ASIX - NYSE

Hello, and welcome to the AdvanSix Fourth Quarter of 2024 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. As a reminder, this conference is being recorded. I would now like to hand the call to Adam Kressel, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, MJ. Good morning and welcome to AdvanSix's fourth quarter 2024 earnings conference call. Joining me here today are President and CEO, Erin Kane, and Senior Vice President and CFO, Sidd Manjeshwar. 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, which we further update in subsequent filings with the SEC. This morning, we will review our financial results for the fourth quarter and full year 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.

Thanks, Adam, and good morning, everyone. We appreciate you joining us here today for our quarterly call. As you saw in our press release, AdvanSix achieved commercial success and advanced our key growth programs in 2024 while navigating operational performance that did not meet our expectations. It was a testament to the resilience of all our dedicated teammates focused on delivering financial results and shareholder value, while remaining committed to continuously improving our health, safety, and environmental performance as we recovered and learned from our challenges. We continue to benefit from our diverse product portfolio, with strong performance across our ammonium sulfate and acetone businesses. Robust market acceptance of our annual ammonium sulfate pre-buy program also supported strong cash flow performance in the fourth quarter, resulting in positive free cash flow for the full year. This past year, we funded key growth in enterprise capital investments, including expansion of our granular ammonium sulfate capacity, returned cash to shareholders through repurchases and dividends, and maintained prudent debt leverage levels. As we move into 2025, we are well-positioned to support our strategic growth priorities and we continue to focus on making the necessary investments at the right time to support our long-term performance. Lastly, I'd like to provide an update on two key developments on which we've made significant progress. First, we reached a final settlement reflecting our ongoing efforts to recover losses associated with the 2019 PES QME supplier shutdown. This included $5.3 million of insurance proceeds in the fourth quarter of 2024 and a final Omnibus settlement in the first quarter of 2025 of approximately $26 million. In total, we have received approximately $39 million of aggregated insurance proceeds since the 2019 event. Second, as one of the largest producers of ammonia along the East Coast, we were pleased to be one of the first industrial companies to be recognized for carbon capture through an approved life cycle assessment enabling initial 45Q tax credits of $9.7 million claimed in the fourth quarter. We both use CO2 as a feedstock in downstream products and sell to customers for beneficial reuse in various applications. Our initial credits were for the 2018 and 2019 tax years, and we continue to pursue credits for subsequent periods. Both of these provide tailwinds from an earnings per share and for cash flow perspective entering 2025. Now let me turn the call over to Sid to walk through the financials.

Thanks, Erin. And good morning all. I am now on slide four, where I will provide a summary and highlight key items of the fourth quarter 2024 financials. Sales of $329 million in the quarter decreased approximately 14% versus the prior year. Sales volume decreased approximately 16%, primarily driven by the delayed ramp to full operating rates following our planned turnaround. Market-based pricing was favorable by 2%, including continued strength in ammonium sulfate and acetone. Adjusted EBITDA of $10 million declined $5 million versus the prior year, primarily driven by the timing and impact of plant turnarounds, partially offset by changes in favorable sales mix, including lower plant nutrients and nylon solutions export volumes, favorable pricing net of raw material costs, and insurance claim proceeds. As a reminder, the impact to pre-tax income due to the plant turnaround in the quarter was $47 million compared to zero in the prior year period. Adjusted earnings per share of $0.09 increased by $0.19 versus the prior year. This included the impact of $9.7 million in 45Q carbon capture tax credits that reduced our effective tax rate to 3.1% for the full year 2024 compared to 21.1% in the prior year period. Free cash flow was $30 million in the quarter, up $8 million versus the prior year. Cash flow from operations of $64 million increased $4 million versus the prior year, primarily due to the favorable impact of changes in working capital, including our strong ammonium sulfate pre-buy program in the quarter. Capital expenditures of $34 million in the quarter decreased $4 million. Now let's turn to the next slide. On slide five, we've summarized our full year 2024 financial results. Our diverse portfolio, advantage of our integrated business model, and favorable industry dynamics, particularly in plant nutrients and acetone, enabled us to successfully navigate the year and deliver full year adjusted EBITDA of $142 million, adjusted earnings per share of $1.96, and positive free cash flow. Now let's turn to slide six. On the left side of the page, we've highlighted our cash flow profile by quarter. I too would like to thank all our dedicated and talented employees for their efforts to overcome and learn from the impacts of our operational challenges while driving commercial success. This demonstrates a persistent focus on effectively running our business to drive profitability. Through 2024, we continue to fund key growth and enterprise investments, including our sustained program, return cash to shareholders, and maintained prudent leverage levels. We ended the year at just about one turn of leverage, and a healthy balance sheet continues to support optionality for value-creative capital allocation initiatives moving forward. Now let's turn to slide seven. As Erin mentioned, I will provide a bit more detail on the 45Q tax credits. We operate an approximately 600,000 metric ton ammonia plant at our Hopewell, Virginia facility, from which CO2 is generated. The captured CO2 is used as a feedstock in downstream products through chemical conversion or sold to our customers for beneficial reuse in essential applications, including food and beverage, cold chain storage, and more. Our recently approved life cycle assessment of greenhouse gas emissions allows the federal tax credit based on the amount of CO2 captured that would otherwise be emitted into the atmosphere. These credits are eligible as of February 2018 when the tax code changed and applies over a 12-year period. The 45Q credits represent a significant value driver for our business over the medium to long term. The credits reduce our effective tax rate, are calculated for utilization, and are adjusted annually for inflation. We claimed $9.7 million in the fourth quarter of 2024 for the 2018 and 2019 tax years and continue to pursue these credits for subsequent periods. Now let me turn the call back to Erin.

