ADVANSIX INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

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(in thousands of dollars, except per share data or unless otherwise indicated)

The following section, referred to as the "MD&A" presents management's
discussion and analysis of the Company's financial condition and results of
operations and should be read in conjunction with the Consolidated Financial
Statements and the notes thereto contained in this Form 10-K. This section of
this Form 10-K generally discusses our financial condition and results of
operations as of and for the years ended December 31, 2021 and 2020 and
year-to-year comparisons between 2021 and 2020. Discussions of our financial
condition and results of operations as of and for the year ended December 31,
2019 and year-to-year comparisons between 2020 and 2019 that are not included in
this Form 10-K can be found under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2020, filed with the SEC on February 19, 2021.

Company Overview

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We produce and sell caprolactam as a commodity product and produce and sell our
Nylon 6 resin as both a commoditized and differentiated resin product. Our
results of operations are primarily driven by production volume and the spread
between the sales prices of our products and the costs of the underlying raw
materials built into market-based and value-based pricing models. The global
prices for nylon resin typically track a spread over the price of caprolactam,
which in turn tracks as a spread over benzene because the key feedstock
materials for caprolactam, phenol or cyclohexane, are derived from benzene. This
price spread has historically experienced cyclicality as a result of global
changes in supply and demand. Generally, Nylon 6 resin prices track the
cyclicality of caprolactam prices, although prices set above the spread are
achievable when nylon resin manufacturers, like AdvanSix, formulate and produce
differentiated nylon resin products. Our differentiated Nylon 6 products are
typically valued at a higher level than commodity resin products.

We believe that Nylon 6 end-market growth will continue to generally track
global GDP over the long-term. Applications such as engineered plastics and
packaging have potential to grow at faster rates given certain macrotrends.
Additionally, we continue to execute against our strategic focus on developing
and commercializing select higher-value, differentiated Nylon 6 products, such
as our wire and cable, Post-Industrial Recycled resins and films and co-polymer
offerings, in current and new customer applications.

We also manufacture, market and sell a number of chemical intermediate products
that are derived from the chemical processes within our integrated supply chain.
Most significant is acetone, which is used by our customers in the production of
adhesives, paints, coatings and solvents. Prices for acetone are influenced by
its own supply and demand dynamics but can also be influenced by the underlying
move in propylene input costs. We continue to invest in and grow our
differentiated product offerings in high-purity applications and high-value
intermediates including our oximes-based EZ-Blox® anti-skinning agent used in
paints and Nadone® cyclohexanone, which is a solvent used in various high-value
applications.

Our ammonium sulfate is used by customers as a fertilizer containing nitrogen
and sulfur, two key crop nutrients. Global prices for ammonium sulfate
fertilizer are influenced by several factors including the price of urea, which
is the most widely used source of nitrogen-based fertilizer in the world. Other
global factors driving ammonium sulfate fertilizer demand are general
agriculture trends, including the price of crops. Our ammonium sulfate product
is positioned with the added value proposition of sulfur nutrition to increase
yields of key crops. In addition, due to its nutrient density, the typical
ammonium sulfate product delivers pound for pound the most readily available
sulfur and nitrogen to crops than other fertilizers.

We seek to run our production facilities on a nearly continuous basis for
maximum efficiency as several of our intermediate products are key feedstock
materials for other products in our integrated manufacturing chain. While our
integration, scale and range of product offerings make us one of the most
efficient manufacturers in our industry, these attributes also expose us to
increased risk associated with material disruptions at any one of our production
facilities or logistics operations which could impact the overall manufacturing
supply chain. Further, although we believe that our sources of supply for our
raw materials, including cumene, natural gas and sulfur, are generally robust,
it is difficult to predict the impact that shortages, increased costs and
related supply chain logistics considerations may have in the future. In order
to mitigate the risk of unplanned interruptions, we schedule several planned
plant turnarounds each year to conduct routine and major maintenance across our
facilities. We also utilize maintenance excellence and mechanical integrity
programs, targeted buffer inventory of intermediate chemicals necessary for our
manufacturing process, and co-producer swap arrangements, which are intended to
mitigate the extent of any production losses as a result of planned and
unplanned downtime; however, the mitigation of all or part of any such
production impact cannot be assured. For a description of our principal risks,
see "Risk Factors" in Item 1A.

RECENT DEVELOPMENTS

COVID-19[female[feminine

In March 2020, the World Health Organization categorized the novel coronavirus
(COVID-19) as a global pandemic with numerous countries around the world
declaring national emergencies, including the United States. Since early 2020,
COVID-19 has continued to spread, with confirmed cases worldwide, and with
certain jurisdictions experiencing resurgences, including as a result of variant
strains. The spread resulted in authorities implementing numerous measures to
contain the virus, such as travel bans and restrictions, quarantines,
shelter-in-place orders and business shutdowns. The pandemic and these
containment measures have had a substantial impact on businesses around the
world and on global, regional and national economies, including disruptions to
supply chains, volatility in demand, production and sales across most
industries, volatility within global financial markets, inflationary pressures
in commodity pricing and an increasingly dynamic workforce environment. The
continuously evolving nature of this pandemic and the pace and shape of a full
recovery may continue to have an impact on the United States and global
economies.

