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DATE

Friday, Aug. 7, 2026 at 9:30 a.m. ET

CALL PARTICIPANTS

• Vice President, Investor Relations and Treasurer - Adam Kressel
• President and CEO - Erin N. Kane
• Senior Vice President and CFO - Patrick C. Day

TAKEAWAYS

• Revenue -- $421.3 million, representing a 3% increase year over year driven by favorable pricing across the portfolio.
• Adjusted EBITDA -- $31.9 million, a decrease of $23.8 million from the prior year primarily reflecting lower plant nutrient volumes and reduced production output.
• Adjusted EPS -- $0.19, declining from $1.24 in the prior-year period due to higher raw material input costs and a higher effective tax rate.
• Pricing Performance -- 18% increase overall, including a 13% gain from raw material pass-through pricing and a 5% improvement in market-based pricing.
• Sales Volume -- 15% decline year over year, driven primarily by reduced in-season fertilizer purchases as farmers faced challenged profitability.
• Raw Material Costs -- $72 million headwind, reflecting significant price increases for benzene and sulfur that the company fully offset through commercial execution.
• Nylon Sales -- $100.2 million, growing 26% year over year behind improved operational performance and higher input cost pass-through.
• Plant Nutrients Sales -- $131.4 million, a 16% decline year over year as ammonium sulfate demand softened following strong early-season purchases.
• Chemical Intermediates Sales -- $127.0 million, increasing 18% year over year as pricing gains offset stable but soft phenol demand.
• Ammonia Sales Volume -- Forecasted to increase 30% for the full year 2026, supported by debottlenecking efforts and record first-half shipments of 49,000 short tons.
• Capital Expenditures Guidance -- $75 million to $95 million for 2026, a reduction from $116 million in 2025 reflecting risk-based prioritization of base investments.
• Turnaround Financial Impact -- $17 million projected for the full year 2026, a reduction from the $25 million impact recorded in 2025.
• Sulfur Input Price -- $705 per long ton for the Tampa sulfur marker in the third quarter, representing a record high that management noted has caused industry-wide demand destruction.
• Sulfur Cost Sensitivity -- Every $100 per long ton change in sulfur price results in an approximately $35 million annual impact on costs.
• Effective Tax Rate Guidance -- 10% to 15% for the full year 2026, excluding any potential future benefits from Section 45Q carbon capture tax credits.
• Section 45Q Tax Credits -- $18 million currently accrued on the balance sheet, with management expecting receipt of this payment in the second half of 2026 pending IRS audit resolution.
• Fixed Cost Savings -- $10 million target in annualized savings exiting 2026, driven by a multiyear non-manpower cost reduction program.
• Free Cash Flow -- $10.7 million use of cash in the quarter, largely tracking the prior year after excluding previous insurance proceeds.

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RISKS

• Kane stated, "It is evident that elevated sulfur prices amplified by the conflict in the Middle East created demand destruction across the industry, most notably in phosphates, which represent ~50% of sulfur demand," reflecting a major cost headwind for plant nutrients.
• Kane noted that "competitive intensity" in the fertilizer market increased as traders and other domestic players sought to liquidate inventory positions without regard to producer economics.
• Kane warned that "this year, we expect the impact to be greater given pricing dynamics amid higher sulfur input costs that have impacted the fill program outcomes," referring to the seasonal $10 million to $15 million earnings headwind typical during the fall fertilizer reset.

SUMMARY

Management of AdvanSix Inc. (ASIX +2.42%) reported sequential improvement in earnings and cash flow despite a volatile macroeconomic environment that impacted the fertilizer sector. The company successfully utilized pricing mechanisms to offset $72 million in raw material inflation, specifically related to benzene and sulfur costs. Strategic priorities focused on commercial execution and operational excellence, including the completion of a major ammonia plant turnaround in the second quarter. The company is actively pursuing growth initiatives through integrated platform expansion and federal grant applications to support domestic supply chain resilience. Management expects stronger cash flow in the second half of the year driven by reduced capital spending, working capital tailwinds, and potential tax credit refunds.