Thanks, Sid. I'm now on slide eight to discuss each of our key product lines, starting with our plant nutrients business. We continued strong performance in 4Q, and market acceptance of our pre-buy program are further proof points to the resiliency of sulfur nutrition demand. Industry corn belt ammonium sulfate prices were up 15% year over year. In contrast, corn belt nitrogen pricing saw an 8% decline, supporting healthy realized sulfur premiums. Moving into 2025, our order book is robust, and we are now sold out well into the second quarter, reflecting a favorable setup into the Right. The combination of strong sulfur nutrition demand and tailwinds from rising grain and nitrogen fertilizer prices is expected to support higher ammonium sulfate pricing in the first half year over year. We remain confident that the underlying industry fundamentals supported by crop prices, stock-to-use ratios, and expected planted acres, among others, will continue to support nutrient demand. We are, however, monitoring higher anticipated raw material prices, namely natural gas and sulfur, which impact our overall price raw spread. Settle prices for both raws in the first quarter were higher than industry expectations, and the forward curve in forecast would indicate a year-over-year headwind for 2025. Long term, we remain excited about the growth prospects for this business and leveraging our expertise as a leader in this space. We continue to see strong demand for ammonium sulfate, as growers understand the value and seek ways to maximize crop yields. Our multiyear sustained growth program remains on track and is supporting market demand in North America, with potential upside driven by increased adoption on soybeans. We anticipate production capability by the end of 2025 to reach a milestone of 72% granular conversion, up from roughly 70% at the end of 2024. Turn to slide nine. For nylon, persistent global oversupply conditions continue to pressure pricing and spreads. The Asia caprolactam of our benzene spreads have essentially bounced around 2012 levels exiting 2024. We now expect a slower recovery off the trough. North American end market demand is relatively stable, with improved domestic supply given the absence of supply chain disruptions in 2024. As a result, from a buying perspective, it's been a relatively slow start to the year, including less disciplined competitive behavior impacting spreads in North America. Trade flows out of China, primarily to Southeast Asia and Europe, have also continued to limit pricing improvement globally. From a North American demand perspective, a lower interest rate environment in time is expected to favorably impact building construction end markets. However, the pace and size of those potential reductions are likely to draw out the time for meaningful impact to translate to fiber and filament locations. Demand across engineering plastics and packaging remained stable overall, with trade policy and tariffs essentially having the greatest impact on pricing and demand in the auto value chain in the near term. As we navigate what has become a protracted downturn in the cycle, we remain highly focused on supporting improved through-cycle profitability by driving productivity, optimizing our regional and product sales mix, and continuing to promote the value proposition of our differentiated nylon offerings, benefiting from running at higher operating rates relative to our peers. Given our cost advantage, our capital allocation utilization rate at Hopewell is targeted to be 90% plus for 2025. Let's turn to slide ten. Moving to chemical intermediates, industry realized acetone prices over refinery grade propylene cost generally remained healthy amid continued balanced global supply and demand, as lower phenol operating rates continue. While for the year, balanced supply and demand conditions are expected to support acetone spreads above cycle averages, here, we have also seen a slower start to the year. With demand for acetone into the MMA markets remaining soft, along with several downstream industry turnarounds occurring this quarter. We're monitoring for any change in phenol demand signals, which can impact market supply. With potential interest rate cuts likely pushed out further, phenol