Slide 1: Analyst Meeting, New York City
September 15, 2016 ANALYST MEETINGNew York City
Slide 2: Forward Looking Statements
Forward Looking Statements AdvanSix Analyst Presentation – September 15, 2016 Statements in this presentation that are not strictly historical, including the expected separation date, statements regarding the Company's business and acquisition opportunities, anticipated revenue growth, anticipated o
Slide 3: Today's Presenters And Agenda
Today’s Presenters And Agenda 3 Today’s Presenters Erin Kane – Chief Executive Officer Vice President and General Manager, Honeywell Resins and ChemicalsJoined Honeywell in 2002Previously led Chemical Intermediates business, among other senior roles in Performance Materials and Technologies (PMT)Bac
Slide 4: Transaction Overview
Transaction OverviewTax-free pro rata distribution to Honeywell shareholders of AdvanSix, a new publicly-traded company AdvanSix Analyst Presentation – September 15, 2016 Exchange • NYSETicker • ASIX (ASIX.WI)Distribution Ratio • 1 share of ASIX for every 25 shares of HONWhen-Issued Trading Commence
Slide 5: Introducing AdvanSix
Introducing AdvanSix AdvanSix Analyst Presentation – September 15, 2016 5
Slide 6: Highlights
Highlights AdvanSix Analyst Presentation – September 15, 2016 Leading integrated Nylon 6 business with 60+ year historyVertical integration and cost-advantaged position, enabling 90%+plant utilization over the cycleStrong heritage of operational discipline and proven ability totransform businessReal
Slide 7: AdvanSix At A Glance
AdvanSix is a leading global producer of Nylon 6 AdvanSix At A Glance Facilities and Employees CustomersTop 10 customers span all product categoriesMost sales contracts have 1-2 year terms with standard renewal / notice provisionsCustomer relationships strong – average 18+ year relationships across
Slide 8: Company History
Company History1884-1896 1916-1920 1925 8 1928-1947 1954 1955 1958 1990s 1998 2000 2004 2005 2007 2011 2013 2015- 2016 Caprolactam plant built at Hopewell via Raschig process, also adding Ammonium sulfate production Chesterfield plant built and begins producing nylon with individual batch reactors H
Slide 9: AdvanSix Leadership Team
AdvanSix Leadership Team Erin KaneCEO Michael Preston, CFACFO ~1,300 employees including 130 engineers & technologists and 25 sales membersSenior leaders with average of 20+ years of service 9 AdvanSix Analyst Presentation – September 15, 2016 Hans Quitmeyer General Counsel Hans Quitmeyer General Co
Slide 10: Portfolio Overview
Portfolio OverviewLeading North American position across industries served 10 Source: Form 10, PCI Nylon, Profercy, CRU, IHS, AdvanSix Management Note: Reported Revenue as of December 31, 2015 AdvanSix Analyst Presentation – September 15, 2016 Nylon Ammonium Sulfate Chemical Intermediates 2015A Reve
Slide 11: Vertically Integrated Manufacturing Sites
One of world’s largest single-site producers of Caprolactam and Ammonium Sulfate fertilizerCapacity: 795M lbs Caprolactam3.3B lbs Ammonium Sulfate600 KMT Ammonia CPL Second largest U.S. site for Nylon 6 productionResins in wide rangeof viscosities and specificationsCapacity: 450M lbs Nylon 6 Resin N
Slide 12: AdvanSix Chemistry
AdvanSix Chemistry Key molecules in manufacturing process derived from benzeneAcetone key co-product from Phenol production; molecule derived from propylene Ammonium Sulfate key co-product from Caprolactam production; AdvanSix technology ~4:1 1 23 Nylon 6, a downstream petrochemical value chainFrank
Slide 13: Rigorous Commitment To Operational Excellence
Rigorous Commitment To Operational Excellence Drive HSE Performance By Reducing Our Risk Acceptance Improve Operational Discipline Through Strong Accountability Process Complete NOx Reduction Program In 2018 And Continue Our PSM Improvement Program Sustain Disciplined Sales, Inventory,And Operations
Slide 14: Strategic Initiatives To Drive Value
Strategic Initiatives To Drive Value Technology driven growth complements strong productivity and operating cultureKey Initiatives Operational Excellence Drive High Value Product And Regional Mix Continuous Enhancement Of R&D Capabilities Upgrade Current ChemistryVia New Product Pipeline Improved yi
Slide 15: Investment Highlights
Investment Highlights AdvanSix Analyst Presentation – September 15, 2016 15
Slide 16: Investment Highlights
