American Vanguard reports Q3 2024 results: Non-crop revenues grew 17%; Green Solutions revenues grew 18% Y/O/Y

Date:11-14-2024

American Vanguard^® Company, a diversified specialty and agricultural products company that develops, manufactures, and and markets solutions for crop protection and nutrition, turf and ornamental management and commercial pest control, reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial and Operational Highlights – versus Third Quarter 2023:

• Net sales of $118.3 million ($130.7 million when excluding Dacthal product recall impact) v. $149.5 million;

• Adjusted EBITDA⁽¹⁾ of $1.8 million v. $11.4 million;

• Maintaining full-year 2024 Adjusted EBITDA guidance of $40 million to $50 million

• EPS of $(0.92) v. ($0.01)

• Decreased debt by $32.5 million from $211.3 million in the previous quarter

First nine months 2024 Financial and Operational Highlights – versus first nine months 2023:

• Net sales of $381.7 million ($394.1 million when excluding Dacthal product recall impact) v. $407.2 million;

• Adjusted EBITDA of $23.3 million v. $33.5 million;

• EPS of $(1.28) v. $0.02

Other Highlights:

• Raising expected full-year transformation related benefits to $20 million from $15 million

• The Board is actively engaged in recruiting a CEO to build upon the transformation momentum

Timothy J. Donnelly, Acting CEO of American Vanguard, stated ″We remain focused on transforming our Company into an efficient, reliable and profitable supplier to the Ag industry. We are pleased with the results that we are beginning to see from our business transformation. While we continue to manage through macroeconomic headwinds, we are seeing pockets of strength. For example, our non-crop business grew 17% as compared to the year ago period, and our green solutions portfolio grew 18% as compared to the year ago period. The growth in these areas was offset by pressure from generics, but the single biggest factor was a significant drop in Aztec sales year over year. Sales in 2023 were unusually high as a result of a previous supply shortage.″

Mr. Donnelly continued, ″As we transform the business, we are incurring one-time charges associated with positioning American Vanguard for longer-term growth. During the quarter we incurred a $8.1 million transformation charge. Additionally, during the quarter we recorded a $16.2 million charge associated with the collection and disposal of Dacthal. The Company benefitted from this profitable product for many years, and we are now taking the necessary steps to safely recall and dispose of it.″

David T. Johnson, Vice President, CFO and Treasurer, stated ″Despite the macro headwinds, the Company remains steadfast in its transformation roadmap, which presents a clear path towards achieving a 15% adjusted-EBITDA margin across the ag-cycle. We are pleased to have been able to pay down a material amount of debt during the quarter, decreasing our long-term debt to $179 million from $211 million at the end of the previous quarter. We expect to further improve our liquidity as we decrease our inventory in our seasonally strong 4th quarter. We remain optimistic that we can decrease inventory to 34% of sales by year end, down $25 million versus last year. We are pleased with the hard work of our employees in pursuing the business transformation projects. Furthermore, through their hard work we were able to reduce operating expenses, excluding transformation costs, for both the three month and nine month periods ended September 30, 2024, as compared to the prior year period.″

Mark Bassett, a board member who is temporarily working with the Company’s Office of the CEO commented, ″Within our transformation, we are encouraged by the initial progress that we have made and see an opportunity for even greater benefits than we had originally calculated. We now expect to achieve $20 million in transformation related benefits instead of our previous estimate of $15 million.″

Dr. Bassett concluded, ″I want to reiterate our full year 2024 revenue (down 2% to flat, excluding the product recall charge) and adjusted EBITDA ($40 - $50 million) targets. I view this achievement as a testament to the resiliency of this Company, especially in the wake of the current market conditions. We are focused on returning American Vanguard to a position of consistent free cash flow generation, which in the near-term will be allocated towards further deleveraging, but over the medium to long-term we expect to be able to apply these cash flows to growth opportunities.″

(1)  Adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently.

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