AdvanSix Announces Fourth Quarter and Full Year 2016 Financial Results
4Q16 Sales of $259 million, down 18% versus prior year
4Q16 Cash Flow from Operations of $47 million, up 49% versus prior
year
4Q16 EPS loss of $0.81 includes impact of significant extended outage
PARSIPPANY, N.J.--(BUSINESS WIRE)--
AdvanSix (NYSE:ASIX) today announced its financial results for
the fourth quarter and full year ending Dec. 31, 2016. The Company
completed its first full quarter as an independent company and generated
strong cash flow while managing through extended plant downtime. Below
are business highlights for the fourth quarter and full year 2016.
Full Year 2016 Highlights
-
Sales down 10% versus prior year, including a 5% unfavorable impact
from 4Q16 unplanned outages
-
Sales volume down 1% versus the prior year, including a 5% unfavorable
impact from 4Q16 unplanned outages; Sales volume increased 5% for the
first nine months of the year due to improved production rates
-
4Q16 plant turnaround activities impacted pre-tax income by
approximately $64 million, including approximately $20 million impact
from the planned turnaround and approximately $44 million from
unplanned outages
-
Net Income of $34.1 million, down $29.6 million versus the prior year;
EBITDA of $96.0 million, a decrease of $40.7 million versus the prior
year
-
Capital Expenditures of $84.0 million, down $13.1 million versus the
prior year
-
Cash Flow from Operations of $113.7 million, up $12.2 million versus
the prior year; Free Cash Flow of $29.7 million, an increase of $25.3
million versus the prior year
Summary full year 2016 financial results for the Company are included
below:
Full Year 2016 Results | |
| |
($ Thousands, Except Earnings Per Share) | FY 2015 | | FY 2016 |
|
Sales
| $1,329,409 | | $1,191,524 |
|
Net Income
|
63,776
| |
34,147
|
|
Earnings Per Share (Diluted)
| $2.09 | | $1.12 |
|
EBITDA (1) |
136,647
| |
95,951
|
| EBITDA Margin % (1) | 10.3% | | 8.1% |
|
Cash Flow from Operations
|
101,536
| |
113,740
|
|
Free Cash Flow (1)(2) |
4,392
| |
29,731
|
| | |
|
(1) See "Non-GAAP Measures" included in this press
release for non-GAAP reconciliations |
(2)Net cash provided by operating activities less
capital expenditures |
"AdvanSix drove improved cash flow in the quarter despite lower income
that was the result of the significant plant challenges we faced. With
our sites currently running at planned rates, we maintain our focus on
safe operations, reliable supply to customers, and productivity as we
start the new year. We successfully navigated through significant
outages in the fourth quarter and look forward to the prospect of an
improved 2017," said Erin Kane, president and CEO of AdvanSix.
4Q 2016 Turnaround Activities
Extensive planned turnaround activities across numerous operating units
began in early October 2016. On Oct. 31, 2016, the Company announced
that its planned fourth quarter turnaround would be extended due to
additional, unplanned maintenance of its ammonia plant within its
Hopewell facility. Operations resumed on Nov. 21, then on Dec. 8, the
Company announced it had experienced a subsequent outage at its Hopewell
facility, reducing caprolactam production and leading to a reduction in
resin production at its downstream Chesterfield polymerization plant.
As a result of the planned turnaround activities and incremental
unplanned outages, the Company's fourth quarter 2016 pre-tax income was
reduced by approximately $64 million, inclusive of reduced fixed cost
absorption, inventory revaluation, additional raw material costs,
maintenance expenses and an approximately $13 million impact from lost
sales. The fourth quarter plant turnaround activities are not expected
to have an adverse impact on first quarter 2017 financial results.
Summary fourth quarter 2016 financial results for the Company are
included below:
Fourth Quarter 2016 Results | |
| |
|
($ Thousands, Except Earnings Per Share) | 4Q 2015 | | 4Q 2016 |
|
Sales
| $315,865 | | $259,323 |
|
Net Income
|
15,338
| |
(24,714)
|
|
Earnings Per Share (Diluted)
| $0.50 | |
($0.81)
|
|
EBITDA (1) |
33,111
| |
(29,586)
|
| EBITDA Margin % (1) | 10.5% | | (11.4%) |
|
Cash Flow from Operations
|
31,688
| |
47,273
|
|
Free Cash Flow (1)(2) |
2,442
| |
20,123
|
| | |
|
(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 volume in the quarter decreased 18% versus the prior year,
including a 23% unfavorable impact from lower production rates as a
result of the factors referenced above. Price was approximately flat
overall in the quarter with 2% higher raw material pass-through pricing
offset by the 2% unfavorable impact of market-based pricing.
