Good morning and welcome to the AdvanSix Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Adam Kressel, Director of Investor Relations. Please go ahead..

Thank you, Andrea. Good morning and welcome to AdvanSix's third quarter 2021 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 of the SEC.

This morning we will review our financial results for the third quarter of 2021 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. Thank you for joining us this morning and for your continued interest in AdvanSix. AdvanSix continued to execute well in the third quarter while supporting our customers to successfully navigate the current set of industry dynamics.

We delivered robust sales, earnings and margin performance as well as record quarterly cash flow since then, made improving end market demand and tight industry supply conditions. Mike will cover the details of our financials in a moment.

It's important to note that our integrated business model and unique combination of assets, coupled with our leading North American positions across our diverse product portfolio are paying significant dividends for the business.

The industries in which we participate were once again presented with supply chain and logistics disruptions, escalating raw material inputs and inflationary costs. Our team continued to demonstrate that we can perform in all environments and this quarter was no exception.

Our performance was supported by strong pricing and volume improvements including contributions from differentiated products and our continued execution to capitalize on near-term opportunities while driving our long-term strategies.

Building off we shared - building off of what we shared at our recent Investor Day, we feel very good about the foundation we've built in the last 5 years and how we are positioning the company going forward to drive performance and growth.

We are highly focused on executing what is in our control, driving superior operational and commercial performance to meet the evolving needs of our customers. Building capabilities to strengthen our innovation and portfolio resiliency and maturing our capital stewardship to enhance attractive total shareholder returns.

There is a lot to be excited about, this past quarter we continue to expand our digital presence with our node storefront featuring a number of chemical intermediates and nylon products across our portfolio. We received our first commercial order a newly introduced 100% postindustrial recycled nylon resins.

We maintain conversion of roughly 65% of our ammonium sulfate into our higher valued granular grades, to meet the growth demands of our customers. We were ranked 30th in Investor's Business Daily best of hundred ESG companies of 2021. We initiated a $12.5 cents per share quarterly dividend, reflecting our confidence in free cash flow generation.

And we completed a refinancing of our existing credit facility by entering into a new 5-year $500 million revolving credit facility, providing increased liquidity and flexibility at lower borrowing costs. As we look ahead, the outlook for our business remains favorable.

We're focused on strong execution to close out and expected post spin record year in 2021 and taking that momentum into 2022. As we align our long-term strategies with strong and sustainable shareholder return. With that, I'll turn it over to Mike to discuss the details of the quarter..

Okay, thanks. Erin, and good morning everyone. I'm now on Slide 4, where I'll highlight the third quarter financial results. As you can see it was terrific performance really across the board. Sales totaled $446 million, up 58% compared to last year.

Pricing was favorable by 50% comprised of raw material pass-through pricing of 22% following a net cost increase in benzene and propylene and market based pricing of 28%. The improvement in market-based pricing was seen across each of our product lines.

Sales volume in the quarter increased 8% driven primarily by improved end market demand across our ammonium sulfate, nylon, and Caprolactam product lines. EBITDA was $75 million, an increase of approximately $59 million versus the prior year. I'll walk through the key year-over-year variances on the next slide.

Earnings per share of $1.51 increase, a $1.53 per share versus the prior year loss of $0.02 per share. Our earnings results were above the high end of our outlook we provided at our September 20th Investor Day, primarily driven by better than expected pricing, net of raw material cost, as well as the timing of ammonium sulfate sales.

And finally, cash flow from operations was a quarterly record since then, reaching $76 million, that's up about $41 million compared to last year, primarily due to higher net income and the favorable impact of changes in working capital.

CapEx of $13 million was favorable by roughly $3 million year-over-year, reflecting capital process efficiencies and timing of project execution.

Now let's turn to Slide 5, here we highlight a few of the key drivers of our third quarter EBITDA performance year-over-year, pricing of raw materials was roughly a $40 million tailwind as we drove value through strong commercial excellence across the portfolio.

Tracking our key variable margin drivers, performance in chemical intermediates reflected a continued favorable supply and demand environment for acetone over propylene spreads.

Caprolactam and nylon over benzene were up year-over-year as well, reflecting continued improvement in industry spreads supported by tight industry supply demand, while demand has steadily improved.

