American Vanguard Corporation

Greetings and welcome to the American Vanguard first quarter 2025 earnings 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. Sir, you may begin.

Thank you, Ali. Good afternoon and welcome to American Vanguard's first quarter 2025 earnings review. Our prepared remarks will be led by Dat Kaye, Chief Executive Officer, and David Johnson, Chief Financial Officer. We have prepared presentation slides, which 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 in the company's SEC reports and pilots. All forward-looking statements represent the company's judgment as of the date of its release, and such information will not necessarily be updated by the company. It is now my pleasure to turn the call over to CEO, Zach Kay.

Thank you, Anthony, and welcome everyone to our first quarter 2025 earnings conference call. Let me start with a view from 10,000 feet. The year 2024 was one of great change at American Vanguard and was then capped off by a prolonged financial close and audit that delayed our form 10K and consequently the 10Q, which David will cover shortly. However, our final audited numbers were substantially similar to the unaudited results we published in March. In spite of tough market conditions, I'm happy to report that we were able to drive improvement in the areas that are within our control. For example, during Q1, our operating expenses dropped by $5 million and net trade working capital was reduced $86 million, both in comparison to last year. We are beginning to see the benefits of our transformation efforts. Further, channel inventories in the US are at historic lows. While customers were able to hold down their working capital during the first quarter, we can see they are starting to replenish their stocks now. Indeed, based upon orders to date, we are seeing a stronger second quarter and expect the remainder of 2025 will be solid. We are well positioned to respond to rising market trends while continuing to improve our operating leverage. Now turning to our first quarter of 2025 financial results. The company generated net sales of $116 million as compared to $135 million in the year-ago period and reported $3 million of adjusted EBITDA as compared to $15.5 million in the year-ago period. There were some specific items in the first quarter of 2024 that positively impacted that period, which we will address later. The first quarter of 2025 was somewhat weaker than we had initially anticipated. This was based upon the opinion formed at the end of 2024 that pretty much all of the stocking had finished. Industry data indicates that our product is being applied in the field, but our customers did not replenish their stocks as quickly as our product was being consumed. Thus, the trend of destocking continued in the first three months of 2025. We also made decisions to adjust our program strategy to keep up with programs that our competitors were deploying at the end of the first quarter. Top line revenue and gross profit were impacted by these developments. In addition to this dynamic, we did not have access to a previously canceled product. We saw a weakness in the Mexican agave market and drought conditions in Australia. I would also like to highlight two bright spots in our portfolio. Medtem sales were up 14% in the quarter versus last year. This is our largest single product and continues to be well respected in the market. Thiamet sales were also up 17%, and this can be attributed to the increase in peanut acreage that was planted this year. I must admit we have faced several challenges in my first five months, but I continue to be impressed with the team at American Vanguard. The opportunity to transform this business largely stands in front of us. We have taken some initial steps to improve the business, but the ongoing weakness of the current cycle has prevented this progress from being fully realized when considering our recent financial results. We expect this hard work should begin to materialize in the upcoming quarters. Two areas of improvement that I would like to highlight are our focus on cost containment and our improvement and our net working capital accounts. First, in the area of cost containment, I have advised the team to continuously evaluate where we can take costs out of the business. Overall, OpEx is down $5 million in the first quarter as compared to a year ago period. We expect to continue to bring further costs out of the business as part of our transformation plan, but this was a strong start to this effort. The team has also done an admirable job of managing net working capital, showing an improvement of $86 million as compared to this time last year. Our SIOP process allowed us to limit our inventory build, while our management of accounts receivable and accounts payable allowed us to limit the amount of debt that was necessary to operate the business. I was surprised by how much working capital was consumed by the company before I arrived and we plan to operate this business in a leaner fashion going forward, which will allow the business to generate higher returns over the long term. Before I turn the call over to David, I did want to address our 2025 revenue and EBITDA guidance. We have analyzed our supply chain, and we believe the impact from any tariffs will be nominal to our cost of goods sold. In fact, given our U.S.-based footprint, any long-term tariffs may create opportunities for American Vanguard. But given our weak first quarter and a market that is only beginning to recover, we are decreasing our full year adjusted EBITDA target range to $40 to $44 million from $45 to $52 million. And we are adjusting our revenue estimate to $535 to $545 million. While we are beginning to see early stages of our recovery, We do not want to forecast an overly optimistic outlook at this juncture. I'll return after David provides his remarks to give some additional industry commentary covering the short-term trends and expectations. I now turn the call over to David, our CFO.