AdvanSix Inc. (ASIX) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for AdvanSix Inc. Our host for today's call is Erin Kane. [Operator Instructions] I would now like to turn the call over to your host. Erin, you may begin.

Thank you, Ross. Good morning, ladies and gentlemen. This is Erin Kane speaking, President and Chief Executive Officer of AdvanSix. On behalf of the Board and the company, I am delighted to welcome you all to the 2020 Annual Meeting of AdvanSix Stockholders, which is being hosted virtually this year. As Chair of this meeting, I hereby call the meeting to order. As you know, due to the concerns relating to the COVID-19 pandemic and to support the health and well-being of our stockholders, directors, officers, employees and our communities, the 2020 annual meeting will be a completely virtual meeting this year via live audio webcast. Next year, if the health concerns have subsided, it is our intention to once again host an in-person annual meeting. As we have done in the past, we will conduct a business portion of the annual meeting first, and then leave time to answer questions at the end of the meeting. Before I go any further, I would like to introduce the company's directors and executive officers who are attending today. Our independent directors that have joined us virtually include Michael Marberry, Chairman of our Board; Paul Huck; Darrell Hughes; Todd Karran; Daniel Sansone; Sharon Spurlin and Patrick Williams. With us today from management are my fellow executive officers: Michael Preston, our Chief Financial Officer; Achilles Kintiroglou, our General Counsel and Corporate Secretary; Wim Blindenbach, our VP Integrated Supply Chain; and Christopher Gramm, our Controller. I'm also pleased to introduce [indiscernible] Kelly Slieter, who joined us yesterday as Chief Human Resources Officer. I will now turn the meeting over to Achilles to proceed with the formal business of the meeting.

Thanks, Erin. In the interest of an orderly meeting, I would kindly ask our stockholders to honor the rules governing conduct, which have been posted on the virtual meeting website. These set forth the proper procedures for stockholders to conduct themselves during the course of today's meeting. In accordance with the provisions of Delaware law, the Board has appointed [ Greg Denman from Carl Heberg and Associates ] to serve as the inspector of elections at this meeting. Prior to the meeting, Mr. Denman subscribed the oath of the inspector of elections, which I have reviewed. Also present at this meeting and available to answer questions are Peter Schlicksup and Andrew Kovonuk from the accounting firm PricewaterhouseCoopers, the company's independent registered public accounting firm. As noted in the notice of annual meeting and proxy statement dated April 29, 2020, the record date for voting at this meeting was the close of business on April 27, 2020. As required by our bylaws, an alphabetical list of stockholders and the record date has been available for review and is available now on the virtual meeting website. Based upon the percentage of the total shares of the company held by holders of record now present at this meeting, either in person or by proxy, I hereby confirm that a quorum is present and the meeting has been properly convened. As Erin noted, we would like to now attend to the formal items of business to be addressed at today's meeting. After the voting and announcement of voting results, we will close the formal part of the meeting, and I will turn the microphone back over to Erin. Any stockholders who have questions concerning the business and affairs of the company not related specifically to one of the formal items of business will have an opportunity to submit those questions at the end of the meeting via the box located on the bottom left corner of your virtual meeting screen. There are 4 proposals being considered at this time, each as described in the proxy statement previously provided to you. Proposal number one. Our first proposal is to elect the following 8 Director nominees to our Board of Directors: Erin Kane, our CEO and a Board member; Michael Marberry, our Chairman; Paul Huck; Darrell Hughes; Todd Karran; Daniel Sansone; Sharon Spurlin; and Patrick Williams. Our second proposal is to ratify the appointment of PricewaterhouseCoopers of the company's independent registered public accountants for fiscal year 2020. Our third proposal is our say on pay vote to approve on an advisory basis the compensation of our executive officers as set forth in the proxy statement. Our fourth proposal is to approve the 2016 stock incentive plan of AdvanSix Inc. and its affiliates as amended and restated. This amendment provides, among other changes, for an increase in the number of shares reserved for issuance under the plan. If there are any questions regarding the proposals, please submit those through the virtual meeting stream now. Seeing no questions, we will now proceed with the voting tabulation. If you have not already voted by proxy and would like to vote today or if you'd like to change your vote, you may do so by clicking on the voting button on the virtual meeting screen and following the stated instructions. If you have already voted, you do not need to take any action at this time. [Voting] Seeing no votes submitted, the proposals are hereby declared closed at this time. The votes and the proposals have been tabulated. The following represents our preliminary voting results. Proposal number one. The company has received approximately 21 million to 22 million votes in favor of each nominated board member, representing approximately 96% to 99% of the votes cast. Therefore, all of the nominated directors have been duly elected for its term to expire at the 2021 annual meeting of stockholders and in each case, until his or her respective successor has been duly elected and qualified. Proposal number two. Proposal to ratify the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the 2020 fiscal year has received approximately 24 million votes in favor of the proposal, representing an excess of 99% of the votes cast. Therefore, this proposal has been approved. Proposal number three. The proposal to approve on an advisory basis the compensation of our executive officers as set forth in the proxy statement has received approximately 21 million votes in favor of the proposal, representing approximately 95% of the votes cast. Therefore, this proposal has been approved on an advisory basis. Proposal number four. The proposal to approve the 2016 stock incentive plan of AdvanSix Inc. and its affiliates as amended and restated has received approximately 20 million votes in favor of the proposal, representing approximately 93% of the votes cast. Therefore, this proposal has been approved. With that, the formal business of the meeting has concluded. The inspector of elections will submit his final report and certificate for the company's files. The final vote results will be reported in a Form 8-K filed with the SEC within 4 business days of today's meeting. Now I'll turn it back over to Erin Kane, our CEO.

