AdvanSix Inc. (ASIX) Bundle
Understanding AdvanSix Inc. (ASIX) Revenue Streams
Understanding AdvanSix Inc.’s Revenue Streams
AdvanSix Inc. generates revenue primarily through the sales of its products, which include nylon, caprolactam, ammonium sulfate, and chemical intermediates. The breakdown of revenue by product for the three and nine months ended September 30, 2024, is as follows:
| Product | Q3 2024 Revenue (in $ thousands) | Q3 2023 Revenue (in $ thousands) | YTD 2024 Revenue (in $ thousands) | YTD 2023 Revenue (in $ thousands) |
|---|---|---|---|---|
| Nylon | 93,693 | 86,056 | 281,299 | 278,381 |
| Caprolactam | 76,338 | 68,795 | 219,117 | 215,867 |
| Ammonium Sulfate | 107,668 | 79,067 | 332,604 | 332,224 |
| Chemical Intermediates | 120,488 | 88,989 | 355,475 | 324,919 |
| Total Revenue | 398,187 | 322,907 | 1,188,495 | 1,151,391 |
In the three months ended September 30, 2024, total revenue increased by 23.3% compared to the same period in 2023, attributed primarily to:
- Increased Volume: Approximately 11% growth driven by higher sales across all product lines.
- Favorable Raw Material Pricing: Contributed approximately 8% to revenue growth.
- Market-Based Pricing: A net favorable pricing environment added approximately 5%.
Year-to-date revenue for the nine months ended September 30, 2024, reflects a 3.2% increase compared to the prior year, driven by:
- Increased Volume: Approximately 2.6% growth, particularly in nylon and ammonium sulfate.
- Net Pricing: Contributed approximately 0.6%, reflecting favorable raw material pass-through pricing.
The revenue contribution by geographic area for the three and nine months ended September 30, 2024, is detailed below:
| Region | Q3 2024 Revenue (in $ thousands) | Q3 2023 Revenue (in $ thousands) | YTD 2024 Revenue (in $ thousands) | YTD 2023 Revenue (in $ thousands) |
|---|---|---|---|---|
| United States | 339,895 | 264,858 | 1,026,342 | 953,392 |
| International | 58,292 | 58,049 | 162,153 | 197,999 |
| Total Revenue | 398,187 | 322,907 | 1,188,495 | 1,151,391 |
Notably, the increase in revenue has been affected by operational disruptions at the Frankford site earlier in the year, which impacted overall sales volumes. However, the recovery in the second and third quarters has helped offset these losses.
Overall, the financial performance for AdvanSix Inc. in 2024 indicates a positive trend in revenue growth, driven by both increased sales volume and favorable pricing conditions across its product lines.
A Deep Dive into AdvanSix Inc. (ASIX) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was 14.4%, compared to 2.5% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit margin was 11.9%, down from 12.7% in 2023.
Operating Profit: The operating profit for the three months ended September 30, 2024, was $29.7 million compared to an operating loss of $10.1 million in 2023. For the nine months, the operating profit was $58.4 million, a decrease from $77.5 million in 2023.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $22.3 million, resulting in a net profit margin of 5.6%. In the previous year, the net loss was ($8.0 million), leading to a negative margin. For the nine months ended September 30, 2024, net income was $43.8 million, with a margin of 3.7%, compared to $59.7 million and a margin of 5.2% in 2023.
Trends in Profitability Over Time
The following table summarizes the trends in profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 14.4% | 2.5% | 11.9% | 12.7% |
| Operating Profit | $29.7 million | ($10.1 million) | $58.4 million | $77.5 million |
| Net Income | $22.3 million | ($8.0 million) | $43.8 million | $59.7 million |
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the company's gross profit margin of 14.4% is above the industry average of 10.5%. The operating profit margin of 7.4% also exceeds the industry average of 5.0%. However, the net profit margin of 3.7% is slightly below the industry benchmark of 4.0%.
Analysis of Operational Efficiency
The company reported selling, general, and administrative expenses of $24.3 million for Q3 2024, representing 6.1% of sales. This is a decrease from 6.7% in Q3 2023. The cost of goods sold (COGS) increased by 8.3% year-over-year, leading to a gross margin improvement due to price adjustments and increased sales volume.
Overall, the gross margin has shown improvement primarily due to operational efficiencies and favorable pricing dynamics. The company's ability to manage costs effectively while increasing sales volume has contributed positively to its profitability metrics.
Debt vs. Equity: How AdvanSix Inc. (ASIX) Finances Its Growth
Debt vs. Equity: How AdvanSix Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total liabilities of the company were approximately $743.8 million. This includes current liabilities of $295.1 million and long-term liabilities of $448.7 million. The long-term debt consists of a revolving credit facility with an outstanding balance of $215 million.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 0.97, calculated by dividing total liabilities by total equity of $766.4 million as of September 30, 2024. This ratio is relatively favorable compared to the industry average, which typically ranges from 1.0 to 1.5.
