Greetings, and welcome to the Stepan Company third quarter 2022 results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Wednesday, October 19th, 2022. I will now turn the conference over to Luis Rojo, Vice President and Chief Financial Officer. Please go ahead. Good morning, and thank you for joining Stepan Company third quarter 2022 financial review. Before we begin, please note that information in this conference call contain forward-looking statements which are not historical facts. These statements involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to, prospects for our foreign operations, global and regional economic conditions, and factors detailed in our Securities and Exchange Commission filing. Whether you're joining us online or over the phone, we encourage you to review the investor slide presentation, which we have made available at www.stepan.com under the Investors section of our website. We made these slides available at approximately the same time as when the earnings release is issued, and we hope you find the information perspective helpful. With that, I would like to turn the call over to Mr. Scott R. Behrens, our President and Chief Executive Officer. Good morning, and thank you for joining us today to discuss our third quarter results. To begin, I will share our third quarter highlights and strategy outlook, and Luis will provide additional details on our financial results for the quarter. The third quarter continued to be a challenging operating environment, given continued raw material constraints, the energy crisis in Europe, cost inflation, foreign currency exchange impacts from a stronger U.S. dollar, and overall global macroeconomic uncertainties. Nonetheless, I am proud of how our team has continued to overcome these challenges by delivering record results for the third quarter. Reported net income reached a record $39.4 million, or $1.71 per diluted share, while adjusted net income was a record of $46.3 million or $2.01 per diluted share. Surfactant operating income was $39.0 million compared to $34.5 million in the prior year quarter. Growth was mainly driven by a better product and customer mix, partially offset by an 8% decline in global volume. Our Polymer segment reached a record operating income of $31.9 million compared to $19.8 million in the prior year, which represents a 61% increase driven by margin recovery and improved mix. Our Specialty Products segment also had a record quarter, growing operating income to $9.7 million, representing a $7.3 million increase over prior year. Our board of directors declared a quarterly cash dividend on Stepan's common stock of $0.365 per share, payable on December 15th, 2022. This represents a 9% increase in our dividend, and Stepan Company has paid and increased its dividend for 55 consecutive years. During the third quarter of 2022, the company paid $7.5 million of dividends to shareholders and repurchased $5.3 million of company stock. During the first 9- months of 2022, the company paid $22.5 million in dividends and repurchased $22.3 million of company stock. The company still has $127.7 million remaining under our share repurchase program. Looking forward, we believe the operational environment will remain challenging. However, we are confident that we can deliver another record year. At this point, I would like Luis to walk through a few more details about our third quarter results. Thank you, Scott. My comments will generally follow the slide presentation. Let's start with slide 4 to recap the quarter. Adjusted net income for the third quarter of 2022 was a record $46.3 million, or $2.01 per diluted share, versus $36.4 million, or $1.57 per diluted share for the third quarter of 2021. Because adjusted net income is a Non-GAAP measure, we provide full reconciliations to the comparable GAAP measures, and this can be found in appendix 2 of the presentation and table 2 of the press release. Specifically, the adjusted net income for the third quarter exclude deferred compensation income of $1.1 million compared to last year's income of $1.3 million. It also excludes changes in our environmental reserve of $7.9 million compared to last year's excluded reserve of $0.7 million. The company increased its pre-tax environmental reserve from $23 million- $33.5 million based on new remediation cost estimate associated with the Maywood, New Jersey site. The deferred compensation figures represent the net income related to the company's deferred compensation plans, as well as cash settled stock appreciation rights for our employees. Because these liabilities change with the movement in the stock price, we exclude this item from operational discussion. Slide 5 shows the total company net income bridge for the third quarter compared to the third quarter last year and breaks down the increase in adjusted net income. Because this is net income, the figures noted here are on an after-tax basis. We will cover each segment in more detail, but to summarize, we delivered excellent income growth in all our segments. Corporate and all other expenses, which are not allocated to the business segments, were up $2.3 million, driven by higher interest expenses and overall inflation. The company effective tax rate was 24% for the first nine months of 2022, versus 19.6% for the first nine months of 2021. This year-over-year increase was primarily due to non-recurrent favorable tax benefits recognized in the third quarter of 2021. We expect the full year 2022 effective tax rate to be in the range of 23%-25%. Slide 6 focuses on Surfactants segment results for the