Mr. Donnelly continued, “As we transform the business, we are incurring one-time charges associated with positioning American Vanguard for longer-term growth. During the quarter we incurred a $8.1 million transformation charge. Additionally, during the quarter we recorded a $16.2 million charge associated with the collection and disposal of Dacthal. The Company benefitted from this profitable product for many years, and we are now taking the necessary steps to safely recall and dispose of it.”
David T. Johnson, Vice President, CFO and Treasurer, stated “Despite the macro headwinds, the Company remains steadfast in its transformation roadmap, which presents a clear path towards achieving a 15% adjusted-EBITDA margin across the ag-cycle. We are pleased to have been able to pay down a material amount of debt during the quarter, decreasing our long-term debt to $179 million from $211 million at the end of the previous quarter. We expect to further improve our liquidity as we decrease our inventory in our seasonally strong 4th quarter. We remain optimistic that we can decrease inventory to 34% of sales by year end, down $25 million versus last year. We are pleased with the hard work of our employees in pursuing the business transformation projects. Furthermore, through their hard work we were able to reduce operating expenses, excluding transformation costs, for both the three month and nine month periods ended September 30, 2024, as compared to the prior year period.”
Mark Bassett, a board member who is temporarily working with the Company’s Office of the CEO commented, “Within our transformation, we are encouraged by the initial progress that we have made and see an opportunity for even greater benefits than we had originally calculated. We now expect to achieve $20 million in transformation related benefits instead of our previous estimate of $15 million.”
Dr. Bassett concluded, “I want to reiterate our full year 2024 revenue (down 2% to flat, excluding the product recall charge) and adjusted EBITDA ($40—$50 million) targets. I view this achievement as a testament to the resiliency of this Company, especially in the wake of the current market conditions. We are focused on returning American Vanguard to a position of consistent free cash flow generation, which in the near-term will be allocated towards further deleveraging, but over the medium to long-term we expect to be able to apply these cash flows to growth opportunities.”
About American Vanguard
American Vanguard Corporation is a diversified specialty and agricultural products company that develops and markets products for crop protection and management, turf and ornamentals management, and public and animal health. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has more than 1,000 product registrations in 56 nations worldwide. Its strategy rests on two growth initiatives – i) Core Business through innovation of conventional products and ii) Green Solutions with more than 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products. American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. To learn more about the Company, please reference www.american-vanguard.com.
The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the Company’s management and are subject to various risks and uncertainties that may cause results to differ from management’s current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed from time-to-time in the Company’s SEC reports and filings. All forward-looking statements, if any, in this release represent the Company’s judgment as of the date of this release.
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