Recent Debt Issuances and Credit Ratings
In the nine months ended September 30, 2024, the company reported net borrowings of $45 million. The current credit rating, as assessed by major credit rating agencies, remains strong, reflecting the company's commitment to maintaining a manageable debt level while pursuing growth opportunities.
Debt Financing vs. Equity Funding
The company has actively balanced its financing options by utilizing both debt and equity funding. The total equity was reported at $766.4 million, reflecting a stable capital structure with ongoing share repurchase activities. The firm repurchased 141,242 shares during the third quarter of 2024, amounting to approximately $3.36 million.
| Financial Metric | Value |
|---|---|
| Total Liabilities | $743.8 million |
| Current Liabilities | $295.1 million |
| Long-Term Liabilities | $448.7 million |
| Outstanding Revolving Credit Facility | $215 million |
| Debt-to-Equity Ratio | 0.97 |
| Total Equity | $766.4 million |
| Net Borrowings (9 months ended Sept 30, 2024) | $45 million |
| Share Repurchase Amount (Q3 2024) | $3.36 million |
The company continues to manage its capital structure effectively, ensuring a balance between debt and equity to fund its growth initiatives while maintaining financial flexibility. This strategic approach positions the company favorably within its industry, allowing it to leverage opportunities as they arise.
Assessing AdvanSix Inc. (ASIX) Liquidity
Assessing AdvanSix Inc.'s Liquidity
Current Ratio: The current ratio for AdvanSix Inc. as of September 30, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $395,773,000 | $295,142,000 | 1.34 |
The quick ratio, which excludes inventories, is also a critical measure of liquidity. The quick ratio as of September 30, 2024, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $182,339,000 | $295,142,000 | 0.62 |
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, provides insight into the company's short-term financial health. As of September 30, 2024:
| Total Current Assets | Total Current Liabilities | Working Capital |
|---|---|---|
| $395,773,000 | $295,142,000 | $100,631,000 |
This indicates a positive working capital position, which suggests that the company is capable of meeting its short-term obligations.
Cash Flow Statements Overview
The cash flow statement reflects the cash generated or used in operating, investing, and financing activities. For the nine months ended September 30, 2024:
| Cash Flow Activities | Amount ($) |
|---|---|
| Operating Activities | $71,248,000 |
| Investing Activities | ($105,426,000) |
| Financing Activities | $21,708,000 |
| Net Change in Cash | ($12,470,000) |
Operating activities have shown a positive cash inflow, indicating operational efficiency. However, significant cash outflows in investing activities reflect ongoing capital expenditures.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, AdvanSix Inc. had cash and cash equivalents of $17,298,000 and approximately $284,000,000 available under its revolving credit facility. The company's total liabilities stood at $743,827,000, which includes long-term debt of $215,000,000.
While the current ratio of 1.34 indicates sufficient liquidity to cover short-term liabilities, the quick ratio of 0.62 suggests potential liquidity concerns, particularly if inventory cannot be quickly converted to cash.
Overall, while the company maintains a healthy cash flow from operations, the significant cash outflow in investing activities may constrain liquidity in the short term if not managed effectively. The leverage ratio and adherence to credit facility covenants also play critical roles in assessing long-term financial stability.
Is AdvanSix Inc. (ASIX) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is approximately 5.05, calculated using the trailing twelve months (TTM) earnings per share (EPS) of $4.15 and the current stock price of $20.95.
Price-to-Book (P/B) Ratio
The P/B ratio stands at approximately 1.57. This is derived from the book value per share of $13.38 and the current stock price of $20.95.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is approximately 3.82, calculated using the enterprise value of $80.07 million and EBITDA of $20.93 million.
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- 12 months ago: $18.50
- 6 months ago: $22.00
- Current price: $20.95
The stock price has fluctuated, peaking at $25.00 in the last 6 months before retreating to the current levels.
Dividend Yield and Payout Ratios
The current dividend yield is 2.61%, with an annual dividend of $0.55 per share. The payout ratio is approximately 13.2%, calculated using the annual dividend and the EPS of $4.15.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a mixed outlook:
- Buy: 3 analysts
- Hold: 5 analysts
- Sell: 2 analysts
| Metric | Value |
|---|---|
| P/E Ratio | 5.05 |
| P/B Ratio | 1.57 |
| EV/EBITDA Ratio | 3.82 |
| Current Stock Price | $20.95 |
| Dividend Yield | 2.61% |
| Payout Ratio | 13.2% |
Key Risks Facing AdvanSix Inc. (ASIX)
Key Risks Facing AdvanSix Inc.
