AdvanSix Inc. Q2 FY2025 earnings call

• AdvanSix delivered resilient earnings with sequential improvement in Q2 2025, driven by plant nutrients volume and pricing. - Navigated margin impact from higher raw materials like natural gas and sulfur. - Planned investment in ERP system nearing completion, reduced CapEx forecast to $135M-$145M. - Awarded 2025 gold rating for CSR from Ecovadis, claimed $8M in 45Q tax credits in Q2, total $20M for 2018-2020 tax periods.

Plant nutrients: Had a 7% increase in domestic granular sales volume in the past fertilizer year, with expected 72% granular conversion by end of 2025. Entered Q3 2025 at higher ammonium sulfate pricing. Nylon: Caprolactam and resin margins expanded year-over-year but operating in a lower-for-longer macro environment with mixed demand in North America and moderated operating rates in China. Chemical intermediates: Acetone prices declined year-over-year due to higher input costs, phenol operating rates low, but acetone demand expected to improve in Q3, with key strategic focus on high-value applications. Revenue contribution details: Sales of $410M in Q2 2025, plant nutrients, nylon, and chemical intermediates each contributing based on performance.

• Expect free cash flow generation to strengthen in the second half of 2025 and target positive full-year free cash flow. - Anticipate an estimated incremental $80M to $100M of potential opportunity from 45Q tax credits in future periods.

• Macro environment uncertainties affecting end market demand. - Higher raw material prices (natural gas, sulfur) impacting margins. - Downstream uncertainty in nylon due to global oversupply conditions.

Q: Could you give a look ahead on how the fall fill program for ammonium sulfate is shaping up and the pricing relationship with urea?

A: Started and built up a robust order book rate supporting a strong anticipated fall fill program. Premiums of ammonium sulfate to urea have been in about the 75% range, expecting similar this year, with growers seeing the sulfur value.

Q: How do you view the stability of AdvanSix's profitability over the medium term in the chemical industry environment?

A: Cautiously optimistic due to diversified portfolio, regional footprint (90% sales in US, 90% supplier spend domestic), flexibility in operations, and ability to hold pricing in some end markets.

Q: Comment on cash flow levers and timing of 45Q tax credit cash flows?

A: Expected second half cash flow to be better, with 45Q tax credits expected to be received after IRS audit completion in current calendar year, ammonium sulfate prebuy program impacting first half, and CapEx being disciplined.