• CEO Kane noted that the company achieved one of its strongest fertilizer year performances for domestic granular ammonium sulfate despite challenging farmer economics.
• The company plans to apply for a new USDA FEELS grant to expand ammonia capacity, which provides a 50% match for eligible dollar expenditures.
• Management confirmed that the Diesel Exhaust Fluid project remains on track for a final investment decision in the first half of 2027, with potential operations starting in 2029.
• CFO Day identified a $39 million sequential pricing tailwind in the second quarter, reversing a $10 million headwind experienced in the first quarter of 2026.
• CEO Kane attributed the shift in product mix toward higher-value applications as a key lever for driving through-cycle value, noting that 75% ammonium sulfate granular conversion remains on track.
• Management highlighted that the company's cash conversion cycle remains in the top quartile of its peer group, supported by disciplined inventory management.
• CEO Kane stated, "Third party industry experts are forecasting $200 decline in sulfur prices entering 2027," which may provide a tailwind for the next planting season.

INDUSTRY GLOSSARY

• 45Q: A federal tax credit for carbon oxide sequestration that incentivizes companies to capture and store carbon dioxide emissions.
• Ammonium Sulfate: A chemical fertilizer used to provide both nitrogen and sulfur to crops, produced as a co-product of the nylon manufacturing process.
• Caprolactam: A primary organic compound used as the precursor to produce Nylon 6 fibers and resins.
• DEF: Diesel Exhaust Fluid, an aqueous urea solution used in selective catalytic reduction to lower nitrogen oxide emissions from diesel engines.
• Nylon 6: A versatile synthetic polymer resin used extensively in automotive parts, electronics, packaging, and textiles.
• SUSTAIN: A company program focused on organic growth and operational improvements, supported in part by federal grants.
• Tampa Sulfur Marker: A benchmark price for molten sulfur in the U.S. Gulf Coast region, used as a reference for nitrogen and phosphate fertilizer input costs.

Full Conference Call Transcript

Operator: Good day. And welcome to the AdvanSix Second Quarter 26 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Adam Kressel, Vice President, Investor Relations and Treasurer. Please go ahead.

Adam Kressel: Thank you, Debbie. Good morning, and welcome to AdvanSix's second quarter 26 earnings Conference Call. With me here today are President and CEO, Erin N. Kane and Senior Vice President and CFO, Patrick C. Day. 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-Ks, as further updated in subsequent filings with the SEC. This morning, we will review our financial results for the second quarter 26, and share our outlook for our key product lines and end markets. Finally, we will leave time for your questions at the end. So with that, I will turn the call over to AdvanSix's President and CEO, Aaron Kane.

Erin N. 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, our resilient second quarter results reflected a significant sequential improvement in earnings and cash flow amid what remains a highly dynamic macro environment particularly in plant nutrients. Patrick will dive into the financials in a moment, but I would like to start the discussion today framing our key strategic priorities. To drive through cycle value creation and support total shareholder return, with higher highs and higher lows, we remain focused on commercial execution, operational excellence, and disciplined capital deployment. These are the controllable levers that are critical to anchor our performance.

On commercial execution, we continue to focus on winning with customers to profitably fill our plants and shifting product mix towards higher value applications. Our commercial teams continue to leverage both formula and market based pricing mechanisms to recover inflationary raw material costs. In the quarter, strong pricing across plant nutrients, Chemical Intermediates and Nylon Solutions offset higher sulfur, benzene, and propylene costs. Importantly, our year-over-year net price overalls impact was neutral in the quarter which is a notable improvement from the first quarter headwinds. On operational excellence, we are well positioned through our integrated asset base global low cost position, and continued focus on productivity. Our base capital investments support safe, stable and sustainable operations.

As we discussed on prior calls, our ammonia turnaround was moved to the second quarter and scoped to align with our suppliers' natural gas pipeline inspection. We are pleased to share that we executed to our expectations. Lastly, we are focused on generating meaningful operating cash flow to support disciplined capital deployment. From a working capital perspective, our cash conversion cycle benchmarks in the top quartile among peers. Our significant runway of opportunity on 45Q carbon capture tax credits also supports future cash generation. As we allocate capital, our discretionary organic investments target greater than 20% returns.

