AdvanSix Inc. Q4 FY2022 Earnings Call

Good morning, and welcome to the AdvanSix Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Adam Kressel, VP Investor Relations and Treasurer. Please go ahead.

Thank you. Good morning and welcome to AdvanSix's fourth 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 fourth quarter and full year 2022 and share our outlook for our key product lines and end markets. Finally, we’ll leave time for your questions at the end. So at 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 record annual sales earnings and cash flow performance in 2022, reflecting strong commercial execution. This builds on our track record of performance with earnings growth for the third consecutive year. And let me share a few highlights before Mike covers the details of our financials in a moment. We continue to benefit from our diversified portfolio, an integrated, efficient, and cost advantage business model. In the fourth quarter, our strong commercial performance helped to offset pockets of soft end market demand, customer destocking, and operational challenges. Cash flow generation continued to be robust to close out the year supporting disciplined and value accretive capital deployment. In 2022, we enhanced our capital deployment with the acquisition of U.S. Amines and an increase in return of cash to shareholders through share repurchases and an increased dividend, while further reducing debt. Our Board of Directors has approved an additional $75 million share repurchase authorization, reinforcing the flexibility we've built into our capital allocation strategy. We've also had several exciting recognitions recently. I am pleased to announce that we continue to be recognized for our strong corporate governance and focus on sustainability. AdvanSix was recently awarded its second consecutive platinum rating for corporate social responsibility from EcoVadis. This continues to rank us among the top 1% of all companies assessed. In addition, the National Association of Corporate Directors New Jersey Chapter has recognized AdvanSix as a Public Company Board of the year. Leading with transparency and accountability enables us to deliver better results for our stakeholders while driving our long-term strategies forward. And looking to 2023, we believe that we are well-positioned for another year of differentiated performance, supported by a diverse product portfolio, continued strong agricultural and fertilizer industry fundamentals, and the resilience of our business model. Roughly one-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 the packaged ammonium sulfate business, CIS, and organic investments to expand our high value granular ammonium sulfate. While we do anticipate the challenges of an uncertain environment, and expect demand weakness in several market segments within our nylon and chemical intermediate product lines, we remain confident in our demonstrated ability to execute and perform through various macroeconomic cycles. We have structurally improved the earnings power of this business and our competitive advantage will support us running disproportionately higher planned production rates in 2023 to complement our strong commercial performance. Our healthy balance sheet will also serve us well and continue to support our ability to deploy capital and maximize shareholder value. With that, I'll turn it over to Mike to discuss the financial details.

