AdvanSix Inc

Previous wording

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” and other variations or similar terminology and expressions identify forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: general economic and financial conditions in the U.S. and globally; the potential effects of inflationary pressures, labor market shortages and supply chain issues; instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of the conflict between Russia and Ukraine, the conflict in Israel and Gaza and the possible expansion of such conflicts; the effect of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.; our ability to sell and provide our goods and services; the ability of our customers to pay for our products; any closures of our and our customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks, data privacy incidents and disruptions to our technology infrastructure; risks associated with operating with a reduced workforce; risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise; the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and, geopolitical conflicts and related events; price fluctuations, cost increases and supply of raw materials; our operations and growth projects requiring substantial capital; growth rates and cyclicality of the industries we serve including global changes in supply and demand; failur…

Excerpt shortened here; the source contains the full paragraph.

Current wording

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” and other variations or similar terminology and expressions identify forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: general economic and financial conditions in the U.S. and globally; the potential effects of inflationary pressures, labor market shortages and supply chain issues; instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of the political and policy uncertainties with the approaching U.S. Presidential election, and the conflict between Russia and Ukraine, the conflict in Israel and Gaza and the possible expansion of such conflicts; the effect of any of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.; our ability to sell and provide our goods and services; the ability of our customers to pay for our products; any closures of our and our customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks, data privacy incidents and disruptions to our technology infrastructure; risks associated with operating with a reduced workforce; risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise; the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and, geopolitical conflicts and related events; price fluctuations, cost increases and supply of raw materials; our operations and growth projects requiring substantial capital; growth rat…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On May 9, 2024, the Company’s Chesterfield bargaining unit, represented by the Teamsters Local 592, ratified a new five-year labor agreement in advance of the prior agreement’s anticipated expiration date of May 14, 2024. The ratified labor agreement affected approximately 160 workers at the Company’s manufacturing facility in Chesterfield, Virginia.

Current wording

On May 9, 2024, the Company’s Chesterfield bargaining unit, represented by the Teamsters Local 592, ratified a new five-year labor agreement in advance of the prior agreement’s expiration date of May 14, 2024. The ratified labor agreement affected approximately 160 workers at the Company’s manufacturing facility in Chesterfield, Virginia.

Previous wording

Costs of goods sold increased in the three months ended June 30, 2024 compared to the prior year period by $12.1 million (approximately 3%) due to increased sales volume (approximately 4%).

Current wording

Costs of goods sold increased in the three months ended September 30, 2024 compared to the prior year period by $26.1 million (approximately 8%) due primarily to (i) increased prices of raw materials (approximately 8%) and (ii)increased sales volume (approximately 7%), partially offset by the favorable timing of planned plant turnarounds year-over-year (approximately 8%).

Previous wording

Costs of goods sold increased in the six months ended June 30, 2024 compared to the prior year period by $16.0 million (approximately 2%) due to increased second quarter 2024 sales volume (approximately 2%), the impact of lower production volumes primarily driven by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site (approximately 1%), partially offset by a decrease in raw material costs driven by natural gas and sulfur (approximately 2%).

Current wording

Costs of goods sold increased in the nine months ended September 30, 2024 compared to the prior year period by $42.0 million (approximately 4%) due primarily to (i) increased sales volume (approximately 4%), (ii) the impact of lower production volumes (approximately 2%) primarily driven by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (iii) increased prices of raw materials (approximately 1%), partially offset by the favorable timing of the planned plant turnarounds year-over-year (approximately 2%).

Previous wording

Gross margin percentage increased in the three months ended June 30, 2024 compared to the prior year period (approximately 2%) due primarily to higher sales volume (approximately 1%) and lower plant costs (approximately 2%).

Current wording

Gross margin percentage increased in the three months ended September 30, 2024 compared to the prior year period (approximately 12%) due primarily to (i) favorable timing of the planned plant turnarounds year-over-year (approximately 6%), (ii) the impact of market-based pricing, net of raw material costs (approximately 4%), and (iii) higher sales volume (approximately 3%).