Our sustained growth program is generating returns in excess of 30% and we remain on track to deliver product mix optimization with 75% ammonia sulfate granular conversion. This is an important milestone as we continue to align our production with growing demand for sulfur nutrition. We will continue to ensure a well managed balance sheet. That will afford the investments for performance and growth. We continue to expect improved earnings and cash flow in the second half of the year compared to the first half as we build momentum into 2027.

While the near term market environment has been mixed, our durable competitive advantage portfolio resiliency across a diverse set of end markets and our long term positioning for growth underpin what we believe is a compelling investment thesis for AdvanSix. Let's turn to slide 4. Based on our expectations coming out of the first quarter earnings call, a number of items played out as anticipated Notably, the sequential improvement in net pricing over rising raw material costs was a primary driver of our earnings improvement. Both Nylon Solutions and Chemical Intermediates performed at or better than our expectations with strong commercial performance and mix optimization supporting margins. Plant nutrient volume, however, was lower than anticipated.

The spring planting season saw significant increase in grower input costs while crop and grain prices remained steady at lower levels. This unfavorably impacted farmer profitability and resulted in a reduction of fertilizer consumption overall. Despite these challenges, we ended the full fertilizer year at near record volume performance for domestic granular ammonium sulfate. Lastly, our utilization rates were lower on operational performance, including the impact of our ammonia plant turnaround. With that, I will turn it to Patrick to discuss the financials.

Patrick C. Day: Thanks, Erin. I am now on Slide 5 to discuss our results for the quarter. Sales of $421 million increased approximately 3% versus the prior year comprised of 18% favorable pricing partially offset by a 15% decline in volume. Raw material pass through pricing was up 13% following a net cost increase in benzene and propylene. Market based pricing improved 5% primarily driven by an increase in plant nutrients. Reflecting higher nitrogen pricing amid increased sulfur input costs. Lower sales volume was primarily driven by more challenging agricultural fundamentals, including farmer economics. Which resulted in a reduction of in season fertilizer purchases. Adjusted EBITDA was $32 million down $24 million from last year.

I will highlight the key year over year variances in a moment. Adjusted earnings per share of $0.19 declined $1.5 versus the prior year. The higher effective tax rate compared to last year was driven primarily by 45Q carbon capture tax credits claimed in the prior year period and changes in taxable income. We expect the full year 2026 effective tax rate to be in the range of 10% to 15% prior to any additional 45Q claims. On a sequential basis compared to the first quarter, earnings and cash flow improved significantly. With tailwinds across the portfolio from net favorable pricing over raw material input costs.

So overall, a testament to the commercial performance in the first half of this year Now let's turn to Slide 6. In the quarter, we drove pricing improvement across the portfolio on both a year-over-year and sequential basis. This was supported by higher raw material pass through pricing as well as an increase in market based pricing. The primary driver of lower volume both year-over-year and sequentially was plant nutrients. Due to the in season dynamics we observe. To a lesser extent we saw modestly lower volumes quarter-over-quarter in nylon solutions and chemical intermediates. Across Nylon Solutions, resin volumes increased year-over-year on improved operational performance while caprolactam volumes moderated in a soft demand environment for carpet applications.

We saw a reduction overall in export volume sequentially in the second quarter. A more constrained production environment including the planned turnaround activities shifted our focus to serving our North American customers. Consistent with our ongoing operating approach, we evaluate the optimal product and geographic mix to ensure the best economic outcome for the integrated enterprise. Let's turn to Slide 7. Here we highlight the key drivers of our second quarter adjusted EBITDA performance year-over-year. We completely offset the significant raw material cost increase in the quarter through commercial execution and pricing actions.

