AdvanSix Q4 2025 Earnings Report

AdvanSix EPS Results

• Actual EPS: $0.03
• Consensus EPS: -$0.06
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: N/A

AdvanSix Revenue Results

• Actual Revenue: $359.95 million
• Expected Revenue: $340.85 million
• Beat/Miss: Beat by +$19.10 million
• YoY Revenue Growth: N/A

AdvanSix Announcement Details

• Quarter: Q4 2025
• Date: 2/20/2026
• Time: Before Market Opens
• Conference Call Date: Friday, February 20, 2026
• Conference Call Time: 9:30AM ET

AdvanSix (NYSE:ASIX) Inc. (NYSE:ASIX) is a diversified chemistry company that manufactures polymer resins, chemical intermediates and performance products. Its portfolio includes Nylon 6 resin, caprolactam, ammonium sulfate fertilizer and a range of intermediate chemicals used in industrial and consumer applications.

The company’s Nylon 6 products are used in automotive components, electrical and electronics applications, packaging, carpets, textiles and other engineered materials. Its chemical products also support markets such as agriculture, coatings, adhesives, construction and general industry.

AdvanSix was established as an independent, publicly traded company in 2016 following its separation from Honeywell International. The company operates an integrated manufacturing network in the United States and serves customers in North America and international markets through its products and global commercial relationships.

AdvanSix Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delivered full-year adjusted EBITDA of $157 million and Q4 $25 million, generating $6 million of free cash flow in 2025 despite trough nylon markets.
• Positive Sentiment: Plant nutrients are a standout—granular ammonium sulfate volumes are up ~10% YTD, with record ammonia and sulfuric acid production and management projecting another year of sales growth.
• Negative Sentiment: Management warns of meaningful input-cost headwinds—sulfur near $500/ton and higher natural gas—plus a ~$8–$10 million first-quarter earnings hit from winter-storm disruptions and related operating moderation.
• Neutral Sentiment: 2026 priorities include reduced CapEx of $75–$95 million and a productivity program targeting ~$30 million in annual run-rate savings, while planned turnarounds are expected to reduce pre-tax income by $20–$25 million (mostly Q2).
• Positive Sentiment: Sees material upside from carbon incentives—expects about $18 million in 2026 45Q credits upon DOE lifecycle approval and projects over $100 million through 2029, though cash refunds remain subject to IRS audit timing.

Presentation

[Operator]

Good day, and welcome to the AdvanSix Q4 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Adam Kressel, Vice President of Investor Relations and Treasurer. Please go ahead, Adam.

[Adam Kressel, VP of Investor Relations and Treasurer at AdvanSix]

Thank you, Bailey. Good morning, and welcome to AdvanSix's fourth quarter 2025 earnings conference call. With me here today are President and CEO, Erin Kane, and Interim CFO, Chris Gramm. This call and webcast, including any non-GAAP reconciliations, are available on our website at investors.advansix.com. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our business as we see it today. Those elements can change, and the actual results could differ materially from those projected, and we ask that you consider them in that light. We refer you to the forward-looking statements included in our press release and earnings presentation. In addition, we identify the principal risks and uncertainties that affect our performance in our SEC filings, including our annual report on Form 10-K, as further updated in subsequent filings with the SEC.

[Adam Kressel, VP of Investor Relations and Treasurer at AdvanSix]

This morning, we will review our financial results for the fourth quarter and full year 2025 and share our outlook for our key product lines and end markets. Finally, we'll leave time for your questions at the end. So with that, I'll turn the call over to AdvanSix's President and CEO, Erin Kane.

[Erin Kane, President and CEO at AdvanSix]

Thanks, Adam, and good morning, everyone. We appreciate you joining us here today for our quarterly call. As you saw in our press release, the AdvanSix team executed well to close out 2025. A great thanks to our organization for remaining focused on safely optimizing operational and commercial performance. We delivered full-year adjusted EBITDA of $157 million and generated $6 million of free cash flow in a year characterized by continued cyclical trough market conditions for nylon solutions, robust plant nutrient supply and demand fundamentals amid an increasing input cost environment, and mixed chemical intermediates industry conditions with lower acetone net pricing as anticipated. While the macro environment has been challenging, there were a number of highlights over the past year to recognize. We successfully executed our planned turnarounds at the low end of our target spend range.

