American Vanguard (AVD) 9 Mar 222021 Q4 Earnings call transcript

Greetings and welcome to the American Vanguard Corporation Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to our host, Bill Kuser, Director of Investor Relations. you. Thank ahead. go Please

much, full-year everyone calendar earnings very fourth year American quarter and review Diego. you to Welcome, Vanguard's XXXX. Thank for the

Eric Senior CEO have the Chief David Financial will several Scott on for company's call, We Hendrix, the Mr. our speakers Johnson, the Chairman President American of Mr. and Officer; Vanguard; Vice Mr. today's Wintemute, answering who Also and Thompson, Trogele, Chief the Business in Development, Jim to Bob SIMPAS initiative. Director Solutions Mr. leads questions, Commercialization; the Green the Crop Operating Business our Mr. Officer. your assist of company's U.S.

let's detailed other our to the statements management the include regulatory differ and in over represent subject policy, Such changes and to as today's forward-looking In a results assumptions based beginning, uncertainties Before may factors expectations. can Such and are that information. by take to of and moment company's forward-looking are best usual cautionary All discuss and the that not the conditions, company's the let and company's statements risks said, this will be company judgment necessarily actual competitive various the SEC such for of from various on reminder. cause and With weather turn call current may information management's filings. estimates as call, updated reports risks in company. date me pressures information Eric. the call by

good everyone. day and Thank to Bill you,

addition, of premier an then come then give our Jim remarks, to solutions. insightful. an on in to it for initiatives, two David format concluding we will North begin over back different give Scott, quite the will or platform. a that remarks. And And opening American view his you Thompson you And our talk give I'll believe about kind have SIMPAS the update will some dramatically. update have call turn financials. want discuss will which And two marketplace, on guest of he evolving I'll We growth we you you with some an today's find update is green who with our then to

like First, of Vanguard kind talk the from to cornerstones American investor's an about viewpoint. I'd of to you

a non-crop in provider targeted niches we industries. to are and agricultural the solutions leading First,

poised are industry are point. currently which we to benefit Second, and tailwinds, favorable at fundamentals from enjoying we this

cross-selling have Third, then geographical on footprint, presentation. we growth broadened our detail this in that greater opportunities. greater two to and providing we'll discuss access market our initiatives in major later And

growing SIMPAS offering significant offering, upside second, And First, our solutions embedded platform. through we value green breakthrough clear portfolio the have our technology. to shareholders

we point, and management sixth And displayed and highly anticipated this Our an have XX with record. XX track long-term acquisitions we years. proven platform And diverse team have growth. momentum excellent with 'XX M&A pipeline a have experienced I'll And a compelling the which finally, support our product licensing have over on very shortly. mid-double-digit we strong capabilities in elaborate year, growth just in innovation earnings we new last with to with powerful

said, originally wound bit little 'XX XX%. digit. growth our a performance had have We the we'd We double low just So on at revenue scorecard. in up

We was it said and recent have profit XX%. to growth we similar exactly years margin

came we a of reduce expenses, the looking percent sales XX% we operating were to versus Our as and at XX%. in

Our XX%. interest by lowered was expense

we're here, to trying still we're as rate resolve, doing have result. a tax preliminary we Our - basically

target have a issue. tax David non-cash one debt-to-equity as that an that's issue will at than with XX%. rate And less about, then reporting is without talk X.X. But we have currently of acquisitions a we're We our acquisitions

and our $XX preliminary our currently, acquisition in as XX% we that quarter. reporting should we're vicinity the again, didn't less in million are XX%. have income, than X, third but increase We of point Net EBITDA an at out

last I in quarter all was our third industries. something year, but industry, germane not - bring across the only the I did up in in that our thought So

supply so today. chain continue And the challenges that that's

Freight force So much into about manage COVID are talking try number is disruptions more this getting We've depletements The seems I year have rapid seen expensive. of obviously products very I we've demands. logistics, This materials, out lastly shifted you're also difficult raw moving balance. and pretty all fuel think longer now, seen costs and think B majeures, demand factory this aware. at Inflation the we're it's companies translated for can a is haul. has recall, demand. of prepared whole strong that COVID. force global system right as are I ever And today, point to surges than what we rates all problems. and just point as that majeures we hope strange, come it's increased from some of and is A demand will point not I'm it have dramatically But given equipment something to