We thought it was important to highlight in this environment the magnitude of the input cost inflation that we were able to offset through pricing in the quarter. As you can see on the right side of this slide, raw material costs were a headwind of $72 million in the second quarter on a year-over-year basis. This was primarily driven by rising benzene and sulfur prices. We were able to fully recoup that impact through strong commercial execution with favorable market and pass through pricing across the portfolio. On a sequential basis, while we incurred a $10 million headwind in 1Q, we saw that flip to a $39 million tailwind in 2Q.

This was also supported by strong pricing in each business line more than offsetting rising benzene sulfur and propylene costs. Natural gas costs were seasonally lower the second quarter as compared to the first which is typical for our business. Now back to the bridge on the left side of the chart. Volume represented a $17 million unfavorable impact primarily driven by lower sales in Plant Nutrients in the face of more challenging agricultural fundamentals including farmer economics. Operationally, we saw an approximately $4 million unfavorable impact from the timing of planned plant turnarounds. Lastly, all other items netted to a $3 million headwind with the impact of reduced production output partially offset by lower SG&A as planned.

Let's turn to slide 8. On the left side of the page, we have shown our first half free cash flow generation for 2025 and 2026. Our year to date performance is largely tracking to last year. When taking into account approximately $26 million of insurance proceeds in the prior year period. Working capital although improved year over year, has been a seasonal use of cash in the first half as expected. The primary driver of the improvement was disciplined inventory management. As we have shared previously, there is non linearity in our cash flow on a quarterly basis.

As we look forward into the second half, we anticipate significant sequential improvement notably as a result of our reduced CapEx run rate working capital tailwinds including our fourth quarter pre buy program in Plant Nutrients, timing of annual payments paid in the first half and 45Q cash tax credits. Let me turn the call back to Aaron.

Erin N. Kane: Thanks, Patrick. With the moving parts in our end markets, let's first take a deeper dive into what we are seeing in the plant nutrients market and specifically sulfur input costs. Which have been key drivers of our first half performance. We realized lower in season Plant Nutrient sales as a result of reduced grower application of nutrients. Ammonium sulfate demand softened significantly in 2Q, after strong early season purchases as farmers prioritize applying nitrogen in the peak of the season above all nutrients most notably ammonia. As the season progressed, growers applied fertilizer, including ammonium sulfate based on purchases and inventory that was in the channel.

Despite weaker in season sales, we still achieved 1 of our strongest fertilizer year performances in terms of total domestic granular volume. It is clear that we structurally improved our output and mix supported by our sustained growth program. From an input perspective, sulfur costs have moved up to record highs over the course of the last year. It is evident that elevated sulfur prices amplified by the conflict in The Middle East created demand destruction across the industry, most notably in phosphates, which represent ~50% of sulfur demand. The Tampa sulfur marker closed at another record of $705 per long ton in the third quarter. Following $655 per long ton in the second.

Third party industry experts are forecasting $200 decline in sulfur prices entering 2027. Which will be a tailwind for the next planting season amid what is likely tighter domestic ammonium sulfate supply. As a sensitivity for impact to AdvanSix, every $100 per long ton change in sulfur raw material price equals an approximately $35 million cost impact on an annual basis. In this environment, we have optionality to incrementally increase ammonia sales availability based on market dynamics across the entire value chain. Our plan for the full year 2026 is expected to be up 30% on ammonia sales volume compared to 2025, which was a prior record year.

This reflects our ongoing debottlenecking efforts and the benefit of targeted replacement maintenance capital investments over time. With our positive experience securing our USDA grant in support of our SUSTAIN program, we are now planning to apply for their new fields grant to expand our ammonia capacity and increase nitrogen nutrition availability for domestic farmers. In addition, our previously announced DEF project is progressing through its evaluation phases as planned, and if move forward would unlock more value off our integrated ammonia platform. We Let's turn to slide 10 to highlight what we are seeing across the rest of the portfolio.

Moving beyond ag to our key nylon and markets, across building construction, engineering plastics and packaging, North American demand has not materially changed. Global pricing has moved up with higher input costs while raw material shortages, logistics constraints, and lower operating rates in China have tightened supply. Similar to nylon, end market demand across chemical intermediates into construction, coatings, and downstream industrials has been broadly stable Phenol demand remained soft overall, driving lower global operating rates, coupled with reduced acetone imports into The US. All of which are supporting tighter phenol-acetone supply and demand dynamics. Let's move to slide 11.

