American Vanguard (AVD) 11 Nov 242024 Q3 Earnings call transcript

Good afternoon, and welcome to American Vanguard's Third Quarter 2024 Earnings Call.

Our prepared remarks will be led by Tim Donnelly, Acting Chief Executive Officer; David Johnson, Chief Financial Officer; and Mark Bassett, Board Member and Architect of our Business Transformation. Mason Bennett, Vice President, North America Crop, is also available to answer agricultural-related questions.

We have prepared presentation slides, which we will reference during the call. These slides are posted on the Investor Relations section of the American Vanguard website.

with cautionary call this begin our reminder. forward-looking Let's

information that discuss All company's differ. forward-looking judgment this this and and and call, to in regulatory are Such All to information. and forward-looking may we uncertainties risks conditions, various the now such During company's factors SEC release, the Donnelly. of date reports is statements include filings. CEO, not results Acting changes updated as company's turn forward-looking estimates be the other subject risks the to represent cause detailed weather of company. It may actual are over in necessarily by to will and statements management Tim the policy the call pleasure by as my

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profitable and reiterating to We recall $XXX financial company $XXX results million transforming XXXX remain I'd our million our sales that excluding our Now, adjusted the are and we like product efficient, target charges. to industry. million, turning into on to million ag outlook, target $XX EBITDA to start our $XX of supplier an by stating of to business reliable focused our and

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in impacted planting to accumulating to to to seems purchases previous some distribution conservative continue to XX past have time. deep partners months, industry inventory, the which closer the phase destocking While XX the be the moved preferring make

We attitude as into cautious in move XXXX. be expect place this we to

this and for year. a through American commodities. will however, continues of with seasonally cotton existing This an the defoliant Vanguard to within strong overall, strong case by from LatAm the typically agricultural period connection our particularly Brazil need be protection and uneven fourth will be downward effort also Additionally, to industry The and aided, industry, generics, market. which inventories our pressure market in the channel on markets pressure exert work crop expect broader is quarter we season. Despite the to a harvest again

and as period heightened but a in are price-driven cyclical that during earlier are instead commodity these are such sensitive of buying quarter. less the crop should seasonal level [ year factors, periods. patterns planting benefit behavior harvesting the season see the products normal and Products each ] non-cyclical typically as of driven in from our Our insecticides, cycle or this used to this Impact fourth by herbicide planting demand Index granular insecticide even soil

a financial to top-level Turning our view of performance.

in During excluding third period million $XXX.X million of company ago compared non-recurring quarter the year to the of charges, XXXX, the ago EBITDA of generated period. $XXX.X million, sales $XX the to compared on $X adjusted million year in

year-over-year. XX% product for interruption. decline due period in buying that to this moment, the atypical over at essentially when year ago granular activity detail of in the comparison in a year-over-year was flat in think quarter Aztec, adjusted this insecticide more David sales lower can sales excluding U.S. More Aztec, a period the a I attributed on following will decline revenue of a the revenue, total saw defoliant year-over-year looking Aztec as in provide it's be noting to All Folex, but cotton worth of year-over-year supply specifically, soil was and revenue the

I a the Finally, candidates and been over CEO CEO to The that, and would new interviewing Directors Board has of up of the call CEO. And is with to I build our will running our David. office created to the like focused search. momentum interim on actively address turn by on getting

company's global the the Dacthal adjusted XXXX. our for of associated with third Thanks, $XXX.X and of million from line was versus for XX% the markets down charges product million, cancellation recall all or Tim. voluntary $XX.X quarter Overall quarter, non-recurring revenue our

quarter shortage, in in herbicides. In supply which declines challenges by half increased crop extended as XXXX, the U.S. into and down was This of These previously were bought the declines as The our started revenue rebuild offset Aztec partially fumigants, meet significant were in and XXXX. in to needs faces third $XX of the Our to drop insecticides million months' customer in the business driven half Tim their this or as and first was of worth XXXX XXXX. a product safety second customers essentially extended Aztec area sales. half second and by Folex by to revenues mentioned, XX well driven stocks. previous the of of sales compared XX%

As a Aztec of result, this in we very quarter. few sales had

expect to of normal for for demand like-for-like a Tim to return in quarter was more activity XXXX. And in the as a third year-over-year unusual adjusting Aztec product, the indicated, on pattern our We XXXX flat starting restocking basically revenue basis.

a our are we celebrating across content While drive or working not aggressively sales, we organization in year-over-year are flat growth. commercial to performance

sales, impact Folex affect did both a entrant hurricane by share the that market major was driven margins. generic the and depressed took While

retain of some volume regain are lost we earnings to We those as and move working forward.

