AdvanSix Inc. Q4 FY2024 earnings call

• AdvanSix achieved commercial success in 2024 but faced operational challenges. - Received $5.3 million in insurance proceeds in Q4 2024 and a final Omnibus settlement of ~$26 million in Q1 2025 related to the 2019 PES QME supplier shutdown, with aggregated insurance proceeds since 2019 totaling ~$39 million. - Claimed $9.7 million in 45Q tax credits in Q4 2024 for 2018 and 2019 tax years for carbon capture at the Hopewell, Virginia facility. - Full year 2024 adjusted EBITDA was $142 million, adjusted earnings per share $1.96, and positive free cash flow. - Funded key growth and enterprise investments, returned cash to shareholders, and maintained prudent leverage levels.

Plant Nutrients

• Fourth quarter performance was strong with industry corn belt ammonium sulfate prices up 15% year over year. Market acceptance of pre-buy program supported strong cash flow. Full year 2024 had robust performance. Granular conversion is expected to reach 72% by the end of 2025, up from ~70% at the end of 2024.

Nylon

• Persistent global oversupply conditions pressured pricing and spreads. North American end market demand is relatively stable but had a slow start to 2025 with less disciplined competitive behavior impacting spreads. Trade flows from China limited pricing improvement globally.

Chemical Intermediates

• Acetone prices remained healthy amid balanced global supply and demand, but there was a slower start to 2025. Received a new European patent grant in the fourth quarter for EasyBlox 2PO product used as an anti-skinning agent for outlet paints and coatings.

• Anticipate meaningful year-over-year earnings improvement for full year 2025 supported by operational excellence and strong commercial performance. - CapEx expected to be in the range of $140 million to $160 million reflecting planned growth projects. - Plant turnarounds anticipated to be a tailwind year over year. - First quarter nylon export mix expected to return to historical averages, but overall expect improved profitability for the full year.

• Higher anticipated raw material prices, particularly for natural gas and sulfur, impacting the price raw spread. - Operational disruptions that did not meet expectations in 2024. - Uncertain macro environment affecting the industries served. - Persistent global oversupply conditions and competitive pressures in the nylon solutions business.

Q: On the conversion to granular side, what's the target and max level?

A: The SUSPANE program is driven to a 75% target conversion, and assets don't anticipate reaching 100%, with 75% being a stretch matching North American domestic demand for the higher premium product.

Q: Is the phenol market problematic and affecting acetone?

A: Phenol rates in the US are at about 65% plus minus, and AdvanSix is targeting a higher rate due to strong integration into the caprolactam value chain, with acetone serving as a natural hedge in lower phenol operating rate environments.

Q: What's the estimate for 2025 carbon capture tax credits excluding prior years?

A: On a run rate basis, could assume a $5 million figure that escalates given utilization and IRS credit schedule with inflation, potentially expanding to a $5-6 million run rate.

Q: How does natural gas cost impact ammonium sulfate and competitiveness?

A: Energy costs are important for plant nutrients, impacting the marginal producer for nitrogen. Higher EU energy costs support higher global urea prices, enabling higher nitrogen-based pricing and driving the premium for sulfur nutrition. It also impacts chemical intermediates and nylon competitiveness.

Q: What's the outlook for the ag chemical portion of the business beyond ammonium sulfate?

A: Continues to face challenges with low price competition and Chinese imports in certain markets, lagging behind the positive trends in the dry fertilizer space.