quarter. Surfactants net sales were $475 million, a 22% increase versus the prior year. Selling prices increased 35%, primarily due to the pass-through of higher raw material and logistic costs, and improved product and customer mix. Volume decreased 8%, primarily due to lower commodity laundry demand and raw material availabilities issues in North America. This was partially offset by higher global demand in functional products and institutional cleaning end markets. Foreign currency translation negatively impacted net sales by 5%. Surfactants operating income for the quarter was $39 million, which represents a 13% growth versus prior year. This increase was driven by improved product and customer mix that was partially offset by the 8% decline in volume. All regions grew operating income in Surfactants despite volume reductions, supply chain challenges, inflationary pressures, and FX headwinds in Europe. This is the result of our diversification strategy to deliver higher value behind product and customer mix. Now, turning to Polymers on slide 7. Net sales were $215 million, up 8% from the same quarter last year. Selling prices increased 26% due to the pass-through of higher raw material and logistic costs and recovery margins. Volume decreased 10%, driven by an 8% decline in global rigid volume, primarily due to softening demand in Europe. Foreign currency translation negatively impacted net sales by 8%. Polymers delivered a record operating income for the quarter of $31.9 million, which represents a 61% increase versus prior year. This is primarily due to margin recovery and improved mix, which was partially offset by the 10% decrease in global volumes. North America Polyol and PA income increased, driven by margin recovery and mix improvements. The decrease in Europe was driven by FX and volume reductions. China operating income was down slightly due to suppressed demand from the COVID lockdowns and restrictions. Specialty Products also had a record quarter, delivering $9.7 million of operating income, an increase of $7.3 million. The operating income improvement was primarily attributed to a favorable customer mix and improved margins within our MCT product line. Turning to slide 8, our balance sheet remains strong, and we have ample liquidity to invest in the business. Despite our CapEx investments, our leverage and interest cover ratios continues at very healthy levels. During the quarter, cash from operations was $71 million, and we deployed $132 million against CapEx investments, dividends and debt payments, share repurchases, higher working capital requirements due to strong sales growth, and the acquisition of Performanx, a surfactant business. We project full year capital spending in the range of $330 million-$350 million, inclusive of our 1,4-dioxane project and Pasadena investments in the U.S. Beginning on slide 9, Scott will now update you on our 2022 strategic priorities. Thank you, Luis. In addition to delivering another record quarter, we continue to advance our strategic priorities in the third quarter. The following two slides capture our strategic priorities and vision for a cleaner, healthier, and more energy-efficient world with our customers' preferences in mind. Our diversification strategy into functional products, including agricultural and oilfield chemicals, continues to be a key priority for Stepan. Our global agricultural volumes increased double digits in the third quarter of 2022. High agricultural commodity prices, coupled with increased planted acreage in 2022, drove a strong season for crop protection sales in North America, while elevated agricultural commodity prices and a favorable currency impact on exports are driving increased planted acreage in Brazil. Oilfield volumes also increased in the third quarter of 2022, despite raw material availability constraints. Demand for our products used in oilfield remains robust as crude oil prices remain elevated around $90 per barrel. Additionally, we are expecting the raw material constraints in this business to improve over the next few quarters. We continue with the build-out of our Chemco oilfield demulsifier product line. We remain optimistic about future opportunities in this business, as elevated crude prices should encourage the increased oil production and the use of production and stimulation chemicals. Our Millsdale plant continues to be one of our key priorities. We are accelerating investments to improve productivity and reliability and to increase capacity through operational excellence initiatives. These investments will continue throughout the year, and we expect to see benefits from our efforts and investments starting next year. One of the key priorities at Millsdale is the execution of our low 1,4-dioxane project. Moving to slide 11, work continues on our new alkoxylation production facility in Pasadena, Texas. This asset will be a flexible, state-of-the-art multi-reactor facility with approximately 75,000 tons per annum of annual alkoxylation capacity. It will provide strategically located capacity and capability for long-term specialty alkoxylate growth across our strategic growth end markets, including agriculture, oil field, construction, and household and institutional cleaning. We expect the plant to be up and running in early 2024. The underlying alkoxylation business that supports the Pasadena investment continues its strong growth and at margins above our original projections. We remain confident and excited about our investment in Pasadena. The recent acquisition of Performanx's alkoxylates business should deliver additional baseload volumes for Pasadena in the future, and the chemistries are well known by Stepan. This acquisition is a strong fit within Stepan's surfactant business and provides attractive market diversification opportunities for our alkoxylation product line. The acquired surfactants are supplied to key customers in end markets covering personal care, pulp and paper, lubricants, household and institutional cleaning, oil and gas, agricultural, and other industrial markets. We are excited to expand our customer base in some of these new end-use markets for Stepan. As you know, we are increasing North American capability and capacity to produce ether sulfates that meet new regulatory limits on 1,4-dioxane by the end of January 2023. 