PARSIPPANY, N.J.--(BUSINESS WIRE)--AdvanSix (NYSE: ASIX) today announced its financial results for the third quarter ending September 30, 2020. Overall, the Company generated higher cash flow in the third quarter while mitigating the ongoing impacts of COVID-19 and executing its planned plant turnaround.

Third Quarter 2020 Results

• Sales down approximately 9% versus prior year, as 5% higher volume was more than offset by 13% lower raw material pass-through pricing and 1% unfavorable impact of market-based pricing
• Net Loss of ($0.7) million, a decrease of $8.6 million versus the prior year
• EBITDA of $15.8 million, a decrease of $9.1 million versus the prior year
• 3Q20 planned plant turnaround successfully completed - approximately $20 million unfavorable pre-tax income impact (compared to approximately $5 million unfavorable impact in 3Q19)
• Cash Flow from Operations of $35.5 million, an increase of $2.4 million versus the prior year
• Capital Expenditures of $16.0 million, $19.2 million favorable versus the prior year
• Free Cash Flow of $19.6 million, an increase of $21.6 million versus the prior year
• As of 3Q20, approximately $17 million of cash on hand with approximately $111 million of additional capacity available under the revolving credit facility

“Our diverse product portfolio and global low-cost position continue to serve us well as we navigate through the current environment," said Erin Kane, president and CEO of AdvanSix. "We have seen nylon volume returning to pre-COVID levels and we continue to optimize our mix across end uses, applications and geographies through the recovery. The performance of the remainder of our portfolio, including ammonium sulfate, acetone and other high-value intermediates, remains resilient complementing ongoing benefits from our focused cost management and high-return capital investments. We generated higher cash flow in the quarter, as anticipated, supported by efficient working capital performance and reduced capital expenditures."

Summary third quarter 2020 financial results for the Company are included below:

($ in Thousands, Except Earnings Per Share)	3Q 2020	3Q 2019
Sales	$281,910	$310,633
Net Income (Loss)	(692)	7,921
Diluted Earnings (Loss) Per Share	($0.02)	$0.28
EBITDA (1)	15,806	24,949
EBITDA Margin % (1)	5.6%	8.0%
Cash Flow from Operations	35,533	33,173
Free Cash Flow (1)(2)	19,572	(2,012)
(1) See “Non-GAAP Measures” included in this press release for non-GAAP reconciliations(2) Net cash provided by operating activities less capital expenditures

Sales of $281.9 million decreased approximately 9% versus the prior year. Raw material pass-through pricing was unfavorable by 13% following a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products). Market-based pricing was unfavorable by 1% compared to the prior year reflecting challenging end market conditions in our nylon and caprolactam product lines and lower sales prices in ammonium sulfate, partially offset by improved industry dynamics in chemical intermediates, particularly acetone. Sales volume in the quarter increased 5% driven by increases in nylon and higher domestic granular ammonium sulfate sales.

Sales by product line represented the following approximate percentage of our total sales:

3Q 2020	3Q 2019
Nylon	26%	25%
Caprolactam	18%	26%
Ammonium Sulfate Fertilizers	22%	20%
Chemical Intermediates	34%	29%

EBITDA of $15.8 million in the quarter decreased $9.1 million versus the prior year primarily due to the unfavorable impact of planned plant turnarounds, unfavorable sales mix and lower market-based pricing, partially offset by productivity and disciplined cost management, and the favorable impact of lower raw material costs including natural gas and sulfur.

Earnings per share decreased $0.30 versus the prior year to a loss of ($0.02) in the quarter driven by the factors discussed above.

Cash flow from operations of $35.5 million in the quarter increased $2.4 million versus the prior year primarily due to the favorable impact of changes in working capital, partially offset by lower net income. Capital expenditures of $16.0 million in the quarter decreased $19.2 million versus the prior year following the completion of several high-return growth and cost savings investments.

COVID-19 Response Summary

As previously discussed, the U.S. Department of Homeland Security designated our industry as "essential critical infrastructure" during the response to COVID-19 for both public health and safety as well as community well-being. During the third quarter, we continued to execute our business continuity and mitigation plans with a focus on health and safety including, among other actions, on-site medical personnel to actively monitor employees and contractors, thermal screening, social distancing measures, telecommuting, upgraded personal protective equipment, face coverings at all facilities, and exposure management protocols.

Outlook

• Targeting strong caprolactam plant utilization and optimizing nylon mix across end uses, applications and geographies
• Expect stable ammonium sulfate fertilizer environment to continue through 2020/2021 planting season
• Expect favorable acetone industry supply and demand balance to continue
• Continued disciplined cost management - expect $20 to $25 million full year 2020 cost reduction
• Capital Expenditures expected to be approximately $85 million in 2020 (down approximately $65 million versus 2019); Expect Capital Expenditures to be $80 to $90 million in 2021
• Expect a reduction in net debt and leverage levels in 4Q20 with robust cash generation supported by working capital improvements and cash tax benefits associated with the CARES Act
• Expect pre-tax income impact of planned plant turnarounds to be $25 to $30 million in 2021 (versus approximately $32 million in 2020)

"During this dynamic time, we continue to strengthen our ability to deliver long-term shareholder return. We are focused on executing for the remainder of 2020 and driving best possible outcomes for the business. Looking ahead to 2021, our priorities are focused on continued operational excellence and improving through-cycle profitability, enhancing our portfolio resiliency through differentiated product growth and mix optimization, and being strong and disciplined stewards of capital,” added Kane.

About AdvanSix

AdvanSix is a leading manufacturer of Nylon 6, 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 electronic components, sports apparel, food packaging and other industrial applications. As a result of our backward integration and the configuration of our manufacturing facilities, we also sell caprolactam, ammonium sulfate fertilizer, acetone and other intermediate chemicals, all of which are produced within unit operations across our integrated manufacturing value chain. More information on AdvanSix can be found at http://www.advansix.com.