Advansix Inc. · NYSE:ASIX
Advansix — Investor Day (September 2021)
44 slides from Advansix's investor day presentation, Sep 28, 2021
Slide 1: 2021 Investor Day
2021 Investor Day September 28, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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
Slide 3: What You'll Hear Today
What You’ll Hear Today • Strong Foundation Built and Significant Value Created Post Spin • Leadership Positions Across Diverse Portfolio • Unique Combination of Assets and Integrated Business Model Core to Our Competitive Advantage • Core Go-Forward Strategies, Including Enhanced Capital Allocation,
Slide 4: AdvanSix Today
AdvanSix Today NYSE Listed: ASIX Spin-off October 1, 2016 OUR PURPOSE: To be our customers’ trusted partner for ~$1.4B Revenue Advantaged Chemistries by caring, innovating (Trailing 12 Months)* and advancing together. ~$1B Market Cap** ~1,400 Employees ~400 Customers Globally 4 2021 Investor Day – S
Slide 5: Strong Foundation Built Post Spin
Strong Foundation Built Post Spin Commitment to Time Tested To More Than A Nylon Environmental, Social Expanded Earnings Perform Through All Company and Economic Base Market Conditions Sustainability ✓ Leading North ✓ Have built track record ✓ Maturing disclosures ✓ Invested in current assets Americ
Slide 6: Leading Positions Across Diverse Product Portfolio
Leading Positions Across Diverse Product Portfolio Nylon Solutions Plant Nutrients Chemical Intermediates Position Leading North American producer – Global leader – largest single-site Leading North American positions global low-cost position producer of AS in the world across key product offerings
Slide 7: Aligned To Favorable Macro Trends
Aligned To Favorable Macro Trends Macro Trends Urbanization and aging • ~25% of ASIX sales into Building & Construction across Nylon and Intermediates infrastructure • Exposure to growing segments within residential and commercial Digital Transformation • Growth in high-purity solvents for electroni
Slide 8: With Scale and Diversity That Serve Us Well
With Scale and Diversity That Serve Us Well Trailing 12 Months % of Sales and Volume Sales by End Market 50% Other Coatings, Ag / Adhesives Fertilizer 35% Packaging 27% 24% 22% 19% Solvents 12% 11% Building & Construction Plastics Nylon Caprolactam Chemical Ammonium Intermediates Sulfate % of Sales
Slide 9: Strong Foundation Built Post Spin
Strong Foundation Built Post Spin Commitment to Time Tested To More Than A Nylon Environmental, Social Expanded Earnings Perform Through All Company and Economic Base Market Conditions Sustainability ✓ Leading North ✓ Have built track record ✓ Maturing disclosures ✓ Invested in current assets Americ
Slide 10: Unique Combination of Assets Supports Competitive Advantage
Unique Combination of Assets Supports Competitive Advantage AdvanSix Integrated Value Chain • Integrated, North American value chain provides access to advantaged raws and high-value end markets • Backward integrated into several key feedstock materials with world scale assets • Security of raw mate
Slide 11: Pricing Strategies Protect Core Variable Margins
Pricing Strategies Protect Core Variable Margins AdvanSix Pricing Mechanisms Formula / Index Pricing ✓ Market Based Pricing ✓ (~50% of total Sales) ✓ (~50% of total Sales) ✓ ✓ • Pricing linked to input • Influenced By: raw materials and/or – Supply / Demand published industry dynamics indices – Marg
Slide 12: Strong Foundation Built Post Spin
Strong Foundation Built Post Spin Commitment to Time Tested To More Than A Nylon Environmental, Social Expanded Earnings Perform Through All Company and Economic Base Market Conditions Sustainability ✓ Leading North ✓ Have built track record ✓ Maturing disclosures ✓ Invested in current assets Americ
Slide 13: Maturing Commitment to ESG Performance
Maturing Commitment to ESG Performance AdvanSix Sustainability Progress Commitment formalized through a Sustainability Council with Board oversight Board of Directors 2017 • Completed first materiality assessment Health, Safety, Environmental & Sustainability (HSE&S) Committee of the Board of Direct
Slide 14: Strong Linkage to Strategy, Delivering For All Stakeholders
Strong Linkage to Strategy, Delivering For All Stakeholders Environmental Social Governance Carbon Footprint and Emissions Safety and Wellness Corporate Governance and Oversight • 69% reduction in Criteria Pollutants since • Target top-quartile ACC performance • Values based leadership 2015 • Total
Slide 15: Strong Foundation Built Post Spin
Strong Foundation Built Post Spin Commitment to Time Tested To More Than A Nylon Environmental, Social Expanded Earnings Perform Through All Company and Economic Base Market Conditions Sustainability ✓ Leading North ✓ Have built track record ✓ Maturing disclosures ✓ Invested in current assets Americ