Previous wording

Gross margin percentage decreased in the six months ended June 30, 2024 compared to the prior year period (approximately 6%) due primarily to (i) the net impact of lower sales volume and changes in sales mix (approximately 2%) as well as lower production volumes (approximately 1%), primarily driven by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (ii) the impact of market-based pricing, net of raw material costs (approximately 2%).

Current wording

Gross margin percentage decreased in the nine months ended September 30, 2024 compared to the prior year period (approximately 1%) due primarily to (i) the net impact of lower production volumes (approximately 2%) driven primarily by the process-based operational disruption at the Frankford, Pennsylvania manufacturing site and (ii) the impact of market-based pricing, net of raw material costs (approximately 1%), partially offset by the favorable timing of the planned plant turnarounds year-over-year (approximately 2%) and decreased plant costs (approximately 1%).

Previous wording

Selling, general and administrative expenses decreased by $1.1 million in the six months ended June 30, 2024 compared to the prior year period due to lower bad debt expense and a decline in functional support costs, including a moderation of enterprise resource planning system expense from the prior year.

Current wording

Selling, general and administrative expenses increased by $1.6 million in the nine months ended September 30, 2024 compared to the prior year period due to increased incentive-based compensation expense and enterprise resource planning system expense partially offset by lower bad debt expense and moderated functional support costs.

Previous wording

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rate for the three and six months ended June 30, 2024 was higher than the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, partially offset by tax credits which generally decrease the tax rate. The Company’s effective tax rate for the three and six months ended June 30, 2023 differed from the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, offset by tax credits and the foreign-derived intangible income deduction which generally decrease the tax rate. Additionally, discrete tax adjustments recorded in the first half of 2023 relating to the vesting of equity compensation and changes in state tax legislation resulted in a net 0.9% decrease to the year-to-date effective tax rate.

Current wording

The Company’s provision (benefit) for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rate for the three and nine months ended September 30, 2024 and 2023 differed from the U.S. federal statutory rate, due primarily to the impacts of state taxes and executive compensation deduction limitations, offset by tax credits and the foreign-derived intangible income deduction. In 2024, the Company recorded discrete tax adjustments related to the vesting of equity compensation, changes to state tax legislation, and return to provision adjustments related to the filing of the Company's 2023 U.S. federal income tax return which resulted in a net 3.3% increase to the quarterly effective tax rate and a net 1.5% increase to the year-to-date effective tax rate. Additionally for 2023, discrete tax adjustments relating to the vesting of equity compensation, changes in state tax legislation, and return to provision adjustments related to the filing of the Company's 2022 U.S. federal income tax return resulted in a net 4.4% increase to the quarterly effective tax rate and a net 1.6% decrease to the year-to-date effective tax rate.

Previous wording

The Company's effective tax rate for the three months ended June 30, 2024 was higher than the prior year period due primarily to impacts of executive compensation deduction limitations and a decrease in the projected foreign-derived intangible income deduction. The Company's effective tax rate for the six months ended June 30, 2024 was higher than the prior year period due primarily to the larger benefit from the vesting of equity compensation in the prior year period versus the current year period and a decrease in the projected foreign-derived intangible income deduction.

Current wording

The Company's effective tax rate for the three months ended September 30, 2024 was higher than the prior year period due primarily to the Loss before taxes recorded in the prior year period and a related reduction in the foreign-derived intangible income benefit that collectively reduced the 2023 quarterly rate by approximately 6%. The Company's effective tax rate for the nine months ended September 30, 2024 was higher than the prior year period due primarily to the impacts of discrete adjustments in each respective period, which represented a net increase in the quarterly rate of approximately 3.1% as compared to the prior year period. This increase in the effective tax rate was attributable to the return to provision adjustments related to the filing of the Company's U.S. federal income tax returns and a reduction in the benefit associated with vesting of equity compensation, net of a decrease in effective tax rate associated with state legislation enacted during the period ended September 30, 2024.

Previous wording

As a result of the factors described above, Net income was $38.9 million for the three months ended June 30, 2024 as compared to $32.7 million in the corresponding prior year period.

