(Mark One) | |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
AdvanSix Inc. (Exact Name of Registrant as Specified in its Charter) |
Delaware | 81-2525089 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
300 Kimball Drive, Suite 101, Parsippany, New Jersey | 07054 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Emerging growth company o |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales | $ | 400,459 | $ | 361,441 | $ | 759,697 | $ | 738,145 | |||||||
Costs, expenses and other: | |||||||||||||||
Costs of goods sold | 342,958 | 299,298 | 664,278 | 613,193 | |||||||||||
Selling, general and administrative expenses | 17,919 | 18,095 | 37,132 | 34,865 | |||||||||||
Other non-operating expense (income), net | 1,582 | 2,965 | 5,128 | 4,763 | |||||||||||
362,459 | 320,358 | 706,538 | 652,821 | ||||||||||||
Income before taxes | 38,000 | 41,083 | 53,159 | 85,324 | |||||||||||
Income taxes | 9,590 | 15,317 | 13,156 | 32,265 | |||||||||||
Net income | $ | 28,410 | $ | 25,766 | $ | 40,003 | $ | 53,059 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.93 | $ | 0.85 | $ | 1.31 | $ | 1.74 | |||||||
Diluted | $ | 0.91 | $ | 0.83 | $ | 1.28 | $ | 1.71 | |||||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 30,481,627 | 30,482,966 | 30,485,095 | 30,482,966 | |||||||||||
Diluted | 31,305,168 | 30,986,854 | 31,294,323 | 30,977,472 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 28,410 | $ | 25,766 | $ | 40,003 | $ | 53,059 | |||||||
Foreign exchange translation adjustment | (17 | ) | (1 | ) | (18 | ) | (3 | ) | |||||||
Pension obligation adjustments | — | — | 410 | — | |||||||||||
Other comprehensive income (loss), net of tax | (17 | ) | (1 | ) | 392 | (3 | ) | ||||||||
Comprehensive income | $ | 28,393 | $ | 25,765 | $ | 40,395 | $ | 53,056 |
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 16,714 | $ | 55,432 | |||
Accounts and other receivables – net | 155,724 | 196,003 | |||||
Inventories – net | 122,129 | 129,208 | |||||
Other current assets | 5,869 | 7,130 | |||||
Total current assets | 300,436 | 387,773 | |||||
Property, plant and equipment – net | 619,267 | 612,612 | |||||
Goodwill | 15,005 | 15,005 | |||||
Other assets | 36,443 | 34,884 | |||||
Total assets | $ | 971,151 | $ | 1,050,274 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 176,589 | $ | 227,711 | |||
Accrued liabilities | 28,208 | 35,013 | |||||
Income taxes payable | 3,258 | 1 | |||||
Deferred income and customer advances | 2,425 | 17,194 | |||||
Line of credit – short-term | 18,300 | — | |||||
Current portion of long-term debt | — | 16,875 | |||||
Total current liabilities | 228,780 | 296,794 | |||||
Deferred income taxes | 99,121 | 92,276 | |||||
Line of credit – long-term | 191,700 | — | |||||
Long-term debt | — | 248,339 | |||||
Postretirement benefit obligations | 29,212 | 33,396 | |||||
Other liabilities | 4,261 | 3,144 | |||||
Total liabilities | 553,074 | 673,949 | |||||
COMMITMENTS AND CONTINGENCIES (Note 9) | |||||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, par value $0.01; 200,000,000 shares authorized; 30,524,738 shares issued and 30,445,636 outstanding at June 30, 2018; 30,482,966 shares issued and outstanding at December 31, 2017 | 305 | 305 | |||||
Preferred stock, par value $0.01; 50,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2018 and December 31, 2017 | — | — | |||||
Treasury stock at par (79,102 shares at June 30, 2018; 0 shares at December 31, 2017) | (1 | ) | — | ||||
Additional paid-in capital | 264,849 | 263,081 | |||||
Retained earnings | 161,578 | 121,985 | |||||
Accumulated other comprehensive loss | (8,654 | ) | (9,046 | ) | |||
Total stockholders' equity | 418,077 | 376,325 | |||||
Total liabilities and stockholders' equity | $ | 971,151 | $ | 1,050,274 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 40,003 | $ | 53,059 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 25,913 | 22,959 | |||||
Loss on disposal of assets | 1,336 | 1,189 | |||||
Deferred income taxes | 6,845 | 20,500 | |||||
Stock based compensation | 4,880 | 3,619 | |||||
Accretion of deferred financing fees | 1,589 | 296 | |||||
Changes in assets and liabilities: | |||||||
Accounts and other receivables | 43,913 | (7,945 | ) | ||||
Inventories | 7,079 | (2,509 | ) | ||||
Accounts payable | (33,442 | ) | (14,157 | ) | |||
Income taxes payable | 3,257 | 4,949 | |||||
Accrued liabilities | (6,805 | ) | (227 | ) | |||
Deferred income and customer advances | (14,769 | ) | (23,982 | ) | |||
Other assets and liabilities | (2,578 | ) | 3,041 | ||||
Net cash provided by operating activities | 77,221 | 60,792 | |||||
Cash flows from investing activities: | |||||||
Expenditures for property, plant and equipment | (53,423 | ) | (47,785 | ) | |||
Other investing activities | (1,254 | ) | (4,062 | ) | |||
Net cash used for investing activities | (54,677 | ) | (51,847 | ) | |||
Cash flows from financing activities: | |||||||
Payment of long-term debt | (266,625 | ) | — | ||||
Borrowings from line of credit | 261,000 | 276,000 | |||||
Payments of line of credit | (51,000 | ) | (276,000 | ) | |||
Payment of line of credit fees | (1,362 | ) | — | ||||
Principal payments under capital lease | (162 | ) | (70 | ) | |||
Purchase of treasury shares | (3,113 | ) | — | ||||
Net cash used for financing activities | (61,262 | ) | (70 | ) | |||
Net change in cash and cash equivalents | (38,718 | ) | 8,875 | ||||
Cash and cash equivalents at beginning of period | 55,432 | 14,199 | |||||
Cash and cash equivalents at the end of period | $ | 16,714 | $ | 23,074 | |||
Supplemental non-cash investing activities: | |||||||
Capital expenditures included in accounts payable | $ | 7,704 | $ | 16,980 | |||
Supplemental cash investing activities: | |||||||
Cash paid for interest | $ | 3,204 | $ | 5,244 | |||
Cash paid for income taxes | $ | 2,240 | $ | 6,671 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Nylon | 27% | 29% | 28% | 29% | |||
Caprolactam | 19% | 18% | 18% | 19% | |||
Ammonium Sulfate Fertilizers | 21% | 21% | 20% | 20% | |||
Chemical Intermediates | 33% | 32% | 34% | 32% | |||
100% | 100% | 100% | 100% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
