American Vanguard Corporation

Greetings and welcome to the American Vanguard 2022 year-end earnings 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 this conference, please press star zero on your telephone keypad. Please note that this conference call is being recorded. I will now turn the conference over to our host, Tim Donnelly, Chief Administrative Officer. Thank you. You may begin.

Thank you, Diego, and welcome, everyone. Our speakers today will be Eric Wintemute, the Chairman and CEO of American Vanguard, David Johnson, the company's Chief Financial Officer, Scott Hendricks, AMVAC's Senior Vice President of Crop Sales for U.S. and Canada, as well as for Application Technology, Jim Thompson, AMVAC's Director of Portfolio Strategy and Business Development. Also to assist in answering your questions, we have Bob Tregell, our Chief Operating Officer on hand. American Vanguard will be filing our Form 10-K with the SEC in the next day or two. That should provide additional detail with respect to the results that we are discussing on this call. Before beginning, let's take a moment for our safe harbor 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 various other risks as detailed in the company's SEC reports and filings. All forward-looking statements represent the company's best judgment as of the date of this call, and such information will not necessarily be updated by the company With that, I turn the call over to Eric Lintemute. Eric?

Thank you, Tim. And welcome, everyone. I'm pleased to report that, as I had noted on our February call, our full year 2022 performance exceeded that of 21 in nearly all material respects. I'm extremely proud of the work our global team delivered, net sales of growth of 9% and growing our net income by 47%. We achieved this result despite a flat fourth quarter, during which we were unable to sell our leading soil insecticide, Aztec, due to a supply chain disruption, which has improved during the first quarter of this year. Here on slide four, I highlight a few important points about our 2022 performance and 23 outlook. First, our core business is strong, on track, to meet or exceed our 25 targets. Similarly, our green solutions business is growing at a fast clip and is also on target. With respect to SimPass, we are moving a bit slower than expected due largely to delays from supply chain disruption and regulatory approvals. The work we are doing to grow precision application agriculture is complex, but we feel strongly that the long-term benefits of CIMPAS play a critical role in maximizing the global farm economy. In short, regulatory design and formulation changes have slowed us down, and we are working on a number of initiatives to accelerate our progress. For example, we are applying additional resources to expand our portfolio and ensure broader adoption by growers. I would like to conclude the 2022 strategic review by noting that we have also strengthened our balance sheet while returning significant value to our investors through increased dividends and share repurchases. This sets up a path to target greater growth and profitability for 23. Just a few quick notes on market conditions highlighted on slide five. As we outlined in our 10-K, 22 was the second full year of an upcycle in the ag sector, featuring high commodity prices and a strong farm economy. Our corn, cotton, soybeans, and fruit and vegetable products all recorded stronger sales during the year. Our non-crop business was about even with the prior year, despite a 30% drop in the domestic consumer product market. We did see a rebound in the commercial non-crop segment as the professional pest control market began to regain its footing. Our international business recorded its highest sales increase, up 13% year-over-year, as we enjoyed significant increases in sales of our green solutions products, higher demand for our soil fumigants in Mexico and Australia, and the benefits of a new soybean registration for counter in Brazil. Also, I'm proud to report that our LATAM business hit a record 100 million milestone in sales. We look forward to building on this platform in the future. At this point, I thought it would be helpful to review our actual 22 performances versus our 22 financial targets. As you can see on slide 6, we were within the targeted range for net sales. Gross profit margin at 40% was at the high end of the target, as were operating expenses as a percent of net income or net sales at 33%. Our interest expense was only slightly above our target, which is noteworthy given how many times the Fed increased interest rates during the year. The tax rate came in at 24%, which is consistent with the target mid-20s. Debt to EBITDA came in at significantly better at at one X of target, better than one X of target. Net income ended up 47% and adjusted EBITDA was up 15% as compared to 21. While these were short of our targeted increases, they represent significant year-on-year improvements. Before continuing, I want to take a moment to credit our global team for those results. We continue to show strong sales growth and increased profitability while expanding our global footprint, offering climate friendly solutions and commercializing leading edge precision application technology. Business success requires not only hard work, but also high caliber people. On today's call, we wanted to feature two of our key executives who are leading important growth initiatives at the company. To support me, revisited our 2025 performance targets Jim Thompson our director of portfolio strategy and business development will report how we are successfully growing our green solution businesses including expanding into huge markets such as China and India also Scott Hendricks our senior VP of sales in the US and Canada crop sales techno and application technology will describe the focused measures that we are taking to ensure SimPass remains the vanguard of prescriptive application technology. At the end of the call, I will cover our 2023 outlook and then leave time to answer any questions you might have. But first, let me turn the call over to David Johnson, our CFO for his financial analysis. David? Thank you, Eric.