Thanks, Erin, and good morning. I'm now on Slide four, where I'll provide a summary of the full year 2022 financial results. As Erin pointed out, it was terrific performance across the board, as strong commercial execution more than offset volume declines and raw material inflation resulting in significant top and bottom-line growth. Sales of $1.9 billion, adjusted EBITDA of $308 million, adjusted earnings per share of $6.28, and free cash flow of $184 million all represented record annual performance. We've now increased earnings for three consecutive years and believe this represents differentiated performance versus our peers. Let's turn to Slide five to recap the fourth quarter results. Sales of $404 million decreased approximately 5% in the fourth quarter, primarily driven by a 15% decline in volume. Pockets of soft end market demand and customer destocking contributed to the volume decline. Pricing was favorable by 6%, comprised of an increase in market-based pricing up 10%, primarily driven by higher ammonium sulfate pricing. This was partially offset by a 4% decline in raw material pass-through pricing, following a net cost decrease in benzene and propylene. The acquisition of U.S. Amines added approximately 4% to sales as well. Adjusted EBITDA was $67 million. I will highlight the key year-over-year variances on the next slide. Adjusted earnings per share was $1.27, up 44% versus the prior year. And finally, free cash flow reached $41 million, up 194% versus the prior year. Cash flow from operations of $70 million increased $36 million primarily due to higher net income. Capital expenditures up $28 million in the quarter increased $9 million versus the prior year. Let's turn to Slide six. Here we highlight a few of the key drivers of our fourth quarter adjusted EBITDA performance year-over-year. Pricing over raw materials was a $44 million benefit. Tracking our key variable margin drivers, ammonium sulfate on a net price over natural gas and sulfur basis remained positive year-over-year, reflecting the strong underlying agricultural environment as well as our ability to drive our sulfur nutrient value proposition. Chemical intermediates price over raw spread was positive year-over-year as well, largely reflecting acetone margin over following propylene costs. Performance across our caprolactam and nylon portfolio over our key raw materials was roughly flat year-over-year. The volume was approximately $26 million unfavorable in the quarter, primarily due to customer destocking and soft end market demand across some of our portfolio. We saw the most impact across our nylon and chemical intermediates product lines, particularly products serving consumer durables and building and construction end markets. The impact of our planned turnarounds was a known tailwind to our year-over-year performance as we had no turnaround activities in the fourth quarter of ‘22 versus approximately $80 million in the fourth quarter of 2021. As you may recall, we completed our 2022 multi-site planned and turnaround in the third quarter of 2022. Finally, we saw approximately $21 million in higher costs and plant spend driven by an increase in gas utility prices and an increase in non-raw material inflation, primarily on transportation costs. Operational performance in December in particular was impacted by extremely cold temperatures across our integrated value chain. As a result, our quarterly utilization was roughly flat to the fourth quarter of 2021 and below historical run rates for a non-outage quarter. Let's turn to the next slide. On the left side of Page seven, we've highlighted our robust 2022 cash flow generation, which was primarily driven by net income of $172 million and a $39 million favorable impact of networking capital, including approximately $32 million of ammonium sulfate pre-buy cash advances in the fourth quarter. CapEx was approximately $89 million for the year, driven by a planned increase in maintenance and health, safety, and environmental projects. I would highlight that over the last 12 months, our free cash flow yield is roughly 17% and our free cash flow conversion is 107%, which reflects the healthy cash flow generation and quality of earnings our business model delivers. On the right side of the page we've depicted our capital allocation since 2017. As you can see, we've enhanced our capital deployment in 2022 with the acquisition of U.S. Amines at a meaningful step up in cash return to shareholders, all while further reducing debt levels. In 2022, we returned a combined $49 million to shareholders by way of dividends and share repurchases. Our next quarterly dividend of $0.145 per share will be made payable on March 17th for shareholders as of record date March 3rd. We are in a favorable position with our healthy balance sheet, particularly as we enter a more uncertain macro environment in 2023. Now let's turn to Slide eight. We remain disciplined in our approach to investing in the business for long-term sustainable returns. We've generated strong returns on invested capital and have outperformed peers, which is a testament to the earnings power created from our investments along with our operational and commercial execution. We continue to focus on improving through cycle profitability across the business with the goal of generating higher lows and higher highs. We expect an increase in capital expenditures in 2023, which will include a mix of critical infrastructure, other maintenance, and growth and cost savings projects as well. These projects are vital for safe, sustainable, and consistent long-term performance. Our growth project pipeline among others includes projects to support our multi-year goal to double earnings of the U.S. Amines business and expand our granular ammonium sulfate conversion. So with that, let me turn the call back to Erin.