And as expected, ammonium sulfate on a net price over natural gas and sulfur basis, turned positive year-over-year, reflecting the strong underlying agricultural environment as well as our ability to drive value above and beyond the sharp increase in input costs.

The impact of planned plant turnarounds to pre-tax income was 0 in the third quarter of 2021, versus approximately $20 million in the third quarter of 2020, representing an approximately $20 million benefit year-over-year.

As you may recall, we successfully completed our larger Hopewell turnaround in 2020 in the third quarter, including our Kellogg ammonia plants. In 2021, our larger Hopewell plant's turnaround including our sulfuric acid plant is in the fourth quarter, which as of today is mechanically complete.

Lastly, volume and other items were approximately $1 million unfavorable in the quarter, higher volume was largely offset by increased plant spend and sales for a support growth and higher incentive compensation expense.

In the third quarter of 2021, we also had roughly $2 million of favorability from additional insurance proceeds related to the 2019 shutdown of cumene supplier Philadelphia Energy Solutions or PES, its overall strong commercial and operational execution in the current set of industry conditions. Now let's turn to the next slide.

On the left side of Page 6, we've highlighted the drivers of the $63 million of free cash flow generation in the third quarter, supported by net income, working capital and lower CapEx spend rates. Another very strong quarter from a cash flow perspective, building on the $85 million of free cash flow generated in the first half of the year.

Working capital was roughly a $12 million source of cash in the quarter with an increase in accounts payable, partially offset by other working capital. As always, there are timing consideration when it come - timing considerations when it comes to working capital, particularly around inventory and accounts payable related to raw material purchases.

For CapEx, we now anticipate a full year estimate of approximately $63 million compared to our prior expectations of $65 million to $70 million, reflecting efficiencies in our capital processes and timing of project execution. This does represent a step-up sequentially in capital spending in the fourth quarter relative to our run rate year to date.

Improved cash flow alongside with robust earnings enables more flexibility to create value for our shareholders. As Erin mentioned earlier, our new credit facility also provides increased liquidity and flexibility at lower borrowing costs, reflecting our strong business performance and more favorable credit market conditions.

Given the strength of our cash flows and our confidence in future cash generation, we have committed to a structural return in the form of a competitive dividend, which we intend to sustain and grow over time. We also continue to target accretive M&A and are building off the success of the CAS acquisition earlier this year.

So overall, a disciplined and balanced capital allocation strategy that we believe is a value enhancer to our core strategies and a key focus to support attractive total shareholder returns. Now let me turn the call back to Erin..

Thanks, Mike. I'm now on Slide 7, where we've included pricing and spreads across our product line. Starting with nylon, we've seen spreads further improving through the third quarter on a year-over-year basis, while remaining roughly flat sequentially from the second quarter.

The Asia Caprolactam where the benzene spreads, average roughly 10.50 per ton in the third quarter. With the second quarter of 2021 and an increase from just over $600 per ton in the third quarter of 2020. Spreads are relatively in line with marginal producer economics, reflecting a more disciplined environment.

we are monitoring potential impacts from dual policy controls in China on these value chain. The North American market continues to be characterized by robust and market demand with the backdrop of rising input costs and continued industry supply constraints globally.

Overall, nitrogen industry pricing has significantly surge higher through the third quarter, supported by higher raw material input costs, industry supply constraints globally, and continued strong agricultural fundamentals including crop prices, stock to use ratios and planted acres overall.

As we have discussed previously, natural gas and therefore ammonia, as well as sulfur prices have substantially moved higher this year relative to historically low prices throughout most of 2020.

We do believe we're well positioned to succeed in this environment, given our footprint here in the U.S., with access to key premium selling region and our make versus buy advantage on feedstocks. As an example, natural gas prices in Europe have been roughly 5 to 6 times higher than here in the U.S.

Overall, we would note that we did not see our typical ammonium sulfate seasonal price and mix impact sequentially in the third quarter. The better than expected results reflected improved domestic volume and pricing performance through the quarter.

And lastly industry realized acetone prices over refinery grade propylene costs, while still higher year-over-year, have further moderated sequentially into the third quarter as expected, and now into the fourth quarter on continued balancing of supply and demand.

