AdvanSix Inc. Q3 FY2022 Earnings Call

Good day and welcome to the AdvanSix third quarter 2022 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 touchtone 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.

Thank you, Betsy. Good morning and welcome to AdvanSix’s third quarter 2022 earnings conference call. With me here today are President and CEO, Erin Kane, and Senior Vice President and CFO, Michael Preston. 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. This morning we’ll review our financial results for the third quarter of 2022 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 CEO, Erin Kane.

Thanks, Adam, and good morning everyone. Thank you for joining us and for your continued interest in AdvanSix. As you saw in our press release, AdvanSix delivered third quarter results consistent with our update in October that reflect the resilience of our business model and our ability to navigate challenging conditions. Let me share a few highlights on Slide 3 before Mike covers the details of our financials in a moment. Despite the unfavorable impact of the previously announced extended plant turnaround, our sales grew year-over-year as our commercial execution captured higher pricing, particularly across our ammonium sulfate and nylon product lines to offset continued higher inflation and lower production output. Our healthy cash flow performance continued to support smart and disciplined deployment of capital in the quarter, including reinvestment in the business, approximately $17 million of cash returned to shareholders in the form of dividends and share repurchases, as well as further debt reduction. With the turnarounds complete, our facilities are now focused on operating at our typical high utilization rates, which we expect to continue into 2023. Looking forward, we expect strong underlying agricultural fundamentals to support robust nitrogen and sulfur fertilizer industry demand into the heart of the 2023 domestic planting season. Nearly a third of our portfolio is in the agricultural sector, including ag chemicals, and our position in this attractive market has extended even further through our acquisitions of U.S. Amines as well as CIS. We know this space well and we continue to invest for growth. As we have shared previously, we are today producing more high-quality granular grade ammonium sulfate to meet the growing demands of our customers. Overall, this is a core and critical product line for our business. Like every company, we are also closely monitoring the heightened macro uncertainty and concerns of an economic slowdown or recession and any potential impacts on industries we serve. We would now characterize the North American demand for nylon and chemical intermediates as mixed overall. While some end markets, like commercial construction and solvents, are holding up, we are seeing softness in consumer durables and residential applications. We’ve consistently demonstrated our ability to navigate, perform, and execute in a multitude of environments. Our low-cost position, diverse portfolio, significant exposure to the North American region in terms of sales and operations, and our ability to stay highly disciplined around costs provides us with a solid foundation and proven track record to perform through all conditions. In this environment, we continue to be highly focused on executing what is in our control, including driving superior operational and commercial performance to meet the evolving needs of our customers, building capabilities to strengthen our innovation and portfolio resiliency, and enhancing our capital deployment. For the fourth quarter of 2022, we expect performance to rebound towards results demonstrated in the first and second quarters of this year and remain confident in our ability to build sustainable long-term shareholder value. With that, I’ll turn it over to Mike to discuss the financial details of the quarter.

Okay, great. Thanks everyone and good morning. I’m now on Slide 4, where I’ll provide a summary of the third quarter 2022 financial results. Sales of $479 million in the quarter increased approximately 7% versus the prior year. Market-based pricing was favorable by 18% compared to the prior year, driven by higher pricing across our ammonium sulfate and nylon product lines. To a lesser extent, raw material passthrough pricing contributed to 4% of top-line growth following a net cost increase in benzene propylene. The acquisition of U.S. Amines added approximately 3% to sales as well. Sales volume decreased approximately 18% driven primarily by the unfavorable impact of the extended plant turnaround and lower production output compared to the prior year. Adjusted EBITDA was $33 million and I’ll walk through the key year-over-year variances on the next slide. Adjusted earnings per share was $0.43. Our effective tax rate was 21.4% in the third quarter versus 23.8% in the prior year period, and finally free cash flow reached $37 million. Cash flow from operations of $59 million in the quarter decreased $18 million versus the prior year primarily due to lower net income, partially offset by the favorable impact of changes in working capital. Capital expenditures of $22 million in the quarter increased $9 million versus the prior year. Now let’s turn to Slide 5. Here, we highlight a few of the key drivers of our third quarter adjusted EBITDA performance year-over-year. Pricing of raw materials was a $49 million benefit. Tracking our key variable margin drivers, performance in caprolactam and nylon over benzene was up year-over-year, reflecting balanced North American industry supply and demand where we primarily participate. Ammonium sulfate on a net price over natural gas and sulfur basis also continued its positive trend year-over-year, reflecting the strong underlying ag environment as well as our ability to drive our sulfur nutrient value proposition. In the quarter, we saw a roughly $16 million unfavorable impact from increased plant spend primarily driven by higher natural gas utility prices and an increase in non-raw material inflation, primarily on transportation costs. Volume and other items were approximately $34 million unfavorable in the quarter primarily due to lower production output versus the prior year. As a reminder, in the third quarter last year, we had roughly $2 million of proceeds related to the PES insurance claim. Lastly, the impact of our plants’ turnarounds was a known headwind to our year-over-year performance as we did not have any turnaround activities in the prior year quarter. The overall impact to third quarter 2022 was approximately $44 million. This was $15 million higher than expected primarily due to additional required maintenance at our Frankford phenol plant, which contributed to reduced production across our innovative value chain and a delayed ramp to full operating rates at our Hopewell and Chesterfield sites.

