AdvanSix reported a solid but sharply lower first quarter, with sales up about 7% year-over-year to $404 million on 6% volume growth, but adjusted EBITDA down $47 million to $5 million as the absence of $26 million in prior-year insurance proceeds, record sulfur and higher natural gas costs, higher utilities, and $11 million of winter storm impacts weighed on results. Management emphasized that formula- and index-based pricing did not fully recover the steep raw material inflation in the quarter but expects to recoup a large portion in the second quarter, heading into the domestic planting season, alongside significant sequential earnings and cash flow improvement. Strategically, the company welcomed new CFO Patrick Day and announced a new integrated-ammonia expansion at Hopewell to domestically manufacture DEF, a larger-than-SUSTAIN, 20%+ IRR growth project targeting a final investment decision in the first half of 2027 and startup in 2029.
Thank you, Danielle. Good morning, and welcome to AdvanSix's first quarter 2026 earnings conference call. With me here today are President and Chief Executive Officer, Erin Kane, Senior Vice President and CFO, Patrick Day, and Vice President of Corporate Finance and Strategic FP&A, 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, 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. This morning, we will review our financial results for the first quarter 2026 and share our outlook for our key product lines and end markets. Finally, we'll leave time for your questions at the end. With that, I'll turn the call over to AdvanSix's President and Chief Executive Officer, Erin Kane.
Thanks, Adam, good morning, everyone. We appreciate you joining us here today for our quarterly call. As you saw in our press release, the AdvanSix team navigated a number of headwinds to deliver a solid first quarter performance, including the earlier winter storm-related impacts and new geopolitical challenges amid continued subdued industrial end market demand. In the quarter, we generated 7% sales growth year-over-year, supported by improvements in chemical intermediates volume and plant nutrients market pricing, partially offsetting the margin impacts driven by increased sulfur and natural gas costs. We are executing with a focus to recover inflationary raw material input costs by leveraging both our pass-through formula and freely negotiated pricing mechanisms. I'd like to thank all of our teammates who contributed to successfully maintaining safe operations during the winter storm earlier this year.
While the earnings impact related to this event came in just above the high end of our anticipated range, we were able to save $3 million of planned turnaround expense for the year. Looking ahead, we anticipate significant sequential earnings and cash flow improvement into the second quarter. We are in a solid position as the domestic planting season progresses and continue to operate amid a tightening acetone global supply and demand environment and a modestly recovering nylon industry. We're maintaining a disciplined focus on cost productivity, capital spending, turnaround execution, and full-year free cash flow generation. We continue to expect full-year CapEx in the range of $75 million-$95 million with targeted allocation of nearly 20% of that towards high return growth investments.
We also continue to expect debt leverage ratios near the low end of our target range of 1x to 2.5x by the end of this year. Key to our strategy is a keen focus on controllable levers to support through cycle profitability and cash conversion while progressing targeted growth strategies and initiatives. We announced yesterday an exciting new opportunity to expand our integrated ammonia platform at our Hopewell, Virginia site to supply the growing regional diesel exhaust fluid or DEF market. I'll share more about this later in the call. Lastly, effective April 27th, we welcome Patrick Day as our new Senior Vice President and Chief Financial Officer. Pat has tremendous experience establishing corporate and financial strategies that accelerate growth and shareholder value. We look forward to his expertise as we advance in our next chapter.
I'd like to also give thanks to Chris Gramm for his commitment and support during his time as Interim CFO over the last year. With that, I'll turn it to Chris to discuss the financials.
Thanks, Erin. I'm now on Slide 4 to discuss our results for the quarter. Sales of $404 million in the quarter increased approximately 7% versus the prior year, comprised of 6% volume growth and 1% favorable price. Sales volume growth was primarily driven by favorable chemical intermediate sales. Market-based pricing improved by 3%, primarily driven by an increase in plant nutrients, reflecting higher nitrogen pricing amid increased sulfur input costs. Raw material pass-through pricing was down 2% following a net cost decrease in benzene and propylene, which is a major input to cumene, our largest raw material and key feedstock to our products. Adjusted EBITDA was $5 million, down $47 million from last year.
This was primarily driven by the absence of insurance proceeds from the prior year of $26 million, the unfavorable impact of higher sulfur and natural gas raw material prices, higher utility expenses, and $11 million of winter storm-related impacts. On a sequential basis compared to the fourth quarter, higher sales volume growth supported by improved operational performance was more than offset by escalating raw material input prices. From a free cash flow perspective, the first quarter represents a seasonal use of cash as expected, primarily due to the timing of cash payments for CapEx following the prior quarter outages. The absence of insurance proceeds was also a meaningful driver of the year-over-year change. We continue to anticipate sequential improvement into the second quarter and expect the second half of the year to be a source of cash to achieve our full year expectations. Let's turn to Slide five.
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. In light of the significant raw material inflation and the mix of our formula or index-based pricing mechanisms, we did not fully cover those costs in the first quarter. However, we anticipate recouping a large portion of that shortfall in the second quarter, particularly into the heart of the domestic planting season for plant nutrients. Starting with Nylon solutions, resin volumes improved sequentially on improved operational performance, while caprolactam volumes moderated in a soft demand environment, particularly for carpet applications. We saw a higher export mix in the first quarter of 2026, which is expected to continue in the near term. With our advantage position, we are evaluating export opportunities to ensure the best economic output for the integrated enterprise.