to as sales an to last to strength, was were driven pleased distribution non-crop here distribution OHP XX% where our U.S. This with compared increased this area compared share OHP nursery of business. were was business of a and to that last agreement, including up biologicals the year gaining our mentioned, previously up are some we the and products market As allowing traction. are year. growth time new sales we was markets, by The greenhouse its offered achieved. by business new portfolio the growth OHP XX% expand led has key

continued we and look expect we as result, our business non-crop a forward. OHP overall in growth As

from increased through to strength year-to-date. Growth our forward in faster experiencing and is portfolio in come and performance grown is This positioned products economy international Green portfolio, bright is continuing and quarter to to Solution investment this Another XX% where non-crop spans opportunity. Green year-to-date XX% OHP, sales and during of businesses years quarterly grow our the Solutions product by our look overall XX% we revenue crop, LatAm, third from a including spot in year-over-year. growth in and growth many standpoint, agricultural pronounced the products up our than have for our

have year. to pressure negative partially charges been has the strong drought season by Our impact. have broadly excluding the Mexico had in product acquired in was international This we agave prior down. factors year. Australia. conditions strong a business market portfolio. a finally, been from Ecuador businesses decline and of banana that broadening X%, Generic And in late the the These saw benefited sales And last business by in addition, non-recurring compared there a offset

Turning was approximately in decreased Aztec profit of XX% X/X for reason prior gross items year. the compared profit to XX%, in excluding our declined non-recurring decline the margin. margins. sales accounted gross Significantly to Product the mix as margin to

the impact on to generic addition, with accelerate team the Folex of decision sales made In slower decision, X/X accounted the along the of for remaining moving That inventory. decline. the

costs was able, to Another year. we area on management million the like-for-like reduce action $X.X measures, as basis, by these in that compared cost took operating on control. prior Through a were to

Looking compared we long-term to report million of to XXXX. pleased balance by second quarter the at sheet, am decreased as $XX.X our our debt I that

we and were this to our reduction a improving we XX% an sales this call, we improvement As area to as consideration is business our our focused last year. remains able pleased of highlighted in area. to key our transformation, We our of time inventory on. in sales compared are in with XX% Inventory also last that decrease liquidity are

a quarter. seasonally would a inventory end our on our have We expect year, $XX the would the take like improvement this to decrease be the fourth last of million meaningful have sales of approximately towards charges quarter year-end. I XX% one-time to comparison impact sales address of which taken to moment our we our effort strong goal net in to by to

the current the First, and recall voluntary costs disposal all with we estimate account company's products. had Dacthal a associated $XX.X to million for charge the of of

digital Additionally, progress pleased to the our we our target the transforming various months. including by been closing, we our is our over This we adjusted EBITDA million, improved a have had continued to associated business X transformation $XX this work our and maintain support our million of with business and $XX to exhibited liquidity charge consultants from aspects able of $X.X is as we are approximately that ongoing, transformation primarily on efforts, in task projects. In of ability of and million XXXX. the last make with

the should Mark. business Finally, will is I XX% that I across Vanguard we when to adjusted emphasize a cycle over like believe American complete. With EBITDA margin our be call the to that, would able transformation turn Ag achieve to

David. Thanks,

this progress of our continue target we provided EBITDA the increasing we further of we of power returns To transformation, improve end, transformation from last quarter. that are uncover benefit estimate $XX annual for our through the previous and we to goal earnings million this $XX ongoing to opportunities from efforts As potential to million journey business.

achieve it this to the savings, company. of While to time earnings it can meaningfully we will me improve clear is these power take that

we earnings In $X and expect the logistics continue the journey, example area additional process procurement, costs we like save opportunity an highlight looks would of should and to those and have business. see out worked taken accomplish of this to to our previously could million this savings order we have uncover $X material with estimated benefits. agreements Kearney that that additional company annually. reach management are to where raw As structure. we to to It annually. In on and we continue had bid I of million take now begun vendor upgrade opportunities. savings, We signing the to modernize these likely

of and in on implementation will to this roles continue initiatives you and will strategies phase, of the entering update we position we be a in and the are international the broaden process savings programs. and referenced to pricing in now With implementation to improvement new continue the which organization, addition this these the area. Both are customer-centric key later, and maintain

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our and we that Vanguard to Finally, into the flow continues cycle. can company American transformation look cash through be generate business consistently to and free customer-focused profitable progress, forward a turning

Let's Operator? for now call up the questions. open

Instructions] [Operator

take to ahead or just Before have your why to Day if we appreciate the family Veterans we service that appreciate had want acknowledge is that, We go their we that phone. you've today we want question? well. With question, first first as any take members I on veterans, veterans service they're don't and and the the thank

Absolutely.