Thanks, Mike. I’m now on Slide 7 to discuss each of our key product lines. Starting with nylon, we’ve seen the global composite price raw spreads modestly improve in the third quarter year-over-year, led by North America. China and Asia have continued to see volatility from a feedstock perspective as well as weakened demand overall. In Europe, while we have seen some producers return to production from temporary shutdowns amid historically high input costs, third-party industry sources are citing utilization in their region remaining around 50% and resulting in a shift towards more imports into the region. The North American supply and demand dynamics, while rebalanced, have continued to support pricing and spreads which have outperformed the global benchmarks. We have seen softness in consumer durables and residential end markets with commercial construction and packaging more resilient. We know this portfolio is more sensitive to consumer demand, particularly for our engineered plastics resins, so we’re keeping a close eye on any further changes in customer buying patterns. Moving to ammonium sulfate, elevated energy input costs alongside resilient underlying agricultural fundamentals drove higher nutrient values in the third quarter on a year-over-year basis. On a sequential basis, we did experience quarterly sales seasonality reflecting both geographical and product sales mix considerations. Given the pricing environment and demand dynamics coming off the weather-impacted and compressed second quarter planting, the seasonality impact this year was above the higher end of the historical range typically seen. While we have observed some cautious buying behavior given the macro environment, overall underlying agricultural industry fundamentals remain favorable heading into 2023. This is supported by crop prices, stock to use ratios, constrained nitrogen fertilizer supply, as well as continued duties on ammonium sulfate imports from China. While raw material input costs have seen reductions recently, costs remain relatively high in other regions, namely Europe, steepening the industry cost curve and supporting tight overall nitrogen fertilizer supply, but altogether, the fundamentals support continued robust fertilizer demand and pricing going forward into 2023. Lastly, turning to chemical intermediates, industry realized acetone prices over refinery grade propylene costs improved sequentially in the third quarter. Propylene costs have trended lower on ample supply over the last few months. This has come at a time when acetone imports into the U.S. have remained stable and phenol operating rates globally have come down on softer demand, particularly into building and construction and other industrial applications. Pricing and spreads overall remain at healthy levels relative to prior periods, and we’ll continue to monitor any changes in downstream demand. Let’s turn to Slide 8. Our outlook for the remainder of 2022 remains largely consistent with what we have shared previously. Again, while we would now characterize North American demand for our nylon and chemical intermediates product lines to be mixed overall, we continue to expect those favorable underlying agricultural industry fundamentals to continue. Operationally, we continue to focus on safe, stable and sustainable performance while driving less variability in utilization rates, which in turn drives improved customer experience and higher returns for the business. For the full year 2022, capex is tracking to approximately $95 million. With the plant turnarounds complete, we do not anticipate any fourth quarter turnaround costs and are targeting our facilities to operate at our typical high utilization rates moving forward. We expect the pre-tax income impact of planned plant turnarounds to be in the range of $28 million to $33 million in 2023 compared to approximately $50 million for the full year 2022. Next year, we expect the larger of our planned plant turnarounds to again occur in the third quarter. Lastly, we expect our effective tax rate for this year and next year to be approximately 24% and anticipate cash pension contributions to be approximately $20 million in 2022, including a $5 million contribution in the fourth quarter which we expect will bring our defined benefit plan to a nearly fully funded status. Let’s turn to Slide 9 to wrap up before moving to Q&A. Consistent to what we had shared last quarter, we continue to believe that AdvanSix offers a compelling investment thesis as there are a number of factors supporting robust performance and attractive returns for the business and our shareholders over the short, medium, and long term. Our leading North American position and advantaged asset base coupled with our efficient and lean business model provide inherent competitive advantages. As industry cost curves steepen globally, we are in a strong competitive position with significant exposure to the advantaged North American region relative to Europe and Asia. Roughly 90% of our sales are in North America while 100% of our manufacturing and primarily all of our raw material purchases are located in the region as well. As a reminder, approximately 50% of our business is on formula or index-based contracts where changes in raw materials are contractually passed through to customers with minimal lag. Our leading product portfolio is aligned to a diverse set of end market applications. We are more than just a nylon company; in fact, our chemical intermediates and ammonium sulfate product lines are a significant portion of both our sales and volume. Not only are these products contributing to top line results, but they are very important drivers of profitability for the company. That is precisely why we have dedicated sales, marketing and technical resources focused on serving customers and developing product line strategies to both drive performance and capture growth opportunities. The diversity of our end market exposure also helps insulate the company from significant variability in any one product line, as demonstrated by our results in several environments. Supplementing our exposure to diverse end-use applications, we have enhanced our sales mix through our differentiated product portfolio which represents over $200 million in annual revenue with margins that are twice our average base business growth margins, and we continue to make smart and disciplined investments in our assets to sustain and improve throughput and profitability. Importantly, we have substantially increased the earnings power of this business with our focus on through-the-cycle profitability. Since 2017, we have structurally added a net $50 million-plus of annual incremental EBITDA benefit to the base business through significant contributions from those differentiated products, our high return growth and cost savings capital projects, improved operational performance with respect to ammonium sulfate granular conversion, and the current performance of our two recent acquisitions. Lastly, our enhanced capital allocation framework provides upside and optionality for further value creation. We have a healthy balance sheet and we’ll continue to maintain prudent leverage levels in the current environment. We are targeting accretive M&A for bolt-on opportunities providing growth and synergies, and reflecting our confidence, we have also stepped up our return of cash to shareholders with a recent dividend increase alongside our opportunistic share repurchases. We feel very good about the strategies we’ve implemented which continue to support expectations for AdvanSix’s long-term sustainable performance. With that, Adam, let’s move to Q&A.