demand into building construction applications is also expected to be subdued. Demand across the rest of the chemical intermediates remains mixed overall, though many of these chemistries are high-value applications, supportive of longer-term growth and profitability. We are pleased to receive our new European patent grant in the fourth quarter for EasyBlox 2PO product used as an anti-skinning agent for outlet paints and coatings. Let's turn to slide eleven. To better help frame the various factors that impact our commercial results, given a number of moving parts year over year and sequentially, we've highlighted here several relevant KPIs and industry pricing metrics. Starting with raw materials. Forward curves and forecasts indicate significant year-over-year and sequential increases for both natural gas and sulfur prices in the first quarter as well as for the remainder of 2025. Natural gas and sulfur represented approximately 10% and 6% respectively, of our raw material costs in 2024. In plant nutrients, while we do expect ammonium sulfate premiums over urea to remain near the high end of historical ranges in 2025, the price roll spread is being impacted by these anticipated higher raw material prices. As a reminder, roughly half of our total company portfolio is on formula or index-based pricing, where we can pass through changes in our raw materials. For ammonium sulfate, however, this business is all freely negotiated and market-oriented. As farmers ultimately buy nutrients on their value, underlying nitrogen nutrient values are influenced by urea prices, which are currently based on industry marginal and producer of gas costs out of Europe and not the US. We then price our product with a premium for the value proposition of sulfur nutrition. Another important dynamic is to highlight that our ammonium sulfate order book is typically sold out one quarter. As I mentioned earlier, we are currently sold into the second quarter, so industry pricing quoted today reflects sales we're recognizing several months out. Also, we will be unwinding our fourth quarter 2024 pre-buy cash advances throughout the first half of the year, with the majority of those sales in the second quarter. For the remainder of our key product lines, we're seeing estimated spreads decline sequentially into the first quarter. Acetone spreads are off the prior year highs but are expected to remain above cycle averages, while global nylon spreads are near trough levels entering 2025. Lastly, we anticipate our first quarter nylon export mix to return to historical averages, representing a sequential headwind. Let's wrap up on slide twelve before moving to Q&A. While like many others, 2025 is off to a slower start, we continue to anticipate meaningful year-over-year earnings improvement for the full year 2025. This is supported by expected operational excellence, strong commercial performance across our diverse product portfolio. Our plant turnarounds are anticipated to be a tailwind year over year based on the scope and focus of this year's activities. We also expect CapEx to be in the range of $140 million to $160 million, reflecting the planned progression of growth projects, including our sustained program and refined execution timing to address critical enterprise risk mitigation. Our organization's efforts are centered around improving through-cycle profitability, which requires us to drive productivity, optimize our regional and product sales mix, and continue to promote the value proposition of our differentiated product portfolio. We understand that we're operating in an uncertain environment. However, the macro backdrop for the industries we serve remains largely favorable overall. We expect strong sulfur premiums supporting plant nutrients, and a constructive global acetone supply and demand environment, which should serve as the counterbalance to an anticipated slower recovery across our nylon solutions business. We continue to protect our healthy balance sheet, enabling our capital allocation framework to provide optionality for further value creation. We remain confident in the future prospects for AdvanSix and are committed to delivering sustainable long-term value to our shareholders. With that, Adam, let's move to Q&A.