As previously disclosed, the Company experienced a material impact on its second
quarter 2020 results of operations associated with lower demand, particularly in
nylon, caprolactam and phenol, and a decrease in overall sales volume related to
global markets and the economic impact of COVID-19. Starting in the second half
of 2020, and through the end of 2021, demand improved to pre-COVID-19
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levels with states, regions and countries in various phases of re-opening and
continued administration of vaccines for COVID-19. The Company will continue to
monitor developments and execute our operational and safety mitigation plans as
previously disclosed.

As the situation surrounding COVID-19 remains fluid and unpredictable, the Company cannot reasonably estimate with certainty the future impact that COVID-19 may have on the Company’s results of operations, financial condition and liquidity. .

Dividends

As announced on February 18, 2022, the Board declared a quarterly cash dividend
of $0.125 per share on the Company's common stock, payable on March 15, 2022 to
stockholders of record as of the close of business on March 1, 2022.

As announced on September 28, 2021, the Board declared a quarterly cash dividend
of $0.125 per share on the Company's common stock, payable on November 23, 2021
to stockholders of record as of the close of business on November 9, 2021.

Acquisitions

On February 18, 2022, the Company announced the signing of a definitive
agreement to acquire U.S. Amines, Ltd., a leading North American producer of
alkyl and specialty amines serving high-value end markets such as agrochemicals
and pharmaceuticals, for an estimated net purchase price of approximately
$100 million. The transaction is expected to close in the first quarter of 2022,
subject to customary closing conditions.

In January 2021, the Company acquired certain assets associated with ammonium
sulfate packaging, warehousing and logistics services in Virginia from
Commonwealth Industrial Services, Inc. for approximately $9.5 million. This
acquisition enables the Company to expand its product offerings by directly
supplying packaged ammonium sulfate to customers, primarily in North and South
America. It diversifies and optimizes our product offerings to include
spray-grade adjuvant to support crop protection and products for industrial use.

credit agreement

On October 27, 2021, the Company completed a refinancing of its existing senior
secured revolving credit facility under that certain Credit Agreement, dated as
of September 30, 2016, among the Company, the guarantors, the lenders party
thereto and Bank of America, N.A., as administrative agent (as amended by
Amendment No. 1 on February 21, 2018 and Amendment No. 2 on February 19, 2020),
by entering into a new Credit Agreement (the "Credit Agreement"), among the
Company, the lenders party thereto, the swing line lenders party thereto, the
letter of credit issuers party thereto and Truist Bank, as administrative agent,
which provides for a new senior secured revolving credit facility in an
aggregate principal amount of $500 million (the "Revolving Credit Facility").
For a discussion of the Credit Agreement and Revolving Credit Facility, please
refer to "Note 9. Long-term Debt and Credit Agreement."

Anti-dumping duty petitions

Acetone

On February 19, 2019, the Company announced that it filed anti-dumping duty
petitions covering imports of acetone with the International Trade Commission
("ITC") and U.S. Department of Commerce ("Commerce"). The petitions allege that
dumped acetone imports into the United States from Belgium, Saudi Arabia,
Singapore, South Africa, South Korea, and Spain have caused material injury to
the domestic industry. On April 4, 2019, the ITC voted to continue the
anti-dumping duty investigations concerning imports of acetone from all such
nations other than Saudi Arabia. During the third quarter of 2019, Commerce
announced its preliminary affirmative dumping determination regarding imports
from Singapore, Spain, Belgium, South Africa and South Korea. On October 21,
2019, Commerce published its final affirmative determination of dumping
regarding imports from Singapore and Spain, and on December 10, 2019, the ITC
issued its final determination of material injury to the industry by reason of
imports from Singapore and Spain. Effective December 20, 2019, Commerce imposed
anti-dumping orders and applicable duties on imports of acetone from Singapore
and Spain for a five-year period. On February 13, 2020, Commerce published its
final affirmative determination of dumping regarding imports from Belgium, South
Africa and South Korea and on March 17, 2020, the ITC issued its final
determination of material injury to the industry by reason of imports from
Belgium, South Africa and South Korea. Effective March 31, 2020, Commerce
imposed anti-dumping orders and applicable duties on imports of acetone from
Belgium, South Africa and South Korea for a five-year period. The anti-dumping
orders are subject to annual administrative review, if requested, which may
change the level of duties applicable to imports in future periods. On May 26,
2020, LG Chem, Ltd., and LG Chem America, Inc. filed a motion with the U.S.
Court of International Trade contesting the final determination made by Commerce
concerning imports from South Korea, and on June 19, 2020, the Company filed a
motion to intervene. The anti-dumping orders applicable to imports from all
other sources were not appealed. On August 13, 2021, the U.S. Court of
International Trade affirmed its final determination and LG Chem did not file
any further appeal.
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Ammonium sulfate

In January 2017, Commerce published its final affirmative determination in the
anti-dumping duty investigation of imports of ammonium sulfate from the People's
Republic of China ("PRC") and in March 2017, the ITC issued its final
determination of material injury by reason of imports from the PRC. Effective
March 9, 2017, Commerce imposed anti-dumping and countervailing duty orders and
applicable duties on imports of ammonium sulfate from the PRC for a five-year
period. The anti-dumping and countervailing duty orders are subject to annual
administrative review, if requested, which may change the level of duties
applicable to imports in future periods. In February 2022, Commerce and the ITC
initiated five-year reviews of the anti-dumping and countervailing duty orders
to determine whether to extend the orders for another five years. Determinations
are expected in the fourth quarter of 2022.