[Erin Kane, President and CEO at AdvanSix]

We delivered record annual production across both of our key ammonia and sulfuric acid unit operations. We invested $116 million in CapEx, funding key growth and enterprise initiatives, including our sustained growth program. We progressed tax strategies, claiming additional 45Q carbon tax credits, received the final $26 million settlement proceeds in the first quarter of 2025 related to the 2019 PES supplier shutdown claim, and we preserved our competitive dividend while maintaining conservative debt leverage levels and ample liquidity. At the end of the year, we also welcomed Jeffrey J. Bird to our board of directors. Jeff's breadth of experience and deep financial and operational leadership in complex industries will further strengthen our board's strategic oversight. As we look ahead to 2026, the end market environment remains mixed overall.

[Erin Kane, President and CEO at AdvanSix]

We anticipate continued strength in plant nutrients, supply-demand fundamentals, and expect acetone margins to remain near cycle averages, while nylon remains plateaued in its trough. Now, there have been several recent industry announcements pointing to capacity rationalization in the nylon chain and lower operating rates in China, which we believe should lead to more favorable supply and demand conditions over time. Raw material input costs are expected to be a headwind, particularly in the first half of the year, on meaningfully higher sulfur and natural gas prices. As many well know, we recently navigated a significant winter storm across the country and mid-Atlantic. We are proud that we were successful in safely and continuously running our operations through these extreme temperature, ice, and snow conditions. Everyone at our operating sites came together to deliver this result.

[Erin Kane, President and CEO at AdvanSix]

We did have to contend with natural gas restrictions, additional maintenance costs, and we elected to moderate operating rates, which was a necessary impact to maintain safe operations. In total, we anticipate roughly an $8 million-$10 million unfavorable earnings impact in the first quarter, which we do intend to fully offset as we progress through the year. In this environment, we remain focused on controllable levers to support through-cycle profitability and cash conversion. This includes optimizing production output and sales volume mix, driving fixed cost reductions and productivity, maintaining a disciplined approach to cash management, and taking a risk-based approach to capital investment and plant turnaround scoping. Our strategic initiatives, unique combination of assets and business model are core to our durable competitive advantage and long-term positioning. With that, I'll turn to Chris to discuss the financials.

[Chris Gramm, Interim CFO at AdvanSix]

Thanks, Erin. I'm now on slide four to discuss our results for the quarter. Sales of $360 million in the quarter increased by approximately 9% versus the prior year. Sales volume increased approximately 11%, driven primarily by the prior year impact of the Q4 2024 extended planned turnaround.

[Chris Gramm, Interim CFO at AdvanSix]

Market-based pricing was favorable by approximately 2%, driven by the continued strength in plant nutrients, reflecting favorable North American ammonium sulfate supply and demand conditions, partially offset by lower acetone prices as anticipated. Raw material pass-through pricing was down 4% following a cost decrease in benzene, which is a major input to cumene, our largest raw material and key feedstock to our products. adjusted EBITDA was $25 million, up $15 million from last year, while adjusted EBITDA margin was 6.9%. The improvement in earnings versus last year was primarily driven by the favorable year-over-year sales volume and lower cost impact of plant turnarounds, partially offset by a decline in chemical intermediates pricing net of raw material costs.

[Chris Gramm, Interim CFO at AdvanSix]

On a sequential basis compared to the third quarter, earnings were roughly flat as higher plant nutrient pricing was offset by increased sulfur and natural gas input costs, as well as the impact of the previously disclosed unplanned Chesterfield electrical outage and planned Hopewell turnaround. Now let's turn to slide 5. On this slide, we are detailing our quarterly sales contributions by product line, as well as price and volume indicators, both year-over-year and sequentially. We hope this view into the underlying dynamics of our financials provides better insight into our commercial sales performance. In Nylon Solutions, volumes declined sequentially as we moderated caprolactam and resin production rates to manage inventory in a softer demand environment. Domestic market-based pricing held relatively steady, while raw material pass-through pricing saw declines on lower benzene input prices. Plant nutrients continue to perform exceptionally well, with strength in volume, pricing, and mix.