1,4-Dioxane is a minor byproduct generated in the manufacture of ether sulfate surfactants, which are key cleaning and foaming ingredients used in consumer product formulations. Stepan is working to supply customers with ether sulfates that meet the new regulatory requirements. As part of this transition, one key customer chose to invest in internal production capabilities, so that lost volume was recognized starting in the third quarter. However, we have gained volume with other customers, and we'll continue focusing on strategic priority of growing within our Tier 2, Tier 3 customer segment. We expect this transition to go through 2023, and our focus is on generating value growth. The good news is that the overall market continues to believe that ether sulfates, which meet the new regulation levels for 1,4-dioxane, are the best alternative for performance and cost. We are pleased with our progress in our fermentation product platform. Our priority remains the development and commercialization of rhamnolipids, our first anticipated biosurfactant offering. We believe this new bio-based product family has significant opportunities in several important end markets for Stepan, including agricultural chemicals, consumer cleaning, personal care, and oil field. Our new fermentation laboratory, which opened in February, continues to make good progress in process development, and we expect to start providing samples to customers later this year. Finally, given the strength of our balance sheet, acquisition opportunities that align with our growth and diversification strategy remain a priority. Summarizing the quarter, we delivered record third quarter and first nine months net income, and I am proud of our team's effort and resiliency in delivering record earnings during this challenging market environment. We expect to deliver another record year, both on a reported and on an adjusted basis, despite approximately $8 million of incremental fourth quarter expenses related to planned maintenance activity in our PA plant at Millsdale and low 1,4-dioxane related transition expenses. We believe that surfactants, polymers, and specialty products will all deliver full-year operating income growth over prior year. Growing the three segments at the same time would represent an extraordinary outcome for 2022. From a segment perspective, we believe that surfactant volume within the functional products and institutional cleaning end markets should show full-year growth over 2021. Despite the short-term demand challenges and volatility, we believe that the long-term outlook for rigid polyols will remain extremely attractive as energy conservation efforts and more stringent building codes are expected to continue and are a critical step to deliver a world with less energy consumption. In closing, looking forward to the next few quarters, we believe the company will be challenged by slowing global economic growth, weakening consumer and construction demand, continued inflationary pressures, and a stronger U.S. dollar. Despite this projected macro environment, we remain committed to executing our long-term growth strategy. This concludes our prepared remarks. At this time, we would like to turn the call over for questions to Kathy. Please review the instructions for the question portion of today's call. Certainly. Thank you. If you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Again, to register for a question, please press the one followed by the four. Our first question comes from the line of Mike Harrison with Seaport Research Partners. Please go ahead. Hi. Good morning. Congratulations on a nice quarter. Thank you, Michael. Scott, I was hoping that you could talk about price cost dynamics in both the surfactants business and polymers as we look from Q3 into Q4. Are you still seeing higher costs and expecting that maybe we could see some sequential margin headwind? Or are you seeing the costs are moderating a little bit and price cost is turning into a good guy for you? I think that seems to be particularly the case in polymers, but maybe you could give us some color again on both of your key segments. Yeah, I would, from a high level, Mike, what I would say is, you know, we've done a good job recovering our margins and covering our inflationary costs to this point. Although we are seeing raw materials somewhat moderating, they still remain highly volatile, and the other inflationary costs that the business is facing still remains. Those remain in the freight area, utilities, and even labor. I would say we are not at a point where, you know, we're done in terms of covering future cost escalations, and I think it's gonna remain volatile going forward. I would say it's pretty evenly spread between the Surfactants and Polymers business. Each are facing similar continued cost pressures. Mike, this is Luis. In line with what Scott