Great, thanks Erin. Betsy, can you please open the line for questions?

The first question today comes from Vincent Anderson with Stifel. Please go ahead.

Thanks, good morning everyone.

Good morning.

Just with regard to the 4Q outlook, I think the top line drivers are fairly well understood; but when I’m looking at sulfur, gas and propylene prices and what they’ve done recently, what kind of keeps the first half earnings the target for 4Q and not the floor for 4Q?

Yes, there are several factors to consider here, and that's a great question, Vincent. We need to take into account the aftermath of the outage, along with the dynamics across all three of our businesses. In ammonium sulfate, we are entering the season as we transition from the fill-in of Q3 toward the first half of next year, which is typically the peak season, especially in Q2. Currently, the ammonium sulfate market is quite emotional, and while the long-term fundamentals appear solid, we are observing some cautious buying patterns, which is common each year. Timing for purchases and sales is critical, as customers often closely monitor the market before making their purchases. We expect our usual seasonal progression in the fourth quarter, but we will need to wait until the first half of next year to see peak performance for that product line. Regarding nylon and chemical intermediates, we have to consider the overall mix. Although spreads are remaining stable, residential applications are experiencing a decline due to rising mortgage rates, which is causing softness in both nylon and do-it-yourself applications through our acetone chain and other intermediates. However, we also see strength in packaging and acetone distribution for direct solvent use, indicating a lot is happening in that area. Our utilization rates guide our operating model, and while volume may remain consistent year-over-year, pricing dynamics will emerge as we monitor demand throughout the quarter.