[Chris Gramm, Interim CFO at AdvanSix]

Granular ammonium sulfate volumes increased year-over-year, supported by the resiliency of sulfur nutrition demand and continued progress of our sustained growth program. And lastly, chemical intermediates pricing was stable sequentially, but lower year-over-year, consistent with expectations as acetone pricing moderated from the multi-year highs experienced in 2024. I'm now on slide 6, where we've summarized our full year 2025 financial results. Sales were roughly flat year-over-year, while we delivered full year adjusted EBITDA of $157 million and 90 basis points of margin expansion to 10.3%. Strong plant nutrients pricing and volume performance, in part supported by our sustained growth program, helped to overcome higher natural gas and sulfur feedstock costs, continued trough market conditions for nylon solutions, and lower acetone pricing over raw.

[Chris Gramm, Interim CFO at AdvanSix]

I would also highlight that the strong fourth quarter performance supported positive free cash flow generation for the full year 2025. On the bottom right portion of the slide, we've included a snapshot of our plant utilization across our three major facilities. At Hopewell, operating rates were roughly flat in 2025 on a year-over-year basis. As Erin mentioned earlier, we delivered record annual production across both of our key ammonia and sulfuric acid unit operations at our Hopewell site, while continuing to optimize granular ammonium sulfate production. At our Frankford phenol and acetone plant, utilization rate was up on improved performance year-over-year. At Chesterfield, operating rates were down high single digits. This reflects the strategic choice to moderate production and manage inventory levels, as well as the site-wide electrical outage and fire.

[Erin Kane, President and CEO at AdvanSix]

Thanks, Chris. I'm now on slide 7 to discuss our end market exposure and what we're seeing across our major product lines. Our diversified end market exposure continues to be a strategic advantage, providing resiliency across cycles. Agriculture and fertilizer remains our largest end market. Overall, we continue to see favorable ammonium sulfate supply and demand fundamentals, with sulfur nutrition demand growing approximately 3%-4%. There is caution around crop prices and sensitivity to declining farmer profitability, in addition to higher sulfur input costs, which are impacting fertilizer margins. Sulfur prices settled at nearly $500 per long ton in the first quarter of 2026. That compares to $165 per ton in the first quarter of 2025, and $310 per ton last quarter, so a meaningful increase that the industry is experiencing.

[Erin Kane, President and CEO at AdvanSix]

There continues to be a robust acceptance of the sulfur value proposition, with growers seeking to maximize crop yields. In the first seven months of this fertilizer year, granular sales volume is up 10%. We continue to build upon last year's success and are on pace for another record year of sales growth. As the value chain has been preparing for the upcoming planting in spring, we are seeing inventory fill up in the channel, particularly with the impact of weather-related delays. We're now seeing our first half order books shift more into the second quarter, when fertilizer typically moves very quickly through the chain to the fields. While there is risk to our first quarter plan volume, we also view this as an opportunity to place more tons in the second quarter when we traditionally see the highest in-season pricing.

[Erin Kane, President and CEO at AdvanSix]

To put this into historical context, at this point in the year, we're typically sold out several months in advance, meaning that pricing for the first quarter shipments is based on the back half of the prior year, and the second quarter shipments largely reflect first quarter pricing. This year, given the considerations around anticipated acceleration of input costs, expectations for corn acres planted, and tight domestic fertilizer supply, we engaged in a more limited pre-buy program and have taken a more cautious and patient approach to the order book. By not selling forward, our average price in the order book is above last year's pricing and much closer to current published pricing without the historical lag. Moving to building construction, dynamics here remain largely unchanged. We have direct and indirect exposure across nylon and chemical intermediates through flooring, oriented strand board, and paints and coatings, to name a few.

[Erin Kane, President and CEO at AdvanSix]

Our view is that latent demand will build and begin to recover through 2026, assuming moderating interest rates going forward. Third-party estimates indicate approximately 3% commercial construction growth anticipated in 2026. For nylon fiber and filament in particular, we see a stronger presence in commercial applications such as office, hospitality, and leisure. Broadly across nylon solutions, the industry remains an extended trough. Pricing has stabilized domestically, with margins supported by lower benzene input costs. However, demand remains muted across construction, automotive, food packaging, and broader industrial applications. As I mentioned earlier, encouragingly, we are seeing increased evidence of capacity rationalization in Europe and lower operating rates in China, which again should support more balanced supply and demand conditions over time. In chemical intermediates, phenol demand remains weak overall, driving lower global operating rates and supporting more balanced acetone supply and demand dynamics.

