligned achieved, line, more bit but dynamics inflationary No, The there, Vincent. and has focus the the really freely focus the a nylon on side capro supply-demand increasing sales has

Vincent Anderson

time. line products of you've over of headwinds actually, for areas another of are over few higher like like able the presumably up automotive, the kind peers we higher headwinds in been generally grow like yet through to of adoption how that performance? pipeline round relative Okay. of market that out, If areas through you see confidence current of in And pointing the have automotive good. to kind to new your keep that last years, of leads some carrying That's your do and just just you've much brought thinking,

Erin Kane

the resiliency. enhanced Again, focus around nylon has fiber optimization, sales been we here so have for filament. mix portfolio into and Yeah,

hospitality continue our area, That Here right barrier see as move again, the markets. in On demand characteristics. that performance ensure packaging, an and a to we to continue has certainly chains inventory which there. durability commercial to resilient value play demand have Key and we and and is again, in we supply there. recovering is consideration the key forward important remained

see we So that continuing.

is with point where in the plastics, engineered you and customers our in electronic out working consumer sub-segments. we're an auto durable As compounding closely area this

to think predominantly independent diversified have win. on much I in in been we compounders past the our the more focus,

folks dedicated So technical dedicated broader technical teams have and now, do we marketing. reach, service we

bit factors that, global that where path considerations, that North always, certainly has So that- compounders happening in in you're signs the but think cognizant little recognizing are here the seeing recent we'll have signals is in as larger at while recognize are Europe. some play slowing through what that other we to in have of of Asia watch the about a navigate be a dynamics there the for I which of probably they favorably the of and global and to, America to as and think growth regional fared position and region we are

Vincent Anderson

pretty looking North winter, helpful. really from some side we then forward then supply Okay. saw in probably over reversal but And like sharp tough have American That's coming standard things seasonally, to better much spring, pretty into perspective. the I fertilizers, it's help turning prices, gotten the we're if from mean, not had a

season, to are supply-demand quite wondering outlook just at today thinking this year. willing kind about if and recently pre-buying the for So about you're share versus anything you're I'm prices early your given were into just approaching of how where where next stage they

Erin Kane

Yeah.

discussed our would nitrogen of So as great market we at fundamentals of working this we focused underlying you costs. we always, the Certainly, early opened move here. lighter on for level input as noted, likely planted value weeks. as robust us, I were on a The spring. supportive as our I through and the proposition. With spring sulfur question, highly and us are it we mean, industry off our the into prices, season appreciation reset targeting fill is say price typical I values chains a to a next nutrient acres, bit Vincent that with We Again, in methodology, season. nutrient consistent do value is coming is strong, can seasonal the assess. look in supply-demand it's earlier, would crop think values energy of say

report in certainly the our we year. thoughts our as we'll later share I as prepared to we think earnings So proceed QX be forward,

Vincent Anderson

you can commit? you maybe a to operates? That's this walk us fill actually fair. a Is volume and bids how through procedural later your you do on Okay. walk season Just that accept If price question works. of tack or that maybe that, and how I it, take kind of just basically through will who just how could decide procedurally seeing then to will much exactly us posting then want you you

Erin Kane

Yeah.

our straightforward. probably prices. We more it's open So post

we I'll go that effectively moving we and are extend our begin high year. typical accepting order can orders mid but season. We forward how to into a watch factors again, the our the with There say of fall four up. are And in consistent We that into consideration on it, book. hundreds, building again, the we're fills Here year lot methodology.

Vincent Anderson

excellent. Thank Okay, you.

Operator

CL Please question from David comes ahead, with Silver Go David. next ahead with your question. Our go King.

David Silver

through All right. Am now? I coming

Operator

Yes.

