American Vanguard Corporation

and welcome to the American Vanguard Fourth Quarter Earnings Review Conference Call. At this time, all participants are on a listen-only mode, and 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Anthony Young, Director, Investor Relations. Sir, the floor is yours.

Thank you, operator. Good morning and welcome to American Vanguard's fourth quarter and full year of 2024 earnings review. Our prepared remarks will be led by Dak Kay, Chief Executive Officer, and David Johnson, Chief Financial Officer. Tim Donling, CIO and General Counsel, is also available to answer questions. We have prepared presentation slides which we will reference during this call. These slides are posted on the investor relations section of the American Vanguard website. Let's begin this call with our forward-looking cautionary reminder. During this call, we may discuss forward-looking information. All forward-looking statements are estimates by the company's management and are subject to various risks and uncertainties that may cause actual results to differ. Such factors include weather conditions, changes in regulatory policy, and other risks as detailed on the company's SEC reports and filings. All forward-looking statements represent the company's judgment as of the date of this release and such information will not necessarily be updated by the company. Before commencing with the call, I would like to note the numbers that are being presented today are unaudited numbers. We anticipate there will be a delay in filing the Audited 10-K and are working closely with our auditors to complete the process, and we'll look forward to providing these audited financial documents shortly. It is now my pleasure to turn the call over to CEO Dak King.

Thanks, Anthony. Hello, everyone, and welcome. My name is Douglas Kaye. But throughout my life, my family, friends, and colleagues have referred to me as Dak. So please feel free to call me Dak in the future. This is my first conference call as CEO. So before discussing our results, I would like to take a moment to introduce myself and answer the question I have received most frequently during my three months on the job. Why did you join American Vanguard? I've been on the job as CEO for three months, but have known, competed against, and admired American Vanguard for many years. I started my career in finance, but have spent the second half of my career managing and growing large-scale crop protection businesses. It was not an easy decision to leave my last role, but I saw a tremendous opportunity at American Vanguard to build upon a business that provides high-quality, irreplaceable products that our customers value and needed by growers. This company has a resilient revenue base that we can build upon, but we must improve margins, right-size the balance sheet, and get back to growth. As David will discuss in a few minutes, the one-time charges taken during this quarter are part of a broader strategy to improve this business. The magnitude of the charge is substantial. These steps are necessary to reposition the company for long-term growth and profitability. We have a lot of ground to cover on this call, but before we get started, I wanted to emphasize that I plan on having a culture that stresses the importance of safety. Ensuring the safety, health, and well-being of our employees and the environment is an important part of my role here, and one of my goals is to ensure that our employees return home safely after every day of work. From the attached charts, you can see that our safety performance has improved over the last 12 months. One of my goals as CEO is to ensure that this trend continues to improve. While we may never be the largest agricultural company, I will strive to make us one of the safest. Now turning to the full year 2024 results, to be able to compare our 24 results with previous periods, I will reference adjusted numbers. American Vanguard generated approximately $42 million of adjusted EBITDA in 2024, within the range of we previously communicated of $40 to $50 million. Adjusted revenue was approximately $563 million, slightly below our target of $565 to $580 million. We acknowledge that in the past, American Vanguard has had a history of missing its targets, but going forward, we want to be a company that sets achievable goals and consistently meets or exceeds these benchmarks. That is a commitment we want to make to our stakeholders, our customers, regulators, employees, and shareholders, and all other constituents. While we are pleased to have achieved our 2024 EBITDA target, the result is just the starting point for what is possible at this company, in my opinion. With an adjusted EBITDA margin of 7.5% in 2024, we would view this level of profitability as being approximately half of what our full cycle earnings power can be. On a percentage basis, we believe that we can achieve double-digit EBITDA growth over the next three to four years as we simplify, prioritize, and deliver. This is a mantra that I have been repeating since the first day I joined the company and will continue to repeat for the foreseeable future. For a relatively small business, I have noticed a significant amount of complexity, and I believe that simplifying many of the things we do will allow us to better understand what is important and be able to deliver against the highest priority task. The Board of Directors has taken the right initial steps to fix the business over the past seven to eight months, exiting some paths, cutting costs, and looking to install an ERP system with the right initial steps to fix the business. I had a deep understanding of what the board was looking to accomplish before I joined the company, but I believe the transformation plan was a starting point for what is possible, not the ultimate destination. I don't think anything revolutionary is necessary to improve upon the business transformation that is well underway, but deploying modern management techniques that I've implemented in several prior positions should build upon the targets that we've already established. Before I turn the call over to David, I can provide some details on what we are seeing in the farm economy. Since taking this role, I have met with many of our largest customers with whom I've had long-standing relationships. These customers are indicating that the slight improvement in the sentiment since the low points experienced in the summer of 2024 has created a more positive environment amongst growers. but they remain conservative in their buying patterns after enduring the recent cyclical downturn and facing the uncertainty of continuing high costs of capital and now the specter of increasing tariffs. It seems the channel is purchasing in season instead of ahead of the season, as we have seen historically. It does not appear that customers are looking to rebuild inventories, which have largely been depleted. Instead, they are buying just in time for the season. I firmly believe that 2025 will be better than 2024, but the improvement will be gradual, and the interest rate environment, coupled with the uncertainty of potential tariffs, will lead to farmers remaining cautious for some time. Taking into consideration these factors, for 2025, we have an adjusted EBITDA target range of 45 to 52 million, and expect sales to fall in the range of 565 to 585 million. We expect capex of approximately $10 million for 2025. So free cash flow should be meaningful, which we will allocate towards the pay down of debt. As we continue to transform this business, we believe that future margins will continue to improve, and we believe there will be further margin enhancement in 2026 and beyond. Now I'll turn the call over to David to discuss financial results before returning for my closing remarks.