Looking ahead, we have line of sight to several drivers in place to support second half sequential EBITDA and cash flow improvement. On earnings, we expect benefits from the absence of the first quarter winter storm impact and the completion of our larger planned turnaround in the second quarter. We continue to target approximately $10 million savings exiting 2026 from our multiyear non manpower fixed cost reduction program. In Nylon Solutions, we expect steady volume performance and continued focus on price-raws expansion through disciplined commercial execution and mix optimization. In chemical intermediates, we continue to expect cycle average performance for acetone spreads while our other products in the portfolio are performing to expectations.

Implant nutrients at this point in the year we have historically realized a $10 million to $15 million sequential headwind on earnings due to the reset of the North American fertilizer year beginning with the fall fill program. This year, we expect the impact to be greater given pricing dynamics amid higher sulfur input costs that have impacted the fill program outcomes. Due to the softer late season demand as discussed, there was fertilizer inventory left in the channel, which prompted competitive intensity as players, including traders of imported and other domestic volume, sought to liquidate their positions without regard to producer economics.

While this has near term impact, we remain focused on serving our customers with a strong sulfur nutrition value proposition we have long built through sound agronomic research, and grower yield benefits. Moving to cash, there are several tailwinds, which Patrick highlighted, supporting our stronger second half performance. Let's turn to Slide 12 before moving to Q&A. We remain confident in the through value creation opportunity at AdvanSix. Our unique combination of assets and business model are core to our durable competitive advantage and long term positioning. Key to our strategy is a focus on the levers we control. Commercial execution, operational excellence, cash generation and disciplined capital deployment.

As we move through the remainder of 2026, and navigate the current industry environment, we are well positioned to support our strategic priorities as a U. S.-based integrated manufacturer aligned to domestic supply chain and energy markets as well as a diverse set of end market applications. We believe the actions we are taking and strategic priorities ahead support AdvanSix to deliver improved performance and sustainable long term value. With that, Adam, let's move to Q&A.

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

Operator: We will now begin the question and answer session. If your question has been addressed and you would like to withdraw your question. Please press star then 2. The first question comes from Pete Oesterlin with Truist Securities. Please go ahead.

Pete Osterland: Hey, good morning. Thanks for taking the questions. So just wanted to start on the comment on running Hopewell at lower rates than you expected. Was this a market based decision driven by ammonium sulfate demand? Or were there any operational delays coming out of the turnaround? And then also maybe if you could size just how far below your optimal rates you are running and how much line of sight you have into when conditions would be supportive of raising operating rates?

Erin N. Kane: Yeah. Thanks for the note question, Pete, and good morning. Certainly in the quarter, we would have had Hopewell running around mid-70s, consistent with Other Turnaround Quarters. So a large majority There Would Have been really being constrained through Our Ammonia Production, Which Has Implications on the full value Chain. And So As We Proceed Forward, Obviously, We are Focused On As We have Shared, Running The Assets To The Demand. So As You have Seen, Certainly, Our Chesterfield operation operations are improving year over year. and operational performance is important there.

Then, obviously, we are continuing to evaluate really the economics given the environment on both how we think about monetizing ammonia and sulfuric acid in the environment for ammonium sulfide. But we have to take the full enterprise chain you know, all the way through to the mix to make those best decisions. So it is kind of an ongoing, you know, opportunity set for us to optimize.

Pete Osterland: Okay. Understood. And then, a lot of moving with pricing versus raw materials. But just following full offset of pricing versus raws in second quarter, do you have an estimate or a range you could share of what you would expect the net impact would look like in the third quarter just based on what you can see right now?