Closing of Philadelphia Energy Solutions

The Company has assessed the business impact of the fire that shut down
Philadelphia Energy Solutions' ("PES") refinery in Philadelphia, Pennsylvania.
PES was one of multiple suppliers to the Company of cumene, a feedstock material
used to produce phenol, acetone and other chemical intermediates. As of year-end
2021, the Company has incurred an approximately $35 million unfavorable impact
to pre-tax income since the refinery shut down and, during 2020, submitted a
business interruption insurance claim, while realigning its supply chain to
ensure the continuity of its cumene supply. While the Company has received $3.9
million of insurance proceeds through December 31, 2021, it continues to pursue
the claim, which is ongoing.

Consolidated Results of Operations for the Years Ended December 31, 2021, 2020
and 2019
(Dollars in thousands)

Sales
                                           2021              2020              2019
Sales                                 $ 1,684,625       $ 1,157,917       $ 1,297,393

Variation in % compared to the previous period 45.5% (10.8)%

(14.4)%

The variation in sales is attributable to the following elements:

          2021 versus 2020      2020 versus 2019
Volume               7.4  %                0.6  %
Price               38.1  %              (11.4) %
                    45.5  %              (10.8) %



2021 compared with 2020

Sales increased in 2021 compared to 2020 by $526.7 million (approximately 45%)
due primarily to (i) favorable market-based pricing (approximately 20%), (ii)
higher formula-based pass-through pricing (approximately 18%) as a result of net
cost increases in benzene and propylene and (iii) higher sales volume
(approximately 7%) driven primarily by improved end market demand and tight
industry supply conditions across all product lines.

Cost of Goods Sold
                                           2021              2020              2019
Cost of goods sold                    $ 1,410,503       $ 1,024,169       $ 1,161,921

Variation in % compared to the previous period 37.7% (11.9)%

    (13.3) %
Gross margin %                               16.3  %           11.6  %           10.4  %



2021 compared with 2020

Cost of goods sold increased in 2021 compared to 2020 by $386.3 million
(approximately 38%) mainly due to (i) the increase in raw material prices (approximately 31%), (ii) the increase in sales volume (approximately 4%), (iii) the increase plant and selling freight expenses to support increased sales volume (approximately 3%) and (iv) an unfavorable adjustment to non-cash LIFO inventory reserves (approximately 1%). The increase observed was partially offset by the collection of insurance proceeds related to the closure in 2019 of the cumene supplier Philadelphia Energy Solutions (approximately 1%).

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Gross margin percentage increased by approximately 5% in 2021 compared to 2020
due primarily to (i) the net impact of formula-based pass-through pricing and
increased market pricing (approximately 4%) and (ii) higher sales volume
(approximately 2%), partially offset by increased plant spend and sales freight
to support higher sales volume (approximately 2%).

Selling, general and administrative expenses

                                                 2021           2020        

2019

Selling, general and administrative expense   $ 82,985       $ 70,870       $ 75,375
% of sales                                         4.9  %         6.1  %         5.8  %



2021 compared with 2020
Selling, general and administrative expenses increased in 2021 compared to 2020
by $12.1 million, or approximately 17%, due primarily to increased incentive and
stock-based compensation costs and increased functional support costs, as
compared to cost control measures implemented in response to the COVID-19
pandemic in the prior year.

Interest expense, net

                          2021         2020         2019

Interest expense, net $5,023 $7,792 $5,454

2021 vs. 2020

Interest expense, net, decreased in 2021 compared to 2020 by $2.8 million, or
approximately 36%, due primarily to lower average borrowings, partially offset
by lower amounts of interest capitalized associated with capital projects.

Other non-operating expenses, net

                                    2021       2020       2019

Other non-operating expenses, net $998 $53 $1,295

2021 vs. 2020

The increase in Other non-operating expense, net in 2021 compared to 2020 was
due primarily to an increase in deferred compensation expense in the current
year.

income tax expense

                        2021           2020          2019

income tax expense $45,325 $8,956 $12,001
Effective tax rate 24.5% 16.3% 22.5%



Under a provision included in the Coronavirus Aid, Relief, and Economic Security
("CARES") Act, the Company filed a Federal net operating loss (NOL) carryback
claim in July 2020 which generated a refund of previously paid taxes in the
amount of $12.3 million. The refund was received in the first quarter of 2021.

The Company's effective income tax rate for 2021 was higher compared to the U.S.
Federal statutory rate of 21% due primarily to state taxes and executive
compensation deduction limitations partially offset by research tax credits and
the foreign-derived intangible income deduction.

The Company's effective income tax rate for 2020 was lower compared to the U.S.
Federal statutory rate of 21% due primarily to the impact of research tax
credits as well as an energy tax credit described in more detail in "Note 4.
Income Taxes". This was partially offset by state taxes, executive compensation
deduction limitations and a shortfall on the vesting of equity compensation.

The Company's effective income tax rate for 2019 was slightly higher compared to
the U.S. Federal statutory rate of 21% due primarily to state taxes and
executive compensation deduction limitations, partially offset by the vesting of
restricted stock units and research tax credits.