was mentioning, raw materials, if you think about raw material specifically, we are seeing kind of the peak. However, there are still a lot of volatility, and some of the things are coming down and others are going up. But we believe at least the raw material piece is in a better spot versus the previous quarter. But again, the other inflationary pressures on freight and other elements will continue. All right. Maybe kind of a related question on how you're seeing the energy availability situation unfold in Europe and with your European operations. Are you planning to continue running all of your plants in the winter, or could you see that maybe energy availability or demand issues could lead you to idle some of your facilities in Europe? Yeah, good question, Mike. At this point, we do not see a disruption in any of our operations in Europe and are expected to continue to operate throughout the winter. We have worked on contingency plans with alternate sourcing of energy that gives us a little more confidence if there was a constraint put on industrial use of natural gas or electricity. As of this point, our anticipation is we're gonna operate as normal throughout the winter. All right, thank you. My last one for now is on the surfactants business and the margin performance there. I'm just curious if that lower commodity laundry volume number is having a negative impact on your fixed cost absorption or is maybe the plant loading factor less of an issue for you guys than it might have been in the past? Also just curious if you're seeing any trading down in this more challenging economic environment for consumers. Any trading down to lower value products in surfactants, whether that's on the laundry side or in personal care? No, good questions, Mike. Of course, when you have lower volumes, you have the fixed cost impacting you. Again, we feel very good with the work that we have done in margins in both surfactants and polymers. Remember that we focus first in dollars per pound, and the percentage of sales is a consequence of our sales growing significantly higher. We're very happy with the year-to-date margins that we have, the 10% in surfactants and 13% in polymers. Of course, you also know that we have some seasonality by quarter. Q4 is the lowest volume quarter. You see more fixed cost impacts and therefore lower margin there. Again, our strategy is to continue growing the high growth, high margin businesses, functional, as Scott was mentioning, you know, the strong double-digit growth in ag and oil field. Those will continue helping our margins despite whatever fixed cost impact that we're gonna have. I will let Scott talk a little bit more about the dynamics. Yeah. on consumer demand. Yeah. Mike, I would say the trading down from premium to mid or economy tiers, I think that started well earlier this year and even late last year. I think what's different now is the sustained inflation that the consumers are facing. It's actually starting to show demand softness across the board. You know, Stepan, we're agnostic to whether you know, we participate in all segments of consumer products, whether it be premium economy or mid-tier, so we're agnostic there. But I think now we're seeing the overall softness of demand from the consumer. Fair to say that that's primarily a Europe and emerging market trend, rather than something you're seeing in North America? Yeah. Yeah, as it follows the other industries, the first signs of softness happened in the emerging markets and in Europe with the energy crisis and interest rates rises, definitely, Europe's gonna be in that boat as well. North America, to this point, has held up much better than the other regions. All right. Thanks very much. I'll turn it back for now. Our next question comes from Vincent Anderson with Stifel. Please proceed. Yeah, good morning, Scott, Luis. Morning. I just wanted to dig in on the acquisition a little bit. You know, I'm trying to understand how the alcohol ethoxylates kind of fits your portfolio. Would these represent an intermediate product between your existing formulations that are mostly, you know, sold, or is this just a brand new derivative family, you know, that would, you know, generally be sold as is? Second, you know, were these products already 1,4-dioxane compliant, or is that something that you're bringing to this company? Great question, Vincent. First, the alcohol ethoxylate product line that we're acquiring or have acquired from Performanx, that is a standard product line that exists in industry today and quite honestly is in Stepan's product portfolio and has been for 20 years. What it's really doing is bringing new customers and new markets to Stepan. That is a great diversification opportunity for our alkoxylate business and provides, I believe, material opportunities for pull through products within Stepan's other product lines, including cationics and maybe even biocides into these new end-use markets. That was really the driver. The chemistry is a standard chemistry line that we have in our product portfolio today. Can you remind me of your second question, Vincent? The one for dioxane. 