Yes Vincent, the only thing I would add is when you’re thinking about rebounding back to the first half performance, I would say value is the greatest in the first half of the year, particularly in the second quarter where you’re in the peak of the season and we sell most of the domestic granular product, so that is definitely a consideration here in the fourth quarter when you compare to the results in the first half of the year. You need to factor that in as well.

No, that makes sense. Then actually the dividend, it was a nice increase. I’m just curious if we should read anything into that in terms of maybe you seeing something even more incrementally positive over the course of this year, that gave you the confidence to underwrite that increase, or did you originally declare the dividend at a level that you knew you would be able to grow for some time before you had to re-evaluate?

Yes well, it was about a year, over a year ago that we announced and initiated a dividend. We felt given the free cash flow conversion and the outlook, it was an appropriate time after about a year to re-evaluate the dividend policy, and hence which resulted in a 16% increase, which we feel very comfortable with and provides a very competitive yield to our shareholders. As we go forward here, we’ll continue to evaluate the dividend policy. We’re very comfortable with the 16% increase and we’ll continue to evaluate based on our outlook and our free cash flow generation. We’ve definitely stepped up the return of cash to shareholders in terms of the dividend as well as share repurchases, so we feel very good about our path forward here and look to continue on that path going forward, so feel very good about it.

Great, and just one last quick one, I know for the base assets, they’re running the same no matter what. But if we do move into a slowdown next year, do you have any rainy day projects that you’re already thinking about pulling forward, maybe on U.S. Amines or maybe some derivative products that there’s work that you can do in a weaker demand environment?

Yes, that's a great question regarding U.S. Amines. When we considered that acquisition, a significant value driver was the opportunity to expand and grow the business. We have several projects being developed through engineering, and we've begun to make some investments in this area as a way to enhance our pipeline for high return growth and cost savings initiatives. As we refine our planning for the upcoming year, we will evaluate any sensible opportunities. Our balance sheet remains strong for reinvestment into the business, and we are well-prepared in case we face a recessionary period and need to recover quickly.

Great, thanks again.

The next question comes from Charles Neivert with Piper Sandler. Please go ahead.

Good morning everyone. Can you hear me okay?

We can. Good morning.

Good morning. I want to touch on a few things. First, China has been challenging for many companies, not just because of what they sell but due to their efforts to maintain their economy. This has led them to export to places they usually don't, such as Europe and South America. Have you encountered them as a competitor in South America regarding sulfate, especially since they seem to be promoting caprolactam? Additionally, are you noticing any caprolactam that normally stays in China showing up in other markets? This could potentially affect pricing, regardless of whether you sell there, and may create some pressure. Have you observed anything from China in this regard?

Yes, there are definitely many dynamics at play. Regarding AS, we have observed significant increases, reaching a record high in September. This surprised some people due to the substantial numbers in terms of operating rates and current inventory levels. They are supplying a large portion of Brazilian imports and have been increasing their share in Brazil over the past few years, especially following the anti-dumping case in North America. Additionally, we have noticed that they have been exporting resin materials to Europe and their competitive cost structure enables them to enter that market, particularly since domestic producers there are operating at lower capacity. Europe is structurally oversupplied in several value chains, especially in capro and resin, so this situation requires careful monitoring. While they might not be directly supplying North America, these are global markets with international pricing factors, and the evolving trade flow is impacting our regional pricing strategies.

And keep in mind, Charlie, we have anti-dumping duties in place regarding China for ammonium sulfate, so we do not see competition from China in the U.S. China has been a significant exporter to Brazil over the years, and we have been diversifying our exports to seek other opportunities in the export market outside of Brazil to address that. For ammonium sulfate, those are important factors to consider.

Okay. On another front, a little bit more in the future, to the degree that you guys can do it, are you moving towards - I hate to use the word - greener application or greener production, and the reason I’m asking is because we’ve seen some of the other companies we cover who have actually managed to maintain market share over Chinese imports in certain markets where they would compete because they have a far greener footprint in places where it makes a difference, like Europe, like the U.S., like some other countries. They’ve actually maintained share that on a price basis they wouldn’t have because of the greener aspect. Is that something you guys are looking at in terms of your product slate? Can you be greener than somebody else and therefore either maintain or take market share for those who are really focused on that aspect of their business?