Great. Thanks, Erin. And, AJ, can you please open the line for questions?

Certainly. We will now begin the question and answer session. To withdraw your question, at this time, we will pause just momentarily to assemble our roster. Today's first question comes from Charles Neivert with Piper Sandler. Please go ahead.

Good morning, everybody. Couple of questions. One, on the conversion to granular side, you said you're heading for, what, 72%. I mean, is there a maximum? Would you go to 100, or does the market not really, you know, given that you move a lot to the Latin American market, at certain times of the year, does that include going to that higher level and ultimately, what level do you guys want to attain in terms of granular production on a a

Yeah. So, Charlie, the SUSPANE program, as you may recall, is being driven to a 75% target conversion. And so, you know, we don't anticipate that, you know, our assets will get to 100. The 75% is a nice stretch matching sort of the North American domestic demand, you know, for this higher premium product. And, you know, certainly on the export side, you know, that is, you know, typically more in our standard grade, that we focused on there at this time. But obviously, there is a, you know, both a technical max that can be achieved and certainly, making sure that we, you know, are driving to support our domestic customers.

Got it. Another question. Is the phenol market, you know, still problematic and therefore creating some opportunity for your acetone side, you guys consume a vast proportion of your phenol, are you still running it above what's, like, industry rates for phenol? And therefore producing the more acetone and acetone remain sort of snug for that reason. Is that still the situation out there? I mean, you look at, you know,

Sort of broader operating rates in the US, phenol rates are sitting at about 65% plus minus percent, and we are targeting a rate that is, you know, higher than that. Obviously, because of our strong integration into our caprolactam value chain. Obviously, you know, given that the vast majority of what we produce is forward integrated. So, again, as we've talked in the past, you know, for us, acetone serves as a bit of a natural hedge. Right, and a lower phenol operating rate. Environments.

Got it. Then just on the carbon capture side, Avid, the assumption is that'd be that you're gonna you've collected eighteen, nineteen. You've got twenty, twenty one, twenty two, twenty three, and twenty four that they'll deal with. But is there any idea about just what twenty five will produce, excluding anything you may get from prior years, do you guys have any estimate on that or any guidance on that number? What it might be? And I know it may or not occur in twenty five, but just what are we what are we potentially looking at there?

So good question, Charlie, and I hope you're doing well. I think look. The way to think about it is it's taken us five years to get to this point. Right, with all the approvals, filings, etcetera, for the 2018 and 2019. Year. So on a run rate basis for the next several years, could assume a $5 million that it escalates given there's on our utilization and what is being published by the IRS in terms of a credit schedule with inflation baked in. So that five, six, million run rate would expand.

Okay. And then if I'm looking at at I'm sorry. Go ahead.

No. I was just gonna say, you know, the one thing to consider here, Kelly, is we're we do move sequentially because we have to file life cycle assessments for certain time periods and then go back and, you know, perfect claims. So Just as that you know, we think about sort of our our time frame here. We are moving sequentially. as a note for your consideration.

Okay. And then on that front, I mean, if you look at all the carbon capture you're you're doing now, is that basically all you can do I mean, physically can do, or is there potentially more coming? Meaning, you know, you have to have the offtake agreement, you know, all the off takes and all the rest of that stuff But are you capturing all that you can, or is there more that conceivably could be captured if you can find the home for it?

Yeah. So, effectively, when you look at what what we consume internally and sort of incorporate through chemical conversion into our downstream products And then with our three you know, three partners for the uptake for beneficial reuse we effectively have been omitting or venting very little process CO2 for quite some time.

Okay. So, basically, you you've got pretty much all you can get out of it. The number will be whatever whatever, you know Yeah. The opportunity is just to finally yeah. To finally get the credit for it. Yes. Yep. Okay. Thanks very much. I'm good. Thank you.

Thank you.

The next question comes from David Silver with CL King. Please go ahead.

Okay. Hi. Thank you. I guess I have several questions. First, let me just look here. First, if you don't mind, you know, you did sketch out a range for capital spending in 2025 of $140 and $160 million. And I was hoping you could just take a minute and maybe call out the different buckets there in particular. I mean, as I recall, I think $75 or $80 million might be sustaining. So I'm kinda more more interested on the discretionary side or the non-sustaining side. Certainly, some of that goes into the ammonium sulfate expansion. But can you just maybe take a minute and, you know, where else are you directing, you know, discretionary CapEx in 2025? Thank you.