Sales by product line represented the following approximate percentage
of our total sales:
| 4Q 2015 |
| 4Q 2016 |
| FY 2015 |
| FY 2016 |
|
Nylon
|
27%
| |
26%
| |
27%
| |
28%
|
|
Caprolactam
|
19%
| |
17%
| |
18%
| |
17%
|
|
Ammonium Sulfate Fertilizers
|
27%
| |
24%
| |
25%
| |
24%
|
|
Chemical Intermediates
|
27%
| |
33%
| |
30%
| |
31%
|
EBITDA loss of $29.6 million in the quarter decreased from EBITDA of
$33.1 million in the prior year primarily due to the factors referenced
above.
Recent Trends and Outlook
-
Global caprolactam and nylon 6 price strength due to underlying raw
material cost increases coupled with current tightened supply
environment
-
Ammonium sulfate fertilizer prices remain stable sequentially;
Challenging agriculture fundamentals expected throughout 2017
-
AdvanSix 1Q17 plant production rates on plan
- Hopewell 2017 plant production rates expected at or above historical
production as a result of system upgrades and reliability improvements
-
Capital Expenditures are expected to be approximately $90 million for
the full year 2017
"We expect improved operational and financial performance in 2017 with
an emphasis on increasing plant production output, driving higher-value
product mix and continued strong working capital results," said Kane.
Conference Call Information
AdvanSix will discuss its results during its investor conference call
today starting at 9:00 a.m. ET. To participate on the conference call,
dial (866) 807-9684 (domestic) or (412) 317-5415 (international)
approximately 10 minutes before the 9:00 a.m. ET start, and tell the
operator that you are dialing in for AdvanSix's fourth quarter 2016
earnings call. The live webcast of the investor call as well as related
presentation materials can be accessed at http://investors.advan6.com.
Investors can hear a replay of the conference call from 12:00 noon ET on
March 3 until 12:00 noon ET on March 10 by dialing (877) 344-7529
(domestic) or (412) 317-0088 (international). The access code is
10100151.
About AdvanSix
AdvanSix is a leading manufacturer of Nylon 6, a polymer resin which is
a synthetic material used by our customers to produce engineered
plastics, fibers, filaments and films that, in turn, are used in such
end-products as automotive and electronic components, carpets, sports
apparel, fishing nets and food and industrial packaging. 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 as
part of the Nylon 6 resin manufacturing process. More information on
AdvanSix can be found at http://www.advan6.com.
Forward Looking Statements
This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical fact, that address activities, events or
developments that our management intends, expects, projects, believes or
anticipates will or may occur in the future are forward-looking
statements. Forward-looking statements may be identified by words like
"expect," "anticipate," "estimate," "outlook", "project," "strategy,"
"intend," "plan," "target," "goal," "may," "will," "should" and
"believe" or other variations or similar terminology. Although we
believe forward-looking statements are based upon reasonable
assumptions, such statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results or
performance of the company to be materially different from any future
results or performance expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not limited
to: our inability to achieve some or all of the anticipated benefits of
the spin-off from Honeywell including uncertainty regarding
qualification for expected tax treatment, indebtedness incurred in
connection with the spin-off, and operating as an independent, publicly
traded company; fluctuations in our stock price; general economic and
financial conditions in the U.S. and globally; growth rates and
cyclicality of the industries we serve; the impact of scheduled
turnarounds and significant unplanned interruptions of production or
logistics operations as a result of mechanical issues or other
unanticipated events such as fires, severe weather conditions, and
natural disasters; price fluctuations and supply of raw materials;
adverse trade and tax policies; extensive environmental, health and
safety laws that apply to our operations; litigation associated with
chemical manufacturing; loss of significant customer relationships;
protection of our intellectual property and proprietary information; and
prolonged work stoppages as a result of labor difficulties. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. Such
forward-looking statements are not guarantees of future performance, and
actual results, developments and business decisions may differ from
those envisaged by such forward-looking statements. We identify the
principal risks and uncertainties that affect our performance in our
filings with the Securities and Exchange Commission, including our
Registration Statement on Form 10 and our Annual Report on Form 10-K for
the year ended December 31, 2016 to be filed with the SEC.