As a reminder, the small medium buyer acetone price is reflective of roughly 1/3 of the domestic industry where pricing is predominantly freely negotiated. Let's turn to Slide 8, to discuss our preliminary outlook considerations for 2022. We are building on the momentum created this year, as we head into next year.

Across the various value chains we participate in, we continue to see rising input costs and industry supply chain disruptions, at a time when demand overall remains robust.

Our ability to execute and navigate in this environment is core to our integrated business model, pricing mechanisms, and leading customer positions across a diverse set of end uses and applications. There are some puts and takes across the portfolio from a commercial perspective.

In the nylon space, we expect steady North America demand and favorable end market conditions and tight industry supply. Residential construction has remained strong and we're seeing early signs of recovery on the commercial side.

Packaging demand has remained healthy as well, demand for engineer plastics continues to be resilient, however we are monitoring the effects of shift and other material shortages leading into value chain.

In this tight supply-demand environment, we remain focused on delivering to our brand promise of being our customers trusted partner, by meeting their volume and quality needs.

In the short term, our priority is to ensure inventories are in line to meet our targeted service levels, while we continue to drive our longer-term development effort on differentiated nylon product offering.

In ammonium sulfate, a number of key agricultural indicators continue to trend favorably as well, and we expect robust industry fundamentals through the 2022 planting season. It's fair to say that this is a strongest Ag and fertilizer environment we've seen in the last decade.

Underlying demand coupled with nitrogen industry supply tightness and rising input costs, all have supported increases in pricing.

With sulfur demand remaining robust as a key nutrient supporting crop yield, we continue our efforts to drive the sulfur nutrition value proposition down the value chain, as well as our initiatives to drive strong granular conversion of our ammonium sulfate product.

Moving to chemical intermediates, expect favorable demand trends to continue for our full product portfolio, which serves a diverse set of end markets and customers across building construction, auto, paints and coatings, solvents, electronics, and pharmaceuticals to name a few.

We're supporting growth across the portfolio through investments in high-value and high purity applications. Our recent 2BO expansion will enable further growth into outlet base paints and other applications, as we continue to drive commercial traction in this product launch.

We're also ramping up efforts to support anticipated growth of our nato and cyclohexanone product line, which is a solving use in various high-value applications. Finally, we do anticipate further balancing as we've see this year to continue North America acetone supply and demand into 2022.

Operationally, we will continually focus on safe, stable, and sustainable performance, while driving less variability in utilization rates, which as we've shared in turn, drives higher returns for the business. We have ramped back up following our plant's fourth quarter 2021 plant turnaround.

I would highlight that as part of the turnaround activity this quarter, we did identify additional required maintenance work at Hopewell and were delayed in our restart, achieving four weeks now, several days later than planned.

During this time, we did take the opportunity to pull forward some compliance and essential work that ultimately would have been completed in 2022. So for the fourth quarter 2021, we now expect the pre-tax income impact from plant turnarounds to be approximately $19 million or roughly $4 million higher than the midpoint of our previous expectation.

In 2022, we expect CapEx to be in the range of $95 million to $105 million, primarily reflecting an increase in base maintenance CapEx from 2021. So, this is tied to an increase in capital associated with our turnarounds and timing of project execution relative to this year.

We are also still refining and executing against the roughly $50 million to $100 million high growth and cost savings project pipeline. However, as we share, these projects will generally be smaller in size, to what has been executed over the past few years.

Overall, we expect continued strong execution into next year with a number of tailwinds that are back to support robust earnings and cash flow performance. Let's turn to Slide 9 to wrap up, before moving to Q&A. I'd like to return back to our investment thesis that we shared at our recent Investor Day.

Our integrated business model and unique combination of assets is a source of competitive advantage and positions us well in any environment.

We continue to see that on display for the third quarter, we have leading positions across our product lines and are more than a nylon company with significant contributions from our ammonium sulfate and comes on our intermediate portfolios. Our products have a variety and diverse applications where macro trends are supporting long-term growth.

We significantly improve the base earnings power of the company with the high return investments we've made in operational and commercial execution. Our differentiated products are providing good tailwinds for the company and we expect that will continue.