1,4-dioxane is really primarily generated from the sulfonation process that's in our commodity anionic product line used in laundry. These nonionics that are not sulfonated have much lower, almost negligible levels of 1,4-dioxane and not really of concern as it relates to the new regulations that are showing up next year. Okay. Perfect. just, you know, on the topic of 1,4-dioxane, you know, you have your investments there to reduce its levels in your relevant products. you know, we're reading about some switching to alpha olefin sulfonates as an alternative to just not even deal with the lower 1,4-dioxane concentration. Is that an opportunity within your portfolio to also push that as an alternative, or would that be considered trading down or, you know, you really are focused on other end markets with your AOS capacity? No. Stepan is a one-stop shop for sulfonation chemistries, whether it be either sulfate, sulfonic acids, alpha olefin sulfonates. You know, we've been practicing and producing these and selling to the market for multiple decades. We are agnostic to the customer base in terms of what is their best solution for their company's needs. Ether sulfates do provide the best cost performance in some consumer cleaning and liquid cleansing applications. Customers that are formulating based on strong consumer performance benefits want to stay in ether sulfates. Others that may be looking to avoid you know a lot of reformulation, or I should say cost related issues with the new 1,4-dioxane regulations are looking to switch away to alternative anionics. We're working with those customers on changing their formulations to AOS or lauryl sulfate or sulfonic acid. You know, we're agnostic and it remains an opportunity for our AOS franchise as well as customers look to find their own custom solution for the 1,4-dioxane regulation. Oh, great. That's very helpful. Just one more quick one from me on something that we don't normally talk about. You know, MCTs had another nice quarter. You've mentioned in the past that you wanted to build out, you know, some of your raw material availability to improve output of those products. Is that still a strategy? You know, how much volume upside is there from those assets? You know, the supply of the fatty acid used to make MCTs has loosened up a bit. Global supply chains are operating a little more freely. I would not say that there's a significant opportunity from here in terms of continued you know profit expansion that we've seen over the last four months or last four quarters, I should say. You know, margins are probably close to being at their peak. I think we've done a really good job with our customer optimization and in getting fatty acids into our manufacturing facilities in a time where they were constrained. Vincent, this is Luis. An additional perspective is, as Scott was mentioning, probably we're on the peak on the margin side, but we continue. Looking for opportunities to grow volume. We have extra capacity right now in our facility in Maywood. As fatty acid become more available, our focus for the next few quarters will continue to grow the business, get new customers and continue growing volume. Understood. If I remember correctly, these are mostly coconut oil or palm kernel oil, fatty acid derivatives? Coconut, yeah. Coconut? Yes. Okay. All right. Thanks, guys. As a reminder, to register for a question, please press the one followed by the four on your telephone. Our next question comes from the line of David Silver with C.L. King. Please proceed. Yeah, hi. Good morning. I guess my first question would be regarding the surfactant segment, and you talked about the price-cost balance earlier. I was wondering if you could maybe just help me parse through the lower sales volume. In other words, for the last few quarters, you've been clear about the divergent trends, let's say, in the personal care side of your surfactants business versus institutional or commercial, which has been healthier. I'm just wondering when, you know, if you could maybe just talk about that a little bit and how far along do you think we are in the personal care side bottoming out, you know, post-pandemic. Maybe we just start there. Thank you. Yeah. David, if I understand your question, as it relates to our personal care volumes, you know, one thing I would say is, you know, we've had significant raw material constraints, affecting our personal care volumes, specifically in our amphoteric product lines. That was quite honestly industry-wide in terms of a critical raw material that was short to the industry. That's helped exacerbate some of the divergence that you're referring to. You know, in terms of the post-COVID demand in personal care as it relates to the increased use of hand wash back during the peak of the pandemic, you know, that has pretty much stabilized and is not in any declining or significant increasing trajectory. That's kind of more stable. I'd say most of the impact or divergence you're seeing has really just been with some isolated supply chain constraints on raw materials that has really impacted the volumes. Thank you for that. Also on surfactants, I was just hoping to get an update, let's say year to date, on your Tier 2, Tier 3, you know, customer strategy. Do you have a figure for accounts added maybe this quarter or year to date? If you might be able to comment on how that's affected the margins. In other words, smaller volumes, but maybe with the greater service component, structurally higher margins. I mean, when we look at the third quarter segment results there, what would you say the impact of that strategy to date might be? Yeah. Definitely contributing to the continued success. It's a core element of our strategic growth priorities going forward. You know, I think in our earnings slide deck, you'll see that there's over 100 new customers that were gained in the third quarter. And yes, the smaller volume tends to be higher margin business, and that's been a core foundation of our growth strategy going forward. Okay. This one's for