Yeah. Thanks, David. Good question. Yeah. Maybe I'll walk you through the framework and the various buckets, like you suggested. So look, this year, it's $140 to $160 million. It's up from the $134 million in 2024, but it primarily reflects the planned progression of our growth projects, including our sustained program, and a refinement, I'd say, on the execution timing over the various critical enterprise risk mitigation. Also, there was a $10 million carryover from 2024 to 2025 based on execution. So that's that's one piece of it. On the base maintenance capital, which you know, improves and supports our safe and stable operations, year over year, we expect that to be down and within our framework. That's offset by some of the enterprise programs, including spend for our Hopewell water permit. And then as you know, the Frankfurt Dock and Boiler upgrade is supposed to wrap up this year, so that's another piece of it. But primarily, the major driver moving the needle here is the growth capital investment related to sustain. It was roughly $8 million last year and it's projected to be in the $20 to $25 million in 2025. So you think about this year versus next year as well, 2026 spend is likely to be flat to down with that framework that we adopt in terms of how we bucket and budget for.

Okay. Great. Thank you very much. Next question would be about natural gas costs and in particular regional spreads. So, Erin, I think in your prepared remarks on maybe the KPI K. She did touch on this briefly, but you know, I do kinda track that regional spread, you know, from when it got extremely wide a few years ago. And it's certainly not back to where it was in, I don't know, 2021 or 2022, but it has been ticking up pretty pretty noticeably through the last few months of the year. So firstly, I mean, I guess I was just wondering, you know, if you consider that kind of a maybe a secondary or a background support to your fertilizer business and and then more directly, but do you think that that has redirected, you know, global trade in in ammonium sulfate or other products. That you know, impact on your you know, competitiveness or competitive advantage in the domestic market?

Yeah. So certainly from you know, a nutrient or, let's call it plant nutrients perspective, you know, energy costs, you know, are important. You know, certainly, as we think about how that impacts, you know, the marginal producer around the world, for for nitrogen. And, certainly, the EU is currently the marginal producer as part of certainly what is supporting the higher global urea prices, you know, certainly in combination, though, with some supply disruptions, higher India demands, you know, other things around around the world, but isn't necessarily impacting global AS trade, if you will. It certainly is enabling a higher nitrogen-based pricing and, again, in which we are then, you know, working to to drive our premium for sulfur nutrition on top of that. So there there is a a play there, right, as it follows through on the nitrogen side. You know, relative to energy costs in in Europe, you know, to your point, it it definitely does impact producers and and other value chains in which we operate when we think about the chemical intermediates, peers that were producing phenol acetone in the region as well as certainly caprolactam and nylon. And so know, we continue to, you know, see that that impacts their utilization rates. And, you know, as we've seen in nylon, you know, that continues to attract import from Asia and China because of where they sit on on the cost curve. So, you know, I think the dynamic has remained the same. It may just be sort of an amplify energy prices.

Okay. And, again, on ammonium sulfate. But you called out, you know, the the improved sulfur values, you know, implied or direct on ammonium sulfate. And I'm just wondering, I mean, there are very few fertilizer products that you know, include sulfur directly, but in the domestic market, what what is the most competitive way of providing that incremental sulfur, let's say, to a fertilizer blend. Is that just elemental sulfur? Or is there another is there another way that you know, the the channel gets the sulfur they need other than, you know, through your yours or someone else ammonium sulfate product.

Yeah. There there certainly are, you know, alternatives. Elemental sulfur is the one as you, you know, point out, but when you just look at the sulfate form of sulfur that you know, we provide, certainly, it's the best option for the pound for pound to deliver the nutrition. You know, that that the plants require. You know, elemental sulfur in comparison has just different types of issues and becoming plant available, you know, from a timing standpoint because it has to oxidize in the soil, which is slow. Right? So, again, we go back to sort of the the years of field research. You know, the education that we spend, you know, with retailers and growers into the value chain, you know, that AS certainly is again, pound for pound, the best the best nutrient for sulfur nutrition available.

Okay. No. Thank you. Yeah. And I I knew there would be agronomic benefits based on the form of the Yeah. Form of the sulfur. Question on nylon. But, you know, you did call out in increase competitive pressures, and I was hoping you might be able to just add a little bit more color there. So is is this the case where, I don't know, the the sloppy marketing is maybe showing up in the form of extra spot product availability, or is this the type of thing where maybe there's unex competition in unexpected kinda end markets. Where, you know, you're having to defend some maybe long-held contract business. But you know and I guess I'm asking that as kind of a metric for you know, whether this is something that might last a quarter or two or whether it's maybe more more structural. But if you could maybe just touch on where the increased competitive pressure in the domestic market are are are most visible. Thank you.

