American Vanguard Corporation

Greetings and welcome to the American Vanguard 2019 fourth quarter and full year conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Bill Kuser, Director of Investor Relations. Thank you. You may begin.

Thank you very much, Diego. Much appreciated. Welcome, everyone, to American Vanguard's 2019 Fourth Quarter and Full Year Earnings Review. Our speakers today will be Mr. Eric Wintermuth, the Chairman and CEO of American Vanguard, Mr. David Johnson, the Company's Chief Financial Officer, and also assisting in answering your questions, Mr. Bob Tregell, the Company's Chief Operating Officer. American Vanguard will file our form 10-K with the SEC tomorrow. That document provides additional detail to the results that we will be discussing in this call. Before beginning, let's take a moment for the usual cautionary reminder. In today's call, the company may discuss forward-looking information. Such information and statements are based on estimates and assumptions by the company's management, and are subject to various risks and uncertainties that may cause actual results to differ from management's current expectations. Such factors can include weather conditions, changes in regulatory policy, competitive pressures, and other risks that are detailed in the company's FCC reports and filings. All forward-looking statements represent the company's best judgment as of the date of this call Such information will not necessarily be updated by the company. With that, we'll turn the call over to Eric.

Thank you, Bill. Good afternoon, everyone, and thank you for your continued support of American Vanguard. Before speaking on our 2019 fiscal year, I think it's appropriate to pause for a moment and reflect on today's extreme overall market mentality. As you may know, led primarily by energy and bank stocks. The Dow dropped over 2,000 points today. An early sell-off actually triggered a 15-minute trading halt. The sell-off was driven primarily by a drop in oil prices triggered by Saudi Arabia's price war with Russia. In addition, the coronavirus has investors worried about supply chain disruption in various sectors. The impact of energy prices companies has, in turn, put pressure on their lenders. While dollar stocks were trading at about two times normal volume, American Vanguard traded slightly under its normal daily volume. Our shares dropped about six and a quarter percent over the course of the day. Generally speaking, most of our competitors experience share price declines in the high single digit to low double digit range. This is in contrast with energy stocks, which in some cases were down 20%. Obviously, our stock is not immune to overall stock market trends. However, we have seen relative stability in both corn and soybean prices and have observed that farm economy tends to have its own cycles in spite of energy and other sectors. With respect to COVID-19, to date, we have not experienced any material interruptions in supply or services from affected regions, including China. On the one hand, we are seeing indications such as more normalized inter-country transportation that would suggest the virus is beginning to show contraction within China. However, the virus has spread into multiple countries with over 100,000 cases and over 3,000 fatalities worldwide. Accordingly, we are following the matter closely and are keeping our workforce apprised of travel and hygiene recommendations published by the Center for Disease Control. Turning our focus to American Vanguard, I would like to give a recap of 2019 followed by our 2020 outlook. I will then turn the call over to David for more detail on our financial performance. Following David, I will give you an update on our new product launches and our SimPass precision application technology. The headline story in our industry during 2019 was weather. In the U.S., we saw unprecedented rainfall and cold in multiple regions, including the Midwest and South, that kept many growers out of the field during the first and most of the second quarters. In fact, prevent plant acres, which are normally 2 to 3 million acres per year, reached nearly 20 million acres in 2019, 11 million of which were in corn alone. Consequently, demand for many of our higher margin products, those destined for corn, sugar beets, fruits and vegetables, diminished. Even after the first half of the year, the domestic weather saga continued. Wet and cold gave way to record-setting heat and drought in the southern region. This had the two-fold effect. of obviating the need for both burned-down herbicides for multiple crops post-harvest and cotton-to-foliant products such as our Folex. In spite of this, we still generated a 3% increase in overall sales. With the addition of Brazil and our Sure2 sales into Canada, international sales rose by 21% for the year, while domestic sales declined by 6%, which was consistent with the performance of our larger peers. Domestically, I believe that we performed as well as we possibly could have. Our sales team had positioned our products strategically, particularly in the Midwest, where channel inventory levels were low at the start of the season. Further, despite reduced corn acres, sales of our leading corn insecticide, Aztec, and our herbicide, Impact, increased year over year. Moving forward in 2020, we expect to see increased demand for our products on many fronts, particularly in the United States markets, which consume many of our higher margin products. By some estimates, corn acres are forecasted to grow by as many as 10 million acres in the coming season. And the level of our domestic channel inventory at the start of 2020 is even lower than it was at the start of 2019. Further, we expect that our LATAM businesses will grow, will continue to a strong international performance as they continue to grow and mature. For the year 2020, then, assuming no material acquisitions, we are targeting net sales in the range of $505 to $515 million, a gross margin of 38%, operating expenses in the range of $160 to $165 million, interest expense of $5 to $6 million, and a tax rate of 27 to 28%. With that, I'll turn the call over to David.