American Vanguard Corporation

We have given the forecasted range for EBITDA from a cash flow perspective. We are a little bit behind in the first quarter, but anticipate our annual cycle is to expand our working capital in the first three quarters or quarters and then start to come down at the end. And I don't see any difference in our profile for 2023. at this time.

Okay. Got it. Sorry, go ahead.

I don't think there's any change in our strategy with regard to investments. I mean, we're looking at all sorts of different things all the time, and yeah, we're not planning to change that.

Got it. Perfect. That's it for me. I appreciate it.

Our next question is going to come from Wayne Vincent with Gabelli. Your line is open.

Hi. Thanks for taking my question. Most of my questions have been answered. But just to expand a little on the Aztec supply issue when you guys got back online with that, I thought that was pretty well resolved when you guys reported the Q4 in March. But then you mentioned the selling season going through late April. I know prior you guys had mentioned that you were anticipating getting a lot of those missed sales from Q4 into the first half. Just if you walk through the cadence there, is it just that – those few weeks, it was just, it came on a little too late to be able to make those sales. And, and then you mentioned, you know, some going into Q2, like what percentage of that 20 cent miss in Q1, do you think shifted into Q2 and we might see recovered?

So as far as that, the shift, yeah, we did, we did have higher sales in Q2 than Q1. and year over year I think we were a little higher in Q2 than Q2 of 22. But on the 20 cents, if you take, I'm talking about what we actually did sell and what Scott's numbers reflected on the 2.3 million pounds out of the seven million, that includes second quarter sales, which were about 1.3, and I think we had about 1 million in Q1 of Aztec equivalent. So that miss of 38 cents was, I'll say, the difference between the 2.3 and the 7 million. So I don't know if that was, did you have a second part of the question? I'm not sure if I answered it.

Yeah, just because that's from the Q4 into Q1. You said sales have picked up into Q2. You may have sold a little more, but the selling season sort of ended there. Can you just quantify how much? Was there any shift there from what you missed in Q1 into Q2?

Well, as I said, we were a little ahead of sales in Q2. of 23 versus Q2 of 2022. So I would say those were kind of more natural. But the bottom line is that of the 7 million pounds, which was a bigger demand than what we had for the 23 season, of that, of actual sales of Aztec, we did about 2.3 million pounds. And this is equivalent of the 4.67% material or granule. So, I mean, the 38 cents I'm reporting is the difference between the seven million pounds and the 2.3. So there'll be a marginal pickup in Q2 of what we missed, but the total combined leaves us 4.7 million pounds short on the Aztec. But as Scott alluded, we did pick up additional sales of a substitute product, which was equivalent to another 400,000 pounds.

And then I know it's different dynamics with the impact, but just the missed sales there, the ability to make those up, or is it just that inventories are looking good going forward and we should just see more normalized demand?

Yeah, I think we'll see more normalized demand. We've had growth in our impact brand family for the last three years. 22 was significant for the dynamics that we described earlier. We anticipate to continue to grow our portfolio through the four brands that I referenced in my comments, and then we'll continue to innovate in this space. So, you'll see at least one, maybe two brands to come within our pipeline.

Okay. Thank you.

And it looks like we have a follow-up question from Chris Ketch. Your line is open.

Yeah.

I had a follow-up focused on green solutions and maybe just focused on biologics first. when you sort of established a beachhead in that niche, if you will, sort of via M&A, and it was a time when the rest of the industry, at least the big guys, were sort of going through a wave of consolidation, so weren't maybe as focused on it. But now, fast forward to today, it's viewed as one of the – I mean, Corteva's highlight is probably the single largest growth area within crop protection – Seems like the big guys are more focused on this. There are more development efforts, maybe committing more resources to developing the market. Obviously, the sustainability characteristics are more interesting. So, just curious about how you've seen this affect your positioning there. Has it become more competitive or, conversely, given the awareness that these big guys might be bringing to the marketplace and the commercial push that maybe that's beneficial to where you are with your product. Just wondering how you see that playing out as you focus on delivering your growth goals in that vector.

Chris, Bob here. That question is a good question. It's a space which is growing very fast, very profitable, better margins than the, I would say, mature crop protection chemical business. We feel that we're outpacing the market today with a 40 percent growth rate versus a growth rate of, let's say, 15 percent in most of the segments. We feel that we have established good, solid foundation in manufacturing with the two plants we acquired through the Agrinos. acquisition we have good research capabilities both in RTP and also in India so we're we're we've got an excellent pipeline we've got great market access throughout the market access structure in the Americas China and India and you know we have dedicated people in you know, selling that. I think so from a business model, we're about as advanced as anybody in the business. And therefore, you know, as you were shown today that, you know, BioWake, for example, is an opportunity for us where companies are coming to us because they see that know-how, they see that structure. New Leaf, which we also announced, is another company which is coming to us with their technology. So we have not only... in-house technology, but we're also getting licensing opportunities. So we're actually, we feel we're very well positioned to be competitive in that space. That space is only going to grow, and we're going to grow with it. So I don't know if you have a follow-up question to that, Chris.

No, I appreciate that color, Bob. And maybe the follow-up would also be maybe for you, because I know Sympath is near and dear to you, and When you joined the company, it was something that you were pretty enthusiastic about, the progress and the opportunity there. The question focused on Sympath is, I think it was you that mentioned that the infrastructure around delivering that was also going to provide a data platform with which growers could measure and capture their, or measure and keep track of, I guess, their um carbon avoidance if you will and you know given the momentum behind you know sort of um decarbonizing our economy it seems like ag is certainly in in focus in that regard and this is a platform which may enable that so i'm just wondering if if there's if there's still a play for in that regard or is it really just more focused right now on delivering the the inputs in a in a more, you know, precision planting manner. Thanks.

Well, CIPPAS, as you say, is the perfect delivery mechanism for any biorational products or nutritional products at plant. So we're developing that range. You've seen the announcements that we partnership, you know, the partnership we have with Rhodesian on the nutritional side. We're delivering those products. The partnerships we have with other companies that are coming to us, we have actually more opportunities than we can process right now. The holdup is really the getting those products registered through the EPA. You're going to see a lot more announcements coming in the future. But we also, through the Agridos range, just want to just remind everyone that we bought four products, and three of those were for soil health. with one of them that we're seeing now that we're getting good results in our trial work for nitrogen fixation, which goes right into the carbon market. And that's a tremendous opportunity for us going forward as the soil health market develops.

And I think it's, again, part of the system that we wound up developing because of wanting to be able to trace measure what goes into the soil is the ultimate system, right? Which is where we're talking about being able to measure, validate, and record. And so that, as we're implementing that through the Sympath system, that winds up giving the grower the ability to have a third party validation of his practices. So what we're really looking to do is capture his practices as far as nitrogen reduction, let's say, and the biologicals that Bob mentioned as far as that we're going to help with nutrient uptake. So that's the platform that we'll be using that we talked about before.

I appreciate the color. Thanks.

And to ask a question, press star 1.

Okay, it doesn't look like there are any more questions, so I'll turn it back over to our speakers for any closing remarks.

Okay, well, I appreciate everybody that participated on the phone today and listened in. Obviously, yeah, we were disappointed with the first quarter, but we do see that we will have a strong recovery over the balance of the three quarters and ultimately report very positive results for the year. And more importantly, that we continue to be on track with our next two-year goals and targets. And also, we're making good progress on all three of our growth platforms. So with that, thank you. And we will have another discussion with the shareholders meeting June 7th, I believe. All right. Thank you, everybody.

And this concludes your call. You may now disconnect.