[Erin Kane, President and CEO at AdvanSix]

While acetone margins have moderated, they remain near cycle averages. Downstream MMA demand is improving, following planned and unplanned downtime in the fourth quarter of 2025. In addition, we note that the refinery-grade propylene pricing marker is being discontinued in 2026, and the industry is moving to buying cumene on a polymer-grade propylene minus pricing construct. Lastly, as of January, the Commerce Department and International Trade Commission made final determinations to renew the anti-dumping duties for acetone into the U.S. for another five years. Let's move to slide 8. As we look ahead to the remainder of 2026, our strategic priorities remain clear. We're focused on bolstering sustainable cash flow generation through risk-based prioritization of capital investments, cost productivity, tax optimization, and commercial and operational execution.

[Erin Kane, President and CEO at AdvanSix]

Our balance sheet is positioned to provide optionality and the ability to weather the challenging macro environment, with leverage exiting 2025 at approximately 1.2 times net debt to adjusted EBITDA. Now, starting with CapEx, we're expecting to spend in the range of $75 million-$95 million in 2026, compared to $116 million in 2025. This reduction reflects a rigorous evaluation and risk-based assessment of base investments and enterprise programs with continued progression of growth projects, including our sustained growth program. We anticipate a similar range of investment in 2027 as well, as we prioritize capital based on compliance, risk, and reliability assessments and efficiency improvements. We've also taken a refined risk-based approach to our planned turnaround schedule in 2026.

[Erin Kane, President and CEO at AdvanSix]

While it is an ammonia turnaround year at Hopewell, we've reduced the scope of these activities, focusing on critical maintenance and compliance areas. In total, we now anticipate the pre-tax income impact of plant turnarounds to be in the range of $20 million-$25 million. The majority of this spend will be in the second quarter this year, as we necessarily aligned our work with planned natural gas pipeline maintenance already scheduled by our vendor partners. As we previewed on our last earnings call, we are embarking on a non-manpower fixed cost takeout initiative, which is expected to support margin resilience. Supported by our recent ERP upgrades and enhanced management tools and data analytics, this multi-year productivity program targets approximately $30 million of annual run rate cost savings.

[Erin Kane, President and CEO at AdvanSix]

From an execution perspective, we remain focused on optimizing production output, inventories, and sales volume mix, while remaining nimble to capture market opportunity in the areas that are most profitable. We are also actively managing our cash tax rate, which we anticipate being below 10% this year. Lastly, all of these contributing items support expected meaningful improvement in free cash flow for the year. As a reminder, our linearity consistent with past years will represent a first half use of cash, primarily due to the unwinding of cash advances, the run rate of cash payments on CapEx, and timing of annual payments. Conversely, we anticipate the second half to be a source of cash to achieve our full year expectations. Let's turn to slide 9 before moving to Q&A. We believe that AdvanSix offers a compelling investment thesis with several value drivers supporting through-cycle profitability and sustainable performance.

[Erin Kane, President and CEO at AdvanSix]

Our leading U.S.-based position, advantage value chain and business model provide inherent competitive advantages. We're aligned to a diverse set of end-market applications, including roughly 40% of our revenue tied to underlying strong agricultural fundamentals. Our ammonia and sulfuric acid platform integration, coupled with leading granular crystallization technology, underpins our ammonium sulfate growth and how we win in plant nutrients. These capabilities, combined with our asset utilization agility and product mix, position us to navigate cycles and capitalize on emerging opportunities. With disciplined capital allocation, a healthy balance sheet, and a keen focus on productivity and free cash flow generation, we believe we have the flexibility and resilience to navigate current market conditions and create long-term shareholder value. With that, Adam, let's move to Q&A.

[Adam Kressel, VP of Investor Relations and Treasurer at AdvanSix]

Thanks, Erin. Bailey, can you please open the line for questions?

[Operator]

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from David Silver with Freedom Capital Markets. Please go ahead.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Yeah. Hi, good morning. Thank you.