United States | $ | 342,497 | $ | 299,537 | $ | 640,145 | $ | 600,035 | |||||||
International | 57,962 | 61,904 | 119,552 | 138,110 | |||||||||||
Total | $ | 400,459 | $ | 361,441 | $ | 759,697 | $ | 738,145 |
Opening balance January 1, 2018 | $ | 17,194 | |
Additional cash advances | 2,107 | ||
Less amounts recognized in revenues | (16,876 | ) | |
Ending balance June 30, 2018 | $ | 2,425 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Basic | |||||||||||||||
Net Income | $ | 28,410 | $ | 25,766 | $ | 40,003 | $ | 53,059 | |||||||
Weighted average common shares outstanding | 30,481,627 | 30,482,966 | 30,485,095 | 30,482,966 | |||||||||||
EPS – Basic | $ | 0.93 | $ | 0.85 | $ | 1.31 | $ | 1.74 | |||||||
Diluted | |||||||||||||||
Dilutive effect of unvested equity awards and other stock-based holdings | 823,541 | 503,888 | 809,228 | 494,506 | |||||||||||
Weighted average common shares outstanding | 31,305,168 | 30,986,854 | 31,294,323 | 30,977,472 | |||||||||||
EPS – Diluted | $ | 0.91 | $ | 0.83 | $ | 1.28 | $ | 1.71 |
June 30, 2018 | December 31, 2017 | ||||||
Accounts receivables | $ | 155,185 | $ | 188,477 | |||
Other | 2,235 | 8,936 | |||||
Total accounts and other receivables | 157,420 | 197,413 | |||||
Less – allowance for doubtful accounts | (1,696 | ) | (1,410 | ) | |||
Total accounts and other receivables – net | $ | 155,724 | $ | 196,003 |
June 30, 2018 | December 31, 2017 | ||||||
Raw materials | $ | 50,151 | $ | 48,502 | |||
Work in progress | 43,269 | 50,511 | |||||
Finished goods | 32,816 | 35,430 | |||||
Spares and other | 24,364 | 23,091 | |||||
150,600 | 157,534 | ||||||
Reduction to LIFO cost basis | (28,471 | ) | (28,326 | ) | |||
Total inventories – net | $ | 122,129 | $ | 129,208 |
Total term loan outstanding | $ | — | |
Amounts outstanding under the Revolving Credit Facility | 210,000 | ||
Total outstanding indebtedness | 210,000 | ||
Less: Line of credit – short-term | (18,300 | ) | |
Line of credit – long-term | $ | 191,700 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service costs | $ | 2,001 | $ | 1,908 | $ | 4,003 | $ | 3,816 | |||||||
Interest costs | 469 | 333 | 938 | 666 | |||||||||||
Expected return on plan assets | (287 | ) | (76 | ) | (575 | ) | (152 | ) | |||||||
Net periodic benefit cost | $ | 2,183 | $ | 2,165 | $ | 4,366 | $ | 4,330 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Sales | $400,459 | $361,441 | $759,697 | $738,145 | |||
% change compared with prior year period | 10.8% | 2.9% |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||
Volume | 4.0% | (1.9)% | |
Price | 6.8% | 4.8% | |
10.8% | 2.9% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Costs of goods sold | $342,958 | $299,298 | $664,278 | $613,193 | |||
% change compared with prior year period | 14.6% | 8.3% | |||||
Gross Margin percentage | 14.4% | 17.2% | 12.6% | 16.9% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Selling, general and administrative expenses | $17,919 | $18,095 | $37,132 | $34,865 | |||
Percent of sales | 4.5% | 5.0% | 4.9% | 4.7% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Tax expense | $9,590 | $15,317 | $13,156 | $32,265 | |||
Effective tax rate | 25.2% | 37.3% | 24.7% | 37.8% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Net income | $28,410 | $25,766 | $40,003 | $53,059 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 28,410 | $ | 25,766 | $ | 40,003 | $ | 53,059 | |||||||
Interest expense, net | 1,598 | 1,873 | 4,688 | 3,412 | |||||||||||
Income taxes | 9,590 | 15,317 | 13,156 | 32,265 | |||||||||||
Depreciation and amortization | 13,371 | 11,663 | 25,913 | 22,959 | |||||||||||
EBITDA (non-GAAP) | $ | 52,969 | $ | 54,619 | $ | 83,760 | $ | 111,695 | |||||||
Sales | $ | 400,459 | $ | 361,441 | $ | 759,697 | $ | 738,145 | |||||||
EBITDA Margin (non-GAAP) | 13.2% | 15.1% | 11.0% | 15.1% |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash provided by (used for): | |||||||
Operating activities | $ | 77,221 | $ | 60,792 | |||
Investing activities | (54,677 | ) | (51,847 | ) | |||
Financing activities | (61,262 | ) | (70 | ) | |||
Net change in cash and cash equivalents | $ | (38,718 | ) | $ | 8,875 |
Six Months Ended June 30, 2018 | |||
Capital expenditures in Accounts payable at December 31, 2017 | $ | 25,222 | |
Purchases of property, plant and equipment | 35,905 | ||
Less: Capital expenditures in Accounts payable at June 30, 2018 | (7,704 | ) | |
Cash paid for capital expenditures | $ | 53,423 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||||||
April 1 - April 30 | — | $ | — | — | $ | — | ||||
May 1 - May 31 | — | — | — | 75,000,000 | ||||||
June 1 - June 30 | 70,107 | 39.10 | 70,107 | 72,258,879 | ||||||
Total | 70,107 | $ | 39.10 | 70,107 | $ | 72,258,879 |
Exhibit | Description | |
3.1 | ||
3.2 | ||
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
ADVANSIX INC. | |||
Date: August 3, 2018 | By: | /s/ Michael Preston | |
Michael Preston | |||
Senior Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of AdvanSix Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Erin N. Kane | ||
Erin N. Kane | ||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of AdvanSix Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael Preston | ||
Michael Preston | ||
Chief Financial Officer |
/s/ Erin N. Kane | |
Erin N. Kane | |
President and Chief Executive Officer |
/s/ Michael Preston | |
Michael Preston | |
Chief Financial Officer |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 27, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AdvanSix Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 30,331,069 | |
Amendment Flag | false | |
Entity Central Index Key | 0001673985 | |
Entity Filer Category | Large Accelerated Filer | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Sales | $ 400,459 | $ 361,441 | $ 759,697 | $ 738,145 |
Costs, expenses and other: | ||||
Costs of goods sold | 342,958 | 299,298 | 664,278 | 613,193 |
Selling, general and administrative expenses | 17,919 | 18,095 | 37,132 | 34,865 |
Other non-operating expense (income), net | 1,582 | 2,965 | 5,128 | 4,763 |
Costs, expenses and other | 362,459 | 320,358 | 706,538 | 652,821 |