Thanks, Mike. I'm now on Slide nine to discuss each of our key product lines. Starting with nylon. The global composite price raw spread remained relatively flat sequentially and year-over-year in the fourth quarter. Asia spreads, however, declined more severely as COVID lockdowns in China led to weaker demand and excess supply moving to other regions at lower prices. Textiles demand declines in Asia have impacted global nylon industry supply and demand conditions. While not a significant end-use for advancing sales directly, textiles represent the largest nylon end-use globally and are impacted by greater consuming U.S. and Europe markets, which face increased uncertainty with respect to consumer spending on goods. Now from an end market perspective in North America, the situation is quite mixed. In the fiber and filament space where we serve our carpet customers, we've seen a slowdown through the chain with continued inventory corrections, which we expect to continue in the first half of the year. In engineered plastics, while we are expecting sequential volume improvement from the fourth quarter into 2023, the price compression out of Asia is impacting global pricing. Now, as a reminder, roughly 30% of our nylon portfolio serves this space into applications such as auto, consumer, and other industrial goods. And here we are seeing resin pricing moving at a multiple lower than the change of raw material input cost. And then as a bright spot, packaging continues to be a stable end market, and despite some inventory drawdowns at year-end remains a resilient end application for our business. We continue to focus on being a reliable North American supplier and will optimize our mix as we have in the past to meet customer demand and navigate through these dynamics. Moving to ammonium sulfate, we've witnessed nitrogen prices come down from significantly higher levels seen earlier in 2022. Nitrogen supply availability as well as lower energy costs, particularly in Europe, have supported a reduction in nutrient pricing. While it is not uncommon to see a seasonal law and demand exiting the year, we remain confident that the resilient underlying agricultural industry fundamentals supported by crop prices, farmer profitability, fertilizer affordability, expected planted acres, and stock-to-use ratios will continue to support strong nutrient demand. And so, despite some cautious buying behavior ahead of the season, we remain well positioned to serve our key customers as we move into the heart of the domestic planting season. And lastly, turning to chemical intermediates. Industry realized acetone prices over refinery grade propylene cost improved year-over-year and sequentially in the fourth quarter. Propylene costs have continued to trend lower on ample supply over the last few months. While acetone demand downstream has seen some softness into the large buyer applications, we see supply as balanced to tight, supported by stable acetone imports into the U.S. and lower phenol operating rates globally on reduced demand into building and construction and other industrial applications. I'll point out here that our integrated operating model serves us well in industry dynamics like these. Now let's turn to Slide 10 to discuss our outlook. We expect performance in 2023 to once again demonstrate the resilience of our business model and our ability to navigate through the challenges of an uncertain environment. We expect favorable underlying agricultural industry fundamentals to continue. We also expect the balanced supply and demand conditions for North American acetone given lower phenol industry operating rates globally. We'll also have the potential for some tightness, particularly in the first half of 2023. We do anticipate headwinds in consumer durables and building construction end markets across our nylon and other chemical intermediates product lines. And as I shared earlier, this will have implications for both volume and price. Now for reference, we've shared our sales by end market exposure on the left-hand side of the page. We are a diversified chemistry company, and the range of our end market exposure helps insulate the company from significant variability in any one product lines, as demonstrated by our results in several environments. Operationally, we continue our focus on safe, stable, and sustainable performance, while driving less variability in utilization rates, which in turn drives our improved customer experience and higher returns for the business. Our integrated value chain and competitive cost advantage enables us to target running our plants at those disproportionately higher rates than the industry on average. For the full year 2023, we are projecting CapEx spend to be approximately $110 million to $120 million. This range reflects higher spend to support critical infrastructure improvements, other maintenance, as well as additional growth and cost savings projects. We expect the pre-tax impact of planned plant turnarounds to be in the range of $20 million to $33 million in 2023, a tailwind compared to approximately $50 million for the full year 2022. And lastly, we expect our effective tax rate for the year to be approximately 24% and anticipate cash pension contributions to be approximately zero to $5 million, following $20 million in contributions in 2022, bringing our defined benefit plan to a nearly fully funded status. Let's turn to slide 11 to wrap up before moving to Q&A. As we've shared previously, we believe that AdvanSix offers a compelling investment thesis 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. And we're aligned to those diverse set of end market applications. Let me point out and reiterate again, roughly one-third of our portfolio is supported by exposure to strong agricultural fundamentals. We also continue to invest for long-term growth across the broader portfolio into applications such as paints and coatings, electronics, and other solvents. Supplementing our exposure to these diverse end-use applications, we seek to enhance our sales mix through our differentiated product portfolio, which are on margins that are roughly twice our average base business growth margins, and also continue to make smart and disciplined investments in our assets to sustain and improve throughput and profitability. We have substantially increased the earnings power of this business with our focus on through-cycle profitability. Lastly, our enhanced capital allocation framework provides upside and optionality for further value creation. So, with that, Adam, let's move to Q&A.

Thanks Erin. Andrew, please open the line for questions.