David Silver

late, just Okay, a to so to great. making repeat you going apologize I'm bit join I if wanted I little to mention be had I yourself.

been to natural there's I guess, so gas question related question other nylon about, natural the I'm I markets. guess, exceptionally been much still from costs benzene, situation the a the your there's think elevated in gas Europe Erin, a see very Europe, of, not and in So and I if perspective, about wondering impact certain you high And affecting production. fertilizer

pretty are of, that's least but at and well on the ammonia. think in production integrated So near is the the a beginning I established, words, side? what have beginning producers caprolactam you a nylon multiple nylon complexes, seeing of products. other And or at there lot highly couple

Germany nylon caprolactam there unusual I it? some materials? offset natural how nylon kind pluses Europe and to to you the supply is your see is others, gas but and supply natural raw going one but situation So the that and networks it of producers in this but minuses, are can gas market, maybe for reduce situation other is any in or do the obviously global their responding opinion mean the to alter of current global

Erin Kane

for thanks And that Sure. question, David.

rates. the think to And comparison XX% in they is rates the And energy cost at from flows globally. beginning for the We primarily gas, you the much US would to XX% has natural Europe structurally curves. influence and imports certainly, are XX%, are around structures, caprolactam is Caprolactam producer the their also potentially XX% in operating trade know, than we coupled, supply balanced. they right have impacted operating is note, time. by probably US this that cost energy whereas the landed sit across higher steepened about to When you as closer structure Europe with board in the the Europe As is all Asia. long. current nylon, note certainly, about considerations, marginal in regional Asia.

evolves demand So I shift, think global in a how think, could to in signal think could nylon caprolactam dynamic flow with at the and the where trade out sits on the volumes networks for I capacity of point Europe, over that the flow watching and plays typical global directions certainly we in different as that positions compensate. I and are naturally

David Silver

recall, great. was might had about little after mean, could was, wondering I'm public, facilities. maybe of became could be tackle, on as a I Okay, might that some think, those where $XX might your the assets willing comment to of of you the kind projects up, the development. bit if made discretionary share list I was color follow on of And lie. I guess, if I on shortly that next million of discretionary the launched new some targeted opportunities on you you acquired you million guessing I areas or wave you that program legacy $XXX focused coming- spend focus product in your I

might So be helpful. would you. any share color Thank you

Erin Kane

Sure.

number we as original our of pipeline. tackled large Certainly, the right. have it shared, about out a out thinking of we of projects you're think gate, I

now So cost are smaller the focused facilities, they on our to size energy of tend core in the be nature. products like At things yield.

sulfate expanded our on continue We for ammonium a to outlook roadmap refine conversion. granular

ability sort doubling today will that as that solvents And themselves million, be the some they in refine next projects these at in sit nature. three will as expansion million through over process. of They growth for $XX US EBITDA opportunities work as five to Amines you of to our continue won't in products like $XX target smaller be high will years to the acquisition. work and pipeline require of time well. engineering Again, to the and of solvents allow continue we've our say, cyclohexanone, certainly, on And there. part sales projects We been a the hard purity of

think for also I underlying so just but core And earning. it's growth, way sort us to a again of nice based drive

David Silver

would great. deployment. be Last about Okay, question capital

up I to probably I time, was reward of maybe volatility the dividend. personally see that. very will I shareholders on next time. share pick I'll tend believe I prices. "opportunistic" wanted think you to the increase So words but comment about that'll stock over the for or over reduce to your in the But day, pleased those the eat tomorrow

stocks if on you or range you over really you Thank might AdvanSix wide repurchase. moved just I'm what considers the within guidepost wondering And you. that of rules offer of some if share could time. Your thumb maybe- some a opportunistic in context have

Unidentified Company Representative

point other going do Obviously, we to, to considerations deploy have. repurchases, there are information reviews when an subject share out, the you the and we're could approach. certain opportunistic David, around we amounts as

does roughly factors. And times deploy I help is that a that could And share be like approach. have opportunity to where are continue due going consideration have we've And the use, things certainly but and the our disclosed give just again, we're price move of authorization you'll various to certainly, you've opportunistic. that forward to think prices There to you So sure, going certainly We to sort to of We've we a to about seen how million and guidepost and our be what XX forward. amounts think will to that at. that opportunistic. repurchase here. be going And share continue left around for on we done. that we see different remaining

David Silver

very All much. I appreciate right. you Thank it.