We are subject to income taxes in the United States and to a lesser extent
several foreign jurisdictions. Changes to income tax laws and regulations, or
the interpretation of such laws, in any of the jurisdictions in which we operate
could impact our effective tax rate and cash flows from operating activities.
The current U.S. administration has released various draft tax reform proposals
and, as such, we continue to monitor these legislative proposals to evaluate the
impact on our business.

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As of December 31, 2021, 2020 and 2019, there were no unrecognized tax benefits
recorded by the Company. Although there are no unrecognized income tax benefits,
when applicable, the Company's policy is to report interest expense and
penalties related to unrecognized income tax benefits in the income tax
provision.

For additional information on income taxes and the effective tax rate, see “Note 4. Income Taxes” in the Notes to the Audited Consolidated Financial Statements included in Item 8 of this Form 10-K. .

Net Income
                2021           2020          2019
Net income   $ 139,791      $ 46,077      $ 41,347



2021 compared with 2020

Due to the factors described above, net profit was $139.8 million in 2021 compared to $46.1 million in 2020.

Non-GAAP Measures

The following tables set forth the non-GAAP financial measures of EBITDA and
EBITDA margin. EBITDA is defined as Net income before Interest, Income taxes and
Depreciation and amortization. EBITDA margin is equal to EBITDA divided by
Sales. The following tables also present each of these measures as further
adjusted. The Company believes these non-GAAP financial measures provide
meaningful supplemental information as they are used by the Company's management
to evaluate the Company's operating performance, enhance a reader's
understanding of the financial performance of the Company, and facilitate a
better comparison among fiscal periods and performance relative to its
competitors, as the non-GAAP measures exclude items that are not considered core
to the Company's operations.

These non-GAAP results are presented for supplemental informational purposes
only and should not be considered a substitute for the financial information
presented in accordance with U.S. GAAP. Non-GAAP financial measures should be
read only in conjunction with the comparable U.S. GAAP financial measures. The
Company's non-GAAP measures may not be comparable to other companies' non-GAAP
measures.

The following is a reconciliation between the non-GAAP financial measures of
EBITDA and EBITDA Margin to their most directly comparable U.S. GAAP financial
measure:

(in thousands of dollars, except per share amounts or as otherwise indicated)

Completed exercises the 31st of December,

                                                                       2021                 2020                 2019
Net income                                                        $   139,791          $    46,077          $    41,347
Interest expense, net                                                   5,023                7,792                5,454
Income tax expense (benefit)                                           45,325                8,956               12,001
Depreciation and amortization                                          65,340               60,832               56,826
EBITDA (non-GAAP)                                                     255,479              123,657              115,628
One-time Pottsville restructuring charges (1)                               -                    -              (11,020)
EBITDA excluding one-time Pottsville restructuring charges
(non-GAAP)                                                        $   255,479          $   123,657          $   126,648

Sales                                                             $ 1,684,625          $ 1,157,917          $ 1,297,393

EBITDA margin % (non-GAAP)                                               15.2  %              10.7  %               8.9  %

EBITDA margin % excluding one-time Pottsville restructuring
charges (non-GAAP)                                                       15.2  %              10.7  %               9.8  %


(1) 2019 single Pottsville restructuring charges reflect the closure of Pottsville, Pennsylvania film factory.

Cash and capital resources

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Liquidity

We believe that cash balances and operating cash flows, together with available
capacity under our credit agreement, will provide adequate funds to support our
current short-term operating objectives as well as our longer-term strategic
plans, subject to the risks and uncertainties outlined below and in the risk
factors as previously disclosed in in Item 1A, Risk Factors. Our principal
source of liquidity is our cash flow generated from operating activities, which
is expected to provide us with the ability to meet the majority of our
short-term funding requirements for the next twelve months and beyond. Our cash
flows are affected by capital requirements and production volume, which may be
materially impacted by unanticipated events such as unplanned downtime, material
disruptions at our production facilities as well as the prices of our raw
materials, general economic and industry trends and customer demand. The Company
applies a proactive and disciplined approach to working capital management to
optimize cash flow and to enable capital allocation options in support of the
Company's strategy. We utilize supply chain financing and trade receivables
discount arrangements with third-party financial institutions which enhance
liquidity and enable us to efficiently manage our working capital needs.
Although we continue to optimize supply chain financing and trade receivable
programs in the ordinary course, our utilization of these arrangements, both
prior to and during the COVID-19 pandemic, has not had a material impact on our
liquidity. In addition, we monitor the third-party depository institutions that
hold our cash and cash equivalents. Our emphasis is primarily on the safety of
principal and secondarily on maximizing yield on those funds. We diversify our
cash and cash equivalents among counterparties to minimize exposure to any one
of these entities.

On a recurring basis, our primary future cash needs will be centered on
operating activities, working capital, and capital expenditures reflecting
disciplined capital deployment and following the completion of several
high-return growth and cost savings investments. Capital expenditures are
deployed for various ongoing investments and initiatives to improve reliability,
yield and quality, expand production capacity and comply with HSE regulations.
While the COVID-19 pandemic has created and continues to create volatility in
funding markets, we expect that our future cash from operations, together with
cash on hand and our access to credit and capital markets, will provide adequate
resources to fund our expected operating and financing needs and obligations.
Our ability to fund our capital needs, however, will depend on our ongoing
ability to generate cash from operations and access to credit and capital
markets, both of which are subject to the risk factors previously disclosed in
Item 1A, as well as general economic, financial, competitive, regulatory and
other factors that are beyond our control.