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

Good morning everyone. I have a quick question. In terms of the CapEx, how do I look at that across the course of the year? Is there going to be fairly evenly spread out? Is there one or two quarters that are going to be heavier than others? And then in terms of the work getting done, does any of that bring sort of increased efficiencies that might lead to maybe a small tweak in capacity or anything of that nature that comes? Or is it just more of long-term maintenance that has to get done to improve the existing equipment, etc.

Yes, Charlie, typically the CapEx spend run rates are heavier in the second half than the first half. As we sort of ramp up here from the $90 million levels in 2022 to roughly the 110 to 120 in 2023. And, you know, again, some of the increase in the spend is critical infrastructure work at our sites, other repair and maintenance projects, which, you know, we've demonstrated has an effect and improves our safe and stable operation supporting safe and stable operations going forward here. So, that's what I would expect. So probably, in the sort of 60% range in the second half, 60% to 70% second half versus first half.

Got it. And then in terms of the movement of product that you guys are seeing, meaning I'm assuming China is exporting where they typically haven't exported because they have some excess production and they want to keep running. I mean, do you see that, has that, the cadence of that product or has that changed at all over the last, let's say couple of months? Or is it maintaining the level, the higher level and looking at it going forward, do you have any idea when things are might come back to, let's say they're more normal state or preexisting?

No, certainly. We've seen this trend again and it's a confluence of factors as you pointed out here over the last couple of months, probably starting late Q3 through Q4 coming into the start of the year, and it's the lower certainly demand in the region now impacting those trade flows, right? So, we're also seeing not just Chinese resin, but also certainly resin from other countries being exported into the European Union. Obviously, that started in 2022, certainly with the higher cost considerations in Europe and the pullback on their operating rates moving into South America and Mexico as well. And we've also seen downstream products including compounded resins on a lot of Asia moving into America and Mexico. Certainly, OEMs have global footprints, so there is this pressure of how do they compete and how what is the consideration against the collective set of overseas assets. So, it's certainly we're watching for the rebound, certainly in a recovery in the region, obviously to pull their volumes back up. You have low operating rates starting to be seen in outside of China. They're about 50%, so hopefully that will contribute as well. So, I think it will certainly be a first half consideration how long it moves into that. Certainly, there's contracted volume here for us, but there's also freely negotiated and spot-oriented products as well. But again, we see this predominantly in that engineered plastic space. And certainly, freight as well, just as another confluence of factors, freight rates dropped dramatically in the back half of the year and sort of making transport, which may have been would have impacted sort of landed costs has moderated here as well.

Got it. Okay. Thanks very much. I'll come back if I have anything more. Thanks.

Okay.

Thanks, Charles.

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

Thanks, and good morning everyone. You made a point to come out and say a couple of times, so you'll be running the plants very hard next year, harder than this year. And that's kind of despite this demand outlook in the past that's involved, things like spot export sales, but you've also mentioned over the last couple of years an improved U.S. market share in nylon specifically. And you also have a balance sheet that can handle greater inventory builds if you needed to lean on that. So, I'm just wondering how your commercial strategy may look different in this particular downturn versus what we've observed in prior years?

Thank you for the question. I’m happy to clarify and provide additional details regarding the statement. As we've mentioned throughout 2022, our operational performance hasn't been as strong as we typically achieve. However, our strategies focused on safe and sustainable operations remain a top priority. The remarks about improving plant utilization rates are about ensuring our strategies are yielding the expected results. Our integrated value chain enables us to operate at higher rates from the outset. To break it down, our Phenol plants are currently operating at least 15% above the rates of other North American competitors because of our integrated position in the phenol market, even as demand is down. This also strengthens our position in the acetone market. Regarding caprolactam and ammonium sulfate, we are optimistic about a strong spring season for fertilizer demand, and it's crucial for us to enhance our performance to meet customer needs. In terms of caprolactam and nylon, there are two factors at play. One is volume, particularly in fibers and filaments, and the other is pricing, which remains solid in engineering plastics and packaging. We're prepared to leverage our mix as a strategic advantage for the organization, including thoughtful inventory management to align with profitable sales, all of which informs our approach. We possess the flexibility to navigate the market effectively, which sets us apart from our competitors.