Operator

please question, a you then star, if Again, one. press have

go ahead comes Our from Charles next question. Please with question Neivert. your

Charles Neivert

South of base any granular to least Is probably back Europe? high of And cost opportunity any Quick down the instead cutting fact and standard more the natural production exceptionally significantly. given mean, product America? the it some Does cutting market, or for off that a to that were fertilizer or Europe a products move if the Europe are of I gas, the take would there question. and lot open product? based opportunities of at ammonia Europe's

Erin Kane

at have back, that has It tighten drawn say, I Europe and Certainly, historically consideration. bit, of, to both the America, something the does well places to we create exported Chinese but value current, as to higher particularly given growth over something made the caprolactam into will that sales Brazil, look continue of predominantly investments not Charlie. time to have as more of that that right? Probably we'll explore, certainly market, granular operating into we even at like nimble perhaps we continue it. others South as At form, America watch, and nutrient opportunity. and and covering rates where dynamics is its looking oriented seen say, agile as are historically, look portion but certainly at stay values the change, [indiscernible] ammonium we've it's a perhaps sulfate could imports into you of limited would North but a Yeah, as they're So as up markets.

Charles Neivert

has of again, walk of, sort you if some sort then issues is to have it, that back, any you gas associated has ability since and natural [indiscernible]? is you all And now produce affected so so global to Europe in going high potential know, with might cost it forward, structure that it capro their opportunities seen basing at again, or and pricing ultimately maybe just therefore given their is that, lifted basically because

Erin Kane

in of Yeah, see so a certainly, declined their in significant in out pulled markets certain statistics, they've from trade We they've utilization certainly export the places. rate. that way pretty

certainly where But can get it in is, into that earlier will middle tilt those supply with Asia of commentary to below little back curve, the bit question So the manufactured the pounds further? Europe of I cost. cost gets a any the think the being

global of the going to as demand plays to months, out have to does. we're So see what next that watch couple in the dynamic for

in really So that's as we've it past Asia. clearing gets we prices, certainly watch global to proceed going global one And in set but lifts have forward. we price closely that that as talked the that

Charles Neivert

deal guys significant going you weeks, automatic system the less, drop? in to and Because think that drop of even pretty sort I really last the of there In a sulfur. along pass of Okay. for or few that's price part you have any maybe an the to been there basically has significant. degree, give it is that was to price in. benefit what Is Clearly,

Unidentified Company Representative

Yeah, in sulfur you no, sulfur, keep it of when from pricing XX%. sequentially we quarter seen the it have reduction look the significant mind, second in the of a and up was first, at

the inflationary significant environment. just year was from like quarter, been In sulfur going we're XXX%. second So has over a backwards what up year,

appears So down and to third. seen it here second the big the here, what numbers From have here. in in peaked is price sharply we've quarter, the coming

production as sulfur to we're with demand pretty some raw it now, off coming sulfur of but to well. starting as of here well. and while and also mean, the that of a consideration it's total our contracts China of well our supply as sort it. key of has steady as here been incorporated tail formula I of the our reducing Certainly, would is And direct the respect is as part bit, see a from say. around that watch demand we'll I fertilizer is a materials X% right the down X% material, bit or of right demand dynamic, sulfur Some

monitor but would quite to it an rapidly it continue it's So we'll and closely. very moving be offset,

Charles Neivert

and any package changes business guys. that about you and of to is just completely you and done therefore it's And and recycling's going multilayer a system, it for area, nylon recycling in guys issues more layers But so like programs nice the about larger cases, others in those consistent things people's through issue part Dow not you in packaging and that companies sort on some if packages guys? issues recyclable. be these in have it's a Is in of is be really- recycling on packaging, present given for of I other packaging that talked movement not is not talked nylon to of its going sort different trying know some for own, and like a an a to or typically easily

Erin Kane

can I used watch dive well. be also term long is as No, in with deeply macro customers, It a the it have mean, and is nylon trend just in we used by itself. that certainly packages our considerations. multilayer to given Charlie,

our launch postindustrial compared area, into was have it's help for as to innovation large further percent films, One but reins is dive in to to this amount their the of meet well. circularity, core, reasons space that term. something our customers of number relative we'll long again, recycled some other PIR again, in up a our a of nylon resin this hundred the the and But of the to behind used innovation targets as certainly over watch we