At December 31, 2021, the Company had approximately $15 million of cash on hand
with approximately $364 million of additional capacity available under the
revolving credit facility. The Company's Consolidated Leverage Ratio financial
covenant of its credit facility allows it to net up to $75 million of cash with
debt. Capital expenditures were approximately $57 million in 2021 compared to
$83 million in 2020, reflecting efficiencies in project execution in 2021 and
the completion of several high-return growth and cost savings investments in
2020.

As noted in Note 4. "Income Taxes," the Company filed a Federal net operating
loss (NOL) carryback claim under the CARES Act in July 2020 which generated a
refund of previously paid taxes in the amount of $12.3 million received in the
first quarter of 2021. Additionally, the Company deferred approximately $6.5
million of social security taxes in 2020 under the CARES Act of which 50% was
paid on January 3, 2022 and the remainder is due by January 3, 2023.

We assumed from Honeywell all 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 have a material adverse effect
on our consolidated financial position and results of operations.

We expect that our primary cash requirements for 2022 will be to fund costs
associated with ongoing operations, capital expenditures and amounts related to
contractual obligations. See below under "Capital Expenditures" for more
information regarding our capital expenditures in 2021, 2020 and 2019 and
anticipated capital expenditures for 2022. Amounts related to contractual
obligations are related to principal repayments and interest payments on leases,
long-term debt, purchase obligations, estimated environmental compliance costs,
and postretirement benefit obligations. We anticipate that our estimated
environmental compliance costs will be approximately $1.7 million in aggregate
for 2022 through 2026. This amount is related to what has been accrued as
probable and reasonably estimable as of December 31, 2021. For information
regarding material cash requirements from known contractual obligations with
respect to lease obligations, long-term debt principal repayments and purchase
obligations please refer to "Note 8. Leases", "Note 9. Long-term Debt and Credit
Agreement" and "Note 13. Commitments and Contingencies", respectively, to the
Consolidated Financial Statements in Item 8 of this Form 10-K. Interest payments
are estimated based on the interest rate applicable as of December 31, 2021 and
approximate $4.1 million per year, subject to changes in variable interest rates
and additional obligations.

The Company made contributions to the defined benefit pension plan of $17.5
million during the year ended December 31, 2021 sufficient to satisfy pension
funding requirements for 2021 under the AdvanSix Retirement Earnings Plan. Cash
contributions of $1.2
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million, $3.6 million and $12.7 million were made in the first three quarters of
2021, respectively. No cash contributions were made in the fourth quarter of
2021. The Company plans to make $10.0 million to $15.0 million of cash
contributions in 2022 and additional contributions in future years sufficient to
satisfy pension funding requirements in those periods.

The Company has made cash contributions to the defined contribution plan of $5.9 million and $6.1 million for the years ended December 31, 2021 and 2020, respectively.

On May 4, 2018, the Company announced that the Board authorized a share
repurchase program of up to $75 million of the Company's common stock. On
February 22, 2019, the Company announced that the Board authorized a share
repurchase program of up to an additional $75 million of the Company's common
stock, which was in addition to the remaining capacity available under the May
2018 share repurchase program. 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 share repurchase program has no expiration
date and may be modified, suspended or discontinued at any time. 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 December 31, 2021, the Company had repurchased 3,615,476 shares of common
stock, including 525,714 shares withheld to cover tax withholding obligations in
connection with the vesting of equity awards, for an aggregate of $102.4 million
at a weighted average market price of $28.31 per share. As of December 31, 2021,
$59.6 million remained available for repurchase under the currently authorized
repurchase program. During 2021 and the period from January 1, 2022 through
February 4, 2022, no additional shares were repurchased under the currently
authorized repurchase program.

At December 31, 2021, 2020 and 2019, the Company did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K or
financing activities with special-purpose entities. The Company has not
guaranteed any debt or commitments of other entities or entered into any options
on non-financial assets.

Dividends

As announced on February 18, 2022, the Board declared a quarterly cash dividend
of $0.125 per share on the Company's common stock, payable on March 15, 2022 to
stockholders of record as of the close of business on March 1, 2022.

As announced on September 28, 2021, the Board declared a quarterly cash dividend
of $0.125 per share on the Company's common stock, payable on November 23, 2021
to stockholders of record as of the close of business on November 9, 2021.
Dividends paid to common stockholders were approximately $3.5 million in 2021
and $0 in 2020.

We generally expect to declare and pay dividends on a quarterly basis; however,
the timing, declaration, amount and payment of future dividends to stockholders,
if any, will depend on our financial condition, earnings, capital requirements
and debt service obligations and fall within the discretion of our Board.
Holders of shares of our common stock will be entitled to receive dividends
when, and if, declared by our Board at its discretion out of funds legally
available for that purpose, subject to the terms of our indebtedness, the
preferential rights of any preferred stock that may be outstanding, legal
requirements, regulatory constraints, industry practice and other factors that
our Board deems relevant. Our credit agreement contains customary covenants
limiting the ability of the Company and its subsidiaries to, among other things,
pay cash dividends. There can be no assurance that payment of a dividend will
occur in the future.

