AdvanSix Inc. (NYSE:ASIX) Q2 2024 Earnings Call Transcript

AdvanSix Inc. (NYSE:ASIX) Q2 2024 Earnings Call Transcript August 2, 2024

AdvanSix Inc. beats earnings expectations. Reported EPS is $1.43, expectations were $1.2.

Operator: Good day. And welcome to AdvanSix Second Quarter 2024 Earnings Conference Call. [Operator Instructions] 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.

Adam Kressel: Thank you, Chad. Good morning, and welcome to AdvanSix’s second quarter 2024 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 way. 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 second quarter of 2024 and share our outlook for our key product lines and end markets. Finally, we’ll leave time for your questions at the end. So with that I’ll turn the call over to AdvanSix’s President and CEO, Erin Kane.

Erin Kane: Thanks, Adam and good morning, everyone. We appreciate you joining us here today for our quarterly call. As you saw in our press release, we delivered a strong second quarter, with year-over-year improvement in sales, earnings, margin rate and cash flow; and a return to targeted utilization rates across our integrated value chain. This performance reflects our collective organization’s focused execution to capture commercial benefits and the advantages of our business model and diverse product portfolio. We realized a 6% improvement in sales reflecting higher domestic nylon volumes, a robust domestic application season for ammonium sulfate and continued strength in acetone pricing. Our disciplined capital execution continued to support long-term performance and growth including SUSTAIN, our Sustainable US Sulfate to Accelerate Increased Nutrition program.

Overall, our team delivered strong operational performance including near record production of granular ammonium phosphate. Additionally, we returned $8 million of cash to shareholders through dividends and repurchases. Looking ahead into the second half, we continue to have several year-over-year tailwinds supporting a favorable earnings outlook including a continued tight global acetone supply and demand environment, modestly improving North American Nylon industry spreads and we started the third quarter with a robust ammonium sulfate Fill program at higher pricing levels compared to the prior year. We are highly focused on delivering the right outcomes for our stakeholders by driving superior operational and commercial performance to meet the evolving needs of our customers, building capabilities to strengthen our innovation and portfolio resiliency and executing against the disciplined capital deployment framework.

We continue to positively position the enterprise to fuel future earnings and cash flow performance in support of robust total shareholder returns. Let me now turn the call over to Mike.

Michael Preston: Okay. Thanks, Erin and good morning, everyone. I’m now on Slide 4, where I will provide a summary of the second quarter 2024 financials and year-over-year performance. Higher sales of nylon and ammonium sulfate due to favorable North American supply and demand conditions and continued strength in acetone pricing drove favorable financial results. We saw a 6% increase in sales, 5% from increased volume and 1% from net pricing, which converted to a 19% increase in adjusted EBITDA of $78 million and a 24% increase in adjusted earnings per share of $1.55. Free cash flow was $17 million in the quarter, up 6%. Cash flow from operations of $50 million, increased $15 million, primarily due to higher net income and the favorable impact of changes in working capital.

Capital expenditures of $33 million in the quarter increased $14 million reflecting our planned increased spend on maintenance and enterprise programs. Now let’s turn to Slide 5. Here we highlight the key drivers of our second quarter adjusted EBITDA performance sequentially from the first quarter of 2024. Overall, the quarter can be characterized by our team’s ability to both capture the benefits of commercial tailwinds, while driving a return to robust operational performance. The absence of the first quarter onetime impact associated with our Frankford site resulted in a $27 million benefit sequentially. Tighter North American supply and demand conditions across each of our product lines supported a $19 million improvement in pricing over raw materials and a $21 million benefit in volume and sales mix.

As expected, ammonium sulfate price net of natural gas and sulfur costs was up sequentially as prices and demand seasonally strengthened. Plant costs and other items were approximately $10 million favorable, reflecting strong operational performance and lower plant spend, including a $2 million reduction in planned plant turnaround costs. Let’s turn to slide 6. Erin will dive further into each of our key product lines in a moment. But here on slide 6 we’ve shown our typical industry pricing charts to provide further context on the market dynamics this past quarter. For Nylon global pricing remained relatively stable sequentially. The declines in Asia offset by improved North American spreads on tighter regional supply amid stable end market demand.