Thank you, Achilles. As there is no other business to be addressed at this meeting, I will now adjourn the official portion of this meeting. With that, we'll proceed with the unofficial portion. I once again want to sincerely thank all of you for joining us here today at our 2020 Annual Meeting of Stockholders and for your support of AdvanSix and hope that amidst the circumstances of the pandemic, all of you, your loved ones and colleagues are healthy and safe. Health and safety remains our top priority, and we have navigated these last few months extremely well across our essential plant operations while ensuring security of supply to our key customers. I want to thank our entire team for all of their efforts, perseverance and commitment to our collective stakeholders these past several months. We continuously seek to improve upon the many measures we have put in place to minimize risk for our people, our sites and our communities. Being recognized in January with EcoVadis' Gold Rating is an acknowledgment of our commitment to corporate social responsibility and the great foundation we have built as an organization to continuously improve upon our sustainability performance. In addition, we recently published our updated 2019 sustainability report, which highlights many ongoing initiatives at AdvanSix along with our commitments in economic, social and environmentally sustainable future. As we navigate through challenging times, I'm confident in our organization's ability to deliver long-term value for all of our key stakeholders. At this time, we'll be pleased to respond to any questions you may have.

[Operator Instructions]

We have one shareholder question regarding paying a dividend instead of purchasing shares.

Great. Thanks, Adam, and happy to take that question on capital allocation. I'd like to share as consistently with our previous disclosures that we are committed to delivering long-term value as we drive growth in the business, consistent with the priorities we've discussed previously, executing on our high-return reinvestment, building out our inorganic pipeline and capabilities while also returning cash to shareholders. And CapEx has been our top priority. And we have extensively been thinking and talking about our most recent capital investments initiated while also triggering smaller and high-return projects. We're pleased with the results to date. And if you step back and kind of look at that pipeline, nearly $100 million have been invested, when you think about the high-return watermark of $20 million, really increasing the underlying earnings basis of the company by about a net earnings worth of about $20 million as we think about the future. So we thank you for the question. We will continue to evaluate these priorities and again, just continued commitment here on our long-term opportunity, raising the earnings base for the company.

There are no further questions.

Great. So ladies and gentlemen, seeing no further questions, we thank you for your interest in AdvanSix and for attending today's 2020 Annual Meeting. We hope that you and your families stay safe and healthy, and we hope to see you next year.

This now concludes the meeting. Thank you for joining, and have a pleasant day.