Non-GAAP Financial Measures
This press release includes certain non‐GAAP financial measures intended
to supplement, not to act as substitutes for, comparable GAAP measures.
Reconciliations of non‐GAAP financial measures to GAAP financial
measures are provided in this press release. Investors are urged to
consider carefully the comparable GAAP measures and the reconciliations
to those measures provided. Non-GAAP measures in this press release may
be calculated in a way that is not comparable to similarly-titled
measures reported by other companies.
|
|
| AdvanSix Inc. |
| Consolidated and Combined Balance Sheets (unaudited) |
| (in thousands, except share and per share amounts) |
|
| | | | |
|
| |
| | | | December 31, |
| | | | 2016 | | | 2015 |
| Assets | | | | | | |
|
Current assets:
| | | | | | |
|
Cash and cash equivalents
| | $ 14,199 | | |
$ -
|
|
Accounts and other receivables – net
|
131,671
| | |
127,545
|
|
Inventories – net
| | |
128,978
| | |
150,231
|
|
Other current assets
| |
7,690
| | |
4,443
|
|
Total current assets
| |
282,538
| | |
282,219
|
| | | | | | |
|
|
Property, plant, equipment – net
| |
575,375
| | |
527,542
|
|
Goodwill
| | |
15,005
| | |
15,005
|
|
Other assets
| | |
32,039
| | |
16,220
|
|
Total assets
| | | $ 904,957 | | | $ 840,986 |
| | | | | | |
|
| Liabilities | | | | | | |
|
Current liabilities:
| | | | | | |
|
Accounts payable
| | | $ 223,015 | | | $ 192,733 |
|
Accrued liabilities
| | |
25,396
| | |
25,114
|
|
Deferred income and customer advances
|
25,567
| | |
25,207
|
|
Total current liabilities
| |
273,978
| | |
243,054
|
| | | | | | |
|
|
Deferred income taxes
| |
114,200
| | |
114,910
|
|
Long-term debt
| | |
264,838
| | |
-
|
|
Postretirement benefit obligations
|
33,544
| | |
-
|
|
Other liabilities
| | |
3,035
| | |
3,952
|
|
Total liabilities
| | |
689,595
| | |
361,916
|
| | | | | | |
|
| Stockholders' Equity | | | | | |
Common stock, par value $0.01; 200,000,000 shares authorized
and
30,482,966 shares issued and outstanding
|
305
| | |
-
|
Preferred stock, par value $0.01; 50,000,000 shares authorized
and
0 shares issued and outstanding
|
-
| | |
-
|
|
Additional paid-in capital
| |
242,806
| | |
-
|
|
Accumulated deficit
| |
(24,714)
| | |
-
|
|
Invested equity
| | |
-
| | |
482,809
|
|
Accumulated other comprehensive income (loss)
|
(3,035)
| | |
(3,739)
|
|
Total stockholders' equity
| |
215,362
| | |
479,070
|
|
Total liabilities and stockholders' equity
| $ 904,957 | | | $ 840,986 |
|
|
| AdvanSix Inc. |
| Consolidated and Combined Statements of Operations |
| For the years and three months ended December 31, 2016 and 2015
(unaudited) |
| (in thousands, except share and per share amounts) |
|
|
| |
| |
| |
|
| |
| |
| | | | Three Months Ended December 31, | | | Years Ended December 31, |
| | | | 2016 | | 2015 | | | 2016 | | 2015 |
|
Sales
| | $ 259,323 | | $ 315,865 | | | $ 1,191,524 | | $ 1,329,409 |
| | | | | | | | | | |
|
|
Costs, expenses and other:
| | | | | | | | | |
|
Costs of goods sold
| |
279,423
| |
279,457
| | |
1,083,894
| |
1,179,651
|
|
Selling, general and administrative expenses
| |
19,804
| |
13,194
| | |
53,753
| |
52,398
|
|
Other non-operating – net
| |
1,894
| |
(863)
| | |
102
| |
(2,877)
|
| | | |
301,121