[Erin Kane, President and CEO at AdvanSix]

Good morning.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Good morning. Number of questions. I guess, I would like to start with a couple on, the nylon, your nylon outlook, and in particular, you know, you did use the, you know, the term that there's been a string of industry announcements. So, you know, I am aware of the one closure in Europe, but, by Fibrant. I'm just wondering, if you could recap, have there been other, capacity closure announcements? And secondly, where would you expect, you know, the reduced, capacity or operating rates, to be, you know, most prominent? In other words, what end markets do you anticipate, the, production, capacity or production cutbacks to, where, where would that show up, most prominently in your view?

[Erin Kane, President and CEO at AdvanSix]

Sure. Yeah, so let's touch on Europe, because I think that certainly is the area where as you mentioned, Fibrant has already reported their intention to shut down. You know, Europe remains structurally long, relative to its demand, and utilization has been hovering 50%-60%. And so there's a Fibrant announcement. DOMO is also operating in insolvency, and so, while not announced, I think there is a watch out there in a consideration on their long-term prospects. To put in perspective, if they both were to exit operating rates in Europe, on a caprolactam perspective, would certainly move up into the 80s range, right?

[Erin Kane, President and CEO at AdvanSix]

Albeit on lower output relative to the full regional capacity, but much more in line from a structured supply-demand fundamental that would ultimately support pricing, we think by $200 per metric ton. So that's Europe. In China, there are also reports that they are managing their operating rate, if you will, in the country. You know, so we have seen their rates come down in the fourth quarter operating anywhere from sort of high 60s-mid 70s range which certainly goes a long way to the global oversupply, you know, if you will.

[Erin Kane, President and CEO at AdvanSix]

And we actually see that reported in constrained ammonium sulfate, coming out of the country as well. So, and at the end, these are things that are pointing, you know, to that direction, because obviously the monomer caprolactam, right, is the key starting point for the nylon chain. And so when you think about sort of just the overall health of the end markets, I know it's hard to say certainly on a global basis, building construction, North America, building construction continues to be a challenge. You know, here that impacts fiber and filament into carpet. Globally, automotive, would be a contributor to engineering plastics, you know, challenges in its demand.

[Erin Kane, President and CEO at AdvanSix]

And then, you know, in the US on packaging, again, just a little bit more challenged. Main applications here in meat and cheese, you know, protective packaging, and you still see some rather inflationary pressures on red meat that are impacting supply-demand there. So again, pointing in the right direction, we're always looking for these green shoots, if you will. And I think certainly it appears that perhaps we're at an inflection point for this movement.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Okay. Thank you for all that detail. I would also just like to follow that with some questions. A question about your outlook on sulfur market dynamics. So, you know, just personally, you know, my view is sulfur is probably one of the least predictable, you know, large volume products to kind of get a real handle on supply and demand drivers at any given point. And of course, you know, it's been, there's been upward pricing momentum for several quarters now. You know, just from your perspective, maybe if you could give us a sense of, you know, now firstly, what is the key driver to the more recent, you know, larger lift in pricing?

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

In other words, is it more supply driven or demand driven, or are there other factors you would point to? And then secondly, what are your expectations for where sulfur might be by the end of the year? In other words, do your folks see a plateauing or, you know, a moderation in the pace of increases here or just anyway. But anyway, your company's view on the market dynamics for sulfur right now would be very helpful.

[Erin Kane, President and CEO at AdvanSix]

Yeah, certainly, you know, Dave, we're sitting at nearly 20-year highs for sulfur prices right now, too. So to your point, you know, perhaps they're predictable until they're not predictable, or not interesting until they become interesting. And, you know, a similar type surge has happened twice before, 2008, 2022. You know, and in both times, prices dropped precipitously, you know, in the following sort of six months. You know, we will note that the 1Q settlement was delayed, you know, I think as negotiations were extended, you know, in a response to sort of the, you know, perhaps bid asks on a global pricing, you know, basis. Relative to supply-demand, I think they both contribute to the current level of pricing.

[Erin Kane, President and CEO at AdvanSix]

You know, the industry has seen stronger demand, you know, in ag and global mining, right? But we've also seen supply constraints in the U.S. Gulf, you know, and lower output in other regions, you know, that is, you know, certainly contributing to the global prices. So, you know, that international market, where we watch the spot, you know, prices that sustained $500+ sulfur since, you know, 4Q of 2025. You know, I would note at these levels, certainly, we don't participate in this space, but, you know, noticing that there is mentioning now of phosphate demand destruction in the industry, right?