Current wording

As a result of the factors described above, Net income (loss) was $22.3 million for the three months ended September 30, 2024 as compared to $(8.0) million in the corresponding prior year period.

Previous wording

As a result of the factors described above, Net income was $21.5 million for the six months ended June 30, 2024 as compared to $67.7 million in the corresponding prior year period.

Current wording

As a result of the factors described above, Net income was $43.8 million for the nine months ended September 30, 2024 as compared to $59.7 million in the corresponding prior year period.

Previous wording

Includes a pre-tax loss of approximately $1.2 million related to the reduction of the Company's anticipated receivable related to the gain on the termination fee recorded upon the exit from the Oben alliance during the third quarter of 2023.

Current wording

2024 includes a pre-tax loss of approximately $1.2 million from the reduction of the Company's anticipated receivable related to the gain on the termination fee recorded upon the exit from the Oben Holding Group S.A. alliance during the third quarter of 2023. During 2023, there were several transactions including the exit from the Oben Holding Group S.A. alliance, licensee exit of legacy technology and exit of certain low-margin oximes products that resulted in a $4.5 million net pre-tax loss.

Previous wording

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the second quarter of 2024, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2023 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements. Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize supply chain financing and trade receivables discount arrangements with third-party financial institutions which optimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.

Current wording

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the third quarter of 2024, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2023 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements. Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize supply chain financing and trade receivables discount arrangements with third-party financial institutions which optimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.

Previous wording

As of the end of the second quarter of 2024, the Company had approximately $12.1 million of cash on hand with approximately $269 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to be approximately $140 million to $150 million in 2024 compared to $107 million in 2023, reflecting increased spend due to replacement maintenance, growth and cost savings projects and enterprise programs.

Current wording

As of the end of the third quarter of 2024, the Company had approximately $17.3 million of cash on hand with approximately $284 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to be approximately $135 million to $140 million in 2024 compared to $107 million in 2023, reflecting refined execution timing to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program.

Previous wording

The Company made no cash contributions to the defined benefit pension plan during the six months ended June 30, 2024. The Company expects aggregate cash contributions of $0 to $2 million in 2024 and additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

Current wording

The Company made no cash contributions to the defined benefit pension plan during the nine months ended September 30, 2024 and does not expect to make cash contributions during the fourth quarter of 2024. Additional contributions may be made in future years sufficient to satisfy pension funding requirements in those periods.

Previous wording

As of June 30, 2024, the Company has repurchased a total of 6,250,181 shares of common stock life-to-date, including 1,004,725 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $192.4 million at a weighted average market price of $30.78 per share. As of June 30, 2024, $62.0 million remained available for share repurchases under the current authorization. During the period from July 1, 2024 through July 26, 2024, 1,933 additional shares were repurchased for tax withholding obligations in connection with the vesting of equity awards at a weighted average market price of $21.64, and no additional shares were repurchased under the currently authorized repurchase program.

Current wording

As of September 30, 2024, the Company has repurchased a total of 6,252,129 shares of common stock life-to-date, including 1,006,673 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $192.4 million at a weighted average market price of $30.78 per share. As of September 30, 2024, $62.0 million remained available for share repurchases under the current authorization. During the period October 1, 2024 through October 25, 2024, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

Previous wording

On September 30, 2016, the Company as the borrower, entered into a Credit Agreement with Bank of America, as administrative agent (the "Original Credit Agreement"), which was amended on February 21, 2018 (the "First Amended and Restated Credit Agreement"), and further amended on February 19, 2020 (the “Second Amended and Restated Credit

Current wording

On September 30, 2016, the Company as the borrower, entered into a Credit Agreement with Bank of America, as administrative agent (the "Original Credit Agreement"), which was amended on February 21, 2018 (the "First Amended and Restated Credit Agreement"), and further amended on February 19, 2020 (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement had a five-year term with a scheduled maturity date of February 21, 2023.

Previous wording

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00 or less for the fiscal quarter ending December 31, 2021, through and including the fiscal quarter ending September 30, 2023 and (ii) 3.75 to 1.00 or less for each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. We were in compliance with all of our covenants at June 30, 2024 and through the date of the filing of this Form 10-Q.