Income before taxes | 38,000 | 41,083 | 53,159 | 85,324 |
Income taxes | 9,590 | 15,317 | 13,156 | 32,265 |
Net income | $ 28,410 | $ 25,766 | $ 40,003 | $ 53,059 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 0.93 | $ 0.85 | $ 1.31 | $ 1.74 |
Diluted (in dollars per share) | $ 0.91 | $ 0.83 | $ 1.28 | $ 1.71 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 30,481,627 | 30,482,966 | 30,485,095 | 30,482,966 |
Diluted (in shares) | 31,305,168 | 30,986,854 | 31,294,323 | 30,977,472 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 28,410 | $ 25,766 | $ 40,003 | $ 53,059 |
Foreign exchange translation adjustment | (17) | (1) | (18) | (3) |
Pension obligation adjustments | 0 | 0 | 410 | 0 |
Other comprehensive income (loss), net of tax | (17) | (1) | 392 | (3) |
Comprehensive income | $ 28,393 | $ 25,765 | $ 40,395 | $ 53,056 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 30,524,738 | 30,482,966 |
Common stock, shares outstanding (in shares) | 30,445,636 | 30,482,966 |
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 79,102 | 0 |
Organization, Operations and Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization, Operations and Basis of Presentation | Organization, Operations and Basis of Presentation Description of Business AdvanSix Inc. (“AdvanSix”, the “Company”, "we" or "our") is an integrated manufacturer of Nylon 6, a polymer resin which is a synthetic material used by our customers to produce engineered plastics, fibers, filaments and films that, in turn, are used in such end-products as automotive and electronic components, carpets, sports apparel, fishing nets and food and industrial packaging. As a result of our backward integration and the configuration of our manufacturing facilities, we also sell a variety of other products, all of which are produced as part of our integrated Nylon 6 resin manufacturing process including caprolactam, ammonium sulfate fertilizers, acetone and other chemical intermediates. Separation from Honeywell On October 1, 2016, Honeywell International Inc. (“Honeywell”) completed the separation of AdvanSix. The separation was completed by Honeywell distributing (the “Distribution”) all of the then outstanding shares of common stock of AdvanSix on October 1, 2016 (the “Distribution Date”) through a dividend in kind of AdvanSix common stock, par value $0.01, to holders of Honeywell common stock as of the close of business on the record date of September 16, 2016 who held their shares through the Distribution Date (the “Spin-Off”). Each Honeywell stockholder who held their shares through the Distribution Date received one share of AdvanSix common stock for every 25 shares of Honeywell common stock held at the close of business on the record date of September 16, 2016. We filed our Form 10 describing the Spin-Off with the Securities and Exchange Commission (the “SEC”), which was declared effective by the SEC on September 8, 2016 (the “Form 10”). On October 3, 2016, AdvanSix stock began “regular-way” trading on the New York Stock Exchange under the “ASIX” stock symbol. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2018, and its results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The Condensed Consolidated Balance Sheets at December 31, 2017 were derived from audited annual financial statements but do not contain all of the footnote disclosures from the annual financial statements. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K (the "2017 Form 10-K") for the year ended December 31, 2017. All intercompany transactions have been eliminated. Certain prior period amounts have been reclassified for consistency with the current period presentation. It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice were generally not significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three and six months ended June 30, 2018 and 2017 were June 30, 2018 and July 1, 2017, respectively. Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2018, and December 31, 2017 aggregated $5.7 million and $8.5 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets. On May 4, 2018, the Company announced that its Board of Directors authorized a share repurchase program of up to $75 million of the Company’s common stock. Repurchases may be made from time to time on the open market, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The Company had approximately 30.4 million shares of common stock outstanding as of June 30, 2018. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital. As of June 30, 2018, the Company had repurchased 70,107 shares of common stock for an aggregate of $2.7 million under the currently authorized program at a weighted average market price of $39.10 per share. As of June 30, 2018, $72.3 million remained available for share repurchases under the currently authorized program. |
Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that allows companies to reclassify to Retained earnings the stranded tax effects in Accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act (the "Tax Act"). The amendments in ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period. The Company elected to early adopt this guidance effective January 1, 2018 and to reclassify the stranded tax effects from the Tax Act from Accumulated other comprehensive income to Retained earnings (see Note 10). In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715), in order to improve the presentation of net periodic pension and postretirement costs. The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable. The amendments in this update related to income statement activity were applied retrospectively whereas balance sheet activity was applied prospectively. For public business entities, the effective date for ASU 2017-07 was annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted this guidance effective January 1, 2018 and there was no impact on the Company’s consolidated financial position and results of operations upon adoption other than pension expense reclassifications in the 2017 Consolidated Statement of Operations which reduced Costs of goods sold and Selling, general and administrative expenses and increased Other non-operating expense (income), net. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018 (early adoption is permitted). The new standard should be applied under a modified retrospective approach. We continue to evaluate the impact of the new standard on the Company’s consolidated financial position, results of operations and related disclosures. Although we have not yet completed our assessment, adoption of this standard will have a significant impact on the Consolidated Balance Sheets. However, we do not expect adoption of this standard to have a significant impact on the recognition, measurement or presentation of lease expenses within the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows. Information about our undiscounted future lease payments and the timing of those payments is provided under “Contractual Obligations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2017 Form 10-K. The Company plans to adopt this standard effective January 1, 2019. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced the existing accounting standards for revenue recognition with a single comprehensive five-step model eliminating industry-specific accounting rules. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. Since its issuance, the FASB amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. The provisions of ASU 2014-09 became effective for public business entities for interim and annual periods beginning after December 15, 2017. The Company adopted this standard effective January 1, 2018 using the modified retrospective method of transition and there was no cumulative impact adjustment on the Company’s Consolidated Financial Position and Results of Operations. Under this standard, revenue recognition from the Company's products remained unchanged from the Company's previous revenue recognition model. As a result of adopting this standard, the Company expanded its revenue recognition disclosures (see Note 3). |
Revenues |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues Revenue Recognition The Company recognizes revenue upon the transfer of control of goods or services to customers at amounts that reflect the consideration expected to be received. AdvanSix primarily recognizes revenues when title and control of the product transfers from the Company to the customer. Outbound shipping costs incurred by the Company are not included in revenues but are reflected as freight expense in Costs of goods sold in the Consolidated Statements of Operations. Sales of our products to customers are made under a purchase order, and in certain cases in accordance with the terms of a master services agreement. These agreements typically contain formula-based pass-through pricing tied to key feedstock materials and volume ranges, but often do not specify the goods, including the quantities thereof, to be transferred. Certain master services agreements (including with respect to our largest customer) may contain minimum purchase volumes which can be satisfied by the customer on a periodic basis by choosing from various products offered by the Company. In these cases, a performance obligation is created when a customer submits a purchase order for a specific product at a specified price, typically providing for delivery within the next 60 days. The Company considers the performance obligation with respect to such purchase order satisfied at the point in time when control of the product is transferred to the customer, which is indicated by shipment of the product and transfer of title and risk of loss to the customer. Variable consideration is estimated for future volume rebates and early pay discounts on certain products and product returns. The Company records variable consideration as an adjustment to the sale transaction price. Since variable consideration is generally settled within one year, the time value of money is not significant. The Company applies the practical expedient in Topic 606 and does not include disclosures regarding remaining performance obligations that have original expected durations of one year or less, or amounts for variable consideration allocated to wholly-unsatisfied performance obligations or wholly-unsatisfied distinct goods that form part of a single performance obligation, if any. The Company also utilizes the practical expedient in Topic 606 and does not include an adjustment for the effects of a significant financing component given the expected period duration of one year or less. We serve more than 500 customers annually in more than 40 countries and across a wide variety of industries. For the three months ended June 30, 2018 and 2017, the Company's ten largest customers accounted for approximately 45% of total sales for each period. For the six months ended June 30, 2018 and 2017, the Company’s ten largest customers accounted for approximately 45% and 43% of total sales, respectively. We typically sell to customers under contracts, with one- to two-year terms on average, or by purchase orders. We have historically experienced low customer turnover. Each of the Company’s product lines represented the following approximate percentage of total sales for the three and six months ended June 30, 2018 and 2017:
The Company's revenues by geographic area for the three and six months ended June 30, 2018 and 2017 were as follows:
Deferred Income and Customer Advances The Company defers revenues when cash payments are received in advance of our performance. Customer advances relate primarily to sales from the ammonium sulfate business. Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2018:
The Company expects to recognize as revenue the June 30, 2018 ending balance of Deferred Income and Customer Advances within one year or less. |
Earnings Per Share |
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Earnings Per Share | Earnings Per Share The computation of basic and diluted earnings per share ("EPS") is based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively. The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2018 and 2017 were as follows:
The diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. For the three months ended June 30, 2018 and 2017, stock options of 128,777 and 175,026, respectively, were anti-dilutive and excluded from the computations of dilutive EPS. On March 2, 2018, the Company granted equity awards representing 231,162 shares of common stock under the 2016 Stock Incentive Plan of AdvanSix Inc. and its Affiliates (the "2016 Stock Plan") to Company employees consisting of 128,777 stock options, 58,078 performance stock units (at target) and 44,307 restricted stock units. These equity awards have a per share strike price (for stock options) or grant date fair value per share (for performance stock units and restricted stock units) of $41.97 with vesting periods ranging from 12 to 36 months. On June 14, 2018, the Company granted equity awards representing 20,760 shares of common stock under the 2016 Stock Plan to certain Company employees and the Company’s Board of Directors consisting of restricted stock units. These equity awards have a grant date fair value per share of $40.74 with vesting periods ranging from 12 to 36 months. In September 2017, the Board adopted the AdvanSix Inc. Deferred Compensation Plan (the “DCP”), effective January 1, 2018. Pursuant to the DCP, our directors may elect to defer their cash retainer fees and allocate their deferrals to the AdvanSix stock unit fund. Each unit allocated under the stock unit fund represents the economic equivalent of one share of common stock. Units are paid out in shares of AdvanSix Inc. common stock upon distribution. As of June 30, 2018, a total of 5,331 units were allocated to the AdvanSix stock unit fund under the DCP during 2018. In the second quarter of 2018, the Company repurchased 70,107 shares of common stock for $2.7 million at a weighted average market price of $39.10 per share. The purchase of shares under the repurchase program reduces the weighted average number of shares outstanding in the basic and diluted earnings per share calculations. |
Accounts and Other Receivables - Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Other Receivables - Net | Accounts and Other Receivables – Net
The decrease in Total accounts and other receivables – net at June 30, 2018 versus December 31, 2017 was due primarily to increased collections during the six months ended June 30, 2018 related to a trade receivables discount arrangement with a third-party financial institution, which enhances liquidity and enables the Company to efficiently manage its working capital needs, as well as the collection of a Federal income tax refund. |
Inventories |
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Inventories | Inventories
The decrease in Total inventories – net as of June 30, 2018 compared to December 31, 2017 is due to lower levels of production, including the impact of the unplanned weather-related outage in January 2018, during the six months ended June 30, 2018. |
Long-term Debt and Credit Agreement |
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Long-term Debt and Credit Agreement | Long-term Debt and Credit Agreement The Company’s debt at June 30, 2018 consisted of the following:
At June 30, 2018, the Company assessed the amount recorded under the Revolving Credit Facility (defined below) and determined that such amounts approximate fair value. The fair values of the debt are based on quoted inactive market prices and are therefore classified as Level 2 within the valuation hierarchy. The outstanding balances under the Revolving Credit Agreement are classified as $18.3 million as short-term and $191.7 million as long-term. The amount included in Line of credit - short-term, noted above and included on the accompanying Condensed Consolidated Balance Sheets, represents the outstanding balance the Company anticipates paying within one year. Credit Agreement On February 21, 2018 (the “Amendment Date”), the Company entered into Amendment No. 1 (the “Amendment”) to the Credit Agreement, dated September 30, 2016 (the “Original Credit Agreement”), among the Company, the guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (the Original Credit Agreement, after giving effect to the Amendment, the “Amended and Restated Credit Agreement”). The credit facilities under the Original Credit Agreement consisted of a senior secured term loan in an aggregate principal amount of $270 million, of which $267 million was outstanding just prior to entering into the Amendment, and a senior secured revolving credit facility in a principal amount of $155 million. Pursuant to the Amendment, (i) the term loan facility under the Original Credit Agreement was terminated and the entire outstanding balance of the term loan facility (the “Term Loan”) thereunder was paid in full and (ii) the maximum aggregate principal amount of the senior secured revolving credit facility (the “Revolving Credit Facility”) was increased to $425 million. On the Amendment Date, the Company borrowed $242 million under the Revolving Credit Facility. The proceeds of such loans, as well as cash on hand, were used to repay the outstanding Term Loan under the Original Credit Agreement. The Revolving Credit Facility under the Amended and Restated Credit Agreement has a 5-year term with a scheduled maturity date of February 21, 2023. The Amendment resulted in an increase in the Revolving Credit Facility to replace the Term Loan and provides increased borrowing flexibility and reduced overall borrowing costs with an approximate 50 basis point reduction in the interest rate spread. The Amended and Restated Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans. The Company has the option to incur incremental term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated Senior Secured Leverage Ratio (as defined in the Amended and Restated Credit Agreement) would not be greater than 1.