American Vanguard Corporation

Greetings and welcome to the American Vanguard third 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. And please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Anthony Young, Director of Investor Relations.

Sir, the floor is yours. Thank you, Operator. Good morning, and welcome to American Vanguard's third quarter 2025 earnings review. Our prepared remarks will be led by Dak Kay, Chief Executive Officer, and David Johnson, Chief Financial Officer. A copy of today's release, along with supplemental slides, are available on our website. A replay of the webcast and transcript from this event will be available on our website shortly as well. Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include non-GAAP figures and forward-looking statements, and actual results may differ materially. Please refer to the cautionary language included in our press release and slides and to the risk factors described in our SEC filings all of which are available on our website. It is now my pleasure to turn the call over to CEO Dakike.

Thank you, Anthony, and welcome everyone to our third quarter 2025 earnings conference call. When I joined the team 11 months ago, my directive was to simplify, prioritize, and deliver, and that is what we are doing. Our adjusted EBITDA increased from 1.8 million in the year-ago period to 8.2 million in the current quarter. an increase of more than 350%. The third quarter is typically our weakest quarter, and the fourth quarter is seasonally our strongest. We expect a strong finish to this year. While we operate through the agricultural down cycle, we are controlling the things that we can control, such as lowering net paid working capital, lowering factory costs and operating expenses, while we've positioned the company to have substantially higher earnings when the agricultural market rebounds. I'll provide my overview of the current state of the agricultural market in a few moments. I am pleased with the progress that we have made so far. Gross profit margins have increased by 300 basis points over the year-ago period. A significant portion of this improvement can be attributed to the operations team. Additionally, we are optimizing our manufacturing effort. For example, by transferring production from LA to Alabama to maximize production efficiencies. I anticipate that most of the cost savings that have materialized during this quarter will stick with the company for the long term. We have also taken steps to improve our operating expenses. These expenses have decreased by approximately $6 million as compared to Q3 of 2024 and by $14 million in the nine-month period. The reduction in spending is company-wide. While we are pleased with what we have accomplished so far, we are still laser-focused on watching our expenses. Controlling expenses should not be viewed as a short-term initiative, but as a change in culture at the company. While we still have transformation listed on our statement of operations this quarter, we are transitioning all of these activities to the internal team. We have the talent to continue with the transformation, and we will now be referring to these efforts as our business improvement initiative as we take full ownership. We had already decreased the spend in this area to $2 million from $8 million compared to the third quarter of 2024. But we anticipate decreasing this spend to negligible levels over the coming quarters. As we seek to simplify the business, we are renaming our non-crop business to be the specialty business. We do not believe the non-crop nomenclature adequately reflects the technology, patents, and innovation that are the foundation of this business. While the specialty business is smaller than our crop business, it has critical mass, with important contracts for mosquito control and advanced technologies that are being used in home pest control, ornamental and greenhouse applications, golf course, lawn, and landscape care. Our current financials still refer to this business as non-crop, but we expect our future financials will affect the name change. While the business improvement initiative is well underway, I think it is important that we also spend a little bit of time talking about the growth opportunities that are in front of us. We have not talked about this much in past conference calls, but we are creating an impressive growth portfolio that will potentially contribute 100 million of net sales over the medium term. We will achieve this growth on top of our already proven products, which will be growing as well through geographic expansion, and expanding into new crops and sectors. This additional volume should also help with our factory utilization, further lowering the cost structure for the company overall. The development team is focused on growing our crop protection portfolio now that Tempass is not a priority. Turning to what we are seeing in the agricultural economy, we are in the midst of a strong harvest in the U.S. However, trade tensions with China have created a cloud over the industry, particularly with U.S. soybean growers, where important trading channels remain unclear. While there are many reasons to be cautious, there are reasons to be optimistic, such as lower channel inventories of our products, a decreasing interest rate environment, recent news indicating that China is restarting soybean purchases, and a possibility for additional subsidies for growers. Against this uncertain backdrop, we are confident in maintaining our full year 2025 adjusted EBITDA target of $40 to $44 million. We have lowered our forecast for net sales to $520 to $535 million in 2025 to reflect various market conditions primarily in Mexico, Central America, and Australia. We will continue to control expenses while ensuring that we are operating our manufacturing facilities as safely and efficiently as possible to maximize our gross profit margin. We are confident we are setting the company up for success in 2026 and beyond. I will now turn the call over to our CFO, David Johnson.