what major okay, adding is, we off to challenges. any on one at guess with pressure I looking even of raw we're critical So number we're a and the to materials parties. sources dependence can where up we deal the adds And take this are first, this? party our new doing or two So question to

this point expressing coming material in was order of the in coming today. have is try demands what effort weekly team is it's a the our our Second, or to production. finance team discuss marketplace factories start in ability sometimes goods going meet occurring growing next accounting the factories, thinks, with with with sure we're global make meetings and these we And three week we're to to giving our global rolling discussion placing into well to seeing them in, give maximize what structure. And finally, how the American cost then that cost the XX-month are two of with constantly a our marketing supply to order actually lead And coming orders our up North a that versus costs in chain to our margins. together communicating of kind or we're extra on advance, with once-a-month current to gross when need our a that period. forecasting output that goods price to the We're maintain six of our to what time

With to that, like discuss the I'd Okay. it to turn over financials. David, you to

Eric. With within our to you, few Thank file XX-K days. filing, public to next regard the Form we plan our

we critical As we to in are is considered noted, company that in operate. countries part fortunate have in all previously infrastructure the which participate industries of

been Within XXXX, international of our throughout the demand our XXXX company, The XX% and with And U.S. $XX regional a million. for XXXX to strong operating parts performance $XXX across result, during disruption business by that our and by continued finally, our product or and as XX% improvement lines All increased without by has million crop overall have increased our the grew and As pandemic. million. revenues compared $XXX the up U.S. our our seeing non-crop or business less all and to employees in to customers XX% more operations broad to to by range of distribution the business $XXX operate strong suppliers, are business business XXXX. million XXXX, about a year XX% businesses.

gross basic inflationary pressures category, through chain. XXXX This the movement we at For of the by the in have the some throughout supply XX%. stability despite significant percentage as line margin underpins full-year XXXX, was business, with managed

XX% is increased sales million. by have operating XX%. to up on end Our at This $XXX expenses

operating sales to in as As XX% XXXX. were a result, compared expenses XXXX, XX% compared to as in

or to million sales is year. as XX% goal improved $XXX XXXX. X% In strategic to of XXXX, our Our leverage by improve about net operating per summary, for compared

general significant the Our sales, gross pressures the year, has during half remained logistics margin flat performance despite second XX% inbound challenges. inflationary at and significant of of

to at pace operating increased, sales when to as than Our the logistics for slower a expenses which freight operating and to a includes compared costs, XX% have of XX% in outbound result, as company sales XXXX. sales and improved have compared but

performance throughout is has year. the and year. strong Our last below cash management is Average interest been expense XX% debt down

Finally, tax offset charge Brazil. asset retains onetime of certain valuation provisions, in to the by ability the losses company in a operating allowance tax establish future. XX% The against those includes uncertain release rate our net effective deferred the utilize a tax non-cash to the of

XX% Our Furthermore, we improvement even would had the focus gain, during did to the tax is net operating XXXX, is If disregarded disregard onetime income benefit $X.XX that follows. financial $X.X per recur EPS my of quarter year. last net perspective, we up higher. as remains for a that income we as would a share. share the the $X.XX bargain mentioned, purchase been If the per million just gain income of at of for year company compared charge net have XXXX. $XX.X and and at per in From moment, not have million final $X.XX been

have we slide, this on strong see on another can cash. performance you As had very

the long-term $XXX generated including seven million managing and a to our our we our of operations. continue performance XXXX combined, cash stronger from X It in benefit to shareholders, credit the borrowings the million our continuing the down of long-term line. make on the to to year. working XXXX of from of cash The over allows next and of than the operating in pay development invest also up This years aggregate to That while business, capital. from repurchase has combined. decisions decision us come the For also performance activities last have to total is us shares allows

activity, a from for year. balancing stronger inventory to as ending inventory from consistently end end year, time recovery continue each of the normal With than XXXX. again low disciplined down time, compared reduced company We financial which been of to XXXX, high our liquidity, overhead year. regard in since of is with about that chart, quarter we've levels. QX last $XXX time last at of the working the this at factory reduced demand debt you is the to the performance $XXX the been million the rhythm this of planning as can this It to XXXX, in the to XXXX comparable quarter and our of by has has to see same million a At XX% pleasing a Debt year. follow note that forecasts approach at