Slide 16: Significant Value Creation Since 2017
Significant Value Creation Since 2017 ~$45M Net Annual EBITDA Benefit ~$2M Inorganic Growth ~$4M • Commonwealth Industrial Services (CIS) – integration Improved AS Granular and synergies well ahead of Conversion plan ~$25M • Targeting ~65% of the AS Differentiated Products produced in higher-value g
Slide 17: Significant Value Creation Since 2017
Significant Value Creation Since 2017 ~$45M Net Annual EBITDA Benefit ~$2M Also reduced share count by Inorganic Growth ~1.5 million shares through $100M+ of repurchases ~$4M • Commonwealth Industrial Services (CIS) – integration Improved AS Granular and synergies well ahead of Conversion plan ~$25M
Slide 18: Focus on Critical Value Creation Levers
Focus on Critical Value Creation Levers Superior Operational Enhanced Portfolio Strong Capital Excellence Resiliency Stewardship Improved through-cycle Sustainable long-term growth Enriched value creation profitability ✓ Asset Productivity – ✓ Drive differentiated ✓ Commitment to healthy realizing v
Slide 19: Key Industry Cycles
Key Industry Cycles Timing of Past Cycle Impacts Vary For Each Product Line Acetone Caprolactam Ammonium Sulfate (cents per pound) ($/MT) ($/ston) 50 2,500 400 350 40 2,000 Significant Chinese Caprolactam & Nylon 300 Capacity Expansion post-2011 250 30 1,500 Avg 200 20 1,000 Avg 150 Avg 100 10 500 5
Slide 20: Favorable Dynamics Currently at Play
Favorable Dynamics Currently at Play Weighted Average AdvanSix Price-Raws Spreads* (Indexed; 2011=1.00) 1 2011-2014 Market impact of significant Chinese 1.20 Caprolactam expansions and declining Nitrogen market 1.00 1 2 2014-2020 Navigating shorter cycle markets in 0.80 Acetone and Nylon 0.60 3 3 20
Slide 21: Safe, Stable and Sustainable Operations
Safe, Stable and Sustainable Operations Core to Operational Excellence Caprolactam Daily Non-Outage Rate * ~92% ~97% ~98% Utilization Utilization Utilization Less variability in utilization rates drives higher returns Supported by growth capital investments and process improvements Opportunity to re
Slide 22: Safe, Stable and Sustainable Operations
Safe, Stable and Sustainable Operations Core to Operational Excellence Planned Plant Turnarounds Pre-Tax Income Impact by Quarter (1) 1Q 2Q 3Q 4Q FY • Timing driven by compliance, inspection and sustaining asset base 2017 -- ~$10M ~$4M ~$20M ~$34M • Critical to supporting high utilization rates 2018
Slide 23: Focus on Critical Value Creation Levers
Focus on Critical Value Creation Levers Superior Operational Enhanced Portfolio Strong Capital Excellence Resiliency Stewardship Improved through-cycle Sustainable long-term growth Enriched value creation profitability ✓ Asset Productivity – ✓ Drive differentiated ✓ Commitment to healthy realizing v
Slide 24: Enhancing Portfolio Resiliency
Enhancing Portfolio Resiliency Supporting Sustainable Long-Term Growth Chemical Intermediates Nylon Ammonium Sulfate • Broad global economic activity – • Carpet ~flat growth with strong, • Sulfur nutrition demand growing (building & construction, auto, nylon 6 foothold in commercial 3-4% per year pl
Slide 25: Differentiated Products Growth
Differentiated Products Growth Significant Growth Since Spin With Runway For Platform Expansion High Purity Applications • Acetone NF, Acetone ACS ($M) ~$190M • Nadone® cyclohexanone $138M High Value Intermediates $116M • Oximes including EZ-Blox® for alkyd-based paints and coatings and silane seala
Slide 26: AdvanSix EZ-Blox - Driving Significant Growth
AdvanSix EZ-Blox® – Driving Significant Growth Successful New Product Introduction from Development to Commercialization • Safe to Use: Safe anti-skinning agent used to optimize Total Oximes Sales ($M) performance of alkyd-based paints and coatings • Effective: Drop-in replacement for MEKO to addres
Slide 27: 100% Post-Industrial Recycled Content
100% Post-Industrial Recycled Content New Solution Helps Customers Achieve Sustainability Goals New Portfolio of Aegis® Resins and Capran® BOPA Films • Contains 100% Post-Industrial Recycled (PIR) Raw Materials • Up to 10% of Total Available Capacity for Sale at a Premium Over Standard Grades • Expe
Slide 28: Our M&A Framework
Our M&A Framework Focused on Bolt-Ons Providing Growth and Synergy Opportunities Value chain integration to drive profitable growth, molecule / product upgrade Platform for broader expansion – building scale in end markets we like Leverages AdvanSix core strengths, market expertise and operating com
Slide 29: Commonwealth Industrial Services (CIS) Acquisition
Commonwealth Industrial Services (CIS) Acquisition Integration and Synergy Realization Well Ahead of Plan Strong channel to upgrade a portion of the ~35% standard grade AS we produce Enables expansion of offering to directly supply packaged AS to customers Warehousing capabilities to bolster logisti