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Amended and Restated Credit Agreement, commits to be a lender for such amount. Borrowings under the Amended and Restated Credit Agreement bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.50% to 1.50% or the sum of a Eurodollar rate plus a margin ranging from 1.50% to 2.50%, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the Amended and Restated Credit Agreement). The Company is also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.20% to 0.40% per annum depending on the Company’s Consolidated Leverage Ratio. The initial margin under the Amended and Restated Credit Agreement is 0.75% for base rate loans and 1.75% for Eurodollar rate loans and the initial commitment fee rate is 0.25% per annum. Substantially all domestic tangible and intangible assets of the Company and its subsidiaries are pledged as collateral to secure the obligations under the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Amended and Restated Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Amended and Restated Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 3.50 to 1.00 or less for the fiscal quarter ending March 31, 2018, through and including the fiscal quarter ending December 31, 2019, (ii) 3.25 to 1.00 or less for the fiscal quarter ending March 31, 2020, through and including the fiscal quarter ending December 31, 2020, (iii) 3.00 to 1.00 or less for the fiscal quarter ending March 31, 2021, through and including the fiscal quarter ending December 31, 2021, and (iv) 2.75 to 1.00 or less for the fiscal quarter ending March 31, 2022 and each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Amended and Restated Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. In addition to the amount borrowed on the Amendment Date, the Company has since borrowed an incremental $19 million ($4 million in first quarter and $15 million in second quarter) for working capital purposes under the Revolving Credit Facility and repaid $51 million ($16 million in first quarter and $35 million in second quarter) to bring the balance under the Revolving Credit Facility to $210 million at June 30, 2018. The Company had approximately $6.6 million of letter of credit agreements outstanding at June 30, 2018, of which $5.5 million are bi-lateral letters of credit and $1.1 million are provided to the Company under the Revolving Credit Facility. |
Postretirement Benefit Obligations |
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Postretirement Benefit Cost | Postretirement Benefit Cost The components of net periodic benefit cost of the Company’s pension plan are as follows:
The Company plans to make contributions during calendar year 2018 sufficient to satisfy pension funding requirements under the AdvanSix Retirement Earnings Plan in an aggregate amount of approximately $10.0 to $15.0 million and will make additional contributions in future years sufficient to satisfy pension funding requirements in those periods. The Company made contributions of $2.0 million in the first quarter of 2018 and $6.6 million in the second quarter of 2018. The pension plan assets are invested through a master trust fund. The strategic asset allocation for the trust fund is selected by the Company's Investment Committee reflecting the results of comprehensive asset and liability modeling. The Investment Committee establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk. |
Commitments and Contingencies |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to a number of lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of the Company or other third parties in the normal and ordinary course of business. A liability is recognized for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts. Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters. Considering the Company’s past experience and existing accruals, the Company does not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company’s consolidated results of operations, balance sheet and/or operating cash flows in the periods recognized or paid. On March 13, 2018, a federal search warrant was executed at the Company’s Hopewell, Virginia manufacturing facility. On the same date, the Company was separately served with a grand jury subpoena issued by the U.S. District Court for the Eastern District of Virginia, which requested documents related to the Hopewell facility’s air emissions and its compliance with the terms of a previously disclosed 2013 consent decree with the federal government and the Commonwealth of Virginia. The Company continues to cooperate fully with the authorities and is providing information in response to the subpoena. The Company’s production across its sites was not affected by these events and the Company expects to continue operating safely at plan moving forward. While the Company may incur penalties or fines in connection with the federal inquiry, the amount of such penalties or fines, if any, cannot be reasonably estimated at this time. Following the Spin-Off, the Company assumed from Honeywell all health, safety and environmental (“HSE”) liabilities and compliance obligations related to the past and future operations of our current business, as well as all HSE liabilities associated with our three current manufacturing locations and the other locations used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to be material for 2018. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the three and six months ended June 30, 2018. For interim reporting purposes, the Company recorded a benefit to the Income taxes of $0.2 million as a discrete item related to excess tax benefits associated with the vesting of restricted stock units for the six months ended June 30, 2018. The provision for income taxes was $9.6 million and $15.3 million for the three months ended June 30, 2018 and 2017, respectively. The provision for income taxes was $13.2 million and $32.3 million for the six months ended June 30, 2018 and 2017, respectively. As a result of the early adoption of ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, during the six months ended June 30, 2018, the Company elected to reclassify $0.4 million from Accumulated other comprehensive income to Retained earnings. The reclassification results from the remeasurement of deferred taxes pursuant to the Tax Act related to the Company’s pension plan that was recognized as a component of Income taxes related to continuing operations for the year ended December 31, 2017 which was originally recognized in Other comprehensive income. The Company elected the optional transition method and recorded the adjustment at the beginning of the period of adoption of ASU 2018-02. The Company’s current accounting policy related to stranded tax effects in Accumulated other comprehensive income is to review and reclassify on an item by item basis. The Company has not made any adjustments in the six months ended June 30, 2018 related to the financial impacts of the Tax Act recorded as provisional amounts in 2017 under Staff Accounting Bulletin No. 118. |