a the company's has availability similarly throughout year. under been facility As improving result, the credit

million up For to compared in the XXXX. full-year, million EBITDA at is $XX.X as $XX.X XX%

than under a ensures The compared liquidity credit above, line has down the EBITDA company's in that invest to to As strong significant more position improvement noted continue debt we and availability doubled. company's with December in XXXX, the can future. as

with is we level of note than at and XXXX look any net is we improved are In to outbound achieved expenses compared the if Operating cash if that took reduced since close during of steady. it summary year that net remained has sales, sales interest gross debt, better the up XXXX. has when fact, - which to to then, sales have is compared end strong cash and hand, at on other include In margin freight interesting in management year. XXXX the achieved to

reduced, concerned, As far is to again no balance causing the overall our well inventories as credit our pay continue profile. customers change risk sheet in have

that, biggest deferred a market, solid revenue back through Some facility, our down in With credit to track and availability to initiatives complement and repurchase sheet shares balance customers the enthusiastically and businesses has increased funded follow participate that that positioned our our initiatives strategic and Debt Eric. availability in will record is long-term domestic continue early generating hand credit of products our under more significantly payments, growth XXXX. our than of business is I company in dividend to programs, line our under realized the acquire the to long global With pay the well continue footprint. be will on in doubled.

our introduce COO, and David. on Solutions our Thank ask you, Trogele, background to Jim platform Bob Green give going to Thompson. I'm you

So Bob?

we that In to adjacent comprising we heads assets the American One technology and Vanguard CEO and Yes. the virtual the joined our with interim people on In Agrinos. Directors. afternoon. global on the this margins. we worked green and In the was the biological or in the time, of into integrating Thank was of country of drive formed country Vanguard the Eric. subsidiaries in you, of of employees team Good exchange October high point, CFO manufacturing team, space functions American segment, double-digit growth and and XXXX, Solutions Thompson spring to technical retired. XXXX, focus result team two Green family. to spring the our segment Jim XXXX, appointed At the we At solutions strategy plants, purchased Board XXXX, a the Solutions formally Jim that to and head XX and Green eight team. leader technology our presented

and hand Jim pleasure introduce to So to over you. it's my you,

Good going afternoon. Solutions primarily Thanks, outlook future and well We'll Green be a of current go on near-term segment activities, this planned Bob, as overview through very business. forward. much. short presentation performance, focusing to I an our have for as an

excited the In latest segment. of terms performance, about we're very the

the can It's an we primary year in the drivers occurred Agrinos of reflecting numbers, in that you from both the $XX we platform. that getting existing were XXXX. AgNova increase growth Green - the million from in out million offerings solid the and As acquisitions which up year XXXX. Solution sales organic $XX through in closed see with effect at XXXX, a full year Two of also and you're our of have

Brazil with currently base build and increase this organic XX% generated include but growth over subset the year. that XX% of product if So the acquisitions really a to they to the the $X.X strong growth on the rate rate strongest was without geographies Latin you from. million importantly growth total, in AMVAC. America XX% XXXX as Agrinos, acquisitions, an set, more for number, the a represent And respect in of previous is of

More XXXX stronger really and preparation in of a as beyond. that was for gross grow growth are segment percent over increase currently. margins to XXXX The XX% expect importantly, this continue time we to for year

couple We expect menu produced how the products of of products. note stay Important of current this are highlighting green both do but have expect our in products slides I'll that activities a solutions volumes to static, third-party growing and that portfolios we see that a growth? the comprised spend AMVAC of AMVAC - the segment. and achieving products. distribution we we of third-party higher-margin to higher to What's

XXXX, which not into And taking is that product and a We've of Scott addition First, few as with XXXX. we've in currently also utilized attractive pipeline geographies other Oregon, in tremendous team established global in our strong tolling geographic in we're a the products on a fermentation those Agrinos trialing to in lead has we've microbial subpoints. is discussed the that will expansion by products facility in effort did by of to the an that Agrinos U.S. focused lines be that a results Hendrix other the can parties selling opportunities facility AMVAC. through also asset Clackamas, into. expansion

But XXXX. into launched The in second a much point is menu also will more SIMPAS, detail later. biological which go Scott in we've

releases iNvigorate running from biological one product see can you As press liquid solutions greenhouse now right, a the the we've our part the have we announced more AMVAC that from recent system. on of is through first of that the

an We we'll their nitrogen product displaying partner also completed XXXX. SIMPAS be with in in also fixing Azotic a agreement company and

to the years of importance we've critical having pipeline More strong for identified a growers is and importantly, open an extensive XXXX got And the for menu and SIMPAS' beyond. success.