Current wording

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 4.00 to 1.00 or less for the fiscal quarter ending December 31, 2021, through and including the fiscal quarter ending September 30, 2023 and

Previous wording

We had a borrowed balance of $170 million under the Revolving Credit Facility at December 31, 2023. We borrowed an incremental net amount of $60 million during the six months ended June 30, 2024, bringing the balance under the Revolving Credit Facility to $230 million, and available credit for use of approximately $269 million as of June 30, 2024. We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Current wording

We had a borrowed balance of $170 million under the Revolving Credit Facility at December 31, 2023. We borrowed an incremental net amount of $45 million during the nine months ended September 30, 2024, bringing the balance under the Revolving Credit Facility to $215 million, and available credit for use of approximately $284 million as of September 30, 2024. We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Previous wording

Cash provided by operating activities decreased by $22.6 million for the six months ended June 30, 2024 versus the prior year period due primarily to (i) a $46.2 million decrease in Net income and (ii) the unfavorable cash impact of $12.8 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax payments. These net unfavorable impacts were partially offset by (i) a $20.1 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with a $46.2 million unfavorable cash impact from working capital for the six months ended June 30, 2024 compared to a $66.3 million unfavorable cash impact in the prior year period due primarily to the favorable impact of Inventory and Deferred income and customer advances partially offset by Accounts and other receivables and Accounts payable, (ii) a $11.9 million favorable cash impact from accrued liabilities due primarily to the timing of payments during the six months ended June 30, 2023 compared to the prior year period and (iii) a $4.3 million favorable impact from other assets and liabilities.

Current wording

Cash provided by operating activities increased by $13.9 million for the nine months ended September 30, 2024 versus the prior year period due primarily to (i) an $18.8 million favorable cash impact from accrued liabilities due primarily to the timing of payments and accruals during the nine months ended September 30, 2024 related to incentive-based compensation and other accrued liabilities compared to the prior year period and (ii) a $9.7 million favorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with a $44.4 million unfavorable cash impact from working capital for the nine months ended September 30, 2024 compared to a $54.0 million unfavorable cash impact in the prior year period due primarily to the favorable impact of Deferred income and customer advances, Inventory and Accounts payable partially offset by Accounts and other receivables. These net favorable impacts were partially offset by a $15.9 million decrease in Net income.

Previous wording

Cash used for investing activities increased by $26.7 million for the six months ended June 30, 2024 versus the prior year period due primarily to higher cash payments for capital expenditures of approximately $25.0 million during the current year period primarily reflecting increased spend on replacement maintenance and enterprise programs.

Current wording

Cash used for investing activities increased by $34.0 million for the nine months ended September 30, 2024 versus the prior year period due primarily to higher cash payments for capital expenditures of approximately $30.3 million during the current year period primarily reflecting increased spend on replacement maintenance and enterprise programs.

Previous wording

Cash provided by financing activities increased by $52.1 million for the six months ended June 30, 2024 versus the prior year period due primarily to net borrowings of $60.0 million during the six months ended June 30, 2024 compared to net borrowings of $25.0 million during the prior year period, partially offset by payments for share repurchases of $10.4 million and cash paid for dividends of approximately $8.6 million during the six months ended June 30, 2024 compared to $28.4 million and $8.0 million during the prior year period, respectively.

Current wording

Cash provided by financing activities increased by $16.5 million for the nine months ended September 30, 2024 versus the prior year period due primarily to net borrowings of $45.0 million during the nine months ended September 30, 2024 compared to net borrowings of $55.0 million during the prior year period, partially offset by payments for share repurchases of $10.4 million during the nine months ended September 30, 2024 compared to $37.7 million during the prior year period. Cash paid for dividends was relatively unchanged year-over-year.

Previous wording

For 2024, we expect our total capital expenditures to be approximately $140 million to $150 million compared to $107 million in 2023, reflecting increased spend to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program.

Current wording

For 2024, we expect our total capital expenditures to be approximately $135 million to $140 million compared to $107 million in 2023, reflecting refined execution timing to address critical enterprise risk mitigation and growth projects including our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program.