[Erin Kane, President and CEO at AdvanSix]

Which would also, again, in just the supply-demand consideration, you know, contribute to the expectation that we would see sulfur believed to come off across 2026, right? But as you know, it's hard to predict the exact timing there.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Maybe just to follow up briefly, but leaving you know, the pricing dynamic aside, are you confident that you know, you will have available supply? In other words, you know, your overall operations do rely, you know, to a certain large extent, on a continuous supply of sulfur. You know, again, leaving aside the cost, do you have any concerns about the availability of product, you know, in the amounts and on a timely basis that you require?

[Erin Kane, President and CEO at AdvanSix]

No, we contract with a number of suppliers, you know, to make sure that we have, you know, ample access. And so at this point, we do not have any concern in that regard.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Okay, great. I wanted to swing over to the Section 45Q carbon credits, please. So, two questions. I'll ask them both here, but firstly, could you talk about the size and the timing of the Section 45Q credits that you expect, you know, to be recognized or claimed in 2026? And then secondly, about a week ago, I guess the federal government did issue a ruling and a little too complicated for me to repeat. But basically, their new policy is that CO2 is no longer considered a pollutant.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

You know, in light of that, I'm kind of wondering whether you see any impact from that ruling on your ability to claim and, and ultimately receive, you know, Section 45Q credits, you know, in the amount, I guess, $100 million-$120 million through 2029 or so. You know, is, is that still your view? Is there any impact on, you know, the magnitude or the timing, of your plans to, you know, participate in the carbon credits available to you?

[Chris Gramm, Interim CFO at AdvanSix]

Yeah. Thanks for the question, Dave. I would say, yeah, obviously we keep a important eye on what's happening in the 45Q credits arena, because they are collectively worth $100 million plus to us over the next several years. So let me take your maybe two questions sequentially here. On the endangerment finding, does that have an impact on the 45Q? I think the simple answer there is no. What is probably helpful is to think about it in two frameworks. One is the EPA framework, and the other is on the tax law framework. So, the endangerment finding from an EPA perspective defines what types of air emissions are subject to the EPA's oversight.

[Chris Gramm, Interim CFO at AdvanSix]

The endangerment finding here would, you know, have an impact on the EPA around air permits and air emissions itself, whereas the 45Q is based in tax law. So in fact, you know, these things are generally separate. In fact, 45Q predates the endangerment finding, and 45Q has had a strong bipartisan support since its creation. In fact, recently in the One Big Beautiful Bill Act, there was strong support for the 45Q, particularly around utilization, and we saw that in which the credit rate was actually increased and is now on par with permanent sequestration.

[Chris Gramm, Interim CFO at AdvanSix]

So the answer there is that we still see the 45Q carbon credits being available to us moving forward, and we don't see a lot of risk with that. In terms of what we think we can expect, just as a reminder, we have to go through a process where we get approval on the life cycle assessments from the Department of Energy, and then once that's approved, we can go ahead and claim the credits. As a reminder, we've already been approved and have claimed the credits for years 18 through 20. For 2021 life cycle assessment, we filed that with the Department of Energy in August 25th, and we've been working with them to answer their questions and sort of help them through the application.

[Chris Gramm, Interim CFO at AdvanSix]

Upon approval of that credit, those approvals are typically good for a three-year cycle, and we would expect that each of those three years is worth about $6 million or so. As we sort of continue to work through this process and catch up to sort of the real time, we would expect that we'd be able to book those three years. So, an $18 million impact for 2026, once again, subject to the Department of Energy's approval of our life cycle. But we're confident in our position, and we're working with them on the claim and the approval.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

That's great, and I'm gonna be stealing your phrase about endangerment ruling, so I needed that. Thank you. Just one quick follow-up, but regarding the carbon credits that you claimed in 2025, first half of the year, have those been received by your company to this point? Are they in the 4Q results or anything? Or your December 31st balance sheets? Sorry.

[Chris Gramm, Interim CFO at AdvanSix]

Yeah, no, that's a good question. So, they're recorded in the P&L across 2024 and 2025. We are still in order to receive the refund, we have to work through the audits, and the audits for those particular years have started. It's obviously subject a bit to the IRS's resource and workload, but we're working through it with them. Once we get through the audits, obviously there's a bit of an approval process that has to happen. So, we have available resources to support the audit and answer all the questions, but it is, it's a bit of a process that's a little bit out of our control. But I think we have the resources committed to make this process move as expeditiously as possible.