Luis, and it would just have to do with the trend on interest expense. Sequentially, you know, I see your debt levels are rising. I think we know that interest rates, at least in this country are, you know, rising. Just wondering why there was a modest sequential decline in interest expense, and maybe if you could kinda help us on where that interest expense line might go in the next quarter or two, as maybe another rate hike or two is in the offing, that would be great. Thank you. Great question, David. Yeah, you're right. We're gonna see our net interest on a yearly basis, of course, going up. We have clear guidance that it's gonna be around $11 million this year versus last year was roughly around $6 million. You clearly see the effect of all the new debt that we acquired. However, remember that we acquired significant new debt at fixed interest rates that were well below 3%. I think we believe we're in a very good spot. Actually, what we're seeing recently is, of course, with the interest rate increases, we're generating more interest income on our cash. That is actually helping. By the way, we're generating now interest income that are higher than what we're paying on the debt. We're generating, you know, 3%-3.5% interest rates for the interest income piece. That is actually helping. I will provide clear guidance as always on what would be our net interest forecast for 2023. Of course, it should go higher than the $11 million that we have in 2022. Nothing dramatic, and we will give you guys the exact numbers when we meet in February. Okay, great. Just last question. I mean, this is something, you know, I just have noticed in the headlines over the last week or two. Water levels, you know, this is in the U.S. logistics, but the water levels on the Mississippi are such that barge and vessel traffic is being disrupted. Thinking about Millsdale and maybe some of your other facilities or maybe your flow of raw materials, you know, is that creating unusual issues for you? Are you kind of diverting to different modes of transport as a result, or is that just something you're able to manage without too much difficulty? Thank you. Yeah, great question. Yes, we've been operating our plant on the Illinois River and the Des Plaines River for 50 years. We have very robust contingency plans, and our sourcing and planning groups work very closely with our raw material suppliers to ensure alternate modes are available into the Chicago area. Not an impactful. Yeah, no major impact. No major impact to our business. You are right, David, that has been an issue, but no major impact for us. Okay, great. Thank you very much. Appreciate it. I do have a follow-up question from the line of Mike Harrison with Seaport Research Partners. Please proceed. Hi, just a few more for me. In terms of this $8 million fourth quarter impact related to some planned maintenance, how much of that is gonna hit the Polymers business, and how much of it impacts Surfactants? Good question, Mike. Actually, I want to make a clarification that $8 million is after tax. Just make sure that everybody understand that. It's roughly, you know, $10-$11 million on a pre-tax basis. Around 70% of that will hit Polymers and 30% will hit Surfactants. Okay. Have you seen any customers pulling forward any volumes in Q3 in anticipation of that Q4 outage, or were the order patterns generally pretty steady? Yeah. We work with our customers well in advance. Our shutdowns are planned 6 months-12 months in advance, so the supply chain's already been executed against the shutdown. Okay. I guess maybe hoping for a little bit more color on what exactly you guys are doing at that Millsdale site. You mentioned some operational excellence initiatives, but are some of these actions intended to help improve reliability? I know if we look back over the last couple years, we've had some power outages that have affected production out of that plant. Yeah. Great insight, Mike. Yes, we are investing heavily in improving the reliability of the infrastructure at that, at our Millsdale site. We've had multiple projects ongoing since Q2 to replace substations, MCCs. And we feel really good that the projects are going to significantly improve our reliability and we're ready for the upcoming winter. I guess as it relates to the low 1,4-dioxane transition costs that are associated with this $8 million impact, what do those costs entail, and are they one time in nature, or are there going to be additional costs that we see you guys incur in at some point in 2023? Mike, I would say a good chunk will be one-time. Of course, as we mentioned in our prepared remarks, the transition for low 1,4-dioxane is gonna go through 2023. This is not a one-day switch. We need to go through the transition, and after we execute all of these, of course we're now gonna incur in some of those one-timers. Okay. It sounds like maybe as we're thinking about 2023 that we should consider that there's still some headwind associated with these transition costs. Yeah, a little bit. I mean, it's not gonna be major. I'm looking forward also to the meeting in February. We can provide a little bit more guidance about how we see the years and what are some of the key elements that we see going forward. Yeah, you're gonna expect some additional expenses there, but nothing major. Okay. The last one I had is on Polymers. Was just hoping you could give a little bit more detail on what you're seeing in terms of demand trends as we're getting into Q4. Obviously the 10% volume decline in Q3 suggests that you're definitely seeing some things getting worse. Curious