In the Fertilizer space, corn belt nitrogen pricing saw a reduction overall in the second quarter relative to the first. In contrast, ammonium sulfate pricing strengthened in the quarter with industry corn belt prices up 25% sequentially with continued sulfur demand growth and reduced supply in North America. And in Chemical Intermediates industry-realized acetone prices over refinery grade propylene costs remain healthy. Now let me turn the call back to Erin.

Erin Kane: Thanks, Mike. The following three slides provide a deeper look at each of our product lines including industry spread trends tied to our key variable margin equations as well as market dynamics and performance drivers. For our Plant Nutrients business, spreads have strengthened in recent months. We believe this is reflective of an increasingly recognized software value proposition and observed growth in demand. We have entered the third quarter at higher ammonium sulfate pricing levels compared to the prior year as the value chain began restocking fertilizers supporting our new season order book. While we navigate typical seasonal pricing considerations and what many consider more cautious broader ag fundamentals we know that farmers need yield to support their profitability.

Our performance in Q2 at a time when nitrogen prices were on the decline albeit with some supply tightness coupled with the outcome of our Fill program, we believe are proof points to the resiliency of sulfur nutrition demand and supports our expectations to deliver improved year-over-year performance. Longer term, we remain excited about the growth prospects for this business and leveraging our expertise as a leader in this space. The projects within our sustained program are progressing well including passing the environmental stage review of the USDA grant process and are continuing to track our target investment return profile of 20% plus. Year-to-date we’ve achieved approximately 68% granular conversion and continuing to anticipate reaching approximately 70% by the end of the year.

This program will continue to support growing market demand for sulfur nutrition with estimated growth of 3% to 4% per year. In addition, we continue to receive positive feedback around product demand to support essential nutrition not only for traditional crops but for soybeans as well. Let’s turn to slide 8. For Chemical Intermediates the chart on the left represents a weighted average industry acetone over refinery-grade propylene margin. As you can see, acetone spreads have recovered amid tight global supply and demand conditions. This has been supported by persistent lower global phenol operating rates on reduced demand to value chains serving building and construction and other industrial applications. Acetone and phenol represent approximately 60% of our intermediate sales with acetone making up a far majority of that.

As a reminder, approximately 80% of our produced phenol is consumed by our downstream propyl operations while all of our acetone is sold externally. For us Acetone is a key product line with a perform and optimized strategy to meet customer needs while driving favorable sales and profitability mix. For the remaining 40% of our Chemical Intermediate portfolio, our key strategic focus is around placing our various chemistry platforms into select high value applications. This diversification of end market exposure supports our sales and margin performance through applications such as our Nadone Cyclohexanone serving the electronic space our EZ-Blox for alkyd based paints and specialty amines for ag, pharma and industrial applications. Now let’s turn to nylon solutions on slide 9.

Here we’ve shown both the global composite caprolactam and North American resin over benzene spreads given the meaningful split of our monomer and polymer sales. Globally nylon demand remains mixed across most major end uses. Varying regional dynamics, including competitive intensity and trade flows continue to impact regional pricing. Despite long supply and demand fundamentals, estimated operating rates out of China are sitting at multiyear highs, resulting in continued nylon exports to other regions, namely Southeast Asia. Here in North America, demand has been stable albeit on a lower base with continued softness in building construction offset by resilience in packaging and engineering plastics applications. Industry supply has been constrained in North America in recent months, supporting regional outperformance as evidenced in the charts.

North American spreads have improved off the second half 2023 trough levels and we expect further modest improvement through the remainder of 2024 given the tighter regional supply environment. For this business, we remain highly focused on supporting improved through cycle profitability given we’re operating in the third cycle since then. While our global low cost position in caprolactam supports our ability to operate at disproportionately higher utilization rates and to meet demand where it exists through-cycle, our goal of generating higher highs requires us to drive productivity, optimize our regional and product sales mix and continue to promote the value proposition of our differentiated nylon products. Supporting our current performance is an improved geographical mix as our export sales have moved back to an average historical level sitting at approximately 12% of our total nylon sales volume in the second quarter.