Yeah. Sure. When you think just sort of kind of the standard sort of supply-demand fundamentals, you know, demand has been relatively stable. Right? You know, I think it's mixed across the end markets, you know, relative to where it sits from, let's say, history or pre-COVID levels. You know, fiber and filament is is down, and engineering is sort of recovered. But it's been year on year, and we kinda see it as as stable given kinda where the value chains exist today. The big difference between 2024 and 2025 is, you know, we were transparent in our operational disruptions. Another North American competitor had several force majeures as well last year. And so, you know, the supply side was a bit tighter domestically. Certainly, we saw, you know, imports continuing to, you know, compete here. But what's what's restored now is the domestic supply. Right? So I think it's a natural, you know, consideration of, you know, where folks are establishing and looking to either gain or defend share, as you say, in the the year given sort of that that fundamental change. You know, relative to timing, Dave, I think what we wanted to clarify in remarks is that it clearly, this chain is is dealing with persistent oversupply. And, you know, we need to continue to to watch. I think, third-party views are that, you know, it's reached a point like in many other value chains, right, where, you know, ultimately, some restructuring, some access has to, to take place here. And we I would note there were recent announcements. You know, Ube is a a large multinational operating in the space is going to cease production of caprolactam and nylon in Japan by March of 2027. They're gonna remain running their their plant in Spain. Solana in the Czech Republic is exiting caprolactam by mid-2025. You know, so there's there's some starts. You know, these these two announcements are not fully restructuring, but I think this is where we're at. We've been watching it. And so again, hence sort of our our commentary that this is gonna be a slower recovery. You know, then perhaps we had previously anticipated.

Okay. Very good. And then maybe just the last one for me. But you've called out the positive outlook for your fertilizer, you know, products sold into the ag markets. You also make, you know, some chemicals that end up in crop chemicals and pesticides and whatnot. You know, would would you say the outlook for that portion of your business is also, you know, as robust or positive or, you know, not not tracking, but how might how might your broader ag portfolio be doing, you know, above and beyond the ammonium sulfate.

Yeah. So we do, you know, certainly see kind of a continued challenge, you know, in the ag chemical space. You know, I think that there's challenges that might see similar sentiment from others, although it's kind of mixed depending on perhaps what what chemical you you are operating in and and where you sit. So you know, we continue to, contend with low price competition and Chinese imports in certain markets, particularly in our amines, you know, business. So this is an area where, you know, certainly we see our our downstream customers, you know, who are taking our products and and transforming into glyphosate type products are also experiencing, you know, some challenges. So this is a space we we continue to perhaps, you know, see lag relative to, the positive trends we're seeing in the dry fertilizer space.

Okay. Terrific. That's it for me. Thank you very much.

Thanks, David.

The next question is a follow-up question from Charles Neivert with Piper Sandler. Please go ahead.

Yeah. Just on a quick thing. You you were talking about nylon production in China maintaining, you know, a fairly high level despite issues in in their economy. Has that created anything that or any sort of additional competition for you guys or seeing any extra product from the AS side since they, you know, they're running a lot of caprolactam as well. To run the nylon. Has that created any any issues in any particular markets, or you just not seeing anything at this point?

Yeah. You know, certainly, you know, all of that extra caprolactam production does come with ammonium sulfate output as you as you point out. Albeit it comes out at a different ratio, but you know, China has been primarily focused on the Brazil market. And so, you know, we have continued to see increasing exports, you know, there. And and their focus there and as a reminder, so obviously, when you look at sort of the two largest, you know, markets that exist today, they're focused there and that enables us to continue to grow, you know, here in North America.

Alright. That's it for me. Thank you.

Great. Thanks, Charlie.

Thank you. This concludes our question and answer session. I will now turn the call back over to Erin Kane for closing remarks.

Thank you all again for your time and interest this morning. Looking forward, we are confident in our demonstrated ability to perform through a multitude of environments. We are well-positioned to deliver improved earnings performance year over year, supported by our resilient business model, our position as a diversified chemistry company, and our strategic growth focus. We are confident in our strategies to support higher through-cycle profitability and total shareholder returns. With that, we look forward to speaking with you again next quarter. Stay safe and be well.