Lake Markets. question Street comes Klieve Capital Ben with first from The

In think of around record you the of recent is couple guidance EBITDA top out full me, the number context imply this one that by the there reiteration, history. at fourth excuse on last top a -- what $XX are $XX would is unusually kind wide realistic Can a year. year quarter EBITDA of you the line line especially a a $XX the point? year the million being for of this First quarters EBITDA us end margin low, guide through a walk full such number in levers million million

would million I that to $XX going believe our -- with to million. again, Well, We hit is we're start guidance. $XX guidance

typically quarter the again, think, quarter. seasonally is I stronger fourth a

I think a number of things.

forward. we of of some one, we're to we of we And will number we'll as move begin out a begin and think, destocking transformation I coming improve demand that deep -- believe the phase, as believe we benefits our get well. going the

North thoughts I are, And think, fundamental any so if I key you're of that. you've in that additional improvement. Mason, drivers know, the those don't the America, on trenches got in

hear Yes. Can Ben? okay, you me

Yes.

Yes.

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crops of itself portfolio. in, and say, our lot strengths those to a cotton, peanuts; corn lend our So,

product feel fit to we we seen and the talked advantage the that We've be of well our So that strong. like coming. will feel take market confident positioned about we're destocking

of here good. are Very generics. by today generics Folex level -- Can more comment expectations that on embedded Wondering uniquely about the this kind you from are that or maybe full products Okay. pressure revenue full your maybe have broadly, specifically pressured for the within just you the of year. that year

-- base these your how that that unique revenue generic pressures of of here to has curious Just kind the degree kind much pressure you're... of which

not in the you you impacted who's can and a Mason, case. biggest it said But At all entered impact market had company. I'll detail short in I the has to then which over a competitors. But, as again, kind Folex, Brazil this chunk we Mason impact company the regions, specific probably a biggest earlier, especially more as year provide from single a of level, as high and our at LatAm been generic on we've has is turn about our player and a a term. of Folex, market Yes. the a in on we've of that level. as lot out I'll Well, periodically high taking of been been start the internationally atypical which

some one Yes. market say bit. you that's a really, maybe And Ben, and they we So, right? being so because plan we we generics, a caught of challenge product in and come that just that thing about, down, looking to see nature product we Folex what pattern specifically guard, there with moving really off decisions that I'll in, it's tend just you support the were came year. year, the next to the with of places growers some farm and and this into and economy term saw generics cyclical see made long not us little to brought cotton a sell our devaluation the

tend seen unreliable and they to a into space in the market, that's So only supplier the we've that really that competitor came be very Ben.

about a and generics X there's formulation I'll this about to our what may that, be going to Just ourselves from to comment, then and X sales in approach come perspective, superior we the a but pride we what service, marketplace, It's teams, providing commercial offering generics support in. areas. yes, coming U.S. strategy, to

an Just customer superior of doesn't AI ], it formulation has because same it's experience. a [ the product that and would it the level mean

are retail support So, And the then areas. the just gate. it's those at X farm lastly,

with overlook support. there's at gate challenges or what, know this. issues there's people the if farm level, or service issues, So no you If generics there's

there. You times, and no away. they get, what you walk many one pay there's for And

growers that ourselves can we with pride we provide our retail quality in space. servicing and Vanguard, American supporting AMVAC, that the in where our that's products So and

wondering associated that, and of fourth with -- wondering, fourth the regarding the if contributors comp that year any me, you want costs more in get the to outlook. the Okay. expect around flagged Dacthal year-over-year difficult additional year-over-year that's quarter expectations fourth I'll also disposal in you and quarter? and back like -- what flag quarter I'm quarter from in last recall you to came Very Aztec, year-over-year queue third have in helpful. any the the given One for and the the that for I'm here

you mind? cover why don't if David, Dacthal first, don't one you the

we we've can as the this the to million I quarter got best as taken product -- we've got Yes. that. mean, that year, globally markets this looked we across the identify $XX and we've diligently estimate current all is of

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I still or be mean, perspective, what the as the X year, from a built bit we from the third year. nearly in this of overhang a it the but case revenue that have last inventory quarter months of shouldn't substantial first was may was Aztec as

questions like have the queue. floor any remarks. Looks closing like further no we Okay. I'd back for turn to in management to

lot amount a again, organization some leadership management in now. leaves we interest at This employees I who make a a drive uncertainty. to our time trying going earlier -- through you, you company. team and the you and future. those With obviously much difficult to recognize of joining. your your I on applaud that, for this they decisions thank afternoon But think our changes for the closing, joined, year. Thank these for the for times. just tremendous your appreciate just want team Well, layer today, tough Changing support want transformation, that, I on focused for very Vanguard right once and just everybody, to taking from have of this American Again, optimism in to tough is dedicated an to I again. cycle have change the ag staying having the

Thank This conference, your you you participation. time. and your concludes disconnect may at today's lines this for