AdvanSix — Second Quarter 2026 Earnings Summary

Financial Performance

• Second quarter 2026 sales reached $421.3 million, a 3% increase year-over-year from $410.0 million in the prior year period.
• Net income was $3.2 million, a 90% decrease from $31.4 million in the prior year.
• Diluted earnings per share (EPS) were $0.12, down from $1.15 in the prior year.
• Adjusted diluted EPS was $0.19, a decrease of $1.05 compared to $1.24 in the prior year.
• Adjusted EBITDA was $31.9 million, down 43% from $55.7 million in the prior year.
• Adjusted EBITDA margin decreased to 7.6% from 13.6% in the prior year.
• Cash flow from operations was $10.0 million, a 52% decrease from $21.1 million in the prior year.
• Capital expenditures were $20.7 million, down 27% from $28.3 million in the prior year.
• Free cash flow was negative $10.7 million, a 49% decline from negative $7.2 million in the prior year.
• Sales growth was driven by 18% favorable pricing, partially offset by a 15% decline in volume.
• Raw material pass-through pricing increased 13% due to higher benzene and propylene costs.
• Market-based pricing improved 5%, primarily driven by higher nitrogen pricing in Plant Nutrients.

Guidance and Future Outlook

• North American ammonium sulfate fill program is expected to drive a sequential domestic pricing decline in Q3 2026 amid competitive dynamics and continued higher sulfur input costs.
• Acetone spread over propylene costs is expected to hold near cycle averages for the full year 2026.
• The company will continue to optimize Nylon Solutions production output, inventories, and sales volume mix in an extended soft industrial end market environment.
• Full-year 2026 capital expenditures are expected to be between $75 million and $95 million, compared to $116 million in 2025.
• Pre-tax income impact from plant turnarounds is now expected to be approximately $17 million in 2026, down from approximately $25 million in 2025.
• Second half 2026 sequential cash flow improvement is expected due to a reduced capital expenditures run-rate, working capital tailwinds including a Q4 2026 pre-buy program in Plant Nutrients, timing of annual payments, and cash tax optimization.

Business Segments and Product Lines

• Nylon Solutions sales were $100.2 million (24% of total), up 26% year-over-year.
• Caprolactam sales were $62.6 million (15% of total), down 6% year-over-year.
• Plant Nutrients sales were $131.4 million (31% of total), down 16% year-over-year.
• Chemical Intermediates sales were $127.0 million (30% of total), up 18% year-over-year.
• Nylon Solutions and Chemical Intermediates performed at or better than expectations.
• Sales volume in Plant Nutrients fell short of expectations due to a decline in ammonium sulfate driven by challenging agricultural fundamentals and reduced farmer profitability.

Market and Competitive Landscape

• The macro environment remains highly dynamic, particularly in the Plant Nutrients sector.
• The industrial end market demand environment is described as subdued.
• Agricultural fundamentals are challenging, with farmer economics resulting in reduced in-season fertilizer purchases.
• The company leverages formula and market-based pricing mechanisms to offset inflationary raw material costs.

Risks and Challenges

• Lower sales volume in Plant Nutrients and reduced production output negatively impacted earnings and cash flow.
• A higher effective tax rate in the quarter was driven by the absence of 45Q carbon capture tax credits claimed in the prior year period.
• The company faces continued higher sulfur input costs and competitive dynamics affecting ammonium sulfate pricing.

Management Commentary and Tone

• CEO Erin Kane described the results as resilient, noting a significant sequential improvement in earnings and cash flow.
• Management expressed confidence in the company's ability to deliver long-term value and perform through various environments.
• Key strategic priorities include focusing on controllable levers for through-cycle profitability, progressing targeted growth strategies, and maintaining non-manpower fixed cost savings.
• The company remains aligned to domestic supply chains and energy markets as a U.S.-based integrated manufacturer.

Other Key Points

• The Board of Directors declared a quarterly cash dividend of $0.16 per share on common stock.
• The dividend is payable on September 1, 2026, to stockholders of record as of August 18, 2026.
• The company reported a 4Q 2026 pre-buy program in Plant Nutrients as a working capital tailwind for the second half of the year.
• The company continues to progress growth programs including SUSTAIN.
• Cash and cash equivalents at June 30, 2026, were $7.2 million, down from $19.8 million at December 31, 2025.
• Total liabilities were $876.1 million at June 30, 2026, compared to $890.9 million at December 31, 2025.
• The line of credit balance increased to $275.0 million at June 30, 2026, from $215.0 million at December 31, 2025.