AdvanSix Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Charles Neivert - Piper Sandler - Analyst : A couple of questions. One, on the conversion to granular side, you said you're heading for, what, 72%. I mean is there a maximum would you go to 100%? Or does the market not given that you move a lot to the Latin American market at certain times of the year, does that include going to that higher level? And ultimately, what level do you guys want to attain in terms of granular production on AS?

Question: Charles Neivert - Piper Sandler - Analyst : Got it. And one question, is the phenol market still problematic and therefore, creating some opportunity for your assets on site since you guys consume a vast proportion of your phenol, are you still running at above I would say, industry rates for phenol and therefore, producing the more acetone and acetone remains sort of snug for that reason. Is that still the situation out there?

Question: Charles Neivert - Piper Sandler - Analyst : Got it. And then just on the carbon capture side, obviously, the assumption is going to be that you're going to -- you've collected '18, '19, you've got '20, '21, '22, '23 and '24 to still deal with. But is there any idea about just what '25 will produce excluding anything you may get from prior years. Do you guys have any estimate on that or any guidance on that number, what it might be? And I know it may or not occur in '25, but just what are we potentially looking at there?

Question: Charles Neivert - Piper Sandler - Analyst : Okay. And then if I'm looking at -- I'm sorry, go ahead.

Question: Charles Neivert - Piper Sandler - Analyst : Okay. And then on that front, I mean, if you look at all the carbon you're doing now, is that basically all you can do? I mean, physically can do? Or is there potentially more coming, meaning you have to have the offtake agreement, all the offtakes and all the rest of that stuff. But are you capturing all that you can? Or is there more that conceivably could be captured if you can find the home for it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:30PM, ASIX.N - Q4 2024 AdvanSix Inc Earnings Call

Question: Charles Neivert - Piper Sandler - Analyst : So maybe you've got pretty much all you can get out of it, the number will be whatever?

Question: David Silver - C.L. King & Associates - Analyst : I guess I have several questions. First, let me just look here. First, if you don't mind, you did sketch out a range for capital spending in 2025 of $160 million. And I was hoping you could just take a minute and maybe call out the different buckets there in particular. I mean, as I recall, I think $75 million or $80 million might be sustaining. So I'm kind of more interested on the discretionary side or the nonsustaining side, Certainly, some of that goes into the ammonium sulfate expansion. But can you just maybe take a minute and where else are you directing discretionary CapEx in '25?

Question: David Silver - C.L. King & Associates - Analyst : Okay. Great. Next question would be about the natural gas costs and in particular, regional spreads. So Erin, I think in your prepared remarks on maybe the KPI page, you did touch on this briefly. But I do kind of track that regional spread from when it got extremely wide a few years ago. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:30PM, ASIX.N - Q4 2024 AdvanSix Inc Earnings Call And it's certainly not back to where it was in, I don't know, 2021 or 2022, but it has been ticking up pretty noticeably through the last few months of the year. So firstly, I mean, I guess I was just wondering if you consider that kind of maybe a secondary or a background support to your fertilizer business? And then more directly, but do you think that, that has redirected global trade in (inaudible) sulfate or other products that impact on your competitiveness or competitive advantage in the domestic market?

Question: David Silver - C.L. King & Associates - Analyst : Okay. And again, on ammonium sulfate, but you called out the improved sulfur values implied or direct an ammonium sulfate. And I'm just wondering, I mean, there are very few fertilizer products that include sulfur directly. But in the domestic market, what is the most competitive way of providing that incremental sulfur, let's say, to a fertilizer blend. Is that just elemental sulfur? Or is there another way that the channel gets the sulfur they need other than through yours or someone else's ammonium sulfate product?

Question: David Silver - C.L. King & Associates - Analyst : Okay. Yes, I knew there would be different agronomic benefits based on the form of the sulfur. Question on nylon. But you did call out increased competitive pressures. And I was hoping you might be able to just add a little bit more color there. So is this the case where I don't know the slope marketing is maybe showing up in the form of extra spot product availability? Or is this the type of thing where maybe there's competition in unexpected kind of end markets where you're having to defend some maybe long-held contract business. But -- and I guess I'm asking that as kind of a metric for whether this is something that might last a quarter or two or whether it's maybe more structural. But if you could maybe just touch on where the increased competitive pressures in the domestic market are most visible. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:30PM, ASIX.N - Q4 2024 AdvanSix Inc Earnings Call

Question: David Silver - C.L. King & Associates - Analyst : Okay. Very good. And then maybe just the last one for me. But you've called out the positive outlook for your fertilizer products sold into the ag markets. You also make some chemicals that end up in crop chemicals and pesticides and whatnot. Would you say the outlook for that portion of your business is also as robust or positive or not tracking, but how might your broader ag portfolio be doing above and beyond the ammonium sulfate?

Question: Charles Neivert - Piper Sandler - Analyst : Just on a quick thing. You were talking about nylon production in China are maintaining a fairly high level despite issues in their economy. Has that created anything that -- or any sort of additional competition for you guys are seeing any extra products from the AS side since they are running a lot of capital as well to run the nylon, has that created any issues in any particular markets? Or you're just not seeing anything at this point?