Slide 30: Multi-dimensional Inorganic Optionality
Multi-dimensional Inorganic Optionality Upstream Combinations End Market Attractiveness: Value Chain Integration/ Current Value Chain Agriculture, Electronics, Molecule Derivatization Pharma, Paints & Coatings Chemical Intermediates Nylon Solutions Plant Nutrients Capability Expansion: Batch/ Flexib
Slide 31: Focus on Critical Value Creation Levers
Focus on Critical Value Creation Levers Superior Operational Enhanced Portfolio Strong Capital Excellence Resiliency Stewardship Improved through-cycle Sustainable long-term growth Enriched value creation profitability ✓ Asset Productivity – ✓ Drive differentiated ✓ Commitment to healthy realizing v
Slide 32: Generating Strong and Consistent Cash Flows
Generating Strong and Consistent Cash Flows… Trailing 12-Month (TTM) Cash Flow ($ Millions) 250 Higher Earnings and Improved Cash • Nearly $700M of operating cash Conversion flow generated since spin 200 Impacts of • Key performance drivers: COVID-19 – Operational and commercial 150 excellence – Dri
Slide 33: Enables Enhanced Capital Allocation Optionality
…Enables Enhanced Capital Allocation Optionality Cash Generation / Use Since Spin* Estimated Annual Future Cash Uses 100% (~$697M) 1% Firepower 15% ~25% • M&A 15% • Share Repurchases ~15% Dividend % 69% ~60% Capex Operating Cash Flows (OCF) Cash Uses - Actual Cash Uses - Future Estimated * From 4Q16
Slide 34: Enables Enhanced Capital Allocation Optionality
…Enables Enhanced Capital Allocation Optionality Cash Generation / Use Since Spin* Estimated Annual Future Cash Uses Leverage at high 100% end of target (~$697M) range ~2.5X 1% Enhanced Firepower 15% • M&A ~25% • Share Repurchases 15% ~15% Dividend % 69% ~60% Capex Operating Cash Flows (OCF) Cash Us
Slide 35: Enhanced Capital Allocation Framework
Enhanced Capital Allocation Framework • Sustaining our competitively advantaged asset base Base Capex • Maintenance + Health, Safety & Environmental (~$75M per year) Debt Paydown • Manage cash and debt within leverage target range of 1.0-2.5x Discretionary • Executed over $100M since spin Growth / C
Slide 36: Capital Expenditures
Capital Expenditures Internal Reinvestment Remains Top Priority Disciplined Capex Investment Capex Trend ($ Millions) • Supporting high utilization rates and safe, 160 300% stable and sustainable operations 140 Base Capex • Rigorous prioritization based on 250% (Maintenance compliance requirements,
Slide 37: $100M+ Executed and Delivering Value
High-Return Growth and Cost Savings Capex Actively Evaluating $50-$100M Pipeline Targeting 20%+ IRR Key Growth and Cost Savings Projects • ~$40M investment to convert coal-fired steam supply to natural gas-fired boilers Natural Gas Boilers • >30% IRR; Significant reduction in GHG emissions and Deliv
Slide 38: Return of Cash to Shareholders
Return of Cash to Shareholders Initiating Quarterly Dividend Reflecting Confidence in Sustainable Cash Generation Structural Return of Cash – Dividend Dividend Yield* vs. Proxy Peers • Initiating $0.125 quarterly dividend ($0.50 annual basis) 3.9% Initiating with a competitive – Represents ~1.3% exp
Slide 39: Supporting Attractive Total Shareholder Returns
Supporting Attractive Total Shareholder Returns Total Shareholder Return* • Driving ownership mindset throughout organization 225% • Added TSR component to long-term incentive compensation program • Outperforming peer groups on both short 102% and long-term performance 95% 68% 71% • Share price impr
Slide 40: 3Q 2021 Outlook
3Q 2021 Outlook Expecting Terrific Performance Across The Board 3Q 2021 Trailing 12 Months EBITDA $65M - $70M $245M - $250M Diluted EPS $1.23 - $1.36 $4.65 - $4.78 Free Cash Flow • Strong execution in dynamic market environment • Continued momentum into 2022 • 3Q 2021 earnings conference call schedu
Slide 41: Compelling Investment Thesis
Compelling Investment Thesis Strong & Sustainable Shareholder Return Advantaged Asset Base Leading Product Portfolio Aligned to Diverse Compelling ROI and Growing Applications Durable FCF Yield and Top Quartile Conversion Improved Through Cycle Profitability and Enhanced Portfolio Resiliency Increas
Slide 42: Q&A
Q&A 42 2021 Investor Day – September 28, 2021
Slide 43: Appendix
APPENDIX Reconciliation of Non-GAAP Measures to GAAP Measures 43 2021 Investor Day – September 28, 2021
Slide 44: Reconciliation Of Net Cash Provided By Operating Activities To Free Cash Flow
Reconciliation Of Net Cash Provided By Operating Activities To Free Cash Flow And Free Cash Flow Conversion (in $ thousands) (1) Free cash flow is a non-GAAP measure defined as Net cash provided by operating activities less Expenditures for property, plant and equipment (2) Free cash flow conversion