And lastly, we are enhancing value creation through our disciplined and balanced capital allocation strategy. We have initiated structural return of cash to shareholders in the form of a dividend and are excited about further opportunities to deploy capital.

All of this positioning us to drive total shareholder return over the short, medium and long-term. with that. Adam, let's move to Q&A..

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

[Operator Instructions] The first question comes from David Silver of CL King. Please go ahead..

Thanks for the opportunity. So I have few questions. I guess maybe, I would first maybe like to drill down on the elements or the catalyst that drove your third quarter results above the guidance that you issued I guess on September 28, as part of the Analyst Investor Day event.

So what happened maybe in the last few business days of the months that led to that incremental upside? Thank you..

Yes, I mean, David, it is a combination of really two things, one is ammonium sulfate volume domestic, volume here was a bit stronger than what we had anticipated and we closed a bit strong, so that - that's really timing between the third quarter and the fourth quarter, so that may perhaps give us a little bit of a headwind in the fourth quarter, so really timing that drove half of that upside.

And the other half was better price draws results, particularly in the intermediate space, we had propylene that ended settling down just a little bit, little more favorable than what we expected and that drove the other half of the favorability..

Okay.

So I'm going to drill down on the fertilizer side of things now, but when I look through the quarterly results, I mean the one number - there were a lot of great numbers, but the one that really stuck out to me was the revenue performance in ammonium sulfate 3Q versus 2Q, I don't --I did not expect the revenues to be higher in the third quarter.

Could you maybe just discuss - I see the price chart and this and that, but can you maybe discuss the elements that led to that kind of unseasonably strong - I guess revenue performance?.

Yes, sure. Thanks David, certainly when you look at where pricing was, let's say on July 1st to where things have really kind of been trending in the last couple of weeks. As you see on the pricing charts, the AS Cornbelt pricing is up 33%, the Cornbelt, up nearly 54% you have rising through this time frame. Energy prices and natural gas.

Just have continued to drive forward on what that means into the industries' cost base. So when we think about normal 3Qs, right. We've talked about this in the past, we tend to see is our fall fill, your pricing resets for the next season, we had indicated pricing would be higher this fall than previous years as the industry reset.

So we started out at a good spot. But as the situation became tighter. right. I think the volumes picked up domestically more than we would have anticipated and pricing moved up quickly as well. So when you think about sort of that sequential consideration that we normally think about, it comes in both volume and mix. So we swing to the export markets.

We still supported the export markets in both granular and standard sales, but the domestic side moved more quickly than what would have typically been seen. I mean, it really is that price move that contributed to the expectations - sorry the results that you saw here versus our expectations..

Okay. And then maybe just one question on cash flow.

I was a tiny bit surprised that the working capital - the net working capital usage was a $10 million benefit this quarter and I'm thinking - I was just wondering how much of that might be an inability to get your full complement of raw materials on the one hand, are you teed up for continued high utilization in the fourth quarter across your integrated chain.

And then the second thing would be, again back on fertilizer and kind of that fall fill, the customer deposit activity. Maybe if you could chart that, this third quarter versus a year ago. That would be helpful. Thank you..

Yes, I'm happy to take that. When you look at the working capital, these really most of that benefit is timing. I would say when you look at the --roughly working capital, when you look at the slide was a generator of $12 million in cash flow overall.

And if you sort of purely on that accounts receivable was actually unfavorable from a cash perspective, sales were up. So that's not a surprise. Inventories were slightly unfavorable by about $3 million. And then really where you saw the big benefit in cash is in accounts payable, accounts payable was favorable by $20 million in the quarter.

And frankly, that was really more associated with timing when we're acquiring raw materials, particularly cumene, you could see some swings from a cumene perspective that could impact the inventory balances as well as the accounts payable and by the way.

Some of that - so that contributed to the very high conversion, free cash flow conversion that we had in the quarter. In addition to the fact that the CapEx spend rates were still below depreciation, which also contributed to the high conversion, what I'll say is some of the working capital will probably reverse itself.

So working capital, when you look at the fourth quarter is likely to be a bit of a headwind. And then, we'll see the CapEx spend rates come up in the fourth quarter if you sort of back out the first three quarters of the year.