Now before moving to Q&A, we would like to take the opportunity on the next two slides to reiterate and illustrate our through-cycle cash generation how we allocate that cash and the long-term returns we’re generating for our business and shareholders. This is a business best viewed through the lens of long-term performance. The big picture can be missed on a short-term snapshot. Ample cash from operations has been generated to fund critical allocation priorities and our healthy balance sheet continues to provide flexibility and optionality when needed. Our approach to deploying cash is disciplined with a two-pronged framework of critical funding and discretionary choices to create value. From a critical funding perspective, we have our ongoing base CapEx including our maintenance projects and health safety and environmental spend as well as our enterprise programs to support long-term operational excellence and risk mitigation.

And our dividend, which has grown since its initiation in 2021 serves as a dependable return of cash to our shareholders and fits very well within this framework, well supported by annual operating cash flow. All further capital allocation is discretionary where we fund growth and cost savings programs at robust returns inorganic opportunities and share repurchases. We’ve generated $1.2 billion of cash from operations since 2017. Through various conditions and cycles this framework has allowed us to fund critical deployment, grow our dividend and invest our long-term performance and growth. Now let’s turn to slide 11. Pulling it all together the net outcome of an effective capital allocation framework is robust returns and we believe for businesses like ours, ROIC is a key valuation metric.

We’ve generated double digit percentage returns on invested capital through the cycle outperforming peers, which is a testament to the earnings power created from our investments along with our operational and commercial execution. We remain well-positioned to deliver as a diversified chemistry company with a playbook and execution to a set of focused priorities and strategies. We have a leading North American position, an advantaged asset base and are aligned to a diverse set of end-market applications with an enhanced sales mix across the portfolio. We have increased the earnings power of this business with our focus on through-cycle profitability and the goal of generating higher lows and higher highs. And as I just shared our capital allocation framework provides upside and optionality for further value creation.

AdvanSix offers a compelling investment thesis. So with that Adam, let’s move to Q&A.

Adam Kressel: Thanks Erin. Chad, can you please open the line for questions?

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question today will be from David Silver from CL King. Please go ahead.

David Silver: Yeah. Hi. Thanks very much. So I do have a number…

Erin Kane: Good morning, David.

David Silver: Yeah. Good morning. Thank you. I do have a kind of a number of questions. I think maybe the first one I’d like to start on is your comments about improved operating performance and higher utilization. So I do recognize being able to run your inter-integrated — vertically-integrated complex at high rates does help you out quite a bit. I’d also comment where there was an issue I guess in the first quarter. So maybe if you could just — what’s the word? I don’t know, dart on a dartboard. But how close to optimal would you say your operational execution was this quarter? In other words, maybe I don’t know 95% utilization might be — might your target. I’m just saying that and obviously without disruptions. But did you really kind of operate as efficiently as you possibly could?

Is that — should we kind of assume that? Or is there incremental room for improvement going forward and potentially even an extra increment to your underlying earnings potential? Thanks.

Erin Kane: Yeah. Well, thanks for the question. I have to maybe sort of start with a quote. I got an email this morning from a friend that had a Franklin D. Roosevelt quote that said, “A smooth sea never made a skilled sailor.” And I know you call out our challenge in Q1, but for us operational excellence is a forever pursuit right. I think when we talk about returning to operational rates in the second quarter we did indeed return sort of mid-to-high-90% range at Hopewell which is the sweet spot of where we look to operate relative to our target. Certainly, the rest of the chain supports and fills in around that. But as you say this is an area of continuous improvement. We know just continuing to create that safe, stable, sustainable operation over longer stretches, inherently creates more operational leverage.

Right? So it supported our results in Q2. We learn from every single challenge that we have. We improve our skill. We improve our capability sets and bring that forward. And that really is the underlying tenant for operational excellence programs.

David Silver: When you started with the FDR quote, I thought you were going to say in politics nothing happens by accident. But I like your quote better.

Erin Kane: Thank you for that.

David Silver: Okay. I guess I would like to ask a couple of questions on, I guess, the ammonium sulfate side of your business. And maybe you could just characterize kind of the spring selling season. In other words, it looks like you had both high volumes and you were able to achieve reasonably good pricing relative to how I guess, the benchmark pricing moved during the quarter. And I’d also say it was kind of in an environment where the comparable product urea was moving in one direction and your product was stable or even slightly higher towards the end. So maybe if you could just talk about that, did you just out-execute maybe some of your competition? Or how would you just characterize your ability to kind of execute very well in the fast-paced spring planning season, especially given a number of issues but one would be attractively priced comparable or close comparable products? Thanks.