Erin N. Kane: Yeah. Certainly, as we shared I can start and then Patrick can jump in as well. Given where sulfur has landed, I think that is going to be the largest headwind vis a vis certainly where ammonium sulfate pricing has reset right in the fall fill program. Benzene and propylene are going to move with oil. Right? And then certainly we have moving parts there based on really how the Middle East is on a regular basis. So when you think about the pricing mechanisms you know, the formula and pass through definitely play more to benzene being passed through in the formulas, you know, mechanistically.

So it is really going to be, you know, how the soft plays out relative to the price performance.

Patrick C. Day: Yeah. I think we highlighted in our comments that $10 million to $15 million sequential headwind. that is currently the range we are working with and what we expect.

Pete Osterland: Okay. Very helpful. Thanks. So just wanted to finish with a couple of questions and some of the cash tailwinds you are expecting in the second half. So just first on the ammonium sulfate pre buy advances with some of the challenges around farmer economics and fertilizer demand that you called out Do you expect the pre buy in the second half to be weaker than normal? And I guess could you size what is normal? And what are your expectations for how that is shaping up this year?

Erin N. Kane: Yeah. At this point, we would anticipate that it is a bit, on 1 hand, a little too early to tell. Right? We are just, you know, getting through the fall fill. Obviously, this is something that we generally see as steady demand, you know, every winter. You know, at this point with you know, nutrition, really kind of watching now the fundamentals and the guideposts. Right? So we are watching the current crop demands sorry, you know, crop performance if you think about we will get more from the USDA this week.

You have got certainly implications now that the corn rating has declined since mid July, a little bit more in line with 22 and 23 crops than the last 2 years. So how that plays into yield estimates, how that will play into future corn prices, obviously, reset in profitability. And so we would if we sit here today, you know, there is no reason to think that there would not be a positive view relative to that pre buy program setting up for next spring. You know, you could see still a constructive setup. Right? When you kind of look forward relative to where we sit today. And head forward into the spring.

We would think that also see that ammonium sulfate will probably be a bit tighter as well as we move forward. I know as we sit here today, the input costs are not supporting, we believe, and what the feedback is from the industry that the marginal producer in The US is not running. And so again, are the things that we are going to continue to look at as we progress through Q4 and work to set up a constructive view as we get to spring.

Pete Osterland: Okay. Great. And then just lastly, on the CapEx for the second half, when you talk about risk based prioritization, are these mainly deferrals of spending that at some point in the future you have to catch up on? And what kind of activities are we talking Just maybe some more color around that would be helpful.

Erin N. Kane: Sure. When you think about sort of historical approaches in many cases to, you know, repair maintenance, as well as, just capital, intensity on that same view. A lot of the techniques are time based. Right? A piece of equipment goes in with an expected life The reality is, you know, in today's view, you can use better data, have quantitative risk assessments, so when we talk about risk based, it is using better indications on when we should be tackling the repair and maintenance type capital in the assets going forward based on how we need them to run to meet demand.

So you know, I would not think about it as a deferral where there will be a catch up, but rather a overall reflating or reprioritization, right, using, you know, data heuristics and new just ways to prioritize we spend, when we spend it, you know, across the enterprise. And so the back half just reflects I mean, obviously, you know, you have got a time lag here, right, for our actions to take place relative to the cash flow. So certainly, the first half heavier, right, as we exited 2025, and then putting this into place as we roll forward.

Pete Osterland: Excellent. Thanks a lot.

Erin N. Kane: Thanks, Pete.

Operator: The next question is from David Silver with Freedom Capital Markets. Please go ahead.

David Silver: Yes. Hi. Thank you. Good morning. Guess I just wanted to pick up maybe on 1 of your recent comments about the lower operating rates for your overall production network. And the opportunity, I guess, to gain some flexibility in what you are selling and whatnot. So you mentioned that the ammonia and the sulfuric acid units in particular, you know, maybe there is an opportunity there to sell more of those products just as they are as opposed to running them through, you know, your vertically integrated network there. But, especially with the slower fertilizer season here, I mean, are you thinking about maybe co ing a little more flexibility and a little more of those basic products.

I am sorry. I am not speaking very clearly. But just selling ammonia and sulfuric acid more into what seemed to be pretty healthy markets right now?