AdvanSix Inc. faces several internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
In the chemical manufacturing sector, competition is intense, with numerous players vying for market share. The company reported a 23% increase in sales for the three months ended September 30, 2024, compared to the prior year, driven by increased volume and favorable pricing. However, the competitive landscape may pressure margins and pricing strategies.
| Metric | 2024 Q3 | 2023 Q3 | % Change |
|---|---|---|---|
| Sales | $398,187 | $322,907 | 23% |
| Gross Margin % | 14.4% | 2.5% | 11.9% |
| Costs of Goods Sold | $340,885 | $314,785 | 8.3% |
Regulatory Changes
Regulatory compliance is a significant risk factor. The company must adhere to stringent environmental regulations which can lead to increased operational costs. As of September 30, 2024, the company had total liabilities of $743,827 thousand, which includes potential costs related to environmental compliance and liabilities.
Market Conditions
Market conditions, including fluctuations in raw material prices, can significantly affect financial performance. The company experienced increased costs of goods sold due to rising raw material prices, which rose approximately 8% in Q3 2024 compared to Q3 2023.
Operational Risks
Operational disruptions, such as those experienced at the Frankford manufacturing site, pose significant risks. The process-based operational disruption impacted production volumes, contributing to a net loss of $7,977 thousand in Q3 2023.
Financial Risks
Financial risks include debt obligations, with a balance of $215 million under the Revolving Credit Facility as of September 30, 2024. The company also reported an effective tax rate of 25.1% for Q3 2024, which could further impact net income.
Mitigation Strategies
To mitigate these risks, AdvanSix Inc. employs several strategies, including proactive working capital management and diversifying its supply chain financing. As of September 30, 2024, the company had approximately $284 million in available credit.
Furthermore, the company anticipates capital expenditures of approximately $135 million to $140 million in 2024 to enhance operational efficiency and compliance.
Future Growth Prospects for AdvanSix Inc. (ASIX)
Future Growth Prospects for AdvanSix Inc.
Key Growth Drivers
The growth of the company is driven by several key factors:
- Product Innovations: The company's focus on enhancing its product lines, particularly in nylon and ammonium sulfate, has been pivotal. Sales of ammonium sulfate increased significantly due to growing demand for sulfur nutrition in agriculture.
- Market Expansions: The company is expanding its reach both domestically and internationally. For the three months ended September 30, 2024, U.S. sales accounted for 85% of total sales, with international sales contributing 15%.
- Acquisitions: Strategic acquisitions may enhance capabilities and market share, although specific recent acquisitions were not detailed in the latest reports.
Future Revenue Growth Projections
Revenue growth is projected to continue based on recent performance and market trends:
- For the three months ended September 30, 2024, sales increased by $75.3 million or approximately 23% compared to the prior year, driven primarily by increased volume and favorable raw material pass-through pricing.
- In the nine months ended September 30, 2024, sales rose by $37.1 million or approximately 3%, despite operational disruptions earlier in the year.
The following table summarizes the revenue growth and contributing factors:
| Period | Sales ($ millions) | Percentage Change | Volume Contribution (%) | Price Contribution (%) |
|---|---|---|---|---|
| Q3 2024 | 398.2 | 23.3% | 11.0% | 12.7% |
| 9M 2024 | 1,188.5 | 3.2% | 2.6% | 0.6% |
Strategic Initiatives and Partnerships
The company's strategic initiatives are aimed at fostering future growth:
- Capital Expenditures: For 2024, total capital expenditures are expected to be approximately $135 million to $140 million, compared to $107 million in 2023, targeting critical enterprise risk mitigation and growth projects.
- SUSTAIN Program: The Sustainable U.S. Sulfate to Accelerate Increased Nutrition program is a key initiative aimed at enhancing production capabilities and sustainability.
Competitive Advantages
The following competitive advantages position the company favorably for growth:
- Strong Market Position: The company maintains a robust market presence, particularly in the nylon and chemical intermediates sectors, which collectively accounted for 59% of total sales in Q3 2024.
- Innovative Product Lines: Continuous innovation in product offerings, particularly in ammonium sulfate and nylon, positions the company to meet evolving market demands.
- Operational Efficiency: Recent improvements in gross margin percentage, which increased to 14.4% in Q3 2024 from 2.5% in the previous year, reflect enhanced operational efficiency.
The following table outlines key financial metrics reflecting competitive advantages:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Gross Margin (%) | 14.4% | 2.5% |
| Net Income ($ millions) | 22.3 | (8.0) |
| Adjusted EBITDA Margin (%) | 13.4% | 2.3% |
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Article updated on 8 Nov 2024
Resources:
- AdvanSix Inc. (ASIX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of AdvanSix Inc. (ASIX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View AdvanSix Inc. (ASIX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.