Perfect, very helpful. Thanks. And if my math is correct, this maybe a big if on a Friday, but it looks like your aiming revenues were actually up sequentially in the fourth quarter. Do I have that right? And if so, can you talk about what was going on there?

Yeah. When you look at the third to fourth quarter sequential bridge here, you'll note that roughly a percentage point on total revenue was driven by M&A. And that's all U.S. Amines. And some of that is they're serving. When you look at the Ag sector, and the seasonality associated with that can impact the timing of revenues from a quarter to quarter. So more of this was a bit of a seasonal improvement, and we would expect also the first half of the year to be strong as the season is at a high level typically in the first half.

Okay. Excellent. And actually, a quick one in the similar vein. Your cash advances picked up quite a bit versus prior years, obviously excluding last year. Can you speak to how much of that represented a higher percentage of your 2Q fertilizer volumes versus just price being higher in that dollar amount?

Sure. We can certainly provide some clarity there. We proceeded with a pre-buy this year based on our customers' interests and their desire to move forward with it. The volume for the pre-buy is expected to be on average consistent with those from the years prior to last year, specifically in 2019 and 2020. The main difference is that the market price is higher than it was during that timeframe.

Hi, good morning. I joined the call late due to an unusual morning, so I may need you to repeat some information. Can you summarize the operational challenges faced this quarter? I wasn't able to catch your opening remarks, so I would appreciate it if you could outline the sources of these challenges and provide any quantification if possible. Thank you.

Yes. Sure, David. Happy to provide a little bit more color. Where we saw some more of the lower utilization rates relative to what we had planned was later in the quarter, particularly in December. You may recall, we hit a string of weather across the country that had some very frigid temperatures that impacted not only us, but also others in the industry. And that resulted in us running at lower rates than what we would have liked. And so that was the main driver in the quarter and we're comfortable that we took all the necessary actions to get back up to plan here, and will and do expect better performance here as we get into the first quarter.

Thank you for that. I wanted to ask a question about U.S. Amines. You've owned it for three full quarters now, and I was wondering if you could discuss the integration process and the synergies you've realized in terms of both costs and revenue, particularly any crossover benefits. Additionally, with your increased capital expenditure for next year, how much of that is specifically allocated to the straightforward expansion opportunities you mentioned in the past? Thank you.

Sure, David. We're approaching a year since the acquisition, and I'm happy to report that the integration has gone smoothly. The functional integration is mostly complete, and it has proceeded according to our expectations over the last few quarters. We're satisfied with our current position and are on track with our goals. This acquisition was aimed at leveraging growth opportunities with the assets we acquired, which are more focused on expanding our capabilities. We're actively working on projects to utilize these multi-faceted assets in innovative ways. Our capital expenditures are not as intensive as with our other assets, and we've started to invest in projects to enhance our capabilities. We're exploring various opportunities, including improvements in producing compounds like psycho hexamine and isopropyl alcohol, with ongoing interest from both current and potential customers. This acquisition is about creating value in different ways beyond traditional sales synergies. We are making progress and will provide more updates on these initiatives as we continue to execute our plan.

Okay. To follow up on that, in the past you mentioned around $200 million in revenues from specialty intermediates and other differentiated products. What do you think the current run rate is for that, and looking ahead to 2023, do you expect it to represent a larger portion of your overall revenues or earnings potential? What is the budgeted outlook for those differentiated products?

No, it's true again. Certainly, we have been proud of the growth that we have seen, really over the last five years as we pointed out in prior sessions. Significant growth in our both high purity intermediates and high value intermediates that are going into areas of paints and coatings and electronics, expanding and continuing to grow for our wire and cable on co-polymer sales and nylon. What I would say, David, is that while these are differentiated products, they're not necessarily immune per se to the global considerations and end market dynamics. So certainly long-term trends for these applications are very positive and it's why we've continued to invest and continue to think about our portfolios in these spaces. But they can have considerations for demand just like other applications. And so, there's continued focus. But for instance, you know, semiconductors as things kind of move down and people are thinking about the purchase of goods in 2023, may perhaps be at a different rate of growth than we've seen in the past few years. Europe has also seen a slowdown in paints, coatings, and sealants. So again, this is a long-term focus for us. And I think that kind of the key takeaway is that it's not entirely immune, but again, we expect these things to recover and continue to have those long-term opportunities for us.