Domestic pricing steadily increased overall, supported in part by higher input costs. Plant nutrient volumes were flat to down both year-over-year and sequentially in the first quarter, while pricing strength continued. In the early parts of the year, we witnessed more cautious buying behavior down the value chain and a more risk-averse sentiment from customers amid the higher input costs and rapidly rising nitrogen prices. Lastly, chemical intermediate sales improved on the back of volume improvements year-over-year. In acetone, as we mentioned on the first quarter 2025 earnings call, downstream MMA saw extended plant outages last year. In the first quarter of 2026, we observed more normalized operating rates down the value chain supporting demand. In addition, given pricing dynamics and trade flows across our key products in this portfolio, we delivered on opportunistic spot sales domestically and in the export markets.
Thanks, Chris. I'm now on Slide six to discuss what we're seeing across our major product lines. Our diversified end market exposure continues to be a strategic advantage, providing resilience across cycles. Agricultural and fertilizer remains our largest end market. As we sit here today, our domestic granular sales for this fertilizer year are now expected to be near record levels, but closer to flat as compared to the last fertilizer year. While the fertilizer year started off with optimism and a strong fall fill, as we've discussed in previous calls, buying has become more cautious given continued challenged fundamentals, including farmer profitability and input affordability, cold weather to start the spring, and drought conditions.
What that means is we are now selling in-season tons with the ability to work coverage of sulfur input costs, which is important because amid a higher global nitrogen pricing environment on the heels of the conflict in the Middle East, our ammonium sulfate pricing actions are largely offsetting sulfur input costs rather than driving margin expansion in this current context. We know that growers value the cost of nutrition. In fact, ammonia for direct application is currently a relatively attractive value for growers. While we are not a large merchant ammonia supplier, we have seen good demand and netbacks and have been maximizing our ammonia availability this spring, while slightly moderating ammonium sulfate production.
While we capture the benefit from the advantage between U.S. natural gas and global nitrogen prices, we also contend with the impact of sulfur input costs versus the sulfur value proposition we deliver to farmers. On tightened global supply, sulfur quarterly prices settled at a record $655 per long ton in the 2Q 2026, with the current spot prices trading even higher than those levels. That represents over 30% sequential increase and a roughly 140% surge year-over-year, so a meaningful increase that the industry is experiencing. Moving to our key nylon end markets across building and construction as well as engineering plastics, North American demand has not materially changed. Global pricing has moved up with capacity rationalization and raw material shortages in Europe, lower operating rates in China, logistics constraints, and higher input costs.
Our industry pricing mechanisms work to pass through changes in core raw materials, notably benzene, but also natural gas and sulfur. Given global trade flow dynamics, reduced imports have created opportunities to gain share. In this environment, it is critical for our business to remain agile through pricing and mix. We continue to execute our plan, including taking advantage of export opportunities as they arise, increasing prices to offset cost increases, and reducing inventory levels for the nylon resin to align with our current market conditions. In chemical intermediates, phenol demand remains soft overall, driving lower global operating rates, coupled with reduced acetone imports into the U.S., all of which are supporting tightening acetone supply and demand dynamics. Acetone price increases have been implemented in the industry to keep pace with rising propylene costs.
Spreads have held near cycle averages, and we continue that continue to anticipate that for the full-year of 2026. Let's move to Slide seven. We were excited to announce yesterday that we have entered into a process design and licensing agreement to assess expansion of our integrated ammonia platform to enable the domestic manufacturing of DEF, a critical emissions control product used across on and off-highway diesel applications. As background, DEF is an EPA mandated additive for reducing NOx emissions from diesel engines, with strong and growing demand driven primarily by Class 8 vehicle usage in the Mid-Atlantic and Northeast. Demand for DEF continues to grow to meet environmental standards and as regulatory requirements expand across transportation, construction, agriculture, and industrial equipment fleets. The AdvanSix Hopewell facility provides a strong foundation for expanding domestic manufacturing at this site and already produces all required DEF inputs.
This potential expansion would complement existing manufacturing capabilities at the site with full continued commitment to the production of ammonium sulfate fertilizer to serve the U.S. farming industry. Our geographic position uniquely enables reliable supply to meet growing demand in a market currently served by imports and production from other domestic regions. Our investments over time with our ammonia unit operations have paid off in terms of our reliability and output. This project has the potential to unlock further value from our existing assets through increased optionality to serve a broadened customer base. We will advance through detailed engineering and development phases with final investment decision targeted for the first half of 2027. Additional updates will be provided as engineering, commercial, and financial milestones are achieved and regulatory approvals are secured.
We anticipate a multiyear capital investment supporting attractive financial returns following expected operational startup in 2029, which align with our long-term value creation objectives and commitment to disciplined capital allocation. Let's turn to Slide eight before moving to Q&A. AdvanSix offers a compelling investment thesis with value drivers supporting through cycle profitability and sustainable performance. Our strategic initiatives, unique combination of assets and business model are core to our durable competitive advantage and long-term positioning. Our global low-cost position and vertically integrated caprolactam production serves us well. Ammonia and sulfuric acid platform integration, coupled with a leading technology position, underpins how we win in plant nutrients. We are progressing our SUSTAIN ammonium sulfate growth program and have now announced another high return investment opportunity to serve the growing DEF market.
These capabilities, combined with increasing asset operational agility and diversified product and end market mix, position us to navigate cycles and capitalize on emerging opportunities. We remain focused on delivering on controllable levers, including our non-manpower fixed cost savings program, risk-based prioritization of our capital investments, continued working capital discipline, and 45Q carbon capture tax credits to support improved cash flow generation. With that, Adam, let's move to Q&A.
Thanks, Erin. Danielle, can you please open the line for questions?