Overview of Financial Performance

AdvanSix Inc. is a diversified chemistry company that plays a critical role in global supply chains. The company’s four key product lines are Nylon, Caprolactam, Ammonium Sulfate, and Chemical Intermediates. AdvanSix’s financial performance in 2024 was impacted by operational disruptions at its Frankford, Pennsylvania and Hopewell, Virginia manufacturing sites, which resulted in lost sales and higher costs.

Revenue and Profit Trends

In 2024, AdvanSix’s sales decreased by 1.0% to $1,517.6 million compared to 2023. This was primarily due to a 1.9% decrease in sales volume, partially offset by a 0.9% increase in pricing. Cost of goods sold remained flat in 2024 compared to 2023, as higher raw material and plant costs were offset by the decrease in sales volume.

Gross margin percentage decreased from 10.8% in 2023 to 10.1% in 2024, due to the impact of market-based pricing, net of raw material costs, and the increased plant costs from the operational disruptions. Selling, general and administrative expenses decreased by 2% in 2024 compared to 2023, due to lower functional support and legal costs, partially offset by higher enterprise resource planning system expenses.

Net income decreased from $54.6 million in 2023 to $44.1 million in 2024, primarily due to the operational disruptions and associated costs. The company’s effective tax rate was significantly lower in 2024 compared to 2023, due to the recognition of prior year tax credits.

The company uses non-GAAP measures such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share to provide supplemental information on its operating performance. Adjusted EBITDA decreased from $153.6 million in 2023 to $142.1 million in 2024, and Adjusted EBITDA Margin decreased from 10.0% to 9.4% over the same period.

Strengths and Weaknesses

A key strength of AdvanSix is its integrated value chain of five U.S.-based manufacturing facilities, which allows the company to reliably and sustainably supply quality products. The company’s diversified product portfolio across nylon solutions, plant nutrients, and chemical intermediates also provides some insulation from cyclical swings in any one end market.

However, the company’s operational performance can be impacted by unplanned disruptions at its manufacturing facilities, as seen in 2024. AdvanSix is also exposed to fluctuations in raw material costs, which can affect its profitability. The company’s reliance on certain key raw materials, such as cumene, natural gas, and sulfur, also presents supply chain risks.

Outlook and Future Prospects

Looking ahead, AdvanSix expects capital expenditures to be in the range of $140 million to $160 million in 2025, as the company progresses growth projects and addresses critical enterprise risk mitigation. The company’s primary cash requirements for 2025 will be to fund ongoing operations, capital expenditures, and contractual obligations.

AdvanSix’s liquidity position remains strong, with $20 million in cash on hand and $304 million of available capacity under its revolving credit facility as of December 31, 2024. The company’s disciplined approach to working capital management and utilization of supply chain financing and trade receivables discount arrangements have helped optimize its liquidity.

The company’s Board of Directors has authorized share repurchase programs, with $62 million remaining available for repurchases as of December 31, 2024. AdvanSix also continues to pay quarterly dividends to shareholders, with the most recent dividend of $0.16 per share announced on February 21, 2025.

Overall, AdvanSix’s diversified product portfolio, integrated manufacturing capabilities, and strong liquidity position provide a solid foundation for the company to navigate the challenges and capitalize on the opportunities in the markets it serves. However, the company’s operational and financial performance remains subject to risks such as unplanned production disruptions, raw material cost fluctuations, and broader economic conditions.