Okay, great. I'm going to keep going if you don't mind. Everyone else had their first shot, so too bad for them. But, I wanted to ask you a question about nylon and in particular, I guess the construction or related uses and in North America, I guess residential construction side of things has slowed down a fair amount and what do I know? But if the Fed is continuing to raise interest rates, I'm thinking that could have incremental negative effects, let's say, on mortgage rates and things like that. How do you think about marketing I guess, or allocating your nylon capacity to different end markets and what makes sense in an uncertain economic environment, but definitely one where residential construction seems to be on the downturn right now? I'll stop there, but thank you.

Residential construction is certainly being hit harder than commercial, but nylon is well-suited for the commercial sector. Areas like lodging and hospitality are still seeing consumer spending. Recent reports on leisure and hospitality services indicate they continue to perform well, creating opportunities for remodeling and upgrades. While this presents challenges and is affected by inflation, consumer confidence, and interest rates, which we see impacting remodeling activity, focusing on the commercial space will be crucial as we navigate these dynamics. Our assets for producing nylon have flexibility, allowing us to manage our mix. Customers are still purchasing, and we want to support these key markets. Sustainability is becoming increasingly important, so interest in our post-industrial and post-consumer recycled grades will be vital here, similar to other applications. In summary, we have the flexibility in our assets and a mix that captures commercial opportunities, even as the smaller residential impact on carpet becomes relevant. Historically, we have demonstrated the ability to adjust our strategy successfully.

Probably nothing you haven't seen before, but interest rates have been so low recently. I don't know. I just, wanted to hear you talk through that, so thank you. One last question. And this has to do with Europe, and I guess, the impact of lower natural gas costs there on, I guess, global trade patterns. But I guess, natural gas has come well off of its spiking highs of the past year, year and a half. And I'm just wondering since natural gas is used effectively for both fertilizers that could be produced in Europe as well as nylon and caprolactam. I mean, I'm just wondering if you're seeing or anticipating any shift in trade patterns, in other words, import product that used to be exported to Europe, imported into Europe, may now get backed out. And just wondering if you're seeing any of that on either nylon or in fertilizer to this point. And what might your expectations be going forward?

Yes. Certainly, as the general situation has improved in Europe. As you point out on the input cost, improving, the sentiment to produce right and in a number of chains, they still have sort of reduced demand in general. And weakness that they're going to have to sort through in a number of end applications as we've touched on. So, it's one where, yes, when we think about production of nutrients, those rates have picked up primarily for the regional demand there. We'll see, like I said, Europe's probably at 50% capacity utilization as we know it right now in caprolactam through the chain. But this is a space where global trade is understood, and certainly things moving in from Asia went in heavily last year as well. And they'll resort themselves accordingly as we move forward. It's hard to say that there's a definitive move here one way or the other. But again, these are global markets in that sense. But certainly, they have their regional nuances as well. So Europe is certainly a buyer's market for nylon, so there's going to be produced certainly, it's a pressure there just because you have a length of supply, and in fertilizer, you've got global buying just slowing down in general. And so again, nitrogen capacity there, we would put at about 70%. So like anything else, this is what the world is going to have to navigate through both globally and regionally, I think moving forward as we progress through the year.

Yes. Even though natural gas prices have decreased, they remain high compared to historical prices and in relation to the U.S. So that's an important factor to consider.

Yes. No, there's definitely still that regional disparity. No question. Okay. Thank you very much. I appreciate all the color.

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 some macro headwinds and operational challenges in the fourth quarter, our performance reflects the resilience of our business model and our ability to navigate and execute in a multitude of environments. Following the record performance in 2022, we look forward to continued execution of our strategic priorities in 2023 and are committed to delivering long-term value to our shareholders. With that we look forward to speaking with you again next quarter. Stay safe and be well.

The conference has now concluded.