| |
291,788
| | |
1,137,749
| |
1,229,172
|
| | | | | | | | | | |
|
|
Income before taxes
| |
(41,798)
| |
24,077
| | |
53,775
| |
100,237
|
|
Income taxes
| |
(17,084)
| |
8,739
| | |
19,628
| |
36,461
|
|
Net income
| | $ (24,714) | | $ 15,338 | | | $ 34,147 | | $ 63,776 |
| | | | | | | | | | |
|
|
Earnings per common share
| | | | | | | | | |
|
Basic
| | $ (0.81) | | $ 0.50 | | | $ 1.12 | | $ 2.09 |
|
Diluted
| | $ (0.81) | | $ 0.50 | | | $ 1.12 | | $ 2.09 |
| | | | | | | | | | |
|
|
Weighted average common shares outstanding
| | | | | | | | | |
|
Basic
| |
30,482,966
| |
30,482,966
| | |
30,482,966
| |
30,482,966
|
|
Diluted
| |
30,503,587
| |
30,482,966
| | |
30,503,587
| |
30,482,966
|
|
|
| AdvanSix Inc. |
| Consolidated and Combined Statements of Cash Flows |
| For the years and three months ended December 31, 2016 and 2015
(unaudited) |
| (in thousands) |
|
|
| | |
| | |
|
| |
| |
| | | Three Months Ended
December 31, | | | Years Ended December 31, |
| | | 2016 | | 2015 | | | | 2016 | | 2015 |
| | Cash flows from operating activities:
| | | | | | | | | |
| |
Net income (loss)
| $ (24,714) | | $ 15,338 | | | | $ 34,147 | | $ 63,776 |
| |
Adjustments to reconcile net income to net cash provided
| | | | | | | | | |
| |
by operating activities:
| | | | | | | | | |
| |
Depreciation and amortization
|
10,365
| |
9,034
| | | |
40,329
| |
36,410
|
| |
Loss on disposal of assets
|
283
| |
273
| | | |
1,529
| |
1,308
|
| |
Deferred income taxes
|
(17,672)
| |
2,284
| | | |
11,534
| |
9,913
|
| |
Stock based compensation
|
1,327
| |
-
| | | |
1,327
| |
-
|
| |
Accretion of deferred financing costs
|
148
| |
-
| | | |
148
| |
-
|
| |
Changes in assets and liabilities:
| | | | | | | | | |
| |
Accounts and other receivables
|
16,169
| |
(1,776)
| | | |
(3,948)
| |
38,399
|
| |
Inventories
|
7,672
| |
(11,518)
| | | |
21,253
| |
5,021
|
| |
Accounts payable
|
24,093
| |
(4,176)
| | | |
23,932
| |
(38,689)
|
| |
Accrued liabilities
|
9,971
| |
3,683
| | | |
281
| |
500
|
| |
Deferred income and customer advances
|
23,861
| |
21,857
| | | |
360
| |
(6,783)
|
| |
Other assets and liabilities
|
(4,230)
| |
(3,311)
| | | |
(17,152)
| |
(8,319)
|
| |
Net cash provided by operating activities
|
47,273
| |
31,688
| | | |
113,740
| |
101,536
|
| | | | | | | | | | |
|
| | Cash flows from investing activities: | | | | | | | | | |
| |
Expenditures for property, plant and equipment
|
(27,150)
| |
(29,246)
| | | |
(84,009)
| |
(97,144)
|
| |
Other investing activities
|
(1,911)
| |
(523)
| | | |
(2,372)
| |
(1,086)
|
| |
Net cash (used for) investing activities
|
(29,061)
| |
(29,769)
| | | |
(86,381)
| |
(98,230)
|
| | | | | | | | | | |
|
| | Cash flow from financing activities: | | | | | | | | | |
| |
Proceeds from long term debt
|
-
| |
-
| | | |
270,000
| |
-
|
| |
Payment of long term debt
|
(3,375)
| |
-
| | | |
(3,375)
| |
-
|
| |
Payment of debt issuance costs
|
(111)
| |
-
| | | |
(1,881)
| |
-
|
| |
Borrowings under revolving credit facility
|
18,000
| |
-
| | | |
58,000
| |
-
|
| |
Payments of revolving credit facility
|
(58,000)
| |
-
| | | |
(58,000)
| |
-
|
| |
Payment of revolving credit facility fees
|
(64)
| |
-
| | | |
(1,080)
| |
-
|
| |
Principal payments under capital lease
|