Erin Kane: Sure. And I appreciate certainly the call out and the comparison here. We believe we positioned ourselves well through the buildup into the season. That’s always important and certainly it’s something that we’re focused on here as we start the next fertilizer year. You may recall that, we had our own production. We’ve increased our granular ammonium sulfate output. So that certainly went a long way to meeting the demand for the higher value, granular product that is growing in demand here in North America. We also purchased extra volume to make sure that we were ready for our customers’ demand to offset our challenges in Q1. But I think, what we’re seeing is really the recognition of the essentiality of sulfur nutrition.

And so there is that growing demand that was taking place. I think the proof points we saw in the quarter was really that not just the 10% to 50% yields that folks typically see on corn, but a recognized value that folks can also see mid single-digit increases on yields on soybeans as well. And when the fundamentals are pressuring profitability for farmers yield is a key consideration for them. And so I think our execution, our positioning, with our customers the growth of the high product or the higher demand product that we’re committing to. And then certainly, we are seeing this demand signal. There was some supply tightness certainly that supported it. But I think it’s those fundamentals that are allowing us to perform — a lot of support in Q2, but also supported really the Fill program that we’ve seen here at the start of Q3 and really the resilience of demand for fertilizers and particularly sulfur nutrition.

David Silver: All right. Thank you for that. And just to follow-up again still on ammonium sulfate first I think you touched on this, but I did want to clarify from your prepared remarks that there was some benefit from the increased percentage of granular product that you might have had available. That was one thing. And then secondly, I mean, this is more from a Corporate Boardroom level than from a down-on-the-ground in the corn belt view. But do you — are you starting to view maybe, I don’t know ammonium sulfate a little bit like acetone? In other words they’re both coproducts to a certain extent. And they the maybe the pressures on Nylon globally led to less product available elsewhere. Somewhat like we see with acetone from time-to-time. But is there any thinking about that in general? Or is that a little bit too arcane?

Erin Kane: Okay. I can certainly tackle both halves of that. Relative to the volume increase, we would put our estimate at about 35% of the granular sales volume increase was attributable to our increased production and that mixed benefit. And so that’s an important trend for us as we continue to invest in our SUSTAIN program. So that’s sort of Part 1. Part 2 relative to fertilizer and intermediates, we’ve shared the view in the past. We talk about the split by sales revenue, but when you look at what we produce by volume fertilizer and intermediates are two-thirds, if not three-quarters of our production. So they’re very important product lines for us. A bit different in the supply/demand global fundamentals where yes phenol and acetone are leading to a tighter global acetone market.

There definitely is quite a bit of ammonium sulfate still coming out of China. And that is predominantly headed to Brazil and other places. But again, we continue to see sulfur nutrition as a recognized need globally for boosting yields.

David Silver: Okay. And this is not a question but maybe just an observation, but I do appreciate this slide that was added this time for the first time charting the price of ammonium sulfate over the raw materials. I tracked that myself, but I think it was — I appreciate you calling it out this time. I did want to ask a question. It’s agricultural but this is more ag-chem or the pesticide line of things. But you do have a couple of product lines that service the crop chemicals market. And I would say that’s an area that for more than one year or so it’s been from the folks I talked to it’s been oversupplied customer inventories had been built up during the pandemic and they were even beyond the normal buffer stock levels. From your perspective, US Amines, and I believe parts of your oximes portfolio go into that area.

Has the environment there improved? Are you able to place more of your product or have the customers the ag-chem makers, have they kind of cleaned up the surplus that built up over the past couple of years in your view?

Erin Kane: Yes. Certainly, we continue and have experienced the headwinds as you point out in the ag-chemical business and certainly continue to see retailers and growers work through that higher inventories. And the value chain from MIPA through all the way to herbicides is really being impacted with low-priced Chinese imports of glyphosate salt, so saving on inventories have improved a little. That value chain is still working through. Certainly, the dynamics that we’ve been tracking and certainly you’re hearing from others. I’d say the flip side, the adjuvants where we’re selling some of the spray-grade ammonium sulfate that gets mixed into that, did improve in the season indicating that there is some progress being made deeper in the value chain, because that would be added in at the last step. So, some progress but certainly some ways to go relative to the underlying dynamics.