Erin N. Kane: Thanks for the question and good morning, David. Yes. So that is definitely what we are trying to increase and certainly been core to a lot of our strategies across even expanding beyond the operational excellence of running our assets well, creating more degrees of freedom and a few more levers to flex in the optionality to do so. So certainly, in the spring, the industry sold more ammonia than normal as it was cheapest source of nitrogen. You know, we sold certainly more in the first half. Again, these are products that are would say, logistics sensitive. Right?

So there are freight logical, you know, reaches, if you will, and certainly where we sit in the Mid Atlantic, we have to optimize what we can sell there. But to put it in perspective, we sold, roughly 49 thousand short tons in the first half up from, you know, 33 in the first half of 25. And just to put that in perspective, while we shared at the end of last year, we had a record sales for ammonia. You know, we anticipate that as we project through this year, we will be up 30%, you know, year on year for the full year.

Now you know, obviously, sulfuric acid as well as a freight logical product, we continue to look at that. You think about the trade offs, right, I would share with you, it is not just a simple as, you know, do we either sell ammonia and sulfuric acid, or do we make ammonium sulfate? Because we are not making just synthetic ammonium sulfate. We have an integrated chain So we really do need to look at the full set of options including, you know, do we make caprolactam for X Do we make resin for export? Know, how are the performance implications on Frankfurt?

So we look at the integrated change make those economic decisions And so certainly, relative to our, targeted operational approach for the back half of the year, we are dialing in to where that optimization makes sense. So and we certainly are we have a little bit of a knob, if you will, on how we can think about the AS, the capro lever. Right? We built that through the COVID years and thinking about our own technology and we certainly are you know, looking to minimize that as well as an extra lever. So it is a pretty integrated set of considerations, but that is how we are running it today.

David Silver: Okay. And I stipulate it is a very complicated decision map, I guess, and not as easy as flipping a switch. But if anybody you know, was aware of kind of how to tweak the system, I think it would be yourself and your team there. If I could just, and I apologize, I did have to step away at 1 point. But, could I just get an update on the expectations for the Section 45 credits? In other words, both when you might be booking an additional round of credits for 20 for 2026? And then when cash might be received from the credits that you claimed? In 2025? Thank you.

Patrick C. Day: Sure, David. Let me take that 1. So just as some background, our 2018 LCA is already approved by the IRS. This allowed us to claim the credits for 2029, 2028, and 2020. We have done over the recent years, We have $18 million currently accrued on the balance sheet related to that LCA. Our 2021 LCA is still under review by the DOE and the IRS We worked closely with them on an updated submission here in the second quarter. To assure that they had all the required data that they needed. All 4 of these years are currently included in a broader audit by the IRS.

As soon as that is resolved, expect to receive the $18 million payment we are still targeting that for the second half of this year. And then once that 21 LCA is approved, we will use the approved 2021 LCA to begin the credit refund process for those applicable years And as a reminder, that can be used for up to 3 years. And at this point, look, all open items on our side related to the LCAs and audits closed. We are here to be responsive to the IRS and or DOE. In the event any questions come up as they may arise, they are completing their process.

David Silver: Okay. that is great detail.

Patrick C. Day: Thank you, Patrick. Can I also just double check, but is the total amount of credits that you are ultimately targeting?

David Silver: Is it still in that $100 million to $125 million range? Or has there been any variation based on the review by the federal authorities thus far.

Patrick C. Day: No changes to that range at this point.

David Silver: Okay, great. Would like to maybe switch over to the DEF opportunity that was mentioned last highlighted a little bit last quarter. At the early stages of the process, I understand, but could you just provide maybe an update on the progress to date and any changes or any notable developments that you would highlight at this, you know, relatively early stage Thanks, David.

Erin N. Kane: Certainly, the project remains on track and as planned. So as you say, we announced it last quarter. We entered into the licensing agreement. To assess the expansion of the platform on our integrated volume platform and certainly supply DEF into the growing market in the Mid Atlantic and East Coast. So we continue to progress through our front end engineering design work. And that is proceeding with our partners and still on track for that final investment decision targeted for the first half of 27. Now as a reminder, this is a multiyear capital investment with you know, we believe, you know, strong attractive financial returns.