Yes, we are definitely focused on this as we move forward. We are starting our life cycle analysis work, which helps us clarify and validate our environmental impact associated with our product lines. This will provide us with a clearer understanding of our current position, which we believe is better than some of the existing benchmarks from third parties in the value chain. At the same time, we are developing a roadmap to significantly reduce that impact, and we are in the process of doing that. There are already known projects we can expedite as we plan for the future, and we are hearing from our customers that they want us to help them understand the greenhouse gas footprint of our product lines, where we currently stand, and where our opportunities lie. We believe this will strengthen our position with our customers moving forward. Regarding CO2 emissions, we currently capture the vast majority of emissions from our Kellogg ammonia plant, a practice we have maintained for many years. This CO2 is beneficially captured and reused in commercial applications for cold chain storage in the food and beverage industry, which will enhance our ability to serve customers sustainably and with a lower environmental impact.

I missed it during the call. You mentioned that the turnaround costs this year were $50 million, which included the $15 million.

Yes, that’s correct.

Next year is looking at, what? What was next year?

Yes, next year we are looking at.

Twenty-eight to 33.

Okay, yes. That’s what I had missed. All right, thanks very much. Appreciate it.

Thank you.

As a reminder, if you would like to ask a question, please press star then one to be joined into the queue. The next question comes from David Silver with CL King. Please go ahead.

Yes hi, good morning. Thanks very much.

Good morning.

I’ll have to stipulate up front, I’ve been jumping around between a couple of calls, so I’ll probably be making you repeat yourself. Actually, just right off the bat, I noticed that the email and the earnings release had a few tweaks to them, and I give them two thumbs up - I think it was more readable and a nicer presentation.

Well, thank you.

Yes, I’m trying to smooth things over with Adam since I was a bit difficult with him this morning. The first question is about the outlook for ammonium sulfate. I noticed that the year-over-year revenues are roughly flat, and based on my price charts, it appears that ammonium sulfate volumes in the third quarter were significantly down compared to last year. First, could you confirm that? Secondly, I expect there will be strong demand during the sold-out post-harvest season or a very active pre-buy. Could you describe the demand for ammonium sulfate and your supply situation as we head into the fall sales season? Thank you.

A few comments to reiterate from earlier. As we move into Q3, we are experiencing the dynamics from Q2, including reduced demand and weather impacts that have compressed the cycle. We noticed that inventory needed to be cleared not only for our products but throughout the fertilizer industry. As we prepare for Q3, this aligns with the higher end of our past seasonal trends. That said, we are progressing through the season as anticipated. Volumes in the third quarter were down, which is not surprising given the circumstances. Demand is still moving forward as we approach the start of next year. The risk aversion I mentioned earlier is typical for the period before farmers need to buy fertilizer, whether it's for fall storage and application or the usual lull before the winter surge heading into early next year. This behavior is not unusual. Additionally, we had turnarounds in Q3 that also affected some volumes as we moved through the chain. As we look ahead and consider your comments about pre-buy, we will be monitoring the market closely over the next 30 days since customer interest in pre-buying is heavily influenced by market sentiment. We are committed to supporting our customers and farmers in their success, and there are benefits for them at year-end, such as tax planning and readiness for the season. As demonstrated in previous seasons, we can manage with or without a pre-buy. However, we will take our cues from the market moving forward and continue to manage our order book. Pricing has increased somewhat during this period, as expected, and we believe the fundamentals for next year look sound. Others are already noting positive prospects for future seasons, based on global stock-to-use ratios. We must continue to support food security worldwide.

And Dave, just on the top line for ammonium sulfate in the third quarter year-over-year, although volume was down, revenue went from $113 million in the third quarter of ’21 to $132 million in the third quarter of ’22, so market pricing more than offset the volume decline, just to be clear.

Thank you for clarifying that. I was mainly considering it from a volume perspective. I also wanted to ask about raw materials and any potential for strategic purchasing. Sulfur prices have fluctuated significantly and are much lower this quarter compared to a few quarters back. When I checked the natural gas prices at yesterday's close, they were among the lowest we've seen in a long time. Looking ahead, how are you approaching raw material volatility, and do you see any opportunities to secure more favorable pricing compared to what you've experienced so far this year? Thank you.