Recent Accounting Pronouncements (Policies) |
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Jun. 30, 2018 | |
Accounting Policies, by Policy (Policies) [Line Items] | |
Basis of Presentation | Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2018, and its results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The Condensed Consolidated Balance Sheets at December 31, 2017 were derived from audited annual financial statements but do not contain all of the footnote disclosures from the annual financial statements. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K (the "2017 Form 10-K") for the year ended December 31, 2017. All intercompany transactions have been eliminated. Certain prior period amounts have been reclassified for consistency with the current period presentation. It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice were generally not significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three and six months ended June 30, 2018 and 2017 were June 30, 2018 and July 1, 2017, respectively. Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2018, and December 31, 2017 aggregated $5.7 million and $8.5 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets. |
Accounting Standards Update 2018-02 [Member] | |
Accounting Policies, by Policy (Policies) [Line Items] | |
New Accounting Pronouncements | In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that allows companies to reclassify to Retained earnings the stranded tax effects in Accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act (the "Tax Act"). The amendments in ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period. The Company elected to early adopt this guidance effective January 1, 2018 and to reclassify the stranded tax effects from the Tax Act from Accumulated other comprehensive income to Retained earnings (see Note 10). |
Accounting Standard Update 2017-07 [Member] | |
Accounting Policies, by Policy (Policies) [Line Items] | |
New Accounting Pronouncements | In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715), in order to improve the presentation of net periodic pension and postretirement costs. The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable. The amendments in this update related to income statement activity were applied retrospectively whereas balance sheet activity was applied prospectively. For public business entities, the effective date for ASU 2017-07 was annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted this guidance effective January 1, 2018 and there was no impact on the Company’s consolidated financial position and results of operations upon adoption other than pension expense reclassifications in the 2017 Consolidated Statement of Operations which reduced Costs of goods sold and Selling, general and administrative expenses and increased Other non-operating expense (income), net. |
Accounting Standards Update 2016-02 [Member] | |
Accounting Policies, by Policy (Policies) [Line Items] | |
New Accounting Pronouncements | In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018 (early adoption is permitted). The new standard should be applied under a modified retrospective approach. We continue to evaluate the impact of the new standard on the Company’s consolidated financial position, results of operations and related disclosures. Although we have not yet completed our assessment, adoption of this standard will have a significant impact on the Consolidated Balance Sheets. However, we do not expect adoption of this standard to have a significant impact on the recognition, measurement or presentation of lease expenses within the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows. Information about our undiscounted future lease payments and the timing of those payments is provided under “Contractual Obligations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2017 Form 10-K. The Company plans to adopt this standard effective January 1, 2019. |
Accounting Standards Update 2014-09 [Member] | |
Accounting Policies, by Policy (Policies) [Line Items] | |
New Accounting Pronouncements | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced the existing accounting standards for revenue recognition with a single comprehensive five-step model eliminating industry-specific accounting rules. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. Since its issuance, the FASB amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. The provisions of ASU 2014-09 became effective for public business entities for interim and annual periods beginning after December 15, 2017. The Company adopted this standard effective January 1, 2018 using the modified retrospective method of transition and there was no cumulative impact adjustment on the Company’s Consolidated Financial Position and Results of Operations. Under this standard, revenue recognition from the Company's products remained unchanged from the Company's previous revenue recognition model. As a result of adopting this standard, the Company expanded its revenue recognition disclosures (see Note 3). |
Revenues (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Each of the Company’s product lines represented the following approximate percentage of total sales for the three and six months ended June 30, 2018 and 2017:
The Company's revenues by geographic area for the three and six months ended June 30, 2018 and 2017 were as follows:
