Advansix Inc. · NYSE:ASIX
Advansix — Jefferies Industrials Conference 2018
29 slides from Advansix's conference presentation, Aug 9, 2018
Slide 1: Jefferies Industrials Conference
August 9, 2018 Jefferies Industrials Conference
Slide 2: Forward Looking Statements
Forward Looking Statements 2 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 o
Slide 3: AdvanSix At A Glance
AdvanSix At A Glance 3 AdvanSix is a Leading Producer of Nylon 6 and Intermediate Chemicals Profile 2017 Revenue Breakdown • NYSE: ASIX By Product By Region By End Market • Spin-off from Honeywell: Asia: $58M EMEA: $46M Coatings, Other Adhesives Chemical October 1, 2016 Intermediates: Nylon: LatAm/C
Slide 4: Investment Highlights
Investment Highlights 4 Sustainable Low Cost Position • Vertical integration and scale • Advantaged location – raw materials, access to high value end markets • Co-product net back optimization Diverse Revenue Sources And Strong Customer Relationships With Global Reach • Three product lines serving
Slide 5: Vertically Integrated Manufacturing Sites
Vertically Integrated Manufacturing Sites 5 Competitive Advantage Derived from Significant Scale, Integration and Diverse Revenue Streams Frankford Plant Hopewell Plant Chesterfield Plant Cumene is converted into Phenol, 75%-80% of Phenol produced at ~60% of the Caprolactam produced Acetone & Alpha-
Slide 6: Sustainable Lowest Cost Position
Sustainable Lowest Cost Position 6 Vertical • Fully backward integrated into several key Integration feedstock materials Global Caprolactam Supply / Cost Landscape • One of world’s largest single-site producers of Global Demand Overcapacity Industry- Caprolactam Leading • Significant operating lever
Slide 7: Nylon Overview
Nylon Overview 7 Leading Vertically Integrated Nylon 6 Producer Highlights Business Characteristics • Nylon 6 Demand Growth In-Line With GDP % of 2017 Total ~48% Revenue – Engineered plastics and packaging faster growing segments • Caprolactam (Flake and Molten) Products • Nylon 6 Resin • Industry C
Slide 8: Ammonium Sulfate Overview
Ammonium Sulfate Overview 8 Key Co-Product Portfolio Delivers On Sulfur Nutrition Value Proposition Highlights Business Characteristics • Ammonium Sulfate ~5% of Nitrogen Fertilizer Market % of 2017 Total ~19% Revenue – Urea has underlying influence on all nitrogen nutrient products, • Ammonium Sulf
Slide 9: Chemical Intermediates Overview
Chemical Intermediates Overview 9 Range of Portfolio Enables Diversity of Revenue Sources Highlights Business Characteristics % of 2017 Total • Manufacture, Market and Sell Chemical Products Derived Revenue ~33% From the Processes Within our Integrated Chain • Acetone • Alpha-Methylstyrene – Integra
Slide 10: 2H 2018 Framework
2H 2018 Framework 10 3Q18 Planned Plant Turnaround Key Consideration 2H18 vs. 1H18 Expectations • Continued favorable industry conditions globally Nylon • Environmental policy and feedstock constraints to continue influencing China dynamics • New season starting with improved pricing year-over-year
Slide 11: Operational Excellence – Planned Plant Turnarounds
Operational Excellence – Planned Plant Turnarounds 11 Key to Safe, Sustainable and Improved Operations Considerations and Priorities Annual Turnarounds Pre-Tax Income Impact • Timing driven by compliance, inspection and sustaining asset base $37-$40M – Critical to supporting high utilization rates $
Slide 12: Cash Flow
Cash Flow 12 Maturing Deployment Strategies Trailing 12-Month Cash Flow Cash Generation and Deployment ($ Millions) • Improved free cash flow generation expected to continue – High plant operating rates; Driving higher-value product mix 170 – Efficient working capital performance – Amended credit fa
Slide 13: AdvanSix Strategy And Priorities
AdvanSix Strategy And Priorities 13 Well Positioned for Strong Operational and Financial Performance Over Long Term Focused Strategy Delivered In 2017 2018 Priorities • Rigorous commitment to Robust production output, sales • High operating rates to continue operational and HSE excellence volume u
Slide 14: Appendix
Appendix ADVANSIX
Slide 15: AdvanSix Chemistry