We're anticipating roughly $25 million of CapEx spend in the fourth quarter so that conversion, if you will, when you look at free cash flow relative to net income will come down relative to what we've seen. So that's what I would anticipate.

With respect to the pre-buy, as is the case in any fourth quarter will assess the market environment, understanding the pre-buy and what the customers are anticipating and what they're looking for. Clearly, it is a tight environment - tight environment overall. At the same time, raw materials, natural gas, as you see sulfur have been very volatile.

So we will take all of these elements into consideration and develop an approach intended really to optimize the outcome in the 4th quarter. So we'll evaluate that as we get through the quarter..

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

So I'm wondering can we expect to see you placing incremental capital into Europe over these next few months, just given the disruptions to their gas and ammonia availability or the U.S.

market is tight enough that with freight, it's still more profitable to keep most of your product here?.

To your point out. Vincent.

Globally, there is quite a bit of tightness going on and disruption in this chain, given our long tenured and standing relationships with our North American customers, as you think about how demand has come back, we have always said that our volumes will come back here and relative to supporting their demand and their needs and right now, North American demand is robust.

So, appreciate that, there are these considerations externally, but over long stretches being close to our customers that if we share 20 to 30 years where the relationship work, it is the keen focus here that where they trust their partner first and then obviously if there is additional molecules to optimize around thereafter, then we would obviously seek to place them in the best opportunity..

Actually, that makes perfect sense.

And just kind of given it's coming up in that time of the year and with the huge swing in trade flows around acetone into the U.S., do you have any indication or maybe some history of the large buyer networks working with some of these new Asian suppliers to the U.S.?.

Yes, I think the large buyer customers here and there, they're buying larger volumes that represents more or less 2/3 of the market. You can look at them on a geographical basis and some do have the ability to potentially import.

The way we see the market is, we need about 15,000 tons give or take to balance the, really the North American situation on average, why do we think about what those monthly and quarterly volumes need to be coming in.

So either right now though, when you look at where underlying raw material pricing is and everything else vis-a-vis where North America sits, most of our discussions around security of supply and that has been a focus really throughout a number of our value chains and obviously plays well into what we believe is our competitive advantage and core proposition that we can bring the customers.

So, fairly it's always a point of conversation, but I think you're seeing it helps to how focused or securing their molecules for next year?.

Yes, Vincent, the only other thing I'd add is that channel to market, which is 2/3 of acetone going into primarily M&A is highly contracted. So we do have agreements that span over time for volumes and, as Erin indicated security supply is really an important element than consideration with that channel..

Okay. I think it is helpful, if I may - I just had a couple of non-market based questions. So first, we've been hearing more and more labor shortages and you in Virginia or maybe a little secluded from the bulk of the U.S. pet chem industry.

So I was hoping you might be willing to discuss how you feel about your age distribution at your key assets and what kind of programs you run or exploring to promote and secure skilled labor over the longer term?.

Thanks, Vincent.

And certainly from a trend perspective in a demographic footprint perspective, I would say that our demographics look very much like the broader industry and I don't think we've talked about that personally, but there is sort of a missing generation, if you will in the chemical industry based on, we are in the passive, had tougher times and less hiring, so we do have a bimodal demographic to some degree.

And certainly as we think about that transition, I think there's a lot of opportunity set for us.

I mean, obviously we are spending time thinking about how we can use technology relative to improvement in sort of industry for that all kinds of conversations and opportunities and how we leverage our technology, building out our reach into communities and high schools and working even with some state programs on what the profile the graduate needs to be, right for us to have a driving pipeline.

We have been supportive of programs and scholarships for into FOSSI, which is a future of stem sellers initiative, focused on really enabling folks that are underprivileged and represented minorities getting into - to some education, so again building out really a multifaceted program here.

And as you point out, something that the industry will have to transition. That said, I do think we're going to have multi-generations in our labor force for years to come.

I think that could be a real strength for us given the longevity of many of our employees and really the strength of knowledge and opportunities that they have relative to driving the company forward as well..

Excellent. And then just because you brought it up, so is playing around on this node website, it looks pretty interesting.

Can you just describe how this operates from a commercial perspective, is this like sales drop from distributors or is it more like a lead generator where the customers are directed to you?.