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Summary of Deferred Income and Customer Advances | Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2018:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2018 and 2017 were as follows:
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Accounts and Other Receivables - Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts and Other Receivables Net |
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Inventories (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current |
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Long-term Debt and Credit Agreement (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Long-term Debt | The Company’s debt at June 30, 2018 consisted of the following:
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Postretirement Benefit Obligations (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit cost of the Company’s pension plan are as follows:
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Revenues - Narrative (Details) - customer |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||||
Length of delivery period | 60 days | |||
Number of customers | 500 | |||
Number of countries in which customers are located | 40 | |||
Minimum [Member] | ||||
Concentration Risk [Line Items] | ||||
Length of contracts | 1 year | 1 year | ||
Maximum [Member] | ||||
Concentration Risk [Line Items] | ||||
Length of contracts | 2 years | 2 years | ||
10 Largest Customers [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 45.00% | 45.00% | 45.00% | 43.00% |
Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Percentage of sales | 100.00% | 100.00% | 100.00% | 100.00% |
Sales | $ 400,459 | $ 361,441 | $ 759,697 | $ 738,145 |
United States [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 342,497 | 299,537 | 640,145 | 600,035 |
International [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 57,962 | $ 61,904 | $ 119,552 | $ 138,110 |
Nylon [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of sales | 27.00% | 29.00% | 28.00% | 29.00% |
Caprolactam [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of sales | 19.00% | 18.00% | 18.00% | 19.00% |
Ammonium Sulfate Fertilizers [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of sales | 21.00% | 21.00% | 20.00% | 20.00% |
Chemical Intermediates [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of sales | 33.00% | 32.00% | 34.00% | 32.00% |
Revenues - Summary of Deferred Revenue and Customer Advances (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Change in Contract with Customer, Liability [Roll Forward] | |
Opening balance January 1, 2018 | $ 17,194 |
Additional cash advances | 2,107 |
Less amounts recognized in revenues | (16,876) |
Ending balance June 30, 2018 | $ 2,425 |
Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Basic | ||||
Net Income | $ 28,410 | $ 25,766 | $ 40,003 | $ 53,059 |
Weighted average common shares outstanding (in shares) | 30,481,627 | 30,482,966 | 30,485,095 | 30,482,966 |
EPS – Basic (in dollars per share) | $ 0.93 | $ 0.85 | $ 1.31 | $ 1.74 |
Diluted | ||||
Dilutive effect of unvested equity awards and other stock-based holdings (in shares) | 823,541 | 503,888 | 809,228 | 494,506 |
Weighted average common shares outstanding (in shares) | 31,305,168 | 30,986,854 | 31,294,323 | 30,977,472 |
EPS – Diluted (in dollars per share) | $ 0.91 | $ 0.83 | $ 1.28 | $ 1.71 |
Accounts and Other Receivables - Net (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivables | $ 155,185 | $ 188,477 |
Other | 2,235 | 8,936 |
Total accounts and other receivables | 157,420 | 197,413 |
Less – allowance for doubtful accounts | (1,696) | (1,410) |
Total accounts and other receivables – net | $ 155,724 | $ 196,003 |
Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 50,151 | $ 48,502 |
Work in progress | 43,269 | 50,511 |
Finished goods | 32,816 | 35,430 |
Spares and other | 24,364 | 23,091 |
Inventory gross | 150,600 | 157,534 |
Reduction to LIFO cost basis | (28,471) | (28,326) |
Total inventories – net | $ 122,129 | $ 129,208 |
Long-term Debt and Credit Agreement - Summary of Company's Debt (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Total outstanding indebtedness | $ 210,000 |
Less: Line of credit – short-term | (18,300) |
Line of credit – long-term | 191,700 |
Term Loan [Member] | |
Debt Instrument [Line Items] | |
Total outstanding indebtedness | 0 |
Revolving Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Total outstanding indebtedness | 210,000 |
Less: Line of credit – short-term | (18,300) |
Line of credit – long-term | $ 191,700 |
Postretirement Benefit Obligations - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Retirement Benefits [Abstract] | ||||
Service costs | $ 2,001 | $ 1,908 | $ 4,003 | $ 3,816 |
Interest costs | 469 | 333 | 938 | 666 |
Expected return on plan assets | (287) | (76) | (575) | (152) |
Net periodic benefit cost | $ 2,183 | $ 2,165 | $ 4,366 | $ 4,330 |
Postretirement Benefit Obligations - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Pension contributions | $ 6.6 | $ 2.0 | |
Scenario, Forecast [Member] | Minimum [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Pension contributions | $ 10.0 | ||
Scenario, Forecast [Member] | Maximum [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Pension contributions | $ 15.0 |
Commitments and Contingencies (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
location
| |
Commitments and Contingencies Disclosure [Abstract] | |
Number of manufacturing locations | 3 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax benefit related to excess tax benefits associated with vesting of RSUs | $ 200 | |||
Income taxes | $ 9,590 | $ 15,317 | 13,156 | $ 32,265 |
Retained Earnings [Member] | Accounting Standards Update 2018-02 [Member] | ||||
Valuation Allowance [Line Items] | ||||
Deferred tax benefit reclassified from AOCI to Retained Earnings | 400 | |||
AOCI Attributable to Parent [Member] | Accounting Standards Update 2018-02 [Member] | ||||
Valuation Allowance [Line Items] | ||||
Deferred tax benefit reclassified from AOCI to Retained Earnings | $ (400) |
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