AdvanSix Stock

AdvanSix Inc. operates as a diversified chemistry company. The company is playing a critical role in global supply chains, innovating and delivering essential products for its customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics. The company’s reliable and sustainable supply of quality products emerges from the integrated value chain of its U.S.-based manufacturing facilities.

The company’s four key product lines are as follows:

Nylon Solutions

Nylon – The company sells its Nylon 6 resin globally, primarily under the Aegis brand name. Nylon 6 is a polymer resin which is a synthetic material used by the company’s customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electric components, sports apparel, food packaging and other industrial applications.

Caprolactam – Caprolactam is the key monomer used in the production of Nylon 6 resin. The company internally polymerizes caprolactam into Aegis Nylon 6 Resins, and it also markets and sells the caprolactam that is not consumed internally to customers who use it to manufacture polymer resins to produce fibers, compounds and other nylon products. The company’s Hopewell manufacturing facility is one of the world’s largest single-site producers of caprolactam as of December 31, 2023.

Ammonium Sulfate – The company’s ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients. Ammonium sulfate fertilizer is derived from the integrated operations at the Hopewell manufacturing facility. Because of its Hopewell facility’s size, scale and technology design, the company is the world’s largest single-site producer of ammonium sulfate fertilizer as of December 31, 2023. The company markets and sells ammonium sulfate primarily to North American and South American distributors, farm cooperatives and retailers to fertilize crops.

Chemical Intermediates – The company manufactures, markets and sells a number of other chemical intermediate products that are derived from the manufacturing processes within its integrated supply chain. Most significant is acetone which is used by the company’s customers in the production of adhesives, paints, coatings, solvents, herbicides and engineered plastic resins. Other intermediate chemicals that it manufactures, markets and sells include phenol, alpha-methylstyrene (AMS), cyclohexanone, 2-pentanone oxime, cyclohexanol, sulfuric acid, ammonia and carbon dioxide. With the acquisition of U.S. Amines Limited (U.S. Amines), the company also produces alkyl and specialty amines serving high-value end markets such as agrochemicals and pharmaceuticals.

The company’s manufacturing process is vertically integrated. The company uses cumene, a chemical compound produced from benzene and propylene, to manufacture phenol, acetone and AMS at its Frankford, Pennsylvania plant. The majority of the phenol the company manufactures is further processed at its Hopewell facility through an integrated series of unit operations, which also consume natural gas and sulfur, to primarily produce caprolactam and ammonium sulfate. In 2023, approximately 55% of the caprolactam the company produced at its facility in Hopewell, Virginia was shipped to its facility in Chesterfield, Virginia where it was polymerized into Aegis Nylon 6 resins. During 2022, the company acquired U.S. Amines, which has manufacturing facilities located in Bucks, Alabama and Portsmouth, Virginia.

The company’s logistics infrastructure enables a reliable intra-plant supply chain and consistent and timely delivery to its customers. In February 2022, the company successfully completed its second acquisition with the U.S. Amines purchase, adding alkly and allyl amine chemistry to its value chains.

The company serves approximately 400 customers globally located in approximately 50 countries. The company is a single operating segment and a single reportable segment, operating through U.S.-based manufacturing sites located in Frankford, Pennsylvania, Hopewell, Chesterfield and Portsmouth, Virginia and Bucks, Alabama.

Competition

The company competes with integrated manufacturers, such as Highsun Group Holdings Ltd., BASF Corporation, Sinopec Limited, DOMO Chemicals GmbH, Envalior and UBE Corporation. The company also competes with synthetic manufacturers of ammonium sulfate, such as Pasadena Commodities International and Nutrien Ltd.; and stand-alone phenol and acetone producers, such as INEOS Phenol and Altivia. In the U.S. Amines business, the key alkyl amines U.S.-based competitor is Eastman Chemical Company.

Product Overview

Nylon and Caprolactam

The company manufactures its Nylon 6 resin in its Chesterfield plant. The company sells its Nylon 6 resin globally, primarily under the Aegis brand name. The company produces caprolactam, the key monomer used in the production of Nylon 6 resin, at its Hopewell plant using phenol produced at its Frankford plant and sulfur and natural gas obtained from third-party suppliers.

Ammonium Sulfate

Ammonium sulfate fertilizer is produced simultaneously with caprolactam as part of the company’s integrated manufacturing process at its Hopewell plant. The company manufactures this product in a ratio of approximately four pounds of ammonium sulfate to one pound of caprolactam. The company targets conversion of approximately 65% of the ammonium sulfate it produces into higher-value granular form. The company sells ammonium sulfate under the brand name Sulf-N.