Latin have in grow Greenplants we outside sales to coming solutions in of with we're in Greenplants. America geographies of a with China addition, Latin sales company, in we called taking first In and have the a theme similar expecting America and years multiple business them other Again, products. the our across running established on our

Next here. slide

for XX filed compound so the yielded AMVAC fruits both And along key new We've is those that of Solutions so far another and Technology broad-spectrum with last are raw and Lastly, a and year. pending. started There robust work is basic ingredients. of a of on efficacy. sectors. a Environmental patents got research that material identified X.X This new with insecticide activities far screen Green focusing with ingredients area have development effort products XX and active crop non-crop the We're six AMGUARD our development active have for the underway. for herbicide business. another very strong that section we efforts million doing in we're The raw,

in the we've we we this growth strong to greenhouse we've in turf which will those segment, results lead had Agrinos products in new ornamental and before. which see as the segment segment been Additionally, future for And trials, was taken tested a and never well. that those believe touched

segment the you are success modes generating in to are just revenue. with I is can Green pillars in strength currently market efforts seeing future of quite part these should activities So many through see think And fruits broad. already summary many action the types AMVAC growth activities. four have we're each lead for this can And have we see we're value for pillars. portfolio. that that each that we products customers. the pillars different Solutions most And different of of the a see this in our broad it's below can And attributes these product the These that of is in from you covering a and different you these portfolio the of our to that importantly, of key that very the segment of of propositions that that

partnership that number forward, relationship effort We a years, research which Labs than engagement see that of additional but had we there, would we've you strengthens AMVAC effort a company in previously. Biotor microbial announcing strong be example is with what past left-hand which the a provides this and them will the product be with collaborating growing have benefits. a for Latin going An that research been American over a of new column

internal R&D We universities also as through the we Technologies our and partner with third-party you have own Envance Group. see

but two the asset. to AMVAC that with very a with in in - broad Agrinos, further geographies brands all different a additional are of plants key have of range world, family. a manufacturing that are then be runs the bolster Manufacturing strategy that we around throughout. the continues you added that, to common acquisition Secondly, the four From the

advantage. where a importantly most market is distinct This AMVAC has and is Lastly access.

products world, acquisitions key and broad Agrinos the as just also again with through third we we several license partner us for throughout access by new reach. XXXX that, acquired a believe not We have and market, take our entities parties, own in have but to agreements and we the distribution market very very, is and AgNova very strengthened very, broad reach of to do that

the continued increased And as see trend talk higher the see now. space really are of biological We and the well, of So products acceptance will years. last going a generally success as identified about our level we forward, - key the much would drivers over to in we Scott that here. two

addition, these advantage necessary elements of AMVAC of tailwinds. the all to In take possesses

SIMPAS We soil promoting health. have that's solution a

areas, We And product in we activities And we have but that addition the of we tools all of to very able in are do that various be the think looks international all And strong all products of the products not and non-crop lots inputs to of - helps have those that around just these showed company, we inputs. these a market, crop created leads we There's development these provide tools technology of and across utilized of kind other but think to more like. performance that can necessary in groups these to and provide be pipeline. the what we that all all application have crop, the validate geographies. can that successful. metrics all we of solutions automate lastly, the to future

about incremental the the green daily Eric presented discussed, which the estimating we a clip that But and channel shaded potential, lastly, current are current distribution licensing a have, opportunities area, which in come at And the a Solutions, highlighted we've we are continue pipeline of strong next XX% growth upside several an pipeline, for Green And acquisition dark company. products we R&D form consist AMVAC look which that from have. green see And merger basis. is the activity, geographies and has the to on point base see tolling SIMPAS that light shaded the over that's rate at nearly our business additional growth which to that area that opportunities opportunities. we're the you years. really of As we

be consider we different over of to years. of areas success coming those the increased All

platform the increase Solutions profit we're So coming where and years what the in can help going company. Green we to bullish about to and do in our is summary, very revenue

Thank you, Jim.