Credit Agreement

On September 30, 2016, the Company as the borrower, entered into a Credit
Agreement with Bank of America, as administrative agent (the "Original Credit
Agreement"), which was amended on February 21, 2018 pursuant to Amendment No. 1
to the Original Credit Agreement (the "First Amended and Restated Credit
Agreement"), and further amended on February 19, 2020 pursuant to, Amendment No.
2 to the First Amended and Restated Credit Agreement (after giving effect to the
Second Amendment, the "Second Amended and Restated Credit Agreement"). The
Second Amended and Restated Credit Agreement had a five-year term with a
scheduled maturity date of February 21, 2023.

The Second Amended and Restated Credit Agreement required the Company to
maintain a Consolidated Leverage Ratio (as defined in the Second Amended and
Restated Credit Agreement) of (i) 3.50 to 1.00 or less for the fiscal quarter
ending March 31, 2020, (ii) 4.50 to 1.00 or less for the fiscal quarter ending
June 30, 2020, (iii) 4.25 to 1.00 or less for the fiscal quarter ending
September 30, 2020, (iv) 3.50 to 1.00 or less for the fiscal quarter ending
December 31, 2020, (v) 3.25 to 1.00 or less for the fiscal quarter ending March
31, 2021 through and including the fiscal quarter ending December 31, 2021, and
(vi) 3.00 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).
The Consolidated Interest Coverage Ratio financial covenant required the Company
to maintain a Consolidated Interest Coverage Ratio (as defined in the Second
Amended and Restated Credit Agreement) of not less than 3.00 to
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1.00. If the Company did not comply with the covenants in the Second Amended and
Restated Credit Agreement, the lenders could, subject to customary cure rights,
require the immediate payment of all amounts outstanding under the Revolving
Credit Facility.

Borrowings under the Second Amended and Restated Credit Agreement bore interest
at a rate equal to either the sum of a base rate plus a margin ranging from
0.50% to 2.00% or the sum of a Eurodollar rate plus a margin ranging from 1.50%
to 3.00%, with either such margin varying according to the Company's
Consolidated Leverage Ratio (as defined in the Second Amended and Restated
Credit Agreement). The Company was also required to pay a commitment fee in
respect of unused commitments under the credit facility, if any, at a rate
ranging from 0.20% to 0.50% per annum depending on the Company's Consolidated
Leverage Ratio.

In addition, the Second Amendment also amended certain administrative provisions
associated with the LIBOR Successor Rate (as defined in the Second Amended and
Restated Credit Agreement).

Obligations under the Second Amended and Restated Credit Agreement were secured by a pledge of assets and liens on substantially all of the assets of
AdvanSix.

The Second Amended and Restated Credit Agreement contained 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, as well as
financial covenants that require the Company to maintain interest coverage and
leverage ratios at levels specified in the Second Amended and Restated Credit
Agreement. These covenants placed limits on how we conduct our business, and in
the event of certain defaults, our repayment obligations could be accelerated.

On October 27, 2021, the Company completed a refinancing of the Second Amended
and Restated Credit Agreement by entering into a new Credit Agreement (the
"Credit Agreement"), among the Company, the lenders party thereto, the swing
line lenders party thereto, the letter of credit issuers party thereto and
Truist Bank, as administrative agent, which provides for a new senior secured
revolving credit facility in an aggregate principal amount of $500 million (the
"Revolving Credit Facility").

The Revolving Credit Facility has a scheduled maturity date of October 27, 2026.
The 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 establish a new
class of 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 First Lien Secured
Leverage Ratio (as defined in the Credit Agreement) would not be greater than
2.75 to 1.00, in each case, to the extent that any one or more lenders, whether
or not currently party to the Credit Agreement, commits to be a lender for such
amount or any portion thereof.

Borrowings under the Credit Agreement bear interest at a rate equal to either
the sum of a base rate plus a margin ranging from 0.25% to 1.25% or the sum of a
Eurodollar rate plus a margin ranging from 1.25% to 2.25%, with either such
margin varying according to the Company's Consolidated Leverage Ratio (as
defined in the 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 0.15% to 0.35% per annum depending on
the Company's Consolidated Leverage Ratio. As of October 27, 2021, the
applicable margin under the Credit Agreement was 0.375% for base rate loans and
1.375% for Eurodollar loans and the applicable commitment fee rate was 0.175%
per annum. The Revolving Credit Facility also contains certain administrative
provisions regarding alternative rates of interest for LIBOR, as applicable.

Substantially all of the tangible and intangible assets of the Company and its national subsidiaries are pledged to secure the obligations under the credit agreement.

As of October 27, 2021, the Company borrowed $150 million under the Revolving
Credit Facility. Borrowings under the Revolving Credit Facility will be subject
to customary borrowing conditions.

The 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 Credit Agreement also
contains financial covenants that require the Company to maintain a Consolidated
Interest Coverage Ratio (as defined in the Credit Agreement) of not less than
3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00
or less for the fiscal quarter ending December 31, 2021, through and including
the fiscal quarter ending September 30, 2023 and (ii) 3.75 to 1.00 or less for
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 Credit Agreement, the
lenders may, subject to customary cure rights, require the immediate payment of
all amounts outstanding under the Revolving Credit Facility. We were in
compliance with all of our covenants at December 31, 2021 and through the date
of the filing of this Annual Report on Form 10-K.

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As the situation surrounding COVID-19 remains fluid and unpredictable, the
Company cannot reasonably estimate with any degree of certainty the future
impact COVID-19 may have on the Company's results of operations, financial
position, and liquidity. For further information regarding risk and the impact
COVID-19 could have on our business, financial condition, results of operations
and liquidity, including our ability to comply with financial covenants in our
credit facility and our access to, and cost of, capital, see "Risk Factors" in
Item 1A of this Annual Report on Form 10-K.