Chemical Intermediates

The company manufactures, markets and sells chemical intermediates to a range of customers for use in many different types of end-products. The phenol the company produces at its Frankford plant is a key chemical intermediate used in its caprolactam manufacturing process. The majority of the phenol the company produces is used in production of caprolactam and other chemical intermediates at Hopewell. Any remaining phenol is sold to customers for use in their product applications, such as phenolic resins, epoxies and Bisphenol A.

All its acetone is sold to customers for use in products such as methyl methacrylate, polycarbonate, epoxy resins, ketones and solvents used widely in automotive and construction, as well as agrochemicals. Acetone is typically used by the company’s customers as a key raw material in the production of a variety of other chemicals which are then used in the applications.

The company also produces and sells AMS, cyclohexanone, oximes and cyclohexanol to customers for use in end-products, such as resins, inks, paints, coatings and electronic components. The majority of cyclohexanone the company produces is used in its caprolactam manufacturing process with the remainder sold to customers.

As a result of the U.S. Amines acquisition during the first quarter of 2022, the company also produces and sells alkyl and specialty amines, which are used in agrochemical intermediates, water treatment and pharmaceutical applications.

Sales, Marketing and Distribution

The company has a sales force with global reach, long-standing customer relationships and deep expertise with its products, product applications and end-markets. The company predominantly sells directly to its customers, primarily under contracts but also through spot transactions under purchase orders and through distributors. The company’s products are supported by its global logistics capability that employs to ensure reliable and timely delivery to its customers while maximizing distribution resources and efficiency.

Customers

Globally, the company serves approximately 400 customers in a wide variety of industries located in approximately 50 countries. In 2023, the company's 10 largest customers accounted for approximately 39% of total sales. The company’s largest customer is Shaw Industries Group Inc. (Shaw), one of the world's largest consumers of caprolactam and Nylon 6 resin. The company sells caprolactam and Nylon 6 resin to Shaw under a long-term agreement. Sales to Shaw were 11% of the company’s total sales for the year ended December 31, 2023. The company typically sells to its other customers under master services agreements, with primarily one-year terms, or by purchase orders.

Seasonality

The company produces ammonium sulfate fertilizer continuously throughout the year as part of its manufacturing process, but quarterly sales fluctuate reflecting both geographical and product sales mix considerations based on the timing and length of the growing seasons in North and South America. North American ammonium sulfate demand and pricing, particularly for its higher-value granular product, are typically strongest during second quarter fertilizer application and then typically decline seasonally with new season fill in the third quarter (year ended December 31, 2023). Ammonium sulfate industry prices in the U.S. corn belt have declined approximately 10% from the second quarter to the third quarter, on average, since 2016. Due to the ammonium sulfate fertilizer sales cycle, the company occasionally builds up higher inventory balances because its production is continuous. Sales of most of the company’s other products have generally been subject to minimal.

Intellectual Property

The company sells its Nylon 6 resin under the Aegis brand name and its ammonium sulfate fertilizer under the Sulf-N brand name. Chemical intermediates are sold under the brand names of Nadone, Naxol and EZ-Blox.

Research and Development

The company conducts research and development (R&D) activities, which consist primarily of the development of new products and product applications consisting primarily of labor costs and depreciation and maintenance costs. R&D costs are charged to expense as incurred. Such costs are included in costs of goods sold and were $9.8 million for the year ended December 31, 2023.

Regulation and Environmental Matters

Among other environmental laws and regulations, the company is subject to the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act and similar state, foreign and global laws for management and remediation of hazardous materials; the Clean Air Act and the Clean Water Act, for protection of air and water resources; the Toxic Substance Control Act (TSCA), for regulation of chemicals in commerce and reporting of potential known adverse effects.

The company’s Frankford and Hopewell facilities are regulated facilities under the Maritime Transportation Security Act of 2002 (MTSA) due to the nature of its operations and the proximity of the facilities to adjacent waterways. As a result, the company is required to comply with numerous regulations administered by the Department of Homeland Security, including the development and implementation of compliant security procedures and protocols. Additionally, sales of certain of the company’s products, such as acetone and amines, may implicate List II or other considerations under the Drug Enforcement Act. Such classifications subject it to further compliance audits by the relevant federal and state agencies and place ongoing restrictions on its sales activities.

History

AdvanSix Inc., a Delaware corporation, was incorporated in 2016.