That was up from 10% in Q2 2022. So it continues to grow rapidly. And when you look at the full year, as we think about the new products rolling into Q4, that number gets up to about $720 million year-on-year versus about $620 million the year before. So almost a 20% increase. That’s the heart of the Company today. It is the new products we’re introducing, the value they bring. Now I did talk about new products in Q4 going forward. Very important in Latin America, we have two brand-new products that we’re launching right now. One is an insecticide for soybeans; the other is a brand-new fungicide that is for soybeans, but will be traditionally launched on cotton first. Those are expected to be very valuable and large volume players as we go into Q4.
So, it’s not just price. It is the portfolio. We also talked about the diamides. Our branded sales of diamides performed well versus the rest of the portfolio. I think they declined something like high single digits versus our overall reduction of about 30%. That can’t be said the same for our partners in the diamides, which are the people that we sell technical diamides to. We talked about these partners before. They have been doing the same thing as everybody else in the industry, which is drawing down their inventories, which impacts our sales to them. That will come back next year. We have no doubt about that. We’ve talked to them. They’re just managing their inventory like we are. So I think you’ve seen a confluence of events that are playing out right now that will unwind as we go into 2024.
Operator: We have our next question comes from Christopher Parkinson from Mizuho.
Christopher Parkinson: Mark, just given everything that’s going on and I’d say the lack of urgency of wholesaler and co-op behaviors relative to the past few years, what do you think the probability is that some of your retail channels kind of overshoot to the downside in terms of inventories, just given healthy end market demand? I know perhaps that’s not kind of the key focus right now, but just given how strong volumes are and once again, what’s actually being sprayed, what are your thoughts on that on the various — within various geographies, but I’m asking specifically on North America. Thank you.
Mark Douglas: Yes. Chris, listen, I think you’re going to see pockets of people overshooting on inventory reduction. It’s such a big industry. There are many different nodes to these channels. You could tell that the industry’s ability to forecast what was coming, as we went down this curve, it’s probably the same as we come out of this curve. So I do expect to see places where inventory has been run down too much and will come back at a faster pace. There are other places where inventory was high and is being drawn down to what we would call more normal levels. So, it’s going to be a combination of the two. It’s — as I said, it’s such a large industry and complex supply chains that it would not surprise me to see that. I think you’ll see it in North America just as much as you’ll see it in anywhere else.
I don’t think North America is in any particularly different shape. I would say, Latin America, we expect to see the same phenomenon and certainly in Europe as well. We have seen public comments by major distributors in the U.S. about how they see their inventory levels reducing and how they expect to see that come back as we go through the next season. So overall, I think you’re going to see probably both impacts. Some people will overshoot and some people won’t.
Christopher Parkinson: Very helpful. And just as a quick follow-up. I know it’s a little bit early, but obviously, there’s going to be a lot of focus on free cash flow generation and obviously, how a lot of investors have been thinking about your rolling three-year averages and how ’23 is a bit of a hiccup in that kind of longer-term trends. Perhaps either you or Andrew could just hit on the key considerations as we’re exiting ’23, understanding there can always be a lot of movement between the fourth and the first quarters. But how should investors be broadly thinking about the longer-term algo as it — specifically as it pertains to hopeful ’24 improvements? Thank you.
Andrew Sandifer: Sure. Hey. It’s Andrew, Chris. Thanks. Look, I think that the story for free cash flow in 2023 is actually relatively simple. However, challenging and disappointing it might be in the immediate term. We have a substantial drop in the EBITDA guidance for the year that flows directly through cash flow. The sales growth is in the second half, and the balance of our sales is more second half weighted as you know well, given the regions in which those sales are made, we won’t collect on those sales in the year, so collections are lower. But building on comments Mark made in our prepared remarks, we are adjusting production levels across our operating lines right now. That means we’re not buying anything as we’re not manufacturing a lot of — we have ample inventory at the moment.