AdvanSix Chemistry 15 Nylon 6, a Downstream Petrochemical Value Chain Frankford Facility Hopewell Facility Chesterfield Facility CH3 CH3 OH O O H N O H N CH2 CH2 C 1 CH2 CH2 CH2 n Benzene 1 1 1 1 +O2 +H2 Cumene Phenol Cyclohexanone Caprolactam Nylon 6 2 Propylene 3 CH3 CH2 Acetone α-Methyl styrene A
Slide 16: Pricing Mechanisms
Pricing Mechanisms 16 Mitigate Commodity Price Risk Through Formula Price Agreements 2017 Sales By Product ~50% Formula / Index Pricing • Pricing Linked to Input Raw Materials and/or Published Industry Indices • Moves in Underlying Raw Materials Typically in Tandem With Sales Price Chemical • “Ad
Slide 17: Full Year 2017 Financial Summary
Full Year 2017 Financial Summary 17 Strong Volume, Earnings and Cash Flow With Record Safety Performance Sales EBITDA* Free Cash Flow ($M) +24% +109% +62% 1,475 201 48 1,192 30 96 2016 2017 2016 2017 2016 2017 Margin % 8.1% 13.6% • Volume +9% • Margin Up 550 bps • Operating Cash Flow +$21M • Market
Slide 18: 2Q 2018 Financial Summary
2Q 2018 Financial Summary 18 Higher Sales, Net Income, and Cash Flow From Operations ($ Millions, Except Per Share Amounts) 2Q 2017 2Q 2018 Comments • Sales Up 11%: Volume +4%, Price +7% Sales $361.4 $400.5 – Raw Material Pass Through +7%, Market Pricing ~Flat EBITDA $54.6 $53.0 • Near Record Plant
Slide 19: Nylon Industry Outlook
Nylon Industry Outlook 19 Continued Favorable Industry Conditions Globally Nylon Key Industry Spreads (1) • North America supply/demand 2Q18 YoY 2Q18 vs. 1Q18 generally in balance Global Composite BNZ-CPL 34% 1% What We’re • Environmental policy and Asia BNZ-CPL 43% 10% feedstock constraints driving
Slide 20: Ammonium Sulfate (AS) Industry Outlook
Ammonium Sulfate (AS) Industry Outlook 20 Improved Market Dynamics as New ’18/’19 Season Begins Ammonium Sulfate Key Industry Prices (1) • Late start to planting season 2Q18 YoY 2Q18 vs. 1Q18 supported strong 2Q18 demand Corn Belt Granular AS 4% 1% • AS price movement modest Corn Belt Urea 21% (9%)
Slide 21: Ammonium Sulfate Seasonality
Ammonium Sulfate Seasonality 21 Typically See Seasonal Decline 2Q to 3Q Cornbelt AS Price (Avg sequential price change 2010-2017) • New North America fertilizer season commencing 3Q 10% 9% 5% • Pricing typically declines with new season fill 5% 4% in 3Q and strengthens into Spring planting season 0%
Slide 22: Chemical Intermediates Industry Outlook
Chemical Intermediates Industry Outlook 22 Strong Global Phenol Demand, North America Acetone Imports Pressuring Price Chemical Intermediates Key Industry Prices (1) 2Q18 YoY 2Q18 vs. 1Q18 • Global phenol demand remains strong, high industry utilization Acetone, Large Buyer 13% 5% What We’re rates l
Slide 23: AdvanSix Financial Drivers
AdvanSix Financial Drivers 23 Raws and Industry Pricing/Spreads Key Performance Considerations 2012 2013 2014 2015 2016 2017* AdvanSix 1,789 1,767 1,790 Sales / Net Income 166 1,329 119 1,192 1,475 ($M) 84 93 64 34 Sales Net Income WTI Crude Oil $95 $100 $90 $50 $45 $50 ($/bbl) Natural Gas $2.80 $3.
Slide 24: Non-GAAP Reconciliations
24 Non-GAAP Reconciliations
Slide 25: Reconciliation Of Net Cash Provided By Operating Activities To Free Cash Flow
Reconciliation Of Net Cash Provided By Operating 25 Activities To Free Cash Flow (in $ thousands) 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
Slide 26: Reconciliation Of Net Cash Provided By Operating Activities To Free Cash Flow
Reconciliation Of Net Cash Provided By Operating 26 Activities To Free Cash Flow (in $ thousands) 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
Slide 27: Reconciliation Of Net Income To EBITDA
Reconciliation Of Net Income To EBITDA 27 (in $ thousands) 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 financia
Slide 28: Reconciliation Of Net Income To EBITDA
Reconciliation Of Net Income To EBITDA 28 (in $ thousands) 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 financia
Slide 29: Reconciliation of Net Income and Diluted EPS Excluding One-Time Net Tax Benefit
Reconciliation of Net Income and Diluted EPS to Net Income 29 and Diluted EPS Excluding One-Time Net Tax Benefit (in $ thousands) 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