Okay.

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ag sector. Eric, thank Eric to provide an me had overview you. U.S. asked of our

is globally. I what So our and overall the providing through the the of U.S. growth but innovation highlight crops driving keeps U.S. and will is U.S. really trend. talk today, business new driving it a forefront productivity you business. that in is as look edge drivers AMVAC exciting about I our quality catalyst history It's our and is our of with that. drive I rich on and us has to before U.S. at ag business about are technology within focusing our SIMPAS. I'll cutting our talk of two and little ag well, other growing how to can there to It stimulating then a and will primary on stimulating get about safest economy ag number a the we the commodity do keeping our technology ag. on and want starts sector a ag the with bit world what within with through crops talk highest But sector. U.S. the technology and advancement using food for our that U.S. facilitate

of what showing chart And futures. Eric is so soybean is the

U.S. corn the annually production. look gross the of That the represents those States certainly, in that their customers yield operations. plant. sure And our to we within of high shift use driver for To to The segments United the understand to that resistance years, It's over make purchase if the decisions for to the and production how lead with is yesterday in slide. corn, the some thing protection acres is compared please million that the driver commodity Eric, you retail price perspective you income. market. primary two allows markets, XXX farm around Wheat across XXXX. goal input relates divided, way. U.S. the continue production last herbicide is maximize our and same If by give business the to in and soybeans, growers, the next hit XX far crop to ag number it understanding one add

six continue sector, crop expanded and build defy strong cotton And and The Rate, portfolio solutions has defend our historically Envoke we to to our market acquired insecticide Assure although sugarcane. continues II, herbicide the Hornet opportunity has in in by First the through annual year-over-year M&A We marketplace. per segment recognize rice, and share strategy, herbicide segment. brands, a Python, strong the been plans and in to X% be been it. helped AMVAC has drive driver for soybeans, about Classic, that have growth corn, herbicide our our growth and in We've and

our forecasting our Jim CORE additional Much focusing our helping our had leads is have our us resources start investments last in brands look understand over innovation forecasting. trends innovation and last helps our core our growth. we the years to Z, accurate to us now focus This I and launched process We accelerate managerial We have just expand which we're want green to herbicide like more we year, this significant today, IMPACT brand mentioned family process highlight in on impact a launched SINATE growth customer the IMPACT core better and marketplace implemented activity. planning brand two with what a you to four solutions. our moment we and and business, at ago, If review in three It drive helps implementation. segments. brands.

to at what see Solutions. markets, to the from ways offer plant with in functional same OHP AMGUARD activity thing and on other green what has leverage capitalizing and by We technology can we across continue look segments to Bio

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to at be We solutions business. our the the to that are our segment use help continuing to start have advantages to and we American relevant customers experience But to with look our and of our drive ways of North manufacturing.

with to to We product see competitive have in the that demands. mix XXXX. is colleagues what critical six respond changing America. agility in in been to our change meet plants and our moment the as and manufacturer to Eric North chain mentioned ago U.S. our work to XXXX a have supply And really, advantage market The demands we opportunity we have

our activities. surcharge the X% challenges We at capacity to gross price we We course cost that maximize looking throughout three our despite margin. to the we season. continue the drive increases planned on of ways price growing offset on opportunities labor. added sales with to costing XXXX, it with all our basis a to XXXX, plant monthly Beginning logistical a look implemented are review season In helps increase rise. and at in throughout and to continuing We're logistics

and Market the sustained for gain goal enables with growth. achieve to market portfolio decade market diversity last to and drive mind diversity to AMVAC been our has share Our customers.

is our I strong you As that and delivery segment augments has growth our our business Eric and systems. indicated outlook better earlier in technology hope have the his U.S. of application next demonstrated AMVAC's understanding crop a today. comments, current SIMPAS

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Lastly, manufacturing developed all and deliver to down chain productivity. operational the SIMPAS up way to efficiencies was the

called for to challenges processes that have with that associated to We infield traceability provides This has USA of critical Ultimus carbon address industry a make supports application. the to to automated system developed distribution, sure manufacturing software been initiatives. the engineered meet records. is that's ecosystem to that retail convenience. needed standard scale we integration from have carbon We to and seamless SIMPAS data

and future stakeholders believe be audit. and carbon You the got able to goals all credit, record With safety provide sustainability We to by is invaluable. ability food customer. current traceability and measure, to validate,