[Chris Gramm, Interim CFO at AdvanSix]

So we haven't received them yet, but I do believe we would expect them this year.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Okay. So another factor in figuring out your boosting, maybe your free cash flow outlook for 2026. Okay.

[Chris Gramm, Interim CFO at AdvanSix]

Yes.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Maybe one last question. I did take note in the prepared remarks about, you know, record ammonia and sulfuric acid production in 2025. And you know, it's kind of scratching my head, but given, you know, the age, I guess, and the seasoning of those facilities, you know, it is kind of notable that you're achieving record production at this point. Should we think about, you know, the nameplate capacity for ammonia and sulfuric acid? Should we think about that being kind of permanently increased, either due to debottlenecking or process improvements or things like that? Or would you say the record production rates over the past year was more, I don't know, just due to shorter-term operating performance variables that, you know, that might be better next year, might be a little worse.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

You know, does the record production rate at some of your basic facilities, does that point to kind of a permanent increase in production potential going forward?

[Erin Kane, President and CEO at AdvanSix]

I appreciate the question, the call-out. Obviously, these are two critical, you know, assets that are, you know, key to our platform integration. You know, the rates and the performance in these assets have continued to, you know, improve over time. We've had a keen focus, and I think this is a demonstrative sort of proof point to how we have, you know, put forth our repair, maintenance, capital investments, and our preventative maintenance programs overall. You know, that's contributing to, you know, uptime and output. We certainly have also had, you know, plan to continue an ongoing effort to identify what I would call more incremental, you know, debottlenecking areas that are definitely contributing as well to these two key assets in our footprint.

[Erin Kane, President and CEO at AdvanSix]

You know, I would say whether, you know, our currently disclosed capacities are still, you know, great to use, you know, as a reference point. You know, we'll continue to assess if we need to update those. But I would also say, you know, part of our opportunity sets and differentiation is we have the ability to, you know, monetize additional profitable volumes off of these assets that don't move downstream into the caprolactam process. You know, and that continues to be a key focus, you know, for us as well. So all of that contributed to, you know, certainly in this environment, you know, our core strategic, you know, effort is to, you know, place molecules into the most profitable areas of opportunity.

[Erin Kane, President and CEO at AdvanSix]

And, you know, the plants did, you know, a great job, those teams, to, you know, to reach these records. And, you know, importantly, Sab did it in a turnaround year, so, you know, great kudos to them.

[David Silver, Managing Director of Equity Research at Freedom Capital Markets]

Okay, great. I'll stop there. Thank you very much for all the detail, all the color.

[Erin Kane, President and CEO at AdvanSix]

Great. Thanks, David.

[Operator]

Our next question comes from Pete Osterland with Truist Securities. Please go ahead.

[Pete Osterland, Senior Equity Research Analyst at Truist Securities]

Good morning. Thanks for taking the questions.

[Erin Kane, President and CEO at AdvanSix]

Good morning, Pete.

[Pete Osterland, Senior Equity Research Analyst at Truist Securities]

Good morning. I just wanted to start by following up on the conversation around the input cost pressure you're seeing right now, particularly for natural gas and sulfur. I guess, just based on the assumptions you're baking in right now for the first quarter, about how much of an earnings headwind do you expect that pricing versus raw materials will represent in the first quarter versus fourth quarter?

[Chris Gramm, Interim CFO at AdvanSix]

Yeah. So, you know, I think we are seeing, you know, pretty significant increases with sulfur almost at $500 a ton, and natural gas also going up kind of the $300 per decatherm range. We are implementing, you know, a number of price increases across really the entire portfolio. What we are sensitive to is in, you know, I think the ammonium sulfate space. There's a bit of probably a gap in terms of the net raw material price impact, probably in the 5- to 6-7 range. And then similarly in nylon, I think the pricing there is probably stronger correlated with benzene.

[Chris Gramm, Interim CFO at AdvanSix]

So we are moving prices up there, as well, but we are seeing a bit of margin compression versus natural gas. You know, probably overall, we're probably seeing sequentially some margin challenges probably in the, you know, the $10 to sort of $15 million range overall.