Charles Neivert

much. on. very Thanks pass Okay. I'll

Operator

Please question. with with last Our Vincent your ahead Anderson Stifel. go comes question from

Vincent Anderson

cost. I ones Yeah, quick on couple just a wanted thanks. to ask

aside guess octane is stable where pass-through just this you are market seeing propylene any given So or first, meaningful from in component? still just gone and pretty I benzene the prices increase have

Unidentified Company Representative

or Yeah, one so and majority of our they're are adders is year under typically and the multiyear at contract the the at finalization. agreements time of determined either contracts,

into so coming year. this And contracted highly we're

sort that's our it given our we've overall of perspective, tightness again, However, contracted basis spot a get But we we're really suppliers a and from where the spot the in marketplace, have when majority are up. at cumin. certainly primarily you on seen the adders look cumin a gone with active

as that our forward work So to approach we as to and we'll spot movement. with the adders through with And necessarily renewals. going feel contracting continue interact we obviously here, don't go forward respect we those suppliers

Vincent Anderson

don't dollar Perfect. then assume utility to the Okay. And earnings want that increase I bridge. break out you versus gas in

about of those talk maybe reliability kind annually just or just of negotiated Are large premium? some rate of how? kind about customer you maybe structure the just Can you contracts. utilities could if a you talk So of your and paying kind

Unidentified Company Representative

subject quarter it's they XX% The electricity really sequentially plants Vincent, sure. gas look pricing QX. as what There well. from is did, to energy And natural also you as what are moves. you utilities by there gas. to imagine, the driven saw were in really intensive is And natural mostly pretty our when rates you and of second up QX in can Yeah, roughly the prices

our And does utilities costs our get gas spend. reflected that so natural for in with to purchase and flows through plant respect

our customers that and is business, sure we as push of of any we a us can the front that recover we're component and we everything to the to is spot non-material that we've worked is sure those doing to utility can hard have across other product for what non-formula what which in so done as And we're costs, make and make we've variable hard addition doing sort very lines, in we inflation.

inflation seen. We well through working recover the transportation the which we actions are quarter, actively commercial as also costs to here we've in saw on

and job being how that's good inflation it actions to the So here covered the get commercial getting through taking. managing again, we're we're those able we're doing costs and a through

Vincent Anderson

Okay, great. Yeah.

like, recently. think wondering natural bit it not benzene last talk too and there. don't insight phenol, of too give just I but you about And worry about like tons merchant us a if little I'm and So sounds [indiscernible]. then, spreads those We often promise. some exploded much one, it just look you gas of to they've as have could

Erin Kane

our caprolactam, that smaller Yeah. of player again, Hopewell downstream higher the XX% Most much of derivatives. nylon phenol for phenol-, both we're value and fact into a our produced given into is for nearly consumption

the here on contracts serve Our are formula contracts. and customers we

perhaps So that certainly those oriented I think in, last some contract fall larger of set the but as been basis, the would be think we on players the sales be and a case, contracted in of would've being which considerations predominantly our spot could year. participating about

Vincent Anderson

Okay. All you. Thank right. Helpful.

Operator

the remarks. closing turn our concludes like session. over I conference would Kane, question-and-answer to This any back for to CEO Erin

Erin Kane

the our for opportunities that and results half interest are delivered We excitement in robust this ahead. hopeful again and the lie your all XXXX you time first you share Thank morning. of about

to capital attractive all priorities, underpin critical of the of aligned a to that which yield is free total in quartile an key returns driving durable, our and stakeholders. focus all It shareholder AdvanSix exciting and achieving conversion, executing are cashflow top set are for We on of returns. measures certainly time compelling

So with to you quarter. forward speaking be that, look again, we'll with and well. Stay next safe

Operator

you conference The concluded. attending presentation. for now is Thank today's

now You disconnect. may

AdvanSix (ASIX) 5 Aug 222022 Q2 Earnings call transcript