if some of that is customer inventory destocking that might be a little bit more temporary. You know, anything you can share on near-term demand. You know, in the construction related portions of polymers would be appreciated. Yeah. I think, you know, as we all read what's happening in Europe, specifically in the construction markets, there is a slowdown happening. Projects are being put on hold or canceled, which is really what's driven our volume decline in Polymers in Q3. The continued kinda lockdowns in China have also significantly impacted demand. You know, where does it look sequentially quarter-over-quarter into Q4? We're kinda expecting a lot of the same for Q4. I think the overall hope is that there's maybe a two- or three-quarter, call it a hiatus, and expecting growth and recovery in the construction markets in Europe in the second half of next year. I think that's kind of a general consensus right now across what we're hearing in the market. As you know, Mike, I mean, at the end, insulation plays a critical role in what needs to be achieved in the world, which is to reduce energy consumption. Of course, people preserve cash in this environment and people put on hold some of the projects. If you need to replace your roof, you need to replace it, right? You can hold off for 1 quarter, 2 quarters, 3 quarters, but you cannot hold forever. We believe this is a transitory thing. If you look at North America, despite all the challenges, rigid in North America year to date is growing in volume, you know, low single digits, but it's still growing. The impact that we saw in Q3 is mainly, you know, Europe and Asia. All right. That's very helpful. Thanks. Our next question comes from the line of David Storms with Stonegate. Please proceed. Morning, gentlemen. Thanks for taking my call. You actually just touched on it, with the demand weakening in Europe and the Chinese markets. I know the North American markets seem to still have pretty strong demand. Are there any indicators that you're keeping an eye on to forecast, you know, if or when any of this demand weakness does spread to the North American markets? Yeah. We're obviously staying very close to our customers and watching and hearing what they're saying about the installation contractors and whatnot. You know, I think everyone's been talking about the backlog of orders and projects. The first sign of weakness that we will see is when we hear that those back orders are starting to decline. You know, at this point in time, you know, as Luis mentioned, our growth, our rigid North American volumes continue to grow in the small single digits. You know, I think we can anticipate that Q4 should be very similar, but too early to tell. Thank you. One more, if I could. You mentioned earlier that labor is an inflationary pressure expected to continue along with freight and utilities. With the labor market in the U.S. remaining as strong as it is, do you anticipate this becoming an outsized expense relative to those freight and utilities expenses, or just kind of maintaining as it has been? No. What I would say is, of course, as a normal chemical company, we don't have, you know, a lot of labor in our sites. But the situation is that we're coming from years where, you know, salary inflation was in the U.S. roughly in the 3%. We could see a little bit more pressure on those numbers in the short term. That's kind of the difference. When you think about developing markets and Europe, it could be, you know, higher single digit type of numbers. That's kind of the new thing on the labor piece. However, labor for us is not the biggest impact. For us, it's about raw materials, freight, and utilities. Perfect. Thank you very much. I have a follow-up question from the line of Vincent Anderson from Stifel. Please proceed. Yeah, thanks. Just hopefully a quick one. I meant to ask, the customer that took its 1,4-dioxane compliance internal, was that a customer that was kind of core to your investment case into the low 1,4-dioxane capacity, or are those customers, you know, more secure? I just have a quick follow-up on that. Yeah. You know, with the level of investment that we've made for 1,4-dioxane, we obviously had early and often conversations with our customer base, both existing and new, to get ready for the type of capacity and capability we put in. You know, core to Stepan, yes, but definitely within our plans and our forecasts. Okay. That makes sense. Just to understand maybe the commercialization of that product, assuming, I'm guessing, it's a little bit more over capacity, so to speak, than you know you need for day one compliance. You know, is most of this being addressed with a purification step post-reaction that you could maybe bypass, or are you managing this on the front end, and so when the plant changes over, you're just making low 1,4 product regardless and it's, you know, it's up to your team to find a home for it at, you know, at a, you know, accretive margin? Yeah. No, we have the flexibility in the design of the process that we've implemented. We have the flexibility to operate the units as we see fit. I'll leave it at that. No, no, it's perfect. I appreciate it. That's all from me, I promise. There are no other questions. I'll turn the call back to you, Scott, for closing remarks. Thank you, Kathy. Thank you all for joining us on today's call. We appreciate your interest and ownership in Stepan Company. Have a great day. Thank you. That does conclude the call for today. We thank you for your participation and ask that you please disconnect your lines. Have a great day.