[Pete Osterland, Senior Equity Research Analyst at Truist Securities]

Okay, great. Thanks. And then you touched on this, but, you know, I guess just given the elevated input cost pressure, is there potential for that to support a higher degree of pricing power than what has historically been typical for ammonium sulfate as we look, you know, kind of beyond first quarter later in the year? Or I guess, you know, if you're competing with alternatives that aren't under as much pressure from those specific materials, does that limit the pricing power at all?

[Erin Kane, President and CEO at AdvanSix]

Yeah. So if we go back to sort of the fundamentals on, you know, ammonium sulfate, certainly, you know, we have the nitrogen, you know, baseline, right? So, to that extent, right, the entire nitrogen market is experiencing the increase in, in natural gas prices. And so, you know, that, that nutrient value, you know, as you probably have seen in, in other spaces, urea, you know, has continued to move up, you know, as well, particularly as we're, you know, head into the season. So that sets the base. And then obviously, we, we have to price for the premium of sulfur. And, you know, certainly, you know, we are seeing industry prices move up mostly in line with sulfur.

[Erin Kane, President and CEO at AdvanSix]

You know, if you think about sort of our posting and latest pricing, you know, moved up, you know, $50 several weeks ago, another $10 more recently. So again, trying to work in lockstep, you know, where we can, you know, accordingly. You know, again, the largest sort of fertilizer that takes sulfur is phosphates, right? And certainly, you know, that, as I mentioned before, has some consideration relative to their outlook. But, you know, we're trying to take all things into consideration, right? Lots comes into play as to sort of what the pricing power is, future crop prices, farmer profitability, you know, acres planted, you know, ultimately, you know, how the weather's gonna allow the planting season to take off.

[Erin Kane, President and CEO at AdvanSix]

But we're doing everything that we do in our playbook relative to positioning, you know, material into the chain, and getting ready for the season.

[Pete Osterland, Senior Equity Research Analyst at Truist Securities]

Great. That's very helpful. Thank you. Just lastly, I wanted to ask about your guidance for your planned turnaround activity this year. Just historically, in years where you're doing maintenance on the ammonia unit, the expense has been, you know, meaningfully higher than what you're guiding to for 2026. So just wondering, you know, what maintenance activities are you forgoing this year, and when do you expect or I guess, do you expect you will have to catch up on this in future years?

[Erin Kane, President and CEO at AdvanSix]

Yeah. No, no, it's recognize that it probably looks different than certainly history. As we mentioned, we, we have our natural gas pipeline that comes into the plant, requiring some maintenance and inspections by our vendor. So we necessarily had to align, you know, ideally, we would align to, you know, the timing of which that takes, right? So it allowed us to come back through and risk prioritize, again, focusing on, you know, key compliance considerations, you know, and the necessary preventative maintenance. And so that's kind of the real drivers here. You know, overall, you know, we are taking a look in general at our global turnaround strategies, and you know, what that really, you know, entails.

[Erin Kane, President and CEO at AdvanSix]

Obviously, we've talked a lot about, you know, the importance of the ammonia plant and the sulfuric acid plant, you know, key to our success, but I think there are potentially some opportunities to look at those, you know, in light as we go forward. So, we'll have to come back and kind of, you know, share as we go forward. But, you know, we're really not forgoing anything that we believe is critical at this time, right, to sustain our operations.

[Pete Osterland, Senior Equity Research Analyst at Truist Securities]

Great. I will leave it there. Thanks for the color this morning.

[Operator]

This concludes our question-and-answer session. I would like to turn the call back over to Erin Kane for any closing remarks.

[Erin Kane, President and CEO at AdvanSix]

Thank you all again for your time and interest this morning. We are confident in our demonstrated ability to perform through a multitude of environments and are positioning the enterprise to win long term. This is supported by our integrated business model, durable competitive advantage, healthy balance sheet, and continued risk-adjusted investment decisions to drive through cycle performance. With that, we look forward to speaking with you again next quarter. Stay safe and be well.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Adam Kressel, VP of Investor Relations and Treasurer
• Chris Gramm, Interim CFO
• Erin Kane, President and CEO

Analysts

• David Silver, Managing Director of Equity Research at Freedom Capital Markets
• Pete Osterland, Senior Equity Research Analyst at Truist Securities