SIMPAS of goal enabling SIMPAS applied we cotton while nine peanuts. seven whole strategy. is soybeans, sustainability and health achieve the for objectives XX for through have unmet today, their for customers carbonate XXXX, meet toolbox continue solutions their and to to will that expand By Our corn solutions to needs our

SIMPAS' today about about to the that We that's portfolio through and the our provide are we're We're opportunity be going excited to excited customers solutions. able both growing. tomorrow

on over. we we some selling grow insight achieve from XXXX As to target highlights to and beyond, at pace our are from 'XX of XX look systems the and

ability In supply our to outpaced sales fact, our XXXX. have from

look target we for you If XXX are at of our systems XXXX, on track.

We we a have for have beyond. ready of then prospects number and in and XXXX the prepared that holding

own bring marketplace marketplace, the IronClad earlier the for As plant solution Aztec, of announcement invigorate to nitrogen that Jim biosolution launched mentioned a MicroSync, a excited fixing by our to have into we've which announcements number commercial the health agreement is Verdesian, sole by we and Eric we're that on, and very of product. Envita

bottom by at As future. a we that we're what propositions to from our we're be better with can shared the the the a that to understand On in net we're investment that, the the revenue what XXXX. years, now out in to revenue we XXXX look was that add another be be at projections. look marketplace. going that monthly coming computing bring going to we XXXX continue in SIMPAS share market, additional $XX we to are that customers to an And the generated feel at our are basis, based chart able past in we've This want continue see on value made look basis, refinements with to based to on to would gleaning quarterly to line indicated to going need We're to can on like information with that million we a that what we excited we refinement projecting that that sales. the solutions

parties, you, the technology working that future strong. organization third are customers Eric. the about SIMPAS, business provide on with in our is and the the and an We be very as that both to Thank we're we're peers very through the going along marketplace solutions excited of

you, Thank in U.S. Scott just about clarify, market And only. talking four Scott. crops is the to

this in to in be Mexico We reporting we'll regions point, but you. have that or not geographical modeled the at Australia, Brazil, future other

our I'd to giving wrap future of Okay. viewpoints like up kind you growth. just two on

up saw back XX changing And have hitting We're our but updated. said, what gave see we've XX%, of in now So updated that's kind anything XX base reported, as we had at Again, before at $X.XX. this at green we not and in our come with we initiatives. Scott November, we where you business there.

we're we And we we a just we looking of committed level together, they revenue are for hitting pull will so forward to on now if as these at that you, graphs by kind on move 'XX guidance a finally, peak or the end update 'XX. of what And our of quarterly year. And as occur. as $X.XX

gross to sales. percent we're XX% of Operating XX% in I we revenue a have reduce that XX% David increase mentioned, somewhere in year per Our revenue, try as X% to target X% profit growth to projecting between a and level. think margins expenses,

were what Tax acquisitions down obviously On advance we of kind Right it come for you. trending mid-XXs. board. to we be being again, have to see expense, Sorry, similar But I now, our in in didn't debt, we'll we're acquisitions. on that on interest see 'XX. expecting but depends what we in we're rate, somewhere the

sticking debt ratio, the acquisitions, - less one than we're press strategics. Our right again, debt-to-EBITDA depending our may right the on of for and without to kind we acquisitions

in a to reporting, would earnings an on $X.XX in Yeah, increase about $X.XX the we're finally, an income. based And seeing of - what reflect final and outcome in be of David that expectation share, increase income net the XX% XX% to where XX%. more Okay. XX% net upon to talked XX% we're

with all you listening up any may to So questions have. we'll Diego? it you open appreciate guys and that, this to

new take I'll your format we've of answered questions. you enjoyed that Well, Okay. all our that and

to anybody thank update who this individual Bill soon. very future Kuser. again in May, that reporting looking near on much So or coming for early the to and have we through again, so would to we like remain available in And up discussion look you we're coordinated forward

you much, evening. great a thank have very So and everybody

Have a Thank you. parties today's good day. call. may All concludes This disconnect.