Yes, so the latter at this point, Vincent. So, I appreciate you was around there and we think about again just it's a build perhaps from your last question right, generation, let me see our bars that our customers have different profiles, technology in our personal lives is how we interact with what we buy as well.

So this digital platform and digital marketplace is just another opportunity for us to right now broadened our reach into formulators and in focus what we specifying and looking for on products with various attributes and benefits.

And then in the background, we obviously are providing technical expertise and of the like and, it's a lead generation and we'll look to continue seeing how that can really kind of play forward for us going forward..

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

Couple of quick questions, One, I'm looking at your chart for ammonium sulfate, and obviously the last month or so, we've seen a real movement on time, saw the nitrogen pricing, but sulfate seems to be lagging a bit. Do you guys expect to sort of close that gap up again. I mean it seems to periodically will open up and then re-close.

So looking at where things are right now and some of the prices that have gone off. Is that something you expect in the fourth quarter - in the fourth quarter numbers.

Understanding that there is maybe a switch between the granular and standard product and then sort of working off of that, have you seen any logistics issues, I guess the Brazil, because I guess it's about time to start moving product down there once you go to winter and you're not moving as much product domestically.

So can you just talk to that dynamic a little bit?.

Yes.

So certainly, when you look at the pricing of AS in urea, as we note there is a - we watch urea as you point out, because it provides the underlying nitrogen value, if you will, and then certainly we are then focused on earning the premium associated with the softer and sort of the residual dollar that a grower would pay for and indeed, when we look at sort of the current mark to market sort of prices, that the latest offerings of ammonium sulfate against the latest offerings of urea, we do continue to see strength in that value proposition and premium.

They have different dynamics. So relative to sort of where reached a product is right, there can be varying considerations on what is more spot oriented trade, which may get published out versus what fall fill. If you will or sort of where people take positions.

It is a market, as you all know that there are folks that kind of sell and buy into position at various times throughout the year. So certainly though the ammonium sulfate market does continue to appreciate in price and we expect that to continue to move forward..

And Charlie, just one consideration with that as well as the rapid escalation with natural gas.

If you think about the variable margin for ammonium sulfate right, it's less sulfur, less natural gas and we saw a 40% increase in natural gas in the third quarter, we're looking at another 40% increase in the fourth quarter and clearly ammonium sulfate pricing is moving in a favorable direction, but when you think it from a net-net EBITDA perspective, you also need to consider the escalation in natural gas as well..

And then with regard to Brazil, in best regards, shall we move product down into that region, is there has been any logistics issues you're having to deal with. I mean, I'm assuming that pricing down there is also moving up fairly nicely, so.

What do you see going on to the Latin American market going forward?.

Yes. No. Thanks for reminding there was a part to their trial. I appreciate that. And as you say certainly.

Yes, I mean I gave some of the data points for the Cornbelt, but AS granular in Brazil July to now is up 60% as well, you see even on the black sea side significant appreciation, particularly on the tightness of materials in coming out of Europe as well as even Asia.

But on logistics side, because they're really here more bulk vessels, we've been able to continue to secure - or our customers have continued to secure the transportation they need to take that material down into South America.

So, not the same logistics challenges that you see on the container side, certainly the freight is up relative to fuel and things like that, but no fundamental sort of capacity constraints..

And then just one quick follow-up. Sorry to sort of speak the of course same horse, one of the things I had noticed for the plastics producers.

It has been, they've been able to move on the export side, a lot of product into the Latin American market, more so than they usually have in large part because competitors who would typically also show up in those markets have been able to get product there, whether it's from Europe or from Asia.

Is that something you guys are seeing at all in the fertilizer side or by the same token, maybe there is a nylon opportunity as well. I know that, I don't think that market is particularly large for that, but is there an opportunity to Latin, so prolapse for that is a we've opened up because others can't get there..

Yes, no, it's. I think it's something to watch for. I mean, certainly China has played on significantly into Brazil, and it's exports into that region over the last couple of years, particularly post the anti-dumping measures that were put into place here in 2017. And as you know, China has put an export ban on fertilizers.

As of October 15th, it does not include ammonium sulfate to date.