From December 31, 2021, $364 million was available for use on the total of
$500 million under the revolving credit facility.

As of December 31, 2020, we had a balance of $275 million under our prior credit
facility. During the twelve months ended December 31, 2021, we repaid an
incremental net amount of $140 million to bring the balance under the Revolving
Credit Facility to $135 million as of December 31, 2021. We expect that Cash
provided by operating activities will fund future interest payments on the
Company's outstanding indebtedness.

The Company had approximately $1 million outstanding letters of credit under the revolving credit facility at December 31, 2021. No amounts were associated with bilateral letters of credit other than the revolving credit facility.

Summary of cash flows for the years ended December 31, 20212020 and 2019

Our cash flows from operating, investing and financing activities for the years
ended December 31, 2021, 2020 and 2019, as reflected in the audited Consolidated
Financial Statements included in this Form 10-K, are summarized as follows:
                                                  Years Ended December 31,
                                             2021           2020           

2019

(Dollars in thousands)
Cash provided by (used for):
Operating activities                      $ 218,849      $ 111,847      $ 120,385
Investing activities                        (67,562)       (84,103)      (153,125)
Financing activities                       (146,793)       (24,188)        29,982

Net change in cash and cash equivalents $4,494 $3,556 ($2,758)



2021 compared with 2020

Net cash provided by operating activities increased by $107.0 million for the
year ended December 31, 2021 versus the prior year due primarily to a $93.7
million increase in net income and a $21.6 million cash improvement from Taxes
receivable (including a $12.3 million cash tax refund received in the first
quarter of 2021). These net favorable impacts were partially offset by a $7.7
million unfavorable cash impact from Other assets and liabilities driven a
decrease in pension liability of $10.0 million (primarily reflecting the impact
of cash pension contributions) partially offset by a $2.7 million increase in
prepaid expenses. Cash from working capital (comprised of Accounts and other
receivables, Inventories, Accounts payable and Deferred income and customer
advances) was relatively neutral year-over-year, with a $20.8 million
unfavorable cash impact for the year ended December 31, 2021 compared to a $20.2
million unfavorable cash impact in the prior year period. Included within the
year-over-year neutrality of working capital was a $23.6 million unfavorable
impact due to the strategic absence of our typical ammonium sulfate pre-buy cash
advances during the fourth quarter of 2021.

Cash used for investing activities decreased by $16.5 million for the year ended
December 31, 2021 versus the prior year period due to a decrease in cash paid
for capital expenditures of approximately $26.1 million reflecting capital
project efficiencies and timing of project execution offset by cash paid for the
acquisition of Commonwealth Industrial Services, Inc. of approximately $9.5
million.

Cash used for financing activities increased by $122.6 million for the year
ended December 31, 2021 versus the prior year due to net payments on the credit
facility of $140.0 million for the year ended December 31, 2021 compared to net
payments of $22.0 million during the prior year. During the year ended December
31, 2021 the Company paid dividends of approximately $3.5 million and entered
into a new Revolving Credit Facility, as described above, with approximately
$2.4 million in fees compared to fee payments of $0.4 million during the prior
year, both of which are described above.

Capital expenditure

Our operations are capital intensive, requiring ongoing investments that have
consisted, and are expected to continue to consist, primarily of capital
expenditures required to maintain and improve equipment reliability, expand
production output, further improve mix, yield and cost position and comply with
environmental and safety regulations.

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The following table summarizes ongoing and expansion capital expenditures for
the periods indicated.
                                                    Years Ended December 31,
                                                2021          2020          2019

(in thousands of dollars) Purchases of property, plant and equipment $56,811 $82,918 $150,322

Capital expenditures decreased $26.1 million from 2020 to 2021 reflecting process and execution efficiencies, as well as the timing and scope of replacement maintenance and high yield growth and cost reduction projects.

For 2022, we expect our total capital expenditures to be approximately $95
million to $105 million. Capital expenditures are deployed for various ongoing
investments and initiatives to improve reliability, yield and quality, expand
production capacity and comply with HSE regulations.

Critical accounting policies and estimates (in thousands of dollars, unless otherwise indicated)

The Company's significant accounting policies are more fully described in "Note
2. Summary of Significant Accounting Policies" to the Consolidated Financial
Statements included in Item 8 of this Form 10-K. Management believes that the
application of these policies on a consistent basis enables the Company to
provide the users of the financial statements with useful and reliable
information about the Company's operating results and financial condition.

The preparation of our Consolidated Financial Statements in conformity with U.S.
GAAP is based on the selection and application of accounting policies that
require management to make significant estimates and assumptions about the
effects of matters that are inherently uncertain and that affect the reported
amounts, including, but not limited to, inventory valuations, impairment of
goodwill, stock-based compensation, long-term employee benefit obligations,
income taxes and environmental matters. Management's estimates are based on
historical experience, facts and circumstances available at the time and various
other assumptions that are believed to be reasonable. The Company reviews these
matters and reflects changes in estimates as appropriate. Management believes
that the following represents some of the more critical judgment areas in the
applications of the Company's accounting policies which could have a material
effect on the Company's financial position, results of operations or cash flows.