Investment Highlights Leading Vertically Integrated Nylon 6 Producer Sustainable Lowest Cost Position Strong Relationships Driven By Dedicated Sales Teams Global Reach Diverse Revenue Sources Continuous Investment In R&D And Technology 1 2 3 4 5 6 AdvanSix Analyst Presentation – September 15, 2016 1
Slide 17: Leading Vertically Integrated Nylon Producer
Leading Vertically Integrated Nylon 6 Producer At Frankford, Cumene is converted into Phenol, Acetone & Alpha- Methylstyrene ~80% of Phenol produced at Frankford transported to Hopewell to produce Caprolactam, Phenol derivatives and Ammonium Sulfate ~60% of the Caprolactam produced shipped to Cheste
Slide 18: Sustainable Lowest Cost Position
U.S. footprint provides access to world’s lowest cost natural gasAccess to high value end markets Advantaged Location Fully backward integrated into several key feedstock materials One of world’s largest single-site producers of CaprolactamSignificant operating leverageScale purchasing leverage Stro
Slide 19: Strong Relationships Driven By Dedicated Sales Teams
Customer Product Relationship Length (yrs.) Customer A Nylon 25+ Customer B Chemical Intermediates 16 Customer C Ammonium Sulfate 40 Customer D Ammonium Sulfate 30 Customer E Chemical Intermediates 5 Customer F Chemical Intermediates 15 Customer G Nylon 13 Customer H Ammonium Sulfate 25 Customer I A
Slide 20: Global Reach
P:\Presentation Center\Maps\Honeywell\R&C World Map Global Reach Chicago, IL Shanghai, ChinaHouston, TX Sales ReachEmployee Locations & Sales ReachTechnology / R&DBulk Chemical Terminals Future Headquarters Manufacturing locations 20 4 AdvanSix's global reach enables it to compete everywhere its pro
Slide 21: Diverse Revenue Sources
Diverse Revenue Sources 21 Provides diversification and mitigates exposure to any single end-use application or product cycle2015A Revenue By End Market Ag / Fertilizer Total Revenue: $1.3B 5 Building & Construction Plastics Solvents Industrial DerivativesTextiles AdvanSix Analyst Presentation – Sep
Slide 22: Continuous Investment In R&D And Technology
R&D Spend By Category CapabilitiesTwo R&D Technology CentersColonial Heights, VirginiaShanghai, ChinaEmploy ~50 researchersNumerous owned patents, trademarks and trade secrets adequately protected for continued performance of the business Focus Areas ManufacturingTechnology New Products / Applicatio
Slide 23: Product Line Overviews
Product Line Overviews AdvanSix Analyst Presentation – September 15, 2016 23
Slide 24: Nylon Overview
Nylon Overview Vertically Integrated With Industry-Leading Cost PositionFlexible Assets Enabling Mix Upgrade To High Value ApplicationsCapacity across multiple polymer trains and viscosity spectrumNew Chesterfield production line capable of producing copolymer Nylon 6 / 6.6New Product Development To
Slide 25: Nylon Demand Outlook
2015 Global Demand Industry CAGR (1) Nylon 6 Demand Outlook Market DriversConsumer Preference Between Soft And Hard FlooringDurability, Stain Resistance, Recyclability/Environmental SustainabilityCommercial Tile Fastest Growing Sub-Segment Source: PCI Nylon, Tecnon OrbiChem, AdvanSix Management(1) 2
Slide 26: Global Caprolactam Dynamics
2010 2012 2014All Markets Ex-China 2015 2016E China Global Caprolactam Dynamics 26 Market re-structure coupled with global macro-economic trends are expected to rebalance supply and demand leading to improved pricing dynamicsCaprolactam Capacity (KMT) Current Dynamics ~5,000 ~6,700 ~3% Demand CAGR O
Slide 27: Ammonium Sulfate Overview
Ammonium Sulfate Overview HighlightsRecognized Industry Leading Technology4:1 Raschig technology; High granular conversion (>60%)Unique Expertise, Dedicated Regional AgronomistsDifferentiated Go-To-MarketOver 70% of North America sales to co-ops and integrated retailersConnection with the grower ena
Slide 28: Monetizing Ammonium Sulfate Fertilizer
Often family-owned businessesRelatively small playersCORPORATE RETAILERCompanies own distribution and retail Sell to parent not direct to indirect retail outlets INDEPENDENT RETAILER Regional or local DISTRIBUTOR Aggregates N-P-K to RetailGlobal trading platform Volume driven CO-OP RETAILER Retailer
Slide 29: Fertilizer Market Dynamics
Fertilizer Market Dynamics∣AdvanSix AS Value 29 1 3 4 2 Urea, 54% World N Consumption 150 Million TonsAS, 4% Ammonium Sulfate quality is paramount Ammonium Sulfate is both a Sulfur and Nitrogen Source Urea contains solely nitrogen and sets baseline for nitrogen fertilizer Significant recent capacity
Slide 30: Chemical Intermediates Overview