David Silver: Okay. And then just the last question here. I’m kind of towards the — I don’t know back half of my earnings season. And I would just say that your company based on the remarks, it’s virtually the only company that did not call out kind of a weaker demand environment across the general industrial sector. And I’m just wondering if you could maybe comment on maybe your relatively buoyant or optimistic outlook for supplying the industrial sector when — again, could just be who I’m talking to. But that has not been a common theme this earnings season. Thank you.

Erin Kane: Certainly — I appreciate that. And we would also share the view that there are aspects in the industrial manufacturing economy that are challenged, right? And that’s collectively we’re all seeing a slower recovery than perhaps where many of us would have been a couple of months ago. But that said, I think there are aspects of our diversification that ultimately are playing out here relative to our favorable outlook year-over-year for the back half. And certainly, the greatest weakness in the slower recovery is in building and construction. I think that’s an area we continue to watch. It impacts the demand growth or the recovery, certainly in Nylon resin but also in certain aspects of our Intermediates. But the flip side is we’ve seen Automotive be relatively stable and strong.

We’ve seen the resiliency of Packaging in our Wire and Cable product lines come back as well. So, I think that for us, we’ve been talking about this diversification as a positive and that’s probably really what’s playing out here for us as we look to the second half.

David Silver: Okay. That’s great. Thanks very much. I appreciate all the color.

Erin Kane: Thanks.

Michael Preston: Thanks David.

Erin Kane: Have a great day.

Operator: And our final question comes from Charles Neivert from Piper Sandler. Please go ahead.

Charles Neivert: Yes. Just a few things. One, when you look at the SUSTAIN program and you’re talking about an additional 200,000 tons of sulfate, how is that coming about? Or what’s happening there? Can you sort of walk through the whole program and whatever expansion there might be?

Erin Kane: Sure. As we have shared in the past here and can just kind of recapture for us, it’s a series of programs and projects over the course of years that really is leading to that opportunity set. And so, it’s going to take us a couple of years to get to the full output. It is a win-win across many ways because we’re increasing the granular conversion here, which is enabling us to do this without great increases in consumption of energy impact to water rates. There is a nice sustainability aspect to it, but it is a series of projects along that route right? So we’re targeting 70% by the end of this year with really the full completion by 2027, and so as you think about just various aspects of how we’re going to address this.

It’s not a new line it’s really dechoking, creating the ability for us to really just convert really standard up to granular is what’s happening here over the course of the next few years. And we can certainly share there was a full page I believe in the last earnings deck that we could send back over to you, Charlie.

Charles Neivert: Yeah. I mean but in terms of total available AS both granular and standard grades, your capacity hasn’t actually increased in total because that’s just a chemical conversion. So you either leave it as one type or the other, but it’s just the amount of product you’re converting that we’re talking about in that 200,000?

Erin Kane: That is that is the primary consideration. I mean, there are some things that’s certainly we are exploring that could continue to release that we have — we’ll continue to evaluate in our system. But yes and again that conversion is valuable, right? Just given the premium that we get from standard to the greater form.

Charles Neivert: Yeah. I just wanted to make sure I was understanding it as what it was as opposed to an actual expansion of capacity by that amount. It’s just a shift, higher value, higher profitability but the absolute tonnage available relatively small change. Just what type of tonnage is available? On that same note are you guys looking at all at — and I know that the systems may not be in place even regionally for you to be able to do it. But is there any thought to carbon capture around the ammonia unit and then creating in effect a green or blue ammonia there and then running that as that would be part of your AS molecules and maybe higher value still? Is that something that’s at all under consideration?

Erin Kane: Yeah. So currently all of our — or the vast majority of our CO2 has been captured — at current has been captured for years for beneficial reuse. So we have partners on the Hopewell site that are taking that CO2, and it is being used in a valuable food and beverage industry and cold chain storage. As you may know the mid-Atlantic is a large poultry and pork industry, and so certainly the beneficial reuse in the region is pretty high relative to that and like I said also for beverage. So we do capture it today and have been. Certainly any other considerations, but right now it’s in good use and we have great partners that are taking that offtake to that.