And align with our long term value creation objectives, and upon a successful view here know, the timing for full operations would be in 2029. So, again, progressing as we anticipated. You know, obviously, we will continue to keep you apprised. You know, I would share, you know, it was in the commentary, you know, lends itself because I know you have asked the question in the past of do we need more ammonia you know, to produce the which we do not necessarily. But it is been interesting.

You know, we are 1 of 8 successfully performing USDA grant projects through SISTAIN, And, with that, credibility and certainly momentum we have built, The USDA has launched a new program called FEELS, the fertilizer investment in expansion for long term domestic supply grants, which we are planning to apply for relative to our ammonia to expand our ammonia capacity and increase nitrogen availability for domestic farmers. So while, again, it was not necessary for DEF, this new opportunity has presented itself. Again, we have strong performance under the current grants. This grant is different. It actually is a 1-for-1 match on dollar spent with 50% covered, whereas the current grant is only 20%.

And we are pretty excited about the opportunity. We believe we have a more capital efficient program than what others have discussed. So more to come there, but just again, you know, the opportunities that we have on the integrated ammonia platform, you know, continues to, provide real opportunity.

David Silver: Wow. that is a little different. And, yeah, you know, just to clarify, and I apologize but you are saying potentially a project to add or debottleneck ammonia capacity would be done 50% subsidies totaling about 50% of the estimated cost. Is that what field represents? Or did I misunderstand?

Erin N. Kane: Yeah. If Yeah, that is the opportunity ahead of us. So, you know, the grant program was launched and applications are due, so we are working that at hand. So more to come there, but, you know, just wanted to you know, to share that.

David Silver: Yeah. Very interesting. Okay. Just some comments, and again, I may have stepped away when Patrick was going over this. But just running kind of, you know, back of the envelope on cash flow generation or free cash flow prospects for the second half of the year? And you did highlight, I am guessing, fourth quarter cash receipts from growers might be a little lower this year. On the other hand, you have really been very, very you know, efficient, with the turnarounds and maintenance expenses. And, you know, I was looking at kind of, you know, you do have relatively low inventory levels, at least to my view.

So just what are the prospects for getting close to cash breakeven or so in the back half of the year?

Patrick C. Day: Yes, sure. I can give you a couple of comments there. First, let me start with the Plant Nutrients pre buy. I will say in Q4 of last year, comparing to the prior year, Q4 of last year, we were fairly selective on what we took in terms of prebuy, Just given we knew some of the dynamics were happening around sulfur. So in terms of year over year comparison, you know, I think that is a I would say that is a you know, a relatively soft, comparison point. We touched on CapEx you know, as we were talking through the CapEx details.

Really, the way that our sequencing lines up on a cash basis with CapEx, we are more heavily weighted to the, you know, to the front end of the of the calendar. And then I think the last piece too, like, we are looking at you know, sequential earnings improvement too in the in the second half, which is obviously gonna contribute some more cash as well. So and I think that just the last piece we talked about payment timing, just the way the calendar year on unfolds for us. Have some higher payments going out the door in the first half of the year.

Insurance, for example, those invoices get paid on a timing basis earlier in the calendar year. So we have some timing due to that as well. But those are really your big drivers that get you back to the you know, first half versus second half sequential improvement in cash.

David Silver: Okay. Great. Thanks for the detail there. that is all for me. Appreciate the color.

Erin N. Kane: Thanks, David. Have a great day.

Operator: This concludes our question and answer session.

Erin N. Kane: I would like to turn the conference back over to Erin N. Kane for any closing remarks. Thank you all again for your time and interest this morning. We hope this call and discussion have clarified the key considerations that supported our second quarter performance and outlook across our end markets. The strength of our business model and our position as an integrated chemistry company will serve us well and we continue to expect performance this year to demonstrate our resilience. With that, we look forward to speaking with you again next quarter. Stay safe and be well.

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