(165)
| |
-
| | | |
(165)
| |
-
|
| |
Distribution to Honeywell in connection with Spin-Off
|
-
| |
-
| | | |
(269,347)
| |
-
|
| |
Net increase (decrease) in invested equity
|
1,738
| |
(1,755)
| | | |
(7,312)
| |
(2,936)
|
| |
Other financing activities
|
-
| |
(164)
| | | |
-
| |
(370)
|
| |
Net cash (used for) financing activities
|
(41,977)
| |
(1,919)
| | | |
(13,160)
| |
(3,306)
|
| | | | | | | | | | |
|
| |
Net increase/(decrease) in cash and cash equivalents
|
(23,765)
| |
-
| | | |
14,199
| |
-
|
| |
Cash and cash equivalents at beginning of period
|
37,964
| |
-
| | | |
-
| |
-
|
| |
Cash and cash equivalents at the end of period
| $ 14,199 | |
$ -
| | | | $ 14,199 | |
$ -
|
|
|
| AdvanSix Inc. |
| Non-GAAP Measures |
| (in thousands) |
|
| | |
| |
| | |
| |
| Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow |
| | | | | | | | |
|
| | Three Months Ended
December 31, | Years Ended December 31, |
| | 2016 | | 2015 | | | 2016 | | 2015 |
| | | | | | | | |
|
|
Net Cash Provided by Operating Activities
| $ 47,273 | | $ 31,688 | | | $ 113,740 | | $ 101,536 |
|
Expenditures for Property, Plant and Equipment
|
(27,150)
| |
(29,246)
| | |
(84,009)
| |
(97,144)
|
|
Free Cash Flow (1) | $ 20,123 | | $ 2,442 | | | $ 29,731 | | $ 4,392 |
| | | | | | | | |
|
| (1) Free Cash Flow is defined as Net Cash provided by Operating
Activities less Capital Expenditures | | |
| | | | | | | | |
|
| The Company believes that this metric is useful to investors
and management as a measure
to evaluate our ability to
generate cash flow from business operations and the impact that
this
cash flow has on our liquidity. |
| | | | | | | | |
|
| | | | | | | | |
|
| Reconciliation of Net Income to EBITDA |
| | | | | | | | |
|
| | Three Months Ended
December 31, | Years Ended December 31, |
| | 2016 | | 2015 | | | 2016 | | 2015 |
| | | | | | | | |
|
|
Net Income
| $ (24,714) | | $ 15,338 | | | $ 34,147 | | $ 63,776 |
|
Interest Expense
|
1,847
| |
-
| | |
1,847
| |
-
|
|
Income Taxes
|
(17,084)
| |
8,739
| | |
19,628
| |
36,461
|
|
Depreciation and Amortization
|
10,365
| |
9,034
| | |
40,329
| |
36,410
|
|
EBITDA (2) | $ (29,586) | | $ 33,111 | | | $ 95,951 | | $ 136,647 |
| | | | | | | | |
|
|
Sales
| $ 259,323 | | $ 315,865 | | | $ 1,191,524 | | $ 1,329,409 |
|
EBITDA Margin (3) |
(11.4%)
| |
10.5%
| | |
8.1%
| |
10.3%
|
| | | | | | | | |
|
| (2) EBITDA is defined as Net Income before Interest, Income
Taxes, Depreciation and Amortization | | |
| (3) EBITDA Margin is defined as EBITDA divided by Sales | | | | | | | |
| | | | | | | | |
|
| The Company believes these non-GAAP financial measures provide
meaningful supplemental information
as they are used
by the Company's management to evaluate the Company's operating
performance,
enhance a reader's understanding of the
financial performance of the Company, and facilitate
a
better comparison among fiscal periods and performance relative to
its competitors,
as the non-GAAP measures exclude
items that are not considered core to the Company's operations. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170303005270/en/
AdvanSix
Media
Debra Lewis, 973-526-1767
[email protected]
or
Investor
Relations
Adam Kressel, 973-526-1700
[email protected]
Source: AdvanSix