Charles Neivert: Yeah. I guess the offtake people aren’t – don’t hate, because you in effect that CO2 doesn’t for lack of a better term disappear. You can’t get the green credit but obviously you’ve got some credit for whatever sales it’s worth. When I look at the again at AS, would you say I mean the realization that sulfur is a valuable part of the input? Do you think that’s going to contribute to a better spread over urea over time? I mean historically there’s been a — there’s that clearly that relationship it’s had a certain spread over time. Do you think that’s something that’s now going to grow because of that realization is more? And have you seen sort of more acceptance of AS in the US? Are we just substituting in part for Chinese product that used to come across? I mean how do you see that market shifting?

Erin Kane: Yes. I mean, certainly as we’ve shared there is that consideration on the baseline nitrogen nutrition price of which we’re working the premium for the sulfur value proposition. But we do believe certainly the willingness to pay and the acceptance of the sulfur proposition has been one that again our field research our agronomists have been out but we certainly are seeing it strengthen the last 18 to 24 months. We expect sulfur consumption to continue to increase accordingly, and there’s a clear willingness to pay for that boost to yield.

Charles Neivert: And depending on how much over the stock nitrogen additions, considering with where corn is going, anything you can do to boost yield under these kind of situations at relatively minimal cost, I think is going to get looked at pretty, positively. On the Nylon side of things. Has there been any particular market that’s been making things a little bit better? Or is it really spread across all the basic Nylon markets?

Erin Kane: Yes. I mean here in North America, I mean certainly it is the region, we want to focus on without clarity of our ability to support our customers here. Again, the resiliency – again, we’ve seen more of it in EP in our Engineering Plastics really buoyed by automotive. We’ve seen Packaging come back as well. I mean there certainly, were pressures several months ago relative to food inflation. We’ve all seen those numbers come back. So that’s supporting revenue in Packaging and others that perhaps were pulled back, along the way. And again, as I mentioned before, it’s really that building construction area that is I think stable now, but certainly the most challenged given the macro dynamic that we sit in relative to interest rates, mortgage rates which is just really slowed down residential.

But more importantly, I think the commercial side indicators are not — they’re growing, but they’re not growing at the rates they’ve grown in the past. So there definitely is a recognized slowing there, but that’s kind of how it plays out. There have been some supply considerations, so I think that has enabled us to not just capture some of the recovery, but also a consideration in share as well.

Charles Neivert: Got it. Natural gas obviously, has been moving downward quite a bit over the last month few months in particular. Are you guys hedged in any way? Or are you able to take pretty much full advantage of the decline in gas particularly obviously, on the ammonia unit, but just in general? And is that something in terms of the AS spread, that’s going to make it look better even as the market moves into a seasonally weaker period and your sales shift toward South America and maybe a little less granular and a little more of the standard product? But I assume that gas should help a lot.

Michael Preston: Yes. Charlie, we as a natural course normal course, we don’t hedge natural gas. It is a consideration in terms of the variable cost for ammonium sulfate and fertilizers and can impact the pricing the marketplace. Therefore, there is I’ll call it a longer term correlation over time with respect to, end market pricing and that feedstock. So as a normal course, we don’t hedge. With respect to the forward look, we did see a bit of a spike in natural gas in July, but it did correct and come back down and settle at a lower level in August. And we’ll continue to watch it. But net-net, overall I’d say, for Q3 our expectation is that natural gas costs will be up a bit, and then we’ll obviously monitor it closely here as we get into the fourth quarter.

Charles Neivert: I think that does it for me today. Thanks very much.

Erin Kane: Thanks, Charlie.

Operator: And ladies and gentlemen, this concludes today’s question-and-answer session. I will turn the conference back to Erin Kane for any closing remarks.

Erin Kane: Thank you, all, again, for your time and interest this morning. We hope this call and discussion have clarified the continued operational and commercial benefits, that our team captured and drove to support our second quarter performance, as well as the key considerations for our favorable earnings outlook. The strength of our business model and our position as a diversified chemistry company, will serve us well. And we continue to expect performance this year to demonstrate our resilience. We feel very good about the strategies we’ve implemented and our continued investments to support expectations for AdvanSix’s long-term sustainable performance. With that, we look forward to speaking with you again next quarter. Stay safe and be well.

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