But certainly, we understand that given just sort of the last 2-week appreciation has been quite a bit of price movement that we have heard it has been reported through property that government officials have reached out to ammonium sulfate producers in China, perhaps suggesting that these types of price gains continue on that they could potentially be added into the band.

So something to watch going forward, but I would say just given the exports coming out of that region, probably right now.

Certainly taking kind of filling the void perhaps with what has been constrained through sort of European supply, but this market is characterized right now just, a lot of focus on security of supply and making sure that folks have their fertilizers as they head forward into, what is expected to be a rather robust planting season, given where to show that fundamentals on-stock to use ratios.

Number of moving parts this year as I'm sure you track on, just sort of where yields have been and where production has been reduced, leading to higher crop futures and just a strong expectation for the coming year..

The last question is a follow-up from David Silver of CL King. Please go ahead..

Yes, hi, thanks very much. So I'll just make it based on the questions in this call, I'm going to make a suggestion your company name might be, M Sulfix or something, I don't know. Sorry, that's all I could come up with on short notice..

Short notice that..

Yes. So this - so I am actually going to maybe grab Vincent's comment about production disruptions starting with ammonia in other regions and Charlie's comment about excellent demand, I guess, but this is more kind of a marketing philosophy question.

So I think this is you mentioned in response a couple of times in the Q&A here, the balance between your long-term customer relationships and maybe the nearer term profit opportunity.

And I know that Mike and Erin you've both use the term robust or strong, but I think personally, I think this is borderline shortage conditions already and that's just my opinion, looking ahead to spring.

So, I guess I'm just wondering, has your - has your oversight, has your philosophy with marketing your fertilizer volume, let's say, from now through next spring.

I mean, does - how does that change or how does that evolve in this environment, in other words, any of your customers that bought in the third quarter, they're probably extremely happy now, just based on the trends in the market and the markets are going to be volatile for sure.

But is this the kind of market where selling the product allocation decisions for your fertilizer business maybe moved from the selling office to the boardroom or how has that thinking about marketing your product for the next few quarters changed? Thank you..

Alright David. And first, I'd like to probably give a great shout out to our plant nutrients team.

This is a group of individuals that are steeped in the industry, are led by a set of folks that really know the industry well, know our customers have a great pulse on and where things are and have inherently I think through the cycles that we've experienced in the past.

Stay true to driving the value proposition, driving priorities for growth and having a keen check on value and how we extract value for the propositions that we deliver, getting paid competitively for the products and earning in many cases, strong premiums over our competitive set as well.

So I think the key thing as you point out, that is probably most notable and what has changed is the frequency of our conversation right.

They - there is just a with the market moving, at the pace they are, a bit more the conversation line, where our order book is, how we can think about where pricing is moving competitively, how as you say we balance the security of supply to customers that have been with us for a very long period of time, it's interesting as I would point out, I was reflecting that's allowing out.

In the nitrogen space, we have been servicing customers since the 1930s, right. We think about the transition of the marketplace and our value chain and where we really entered selling nylon, right, it was 2006-2007.

So our depth here and longevity is important to our success and maybe the flip side is even, Charlie's question on can we move up at the same pace as urea, you can go back in time and see, we don't give back at the paced urea.

Urea in general is much more volatile than the more AS sets, so a lot of attention, a lot of focus on how we think about optimizing our performance in the set of considerations. But we have a tremendous and quite talented team at the helm here managing this business and I have full trust in them and our conversations are just more frequent..

Okay. No. Thanks a lot and I apologize for not in my long preamble, I should have mentioned that, I consider your sales team, probably the most sophisticated in terms of marketing ammonium sulfate, probably in the world. So, I left out that part, but no. Thank you for that perspective..

You bet. Appreciate it. They're working hard..

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

Perfect, thank you all again for your time and dialog and interest this morning. The third quarter results represented standout performance and I'm very proud of how our organization continues to support our customers while navigating the current environment.

We continue to execute against focused strategies, align with our ability to drive and achieve attractive total shareholder return over the long term. I hope you are as excited about our future, as we are here today. So with that, we'll look forward to speaking with you again next quarter. Stay safe and be well..

The conference is now concluded. Thank you for attending today's presentation and you may now disconnect..