No, that’s a good question. As we mentioned earlier, raw materials have decreased a bit in the fourth quarter compared to the third quarter. You pointed out that natural gas prices have dropped, although natural gas can be quite unpredictable based on weather and the supply and demand dynamics, so it’s something to monitor closely. Sulfur prices have also fallen in the fourth quarter compared to the third, and we anticipate a slight decline in benzene prices, while propylene may remain stable in the fourth quarter relative to the third. Regarding strategic purchases, our storage capability for raw materials is somewhat limited. We may have opportunities to enhance volume on the margins and take advantage of certain situations, but it’s more about managing regular purchases rather than being able to stock up significantly. However, it’s important to note that half of our revenue comes from formula-based agreements, which means that even with the volatility in raw materials, we are well protected through these agreements, allowing us to respond quickly with minimal delay. We feel quite confident about that. In areas where we engage in spot business, we proactively adjust pricing in response to changes in raw material costs, which we manage effectively, as evidenced by our quarter-by-quarter results. We will keep an eye out for chances to secure favorable pricing when possible, but generally, our business model is robust and enables us to perform effectively in a volatile raw material environment.

Okay, great. I have one more question regarding competition from Europe, specifically related to the nylon chain. I am not as focused on the fertilizer side, but the cost situation in Europe has been quite volatile along with the economic outlook. I’d like to know your thoughts on the supply-demand fundamentals for nylon and caprolactam products. What are you observing in Europe regarding producers who rely on highly integrated production models? As we look ahead to the third quarter after the holiday season, are larger strategic players inclined to ramp up production to maintain their market shares, or are they taking a more cautious approach given the regional economic trends? How competitive do you anticipate European-based producers will be in the upcoming quarter or two, considering their economic outlook and the cost challenges they face? Thank you.

Sure. Certainly in a number of value chains, when you notably point to caprolactam in the monomer and certainly nylon in the polymer, the energy dynamics, the input cost structure is regionally high there. That is why they have typically been operating at the lower utilization rate for a number of quarters, and while certainly natural gas has come back down more recently and we’ve seen some pick-up in utilization, it is, I would say, a structurally challenged region. It is structurally long and has been. It has relied on the ability to, I would say, export for full capacity utilization, and that is being certainly challenged at current with import pressures really now coming from China. I would say that the strength of integration, so there are players that are more standalone, there are players that have full integration and have positions, and I think those that have that business model, that full integration through most notably probably engineered solutions, have high good contractual considerations that are focused on sustainability considerations, like we talked about a little bit previously, are likely the winners over the long haul here.

Okay, great. I appreciate all the color. Thank you.

You bet.

Yes, thanks. I had one more question. It seems like we haven’t experienced a normal economic environment for the fourth quarter negotiations for large acetone buyers since the trade case was resolved. What are you observing? Is MMA actually going to make significant commitments if we are facing a recession? I’m just interested in what’s happening in that regard right now.

Yes, and I mean, we’re cautious because we’re in the heart of a lot of those conversations at current, and as you say, if you think about MMA tied through into general application basis. But I think that the best way to think about it is probably just stability year-on-year relative to what we see right now.

Okay, all right. That’s probably as good as it’s going to get for the time being. Actually, I just have one other one. It sounds like the answer is no for now, but have you seen any incremental interest in ammonium sulfate just given your supply is not tied to the logistics issues on the Mississippi River right now?

Yes, again we’re focused into positioning for our customers and into the value chain. As you say, we wouldn’t have the same exposure relative to the barge movements. We do some rail to barge but further north up the river, so I think that relative to those dynamics, we are in a different competitive state.

Okay, all right. Thank you, that was it.

You bet.

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

Thank you all again for your time and interest this morning. Despite the challenges of the third quarter, our performance reflects the resilience of our business model and our ability to navigate and execute in a multitude of environments. The growth prospects of AdvanSix remain robust. We look forward to closing out 2022 with another strong quarter and are committed to delivering long-term value to our shareholders. With that, we’ll look forward to speaking with you again next quarter. Stay safe and be well.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.