Chemical Intermediates Overview Well-Positioned to Extract Value and Optimize Cost of PhenolAdvantaged geography, distribution footprint and qualityRobust Acetone portfolio to reach specialty applicationsLargest domestic producer of Alpha-Methylstyrene andCyclohexanone 3. Dedicated Sales and Product
Slide 31: Financial Overview
Financial Overview AdvanSix Analyst Presentation – September 15, 2016 31
Slide 32: Key Takeaways
Key Takeaways AdvanSix Analyst Presentation – September 15, 2016 Signs of supply/demand re-balancing for Caprolactam after capacity increases over past several yearsAdvanSix lowest cost producer due to scale, vertical integration and highvalue co-productsManufacturing utilization rates remain high t
Slide 33: Key Financials
Key Financials 1,767 1,790 1,329 1,260 2,0001,5001,0005000 2013 0 2013 2014 2015 LTM 2016 Source: Form 10; LTM 2016 as of June 30, 2016 (1) Reported CapEx includes Capex Accounts Payable; (2) Free Cash Flow defined as Net Cash provided by operating activities minus CapEx(3) Working capital timing di
Slide 34: Debt Capitalization – Pro Forma
Debt Capitalization – Pro FormaCapital structure allows flexibility to support growth 34 Pro Forma Capitalization Sources & Uses Pro Forma 6/30/2016 Maturity Cash -- $40.0 (1) New Revolver ($155) New Term Loan A 20212021 $40.0 270.0 Total Debt $310.0 PF LTM 6/30/16 Reported EBITDA Total Debt / PF LT
Slide 35: Capital Deployment Framework
Base Capex Growth Capex Maintain Financial Flexibility Growth Through Strategic Acquisitions:Seek bolt-on acquisitions and alliances to broaden our customer base, expand our geographic reach, and enhance our technology and product portfoliosReturn Excess Cash To Shareowners:Potential share repurchas
Slide 36: Capital Investments
2013 2014Maintenance 2015HSE Growth 2016E $74M8% AdvanSix Analyst Presentation – September 15, 2016 $101M $97M ~$90M Near-Term Capex~$100M per year Maintenance Spend elevated near-term with key mandated investmentsFlexing investment timelines on consent decree items requires agreement by regulatory
Slide 37: AdvanSix Outlook
What We’re Seeing What We’re Expecting AdvanSix Analyst Presentation – September 15, 2016 Mitigating near-term headwinds, positioned to outperformStabilization of pricing with some uptick in Nylon Weak Agriculture fundamentals ahead of 2016/2017 seasonOil-related raw materials pass-through pricing i
Slide 38: Investment Highlights
Investment Highlights Leading Vertically Integrated Nylon 6 Producer Sustainable Lowest Cost Position Strong Relationships Driven By Dedicated Sales Teams Global Reach Diverse Revenue Sources Continuous Investment In R&D And Technology 1 2 3 4 5 6 AdvanSix Analyst Presentation – September 15, 2016 3
Slide 39: Q&A
Q&A AdvanSix Analyst Presentation – September 15, 2016 39
Slide 40: Appendix
Appendix AdvanSix Analyst Presentation – September 15, 2016 40
Slide 41: Historical Income Statement ($ Thousands)
Historical Income Statement ($ Thousands) 41 AdvanSix Analyst Presentation – September 15, 2016
Slide 42: Historical Income Statement ($ Thousands)
Historical Income Statement ($ Thousands) 42 AdvanSix Analyst Presentation – September 15, 2016
Slide 43: Historical Balance Sheet ($ Thousands)
Historical Balance Sheet ($ Thousands) 43 AdvanSix Analyst Presentation – September 15, 2016
Slide 44: Historical Balance Sheet ($ Thousands)
Historical Balance Sheet ($ Thousands) 44 AdvanSix Analyst Presentation – September 15, 2016
Slide 45: Historical Cash Flow Statement ($ Thousands)
Historical Cash Flow Statement ($ Thousands) 45 AdvanSix Analyst Presentation – September 15, 2016
Slide 46: Historical Cash Flow Statement ($ Thousands)
Historical Cash Flow Statement ($ Thousands) 46 AdvanSix Analyst Presentation – September 15, 2016
Slide 47: Reconciliation Of EBITDA To Net Income
Reconciliation Of EBITDA To Net Income AdvanSix Analyst Presentation – September 15, 2016 47 Source: Form 10; LTM 2016 as of June 30, 2016EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization ($ Thousands) 2015 2014 2013 LTM 2016 EBITDA $136,647 $165,655 $221,527 $160,622 Income Ta
Slide 48: Reconciliation Of Cash Provided By Operating Activities To Free Cash Flow
Reconciliation Of Cash Provided By Operating Activities To Free Cash Flow ($ Thousands) 2015 2014 2013 LTM 2016 Cash Provided by Operating Activities $101,536 $188,424 $119,995 $96,962 Expenditures for Property, Plant and Equipment (97,144) (101,382) (73,912) (91,184) Free Cash Flow $4,392 $87,042 $
Slide 49: Thank You
Thank You AdvanSix