Inventories - Substantially all of the Company's inventories are valued at the
lower of cost or market using the last-in, first-out ("LIFO") method. The
Company includes spare and other parts in inventory which are used in support of
production or production facilities operations and are valued based on weighted
average cost.

Inventories valued at LIFO amount to $149.6 million and $180.1 million at
December 31, 2021 and 2020. If these LIFO inventories had been valued at current costs, their book value would have been approximately $6.0 million and
$35.4 million higher at December 31, 2021 and 2020.

Goodwill - The Company had goodwill of $17.6 million and $15.0 million as of
December 31, 2021 and 2020, respectively. Goodwill is subject to impairment
testing annually as of March 31, or whenever events or changes in circumstances
indicate that the carrying amount may not be fully recoverable. Management first
assesses qualitative factors as described in ASC 350 to determine whether it is
necessary to perform the quantitative goodwill impairment test. The Company
completed its annual goodwill impairment test as of March 31, 2021 and, based on
the results of the Company's assessment of qualitative factors, it was
determined that it was not necessary to perform the quantitative goodwill
impairment test.

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. Management 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. Transfer of
control to the customer occurs through various modes of shipment, including
trucks, railcars, and vessels, and follows a variety of commercially acceptable
shipping or destination point terms pursuant to the arrangement with the
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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 uses the practical expedient of Topic 606 and does not include an adjustment for the effects of a significant financing item given the expected duration of the period of one year or less.

Stock-Based Compensation Plans - The principal awards issued under our
stock-based compensation plans, which are described in "Note 16. Stock-Based
Compensation Plans" to the Consolidated Financial Statements included in Item 8
of this Form 10-K, are non-qualified stock options, performance stock units and
restricted stock units. The cost for such awards is measured at the grant date
based on the fair value of the award. The value of the portion of the award that
is ultimately expected to vest, including the impact of the Company's
anticipated performance against certain metrics for performance stock units, is
recognized as expense over the requisite service periods (generally the vesting
period of the equity award) and is included in selling, general and
administrative expenses. Estimates of future performance are utilized to
determine the underlying expense for shares expected to vest. Forfeitures are
estimated at the time of grant to recognize expense for those awards that are
expected to vest and are based on our historical forfeiture rates.

Pension Benefits - We have a defined benefit plan covering certain employees
primarily in the U.S. The benefits are accrued over the employees' service
periods. We use actuarial methods and assumptions in the valuation of defined
benefit obligations and the determination of net periodic pension income or
expense. Differences between actual and expected results or changes in the value
of defined benefit obligations and fair value of plan assets, if any, are not
recognized in earnings as they occur but rather systematically over subsequent
periods when net actuarial gains or losses are in excess of 10% of the greater
of the fair value of plan assets or the plan's projected benefit obligation.

A 25 basis point increase in the discount rate would result in a decrease of
approximately $0.1 million to the net periodic benefit cost for 2022, while a 25
basis point decrease in the discount rate would result in an increase of
approximately $0.1 million to the net periodic benefit cost for 2022. The
resulting impact on the pension benefit obligation would be a decrease of $3.5
million and an increase of $3.7 million, respectively.

Income Taxes - We account for income taxes pursuant to the asset and liability
method which requires us to recognize current tax liabilities or receivables for
the amount of taxes we estimate are payable or refundable for the current year
and deferred tax assets and liabilities for the expected future tax consequences
attributable to temporary differences between the financial statement carrying
amounts and their respective tax bases of assets and liabilities and the
expected benefits of net operating loss and credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period enacted. A
valuation allowance is provided when it is more likely than not that a portion
or all of a deferred tax asset will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
and the reversal of deferred tax liabilities during the period in which related
temporary differences become deductible.

We adopted the provisions of ASC 740 related to the accounting for uncertainty
in income taxes recognized in an enterprise's consolidated financial statements.
ASC 740 prescribes a comprehensive model for the financial statement
recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns.

The benefit of tax positions taken or expected to be taken in our income tax
returns are recognized in the financial statements if such positions are more
likely than not of being sustained upon examination by taxing authorities.
Differences between tax positions taken or expected to be taken in a tax return
and the benefit recognized and measured pursuant to the interpretation are
referred to as "unrecognized benefits". A liability is recognized (or amount of
net operating loss carryover or amount of tax refundable is reduced) for an
unrecognized tax benefit because it represents an enterprise's potential future
obligation to the taxing authority for a tax position that was not recognized as
a result of applying the provisions of ASC 740. Interest costs and related
penalties related to unrecognized tax benefits are required to be calculated, if
applicable. Our policy is to classify tax related interest and penalties, if
any, as a component of income tax expense. No interest or penalties related to
unrecognized income tax benefits were recorded during the years ended December
31, 2021, 2020 and 2019. As of December 31, 2021 and 2020, no liability for
unrecognized tax benefits was required to be reported. We do not expect any
significant changes in our unrecognized tax benefits in the next year.

Use of Estimates - The preparation of the Consolidated Financial Statements in
conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts in the Consolidated Financial Statements and
related disclosures in
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the accompanying Notes. Actual results could differ from those estimates.
Estimates and assumptions are periodically reviewed and the effects of changes
are reflected in the Consolidated Financial Statements in the period they are
determined to be necessary.

Recent accounting pronouncements